<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
---------------
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-12923
WESTFIELD AMERICA, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MISSOURI 43-0758627
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
11601 WILSHIRE BOULEVARD
12TH FLOOR
LOS ANGELES, CALIFORNIA 90025
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (310) 478-4456
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
As of August 14, 1998, 73,336,465 shares of common stock, par value $.01 per
share, were outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
PART I--FINANCIAL INFORMATION
Item 1: Condensed Financial Statements
Consolidated Balance Sheets as of June 30, 1998 (unaudited) and December 31, 1997........... 2
Consolidated Statements of Income (unaudited) for the three months ended June 30, 1998 and
1997 and for the six months ended June 30, 1998 and 1997.................................. 3
Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 1998 and
1997...................................................................................... 4
Notes to Condensed Consolidated Financial Statements (unaudited)............................ 5
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations....... 13
PART II--OTHER INFORMATION
Items 1 through 6....................................................................................... 24
Signatures.............................................................................................. 26
</TABLE>
1
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
ASSETS:
Land.................................................................................... $ 381,485 $ 302,260
Buildings, improvements and equipment................................................... 1,552,530 1,491,067
Less accumulated depreciation........................................................... (268,263) (236,220)
------------ ------------
Net property and equipment............................................................ 1,665,752 1,557,107
Construction in progress................................................................ 30,242 11,651
Investments in unconsolidated real estate partnerships.................................. 46,325 49,391
Participating loan to an affiliate...................................................... 145,000 145,000
Direct financing leases receivable...................................................... 84,301 85,352
------------ ------------
Net investment in real estate......................................................... 1,971,620 1,848,501
Cash and cash equivalents............................................................... 8,067 11,003
Restricted cash......................................................................... 30,882 28,305
Accounts and notes receivable, net of allowance of $10,525 and $8,912 in 1998 and 1997,
respectively.......................................................................... 28,432 27,499
Deferred expenses and other assets, net................................................. 25,013 54,322
------------ ------------
Total assets.......................................................................... $ 2,064,014 $ 1,969,630
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Notes payable and revolving credit facility............................................. $ 1,176,059 $ 1,107,425
Accounts payable and accrued expenses................................................... 31,025 38,352
Distribution payable.................................................................... 28,758 28,350
Minority interest....................................................................... 23,986 25,123
------------ ------------
Total liabilities..................................................................... 1,259,828 1,199,250
------------ ------------
SHAREHOLDERS' EQUITY (Note 9):
Common stock............................................................................ 731 731
Preferred stock......................................................................... 121,000 121,000
Additional paid-in capital.............................................................. 648,769 648,649
Retained earnings....................................................................... 33,686 --
------------ ------------
Total shareholders' equity............................................................ 804,186 770,380
------------ ------------
Total liabilities and shareholders' equity............................................ $ 2,064,014 $ 1,969,630
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED AND IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED JUNE
JUNE 30, 30,
---------------------- ----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Minimum rents................................................... $ 48,335 $ 33,184 $ 96,519 $ 64,068
Tenant recoveries............................................... 18,620 14,294 37,779 28,349
Percentage rents................................................ 1,724 521 4,298 2,507
---------- ---------- ---------- ----------
Total revenues................................................ 68,679 47,999 138,596 94,924
---------- ---------- ---------- ----------
EXPENSES:
Operating....................................................... 19,837 12,726 39,763 27,436
Management fees................................................. 1,383 1,108 2,770 1,998
Advisory fee.................................................... 1,483 -- 2,966 --
General and administrative...................................... 422 13 901 294
Depreciation and amortization................................... 17,040 12,210 33,878 23,758
---------- ---------- ---------- ----------
Total expenses................................................ 40,165 26,057 80,278 53,486
---------- ---------- ---------- ----------
OPERATING INCOME.................................................. 28,514 21,942 58,318 41,438
INTEREST EXPENSE, net............................................. (18,911) (13,222) (39,202) (26,082)
OTHER INCOME:
Equity in income of unconsolidated real estate partnerships..... 423 939 910 2,314
Gain on sale of investments..................................... 65,710 -- 65,710 --
Interest and other income....................................... 3,909 1,683 7,440 1,854
---------- ---------- ---------- ----------
INCOME BEFORE MINORITY INTEREST................................... 79,645 11,342 93,176 19,524
Minority interest in earnings of consolidated real estate
partnerships.................................................... (998) (534) (1,978) (752)
---------- ---------- ---------- ----------
NET INCOME........................................................ $ 78,647 $ 10,808 $ 91,198 $ 18,772
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income allocable to preferred shares.......................... $ 2,723 $ 3,822 $ 5,447 $ 6,060
Net income allocable to common shares............................. 75,924 6,986 85,751 12,712
---------- ---------- ---------- ----------
$ 78,647 $ 10,808 $ 91,198 $ 18,772
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
EARNINGS PER COMMON SHARE:
Basic........................................................... $ 1.04 $ 0.11 $ 1.17 $ 0.22
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Diluted......................................................... $ 0.97 $ 0.11 $ 1.06 $ 0.22
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
DISTRIBUTIONS DECLARED PER COMMON SHARE........................... $ 0.355 $ 0.883 $ 0.710 $ 0.891
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Basic........................................................... 73,333 62,121 73,331 57,551
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Diluted......................................................... 81,192 62,121 81,140 57,551
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
------------------------
1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................................................................ $ 91,198 $ 18,772
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization....................................................... 33,878 23,758
Amortization of deferred loan costs................................................. 521 115
Equity in income of unconsolidated real estate partnerships......................... (910) (2,314)
Minority interest in earnings of consolidated real estate partnerships.............. 1,978 752
Gain on sale of investments......................................................... (65,710) --
Issuance of common stock to independent directors................................... 120 --
Changes in assets and liabilities:
Accounts and notes receivable, net.................................................. (948) (4,980)
Deferred expenses and other assets.................................................. (1,897) (1,815)
Accounts payable and accrued expenses............................................... (7,326) (1,030)
----------- -----------
Net cash flows provided by operating activities....................................... 50,904 33,258
----------- -----------
INVESTING ACTIVITIES:
Capital expenditures and acquisitions................................................. (156,149) (213,418)
Participating loan to an affiliate.................................................... -- (145,000)
Purchase investment................................................................... -- (15,184)
Proceeds from sale of investment...................................................... 99,670 --
Cash distributions received from unconsolidated real estate partnerships.............. 3,976 6,973
Notes receivable repayments........................................................... 28 554
Direct financing leases receivable repayments......................................... 1,051 991
Cash and cash equivalents of consolidated real estate partnerships.................... -- 613
Increase in restricted cash........................................................... (2,577) --
----------- -----------
Net cash flows used in investing activities........................................... (54,001) (364,471)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock................................................ -- 436,500
Proceeds from issuance of preferred stock............................................. -- 27,000
Redemption of common stock............................................................ -- (130,500)
Redemption of preferred shares........................................................ (67) (50)
Stock issuance costs.................................................................. -- (31,327)
Cash distributions paid to preferred shareholders..................................... (5,408) (4,432)
Cash distributions paid to common shareholders........................................ (51,697) (39,957)
Cash distributions paid to minority interests, net.................................... (3,061) (568)
Proceeds from notes payable and revolving credit facility............................. 494,847 321,448
Principal payments on notes payable and revolving credit facility..................... (434,453) (210,162)
----------- -----------
Net cash flows provided by financing activities....................................... 161 367,952
----------- -----------
Net (decrease) increase in cash and cash equivalents.................................. (2,936) 36,739
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.......................................... 11,003 6,729
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................................ $ 8,067 $ 43,468
----------- -----------
----------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION PROVIDED IN NOTE 10.
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED AND IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
1. INTERIM FINANCIAL STATEMENTS:
The accompanying Condensed Consolidated Financial Statements of Westfield
America, Inc. and Subsidiaries ("WEA" or the "Company") are unaudited; however,
they have been prepared in accordance with generally accepted accounting
principles for interim financial information and in conjunction with the rules
and regulations of the Securities and Exchange Commission. Accordingly, they do
not include all of the disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting solely of normal recurring matters) necessary for a fair
presentation of the Condensed Consolidated Financial Statements for these
interim periods have been included. The results for the interim period ended
June 30, 1998, are not necessarily indicative of the results to be obtained for
the full fiscal year. These unaudited Condensed Consolidated Financial
Statements should be read in conjunction with the December 31, 1997 audited
Consolidated Financial Statements and notes thereto included in the WEA Form
10-K filed on March 26, 1998.
Certain amounts in the 1997 Condensed Consolidated Financial Statements have
been reclassified to conform to the 1998 presentation.
2. ORGANIZATION:
WEA 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. The Company owns interests in
26 shopping centers, 12 separate department store properties which are net
leased under financing leases to the May Department Stores Company and certain
other real estate investments located in seven states in the east coast, mid
west and west coast regions of the United States.
In May 1997, the Company completed an initial public offering (the
"Offering") whereby the Company issued 20,400,000 common shares and 270,000
preferred shares which resulted in proceeds totaling $300,384, net of
underwriting discounts and expenses of the Offering.
3. BASIS OF PRESENTATION:
The Company conducts its business through its wholly-owned subsidiaries and
affiliates. These Condensed Consolidated Financial Statements include the
accounts of the Company and all subsidiaries and partnerships 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 a general and/or limited partner in
non-controlled partnerships are accounted for using the equity method. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
4. ACQUISITIONS:
In January 1998, the Company paid $106,426 to acquire Crestwood Plaza, a
super-regional shopping center located in St. Louis, Missouri. Funds for the
purchase were obtained from borrowings under the Company's unsecured revolving
credit facility.
In June 1998, the Company paid $33,500 to acquire The Promenade at Woodland
Hills, a regional shopping center located in Los Angeles, California. Funds for
the purchase were obtained from borrowings under the Company's unsecured
revolving credit facility.
5
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
5. DISPOSITIONS:
In conjunction with the Offering, the Company acquired 49 million
non-transferable options to acquire ordinary shares of Westfield Holdings
Limited ("WHL"), an affiliate of the Company, (the "WHL Options"). The Company's
December 31, 1997 balance sheet has been restated to reflect the fair value of
the WHL Options, which at the time of the Offering, exceeded the Company's cost
basis. In April 1998, the Company exercised the WHL Options by electing to
receive the profit element of the WHL Options. As a result of the exercise, WHL
elected to pay the profit element of the WHL Options by issuing 20,339,066 WHL
ordinary shares. These shares were then sold by the Company for $99,670.
6. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS:
As of June 30, 1998, the Company's interest in each unconsolidated
partnership, is as follows:
<TABLE>
<CAPTION>
PERCENTAGE INTEREST
-----------------------------------------------
PROPERTY LOCATION GENERAL PARTNER LIMITED PARTNER TOTAL
- --------------------------------------------------- -------------------- ----------------- ----------------- ---------
<S> <C> <C> <C> <C>
Plaza Camino Real.................................. Carlsbad, CA 40.0% -- 40.0%
Topanga Plaza...................................... Canoga Park, CA 42.0% -- 42.0%
Vancouver Mall..................................... Vancouver, WA 50.0% -- 50.0%
West Valley........................................ Canoga Park, CA 40.0% 2.5% 42.5%
North County Fair.................................. Escondido, CA -- 45.0% 45.0%
</TABLE>
A summary of the condensed balance sheets and unaudited statements of income
for all unconsolidated real estate partnerships on a combined basis is as
follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
<S> <C> <C>
(UNAUDITED)
CONDENSED COMBINED BALANCE SHEETS:
Investment in real estate:
Land, building and improvements, at cost............................................ $ 289,290 $ 290,092
Less accumulated depreciation and amortization...................................... (110,324) (105,495)
Construction in progress............................................................ 1,553 1,322
----------- ------------
Net investment in real estate......................................................... 180,519 185,919
Other notes payable................................................................... (174,571) (175,289)
Other assets and liabilities, net, and interest of other partners..................... 40,377 38,761
----------- ------------
Investments in unconsolidated real estate partnerships................................ $ 46,325 $ 49,391
----------- ------------
----------- ------------
</TABLE>
6
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
6. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS: (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- --------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CONDENSED COMBINED STATEMENTS OF INCOME:
Total revenues........................................................ $ 14,219 $ 19,261 $ 28,704 $ 41,527
Costs and expenses:
Operating, general and administrative............................... 4,363 5,423 8,546 12,063
Interest expense, net............................................... 4,817 5,755 9,595 11,291
Depreciation and amortization....................................... 3,045 5,360 6,480 11,557
--------- --------- --------- ---------
Net income............................................................ 1,994 2,723 4,083 6,616
Other partners' share of income....................................... (1,571) (1,784) (3,173) (4,302)
--------- --------- --------- ---------
Equity in income of unconsolidated real estate partnerships........... $ 423 $ 939 $ 910 $ 2,314
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Significant accounting policies used by unconsolidated real estate
partnerships are similar to those used by the Company.
7. NOTES PAYABLE AND REVOLVING CREDIT FACILITY:
In June, 1998 the Company issued $301,087 of unsecured subordinated notes
("Capital Notes") to Australian investors, repayable in three equal installments
due in June 2001, 2002 and 2003. The Capital Notes, which are listed on the
Australian Stock Exchange, are denominated in Australian dollars and bear
interest at 2.25% above the Australian dollar swap rate at the time of issuance.
In conjunction with the issuance of the Capital Notes, the Company entered into
interest rate swap and foreign currency hedge agreements which effectively fixed
the interest and principal payments due to holders of the Capital Notes in U.S.
dollars and fixed the interest rate at 8.38%. The Capital Notes have not been,
and will not be, registered under the Securities Act of 1933, as amended, and
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
7
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
7. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
The Company's notes payable and revolving credit facility are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Collateralized non-recourse notes to an insurance company, interest only payable
monthly at 6.15%, due in 1999...................................................... $ 172,000 $ 172,000
Collateralized recourse note to an insurance company, interest only payable monthly
at 8.09%, due in 1999.............................................................. 15,000 15,000
Collateralized non-recourse notes to an insurance company, interest only payable
monthly at 6.51%, due in 2001...................................................... 167,000 167,000
Senior collateralized non-recourse notes, bearing interest at 6.39% principal and
interest payable quarterly, due in 2004............................................ 18,108 19,392
Senior collateralized non-recourse notes bearing interest at 7.33%, interest only
until 2004, principal and interest payable thereafter, due in 2014................. 55,167 55,167
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............................................................................... 138,697 140,866
Unsecured revolving credit facility with a group of banks with a maximum commitment
of $800,000, interest only at LIBOR + 1% (7.00% at June 30, 1998) payable monthly,
due in 2000 with options to extend................................................. 234,000 463,000
Collateralized commercial mortgage notes due in 2004, interest only payable monthly
at 6.78%........................................................................... 75,000 75,000
Unsecured subordinated notes to Australian investors, interest payable monthly at
8.38%, due in equal installments in 2001, 2002 and 2003............................ 301,087 --
------------ ------------
$ 1,176,059 $1,107,425
------------ ------------
------------ ------------
</TABLE>
Interest costs capitalized for the three months ended June 30, 1998 and 1997
and the six months ended June 30, 1998 and 1997, totaled $543, $797, $661 and
$1,148 respectively.
The annual maturities of notes payable and revolving credit facility as of
June 30, 1998, are as follows:
<TABLE>
<S> <C>
1998............................................................. $ 3,569
1999............................................................. 194,541
2000............................................................. 368,657
2001............................................................. 270,520
2002............................................................. 103,726
Thereafter....................................................... 235,046
----------
$1,176,059
----------
----------
</TABLE>
8
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
8. INTEREST RATE SWAP CONTRACTS:
At June 30, 1998, the Company had ten current interest rate 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). In the
unlikely event that a counterparty fails to meet the terms of an interest rate
swap contract, 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.
The Company has also entered into deferred interest rate exchange agreements
to manage future interest rates corresponding with the expiration of existing
fixed rate debt. The agreements consist of swaps and involve the future receipt
of a floating rate based on LIBOR and the payment of a fixed rate.
During the three months ended June 30, 1998, the Company entered into six
swap contracts and eight deferred interest rate exchange agreements as follows:
<TABLE>
<CAPTION>
RATE
--------------------- EFFECTIVE EXPIRING
NOTIONAL AMOUNT RECEIVABLE PAYABLE DATE DATE
- ------------------------------------------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C>
CURRENT SWAP CONTRACTS:
$ 80,000....................................... LIBOR 5.94% 06/30/98 06/30/01
80,000....................................... LIBOR 5.94% 06/30/98 06/30/02
80,000....................................... LIBOR 5.94% 06/30/98 06/30/03
20,000....................................... LIBOR 5.98% 06/30/98 06/30/01
20,000....................................... LIBOR 5.98% 06/30/98 06/30/02
20,000....................................... LIBOR 5.98% 06/30/98 06/30/03
DEFERRED INTEREST RATE EXCHANGE AGREEMENTS:
$100,000....................................... LIBOR 6.03% 10/11/98 02/11/08
50,000....................................... LIBOR 6.01% 11/11/98 03/11/08
50,000....................................... LIBOR 6.03% 11/11/98 03/11/08
380,000....................................... LIBOR 6.02% 11/12/98 11/11/05
100,000....................................... LIBOR 6.03% 12/11/98 04/11/08
60,000....................................... LIBOR 6.01% 02/11/02 02/11/08
65,000....................................... LIBOR 5.99% 04/01/02 04/01/07
65,000....................................... LIBOR 6.00% 04/01/02 04/01/08
</TABLE>
9
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
9. CAPITAL STOCK:
At June 30, 1998 and December 31, 1997, the total number of shares
authorized, issued and outstanding were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
--------------------------- ---------------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
SHARES SHARES SHARES SHARES
AUTHORIZED OUTSTANDING AUTHORIZED OUTSTANDING
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Common stock, $.01 par value........................... 200,000,000 73,336,465 200,000,000 73,329,535
Excess stock, $.01 par value........................... 205,000,000 -- 205,000,000 --
Non-voting senior preferred stock, $1.00 par value..... 200 2 200 9
Preferred stock, $1.00 par value of which 940,000
shares are designated Series A cumulative redeemable
preferred stock and 270,000 shares are designated
Series B cumulative redeemable preferred stock....... 5,000,000 1,210,000 5,000,000 1,210,000
</TABLE>
Each Director who is not an officer of the Company or an employee of WHL is
entitled to annual compensation equal to $20 in cash and $20 in unregistered
common stock. The number of shares issued is based on the share price of the
Company's common stock on the anniversary of the Director's appointment. In May
1998, the Company issued 6,930 shares of common stock to Directors.
In May 1998, the Company entered into a stock subscription agreement with
Westfield America Trust ("WAT"), a property trust listed on the Australian Stock
Exchange and a 56.1% shareholder of the Company's common stock. Subject to
shareholder approval, the Company has the right to sell and WAT has the
obligation to purchase up to $A465,000, (approximately $US300,000), of the
Company's common stock in three equal installments at a 5% discount to the then
prevailing market price of the Company's common stock at June 2001, 2002 and
2003. In lieu of issuing stock at each installment date, the Company has the
option to pay the 5% discount in cash or in common stock. The stock has not
been, and will not be, registered under the Securities Act of 1933, as amended,
and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
A quarterly distribution was declared on June 19, 1998 to shareholders of
record on June 30, 1998 of $28,758, including $0.355 per common share, which
equates to $1.42 per share on an annualized basis.
10. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash paid during the period for interest
(net of amounts capitalized).......................................... $ 40,649 $ 26,683
--------- ---------
--------- ---------
</TABLE>
10
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
10. SUPPLEMENTAL CASH FLOW INFORMATION: (CONTINUED)
NON CASH INVESTING AND FINANCING INFORMATION:
For the six months ended June 30, 1997, construction in process totaling
$25,886 was placed into service. No amounts were placed into service during the
three and six months ended June 30, 1998.
11. RELATED PARTIES:
Westfield Management Company ("WMC") an entity indirectly owned by WHL,
entered into an agreement with WEA to manage the properties in WEA's portfolio.
In consideration for providing these management services, WMC is reimbursed
certain recoverable property operating costs including mall related payroll and
is entitled to receive 5% of minimum and percentage rents received by the
Company. Property management fees totaling $1,383 and $1,108, net of capitalized
leasing fees of $1,053 and $510, were expensed for the three months ended June
30, 1998 and 1997, respectively. Property management fees totaling $2,770 and
$1,998, net of capitalized leasing fees of $2,062 and $1,027 were expensed for
the six months ended June 30, 1998 and 1997, respectively. Included in accounts
payable and accrued expenses at June 30, 1998 and December 31, 1997, are
management fees payable to WMC totaling $693 and $1,068, respectively.
In addition to the management fees, WMC was reimbursed for recoverable
operating costs including mall related payroll costs totaling $3,933 and $3,006
for the three months ended June 30, 1998 and 1997 respectively, and $7,937 and
$6,578 for the six months ended June 30, 1998 and 1997, respectively.
In accordance with a Master Development Framework Agreement, Westfield
Corporation, Inc. ("WCI"), a wholly owned subsidiary of WHL, has the exclusive
right to carry out expansion, redevelopment and related works. During the three
months ended June 30, 1998 and 1997, the Company reimbursed WCI $14,746 and
$14,812, respectively and for the six months ended June 30, 1998 and 1997, the
Company reimbursed WCI $20,104 and $23,537 respectively, for expansion,
redevelopment and related work.
Westfield U.S. Advisory, L.P. ("Advisor"), which is controlled by WHL,
provides a variety of asset management and investment services, subject to
supervision of the Company. The Advisor is entitled to an annual fee equal to
25% of the annual Funds of Operations ("FFO") in excess of the Advisory FFO
Amount ($114,700), but not to exceed 55 basis points of the Net Equity Value (as
defined) of the Company's assets. The Advisory FFO Amount shall be increased
whenever the Company issues additional Common Stock. The advisory fee expense
for the three and six months ended June 30, 1998 was $1,483 and $2,966,
respectively. The advisory fee was not payable for periods through December 31,
1997. Had the amounts been payable, the Advisory Fee would have been zero for
the three and six months ended June 30, 1997.
Included in interest and other income for the three months ended June 30,
1998 and 1997 and the six months ended June 30, 1998 and 1997 is interest income
earned on a participating loan to wholly-owned indirect subsidiaries of WHL
totaling $3,635, $1,369, $7,090 and $1,369 respectively.
12. COMMITMENTS AND CONTINGENCIES:
The Company is currently involved in several development projects and had
outstanding commitments with WCI totaling approximately $28,779 at June 30,
1998.
11
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
12. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
The Company has signed an agreement for the acquisition of interests in up
to 12 shopping center properties (eleven in California and one in Washington
State) (the "Hahn Portfolio") comprising approximately 12.1 million square feet
of gross leasable area from TrizecHahn Centers, Inc. ("TrizecHahn") for a
maximum purchase price of $1,391,000, including the assumption of debt. The
final price and the number of centers ultimately acquired will be dependent upon
the interests ultimately conveyed at closing since certain of the properties are
owned by joint ventures and are subject to partnership rights, such as rights of
first refusal to acquire the property. The Hahn Portfolio acquisition will close
in stages from July 1998 to December 1998.
13. SUBSEQUENT EVENTS:
In July 1998, the Company acquired a 50% interest in Valley Fair, located in
San Jose, California and a 100% interest in University Towne Center, located in
San Diego, California for an aggregate price of $332,000, including the
assumption of debt. Valley Fair is a super-regional center with 1,138 square
feet of gross leasable area. University Towne Center is an open-air
super-regional shopping center with 1,033 square feet of gross leasable area.
These centers represent the first acquisitions from TrizecHahn as discussed in
Note 12 above.
In August 1998, the Company issued $200 million of convertible preferred
stock. Security Capital Preferred Growth Incorporated purchased $75,000 of
Series C Cumulative Convertible Redeemable Preferred Stock and WAT and WHL
purchased $75,000 and $50,000, respectively, of Series D Cumulative Convertible
Redeemable Preferred Stock. The Series C and Series D Shares are convertible
into common stock at the price of $18.00 per share and have a dividend rate
equal to the greater of 8.5% or the dividend declared on the Company's common
stock. The convertible preferred stock acquired by WHL and WAT is not
convertible into the Company's common stock until approval of the Company's
shareholders is obtained. The convertible preferred stock and the underlying
common stock have not been registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements.
12
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements of the Company, the Notes thereto for the six
months ended June 30, 1998 (unaudited) and the Condensed Consolidated Financial
Statements of the Company for the year ended December 31, 1997 included on Form
10-K filed on March 26, 1998.
GENERAL BACKGROUND
The Company acquired Crestwood Plaza and The Promenade at Woodland Hills in
January 1998 and June 1998, respectively. Additionally, the Company acquired the
70% interest in Annapolis Mall that it did not already own and a 68% managing
interest in Wheaton Plaza in June 1997, the 50% interest in Meriden Square that
the Company did not already own and Northwest Plaza, in September 1997 and
December 1997, respectively. For purposes of discussing the results of
operations, the centers acquired in 1997 and 1998 are hereby referred to as
"Acquisition Centers."
At June 30, 1998 and for the six months then ended, the Condensed
Consolidated Financial Statements and Notes thereto reflect the consolidated
financial results of 19 centers, the equity in income of five unconsolidated
real estate partnerships, Crestwood Plaza following its acquisition in January
1998, The Promenade at Woodland Hills following its acquisition in June 1998, 12
separate department store properties that are net leased to the May Company
under financing leases, certain other real estate investments, the Offering, a
$145 million participating loan made to two wholly-owned indirect subsidiaries
of WHL secured by a 50% indirect interest in Garden State Plaza and the sale of
investments.
At June 30, 1997 and for the six months then ended, the Condensed
Consolidated Financial Statements and Notes thereto reflect the consolidated
financial results of 15 centers, the equity in income of six unconsolidated real
estate partnerships, Annapolis Mall and Wheaton Plaza following their
acquisition on or about June 1, 1997, 13 separate department store properties
that are net leased to the May Company under financing leases, certain other
real estate investments, the Offering and a $145 million participating loan made
to two wholly-owned indirect subsidiaries of WHL secured by a 50% indirect
interest in Garden State Plaza.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1998 TO THE THREE MONTHS ENDED
JUNE 30, 1997
TOTAL REVENUES increased $20.7 million or 43% to $68.7 million for the three
months ended June 30, 1998 as compared to $48.0 million for the same period in
1997. The increase is the result of the addition of the Acquisition Centers
which contributed $18.9 million or 91% of the increase in total revenues.
Excluding the total revenues generated by the Acquisition Centers, total
revenues increased $1.8 million due to higher minimum rents throughout the
portfolio and higher minimum rents generated by the Eastland, South Shore and
Trumbull redevelopments.
TOTAL EXPENSES increased $14.1 million or 54% to $40.2 million for the three
months ended June 30, 1998 as compared to $26.1 million for the same period in
1997. The increase was primarily the result of the addition of the Acquisition
Centers, which contributed a combined $9.3 million or 66% of the increase in
total expenses. Excluding the total expenses incurred by the Acquisition
Centers, total expenses increased $4.8 million due to the advisory fee totaling
$1.5 million which became payable in 1998, an increase in general and
administrative expenses totaling $0.4 million as a result of directors' fees and
directors and officers liability insurance premiums, an increase in depreciation
totaling $1.0 million, primarily due to
13
<PAGE>
Eastland, Enfield, Mid Rivers, South Shore and Trumbull redevelopments placed
into service in the second half of 1997 and property tax rebates received in
1997.
INTEREST EXPENSE, net of capitalized interest, increased $5.7 million or 43%
to $18.9 million for the three months ended June 30, 1998 as compared to $13.2
million for the same period in 1997 due primarily to increased borrowings under
the Company's unsecured revolving credit facility as a result of the additions
of the Acquisition Centers.
EQUITY IN INCOME OF UNCONSOLIDATED REAL ESTATE PARTNERSHIPS decreased
approximately $0.5 million to $0.4 million for the three months ended June 30,
1998 as compared to $0.9 million for the same period in 1997 due primarily to
the consolidation of Annapolis Mall and Meriden Square partnerships which were
acquired in June and September of 1997, respectively.
INTEREST AND OTHER INCOME increased $2.2 million to $3.9 million for the
three months ended June 30, 1998 as compared to $1.7 million for the same period
in 1997. The increase was due to interest earned on the $145 million
participating loan made to two wholly-owned indirect subsidiaries of WHL in
conjunction with the Offering.
MINORITY INTERESTS IN EARNINGS OF CONSOLIDATED REAL ESTATE PARTNERSHIPS
increased $0.5 million to $1.0 million for the three months ended June 30, 1998
as compared to $0.5 million for the same period in 1997 due to the acquisition
of a 68% managing interest in Wheaton Plaza.
NET INCOME increased $67.8 million including a gain of $65.7 million
recognized from the sale of investments. Excluding this gain, net income
increased $2.1 million or 20% to $12.9 million for the three months ended June
30, 1998 as compared to $10.8 million for the same period in 1997 for the
reasons discussed above.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1998 TO THE SIX MONTHS ENDED JUNE
30, 1997.
TOTAL REVENUES increased $43.7 million or 46% to $138.6 million for the six
months ended June 30, 1998 as compared to $94.9 million for the same period in
1997. The increase is primarily the result of the addition of the Acquisition
Centers, which contributed $39.8 million or 91% of the increase in total
revenues. Excluding the total revenues generated by the Acquisition Centers,
total revenues increased $3.9 million due to higher minimum rents throughout the
portfolio and higher minimum rents generated by redevelopments at Eastland,
South Shore and Trumbull.
TOTAL EXPENSES increased $26.8 million or 50% to $80.3 million for the six
months ended June 30, 1998 as compared to $53.5 million for the same period in
1997. The increase was primarily the result of the addition of the Acquisition
Centers which contributed $20.0 million or 75% of the increase in total
expenses. Excluding the total expenses incurred by the Acquisition Centers,
total expenses increased $6.8 million due to the advisory fee totaling $3.0
million which became payable in 1998, an increase in general and administrative
expenses totaling $0.6 million as a result of director's fees and directors and
officers liability insurance premiums, an increase in depreciation of $1.8
million primarily due to Eastland, Enfield, Mid Rivers, South Shore and Trumbull
redevelopments placed into service in the second half of 1997 and property tax
rebates received in 1997.
INTEREST EXPENSE, net of capitalized interest, increased $13.1 million or
50% to $39.2 million for the six months ended June 30, 1998 as compared to $26.1
million for the same period in 1997. The increase was due primarily to increased
borrowings under the Company's unsecured revolving credit facility as a result
of the addition of the Acquisition Centers.
EQUITY IN INCOME OF UNCONSOLIDATED REAL ESTATE PARTNERSHIPS decreased
approximately $1.4 million to $0.9 million for the six months ended June 30,
1998 as compared to $2.3 million for the same period in 1997 due primarily to
the consolidation of Annapolis Mall and Meriden Square Partnerships which were
acquired in June and September of 1997, respectively.
14
<PAGE>
INTEREST AND OTHER INCOME increased $5.6 million to $7.4 million for the six
months ended June 30, 1998 as compared to $1.8 million for the same period in
1997. The increase was primarily due to interest earned on the $145 million
participating loan to an affiliate made in conjunction with the Offering.
MINORITY INTEREST in earnings of consolidated real estate partnership
increased $1.2 million to $2.0 million for the six months ended June 30, 1998 as
compared to $0.8 million for the same period in 1997 due to the acquisition of a
68% managing interest in Wheaton Plaza.
NET INCOME increased $72.4 million including a gain of $65.7 million on the
sale of investments. Excluding this gain, net income increased $6.7 million or
36% to $25.5 million for the six months ended June 30, 1998 as compared to $18.8
million for the same period in 1997 for the reasons discussed above.
EBITDA--EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
The Company believes that there are several important factors that
contribute to the Company's ability to increase rent and improve profitability
of its shopping centers, including aggregate retailer sales volume, sales per
square foot, occupancy levels and retailer costs. Each of these factors has a
significant effect on the Company's earnings before interest, taxes,
depreciation and amortization ("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 generally accepted
accounting principles ("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 EBITDA after minority interest plus its pro rata share of
EBITDA of unconsolidated real estate partnerships increased from $79.2 million
to $106.7 million for the six months ended June 30, 1997 and 1998, respectively,
representing an increase of 35%. The growth in EBITDA reflects the addition of
total gross leasable area ("GLA"), increased rental rates, increased tenant
sales and improved occupancy levels.
The following is a summary of the unaudited EBITDA of the Company:
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
EBITDA of wholly-owned and consolidated real estate
partnerships......................................... $ 50,051 $ 36,453 $ 100,861 $ 68,249
Pro rata share of EBITDA of unconsolidated real estate
partnerships......................................... 4,453 5,924 8,915 12,487
--------- --------- --------- ---------
Total EBITDA........................................... $ 54,504 $ 42,377 $ 109,776 $ 80,736
--------- --------- --------- ---------
--------- --------- --------- ---------
EBITDA after minority interest (1)..................... $ 53,012 $ 41,454 $ 106,715 $ 79,204
--------- --------- --------- ---------
--------- --------- --------- ---------
Increase in EBITDA after minority interest............. 28% 35%
--------- ---------
--------- ---------
</TABLE>
- ------------------------
(1) EBITDA after minority interest represents earnings before interest, taxes,
depreciation and amortization and gain on sale of investments for all
Properties excluding the minority partners' share of EBITDA in Mission
Valley Partnership and Wheaton Plaza Regional Shopping Center, LLP.
15
<PAGE>
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.
The following is a summary of the unaudited Funds from Operations of the
Company and reconciliation of net income to Funds from Operations:
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Funds from Operations.................................. $ 32,155 $ 25,809 $ 63,713 $ 48,268
--------- --------- --------- ---------
--------- --------- --------- ---------
Increase in Funds from Operations from prior period.... 25% 32%
--------- ---------
--------- ---------
Reconciliation:
Net income........................................... $ 78,647 $ 10,808 $ 91,198 $ 18,772
Gain on sale of investments.......................... (65,710) -- (65,710) --
Depreciation and amortization:
Deferred financing leases............................ 530 508 1,051 1,007
Consolidated properties.............................. 17,040 12,210 33,878 23,758
Unconsolidated real estate partnerships.............. 1,938 2,490 3,876 5,160
Minority interest portion............................ (290) (207) (580) (429)
--------- --------- --------- ---------
Funds from Operations................................ $ 32,155 $ 25,809 $ 63,713 $ 48,268
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
16
<PAGE>
PORTFOLIO DATA
SEASONALITY
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when retailer occupancy and retail
sales are typically at their highest levels. In addition, shopping malls achieve
a substantial portion of their specialty (temporary retailer) rents during the
holiday season. As a result of the above, earnings are generally highest in the
fourth quarter of each year.
The following table summarizes certain quarterly operating data for 1997 and
the first two quarters of 1998 for Centers, excluding North County Fair:
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1998 QUARTERLY DATA
Mall store sales.................................. $ 350,456 $ 392,112 N/A N/A
Revenues.......................................... $ 87,933 $ 86,807 N/A N/A
Percentage leased................................. 92% 93% N/A N/A
1997 QUARTERLY DATA
Mall store sales (1).............................. $ 289,716 $ 316,178 $ 325,834 $ 506,591
Revenues.......................................... $ 69,482 $ 69,087 $ 80,209 $ 83,081
Percentage leased (1)............................. 91% 92% 92% 93%
</TABLE>
- ------------------------
(1) Excludes centers under redevelopment in the first and second quarters.
REPORTED TENANT SALES VOLUME AND SALES PER SQUARE FOOT
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 retailers can afford to pay. Mall
store sales for Centers, excluding North County Fair, for the six months ended
June 30, 1998, increased 3.8% on a per square foot basis over the same period in
1997. The Company believes these sales levels enhance the Company's ability to
obtain higher rents from retailers.
The table below sets forth mall store sales and per square foot percentage
increases over the same periods in 1997 for Centers, excluding North County
Fair, in the east coast, the mid west and the west coast regions of the United
States.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998
---------------------- ----------------------
MALL MALL
STORE INCREASE STORE INCREASE
SALES PER SQ. FT. SALES PER SQ. FT.
--------- ----------- --------- -----------
($000) ($000)
<S> <C> <C> <C> <C>
East coast............................. $ 177,798 4.3% $ 329,840 2.3%
Mid west............................... 81,702 4.8% 158,832 5.4%
West coast............................. 132,612 3.3% 252,842 4.5%
-- --
--------- ---------
Total Centers.......................... $ 392,112 4.1% $ 741,514 3.8%
-- --
-- --
--------- ---------
--------- ---------
</TABLE>
17
<PAGE>
LEASING
Mall store space was 93% leased at June 30, 1998, at Stabilized Centers
excluding North County Fair and the recently acquired Promenade at Woodland
Hills. The Company excludes temporary leasing from the calculation of leased
mall store space since such leases are on a short-term basis (30 days to 11
months) and are subject to termination by the Company on 30 days notice. The
following table sets forth leased status for Centers in the east coast, the mid
west and the west coast regions of the United States.
<TABLE>
<CAPTION>
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
<S> <C> <C>
East coast................................................................ 92% 93%
Mid west.................................................................. 92% 92%
West coast................................................................ 95% 91%
Total Centers............................................................. 93% 92%
</TABLE>
RENTAL RATES
As leases have expired, the Company has generally been able to rent the
available space, either to the existing retailer or a new retailer, at rental
rates that are higher than those of the expired leases. In a period of
increasing sales, rents on new leases will tend to rise as retailer's
expectations of future growth become more optimistic. In periods of slower
growth or declining sales, rents on new leases will grow more slowly or will
decline for the opposite reason. Revenues nevertheless increase as older leases
rollover or are terminated early and replaced with new leases negotiated at
current rental rates that are usually higher than the average rates for existing
leases.
Average base rent was $28.22 at June 30, 1998. The following table contains
certain information regarding base rent per square foot of the mall stores
excluding North County Fair and leases in excess of 20,000 square feet that have
been executed since January 1, 1997.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Average base rent of mall store leases, at
the end of the period..................... $ 28.22 $ 27.50 $ 28.22 $ 27.50
Leases expired during the period............ 26.70 28.55 25.17 27.26
Leases executed during the period........... 30.32 27.61 29.11 28.72
</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 was $1,011 and
$666 for the three months ended June 30, 1998 and 1997, respectively, and $2,012
and $1,279 for the six months ended June 30, 1998 and 1997, respectively.
18
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
On January 15, 1998, the Company's unsecured revolving credit facility from
National Australia Bank, Australia New Zealand Banking Group, Commonwealth Bank
of Australia and UBS AG (formerly known as Union Bank of Switzerland) was
increased to $800 million. At June 30, 1998, the Company had unused capacity
under its unsecured revolving credit facility totaling $566 million which will
be used to finance future redevelopments, acquisitions and as a revolving
working capital facility. The loan matures in May 2000 and is extendable
annually thereafter for an additional year.
During the quarter, the Company issued $301.1 million of unsecured
subordinated notes ("Capital Notes") to Australian investors, repayable in three
equal installments due in June 2001, 2002 and 2003 and bears interest at 8.38%.
The Company also entered into a stock subscription agreement with WAT. Subject
to shareholder approval, the Company has the right to sell and WAT has the
obligation to purchase up to $A465,000, (approximately $US300 million), of the
Company's common stock in three equal installments at a 5% discount to the then
prevailing market price of the Company's common stock at June 2001, 2002 and
2003.
Additionally, during the quarter, the Company exercised the WHL Options by
electing to receive the profit element of the WHL Options. As a result of the
exercise, WHL elected to pay the profit element of the WHL Options by issuing
20,339,066 WHL ordinary shares. These shares were then sold by the Company for
$99.7 million.
In August 1998, the Company issued $200 million of convertible preferred
stock. Security Capital Preferred Growth Incorporated purchased $75 million of
the convertible preferred stock and WAT and WHL purchased $75 million and $50
million, respectively. The covertible preferred stock is convertible into common
stock at the price of $18.00 per share and has a dividend rate equal to the
greater of 8.5% or the dividend declared on the Company's common stock. The
convertible preferred stock acquired by WAT and WHL is not convertible into the
Company's common stock until approval of the Company's shareholders is obtained.
At June 30, 1998, the Company's balance of cash and cash equivalents was
$8.1 million not including its proportionate share of cash held by
unconsolidated real estate partnerships.
The Company's consolidated indebtedness at June 30, 1998 was $1,176.1
million, all of which is fixed-rate debt after considering interest rate
protection agreements totaling $234 million (see discussion below). The interest
rate on the fixed rate debt ranges from 6.15% to 8.38%. The Company's pro rata
share of debt-to-total market capitalization, based on the share price on June
30, 1998 was 45.3%. If the Capital Notes were treated as equity, the
debt-to-total market capitalization ratio would have been 34.3%.
The Company has entered into interest rate exchange agreements to manage
current and future interest rates. The agreements consist of swaps and involve
the future receipt, corresponding with the expiration of existing fixed rate
debt, of a floating rate based on LIBOR and the payment of a fixed rate. Since
June 30, 1997, the Company has lengthened the average remaining term of its pro
rata share of total borrowings and hedges, including delayed start swaps from
5.0 to 7.6 years.
19
<PAGE>
The following is a summary of the Company's fixed rate debt, average
interest rate and average remaining term to maturity for the Company's pro rata
share of notes payable and revolving credit facility:
<TABLE>
<CAPTION>
JUNE 30,
------------------------
1998 1997
------------ ----------
($ IN THOUSANDS)
<S> <C> <C>
Principal amount of fixed rate debt................................. $ 1,000,492 $ 666,681
Principal amount of other current fixed rate payable instruments.... 234,000 125,000
------------ ----------
$ 1,234,492 $ 791,681
------------ ----------
------------ ----------
Fixed rate debt as a percentage of total notes payable and revolving
credit facility................................................... 100% 81%
------------ ----------
------------ ----------
Average rate (inclusive of margins) of total borrowings and
hedges............................................................ 7.39% 7.08%
------------ ----------
------------ ----------
Average remaining term (in years) of total borrowings and hedges,
including delayed start swaps..................................... 7.6 5.0
------------ ----------
------------ ----------
</TABLE>
As previously discussed, the Company has entered into an agreement to
acquire interests in up to 12 shopping center properties from TrizecHahn
Centers, Inc. for a maximum purchase price of $1.391 billion including the
assumption of debt. In this regard, the Company has existing debt facilities,
has issued additional debt and equity as noted above and has arranged additional
loan facilities to fund the Hahn Portfolio acquisition.
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 expansion projects and potential
acquisitions will be funded by external financing sources.
Capital expenditures and capital leasing costs, excluding property
acquisitions, were $25.1 million and $30.1 million for the six months ended June
30, 1998 and 1997, respectively. The following table shows the components of
capital expenditures:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
1998 1997
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
Renovations and expansions.............................................. $ 18,686 $ 25,957
Tenant allowances....................................................... 3,994 2,898
Capital leasing costs................................................... 2,062 1,027
Other capital expenditures.............................................. 317 239
--------- ---------
Total................................................................. $ 25,059 $ 30,121
--------- ---------
--------- ---------
</TABLE>
20
<PAGE>
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 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.
Redevelopments approved by the Board of Directors are as follows:
- The Company commenced redevelopment of Mission Valley Center-West, in San
Diego, California, at the beginning of 1998. The property will be
redeveloped into an approximate 210,000 square foot power center with
value-oriented retailers that will complement Mission Valley Center.
Completion is planned for a Spring 1999 opening.
- Annapolis Mall in Annapolis, Maryland, is a four anchor super-regional
shopping center with 155 Mall Stores. The addition of a fifth anchor, Lord
& Taylor, is planned to open in Fall, 1998, which will further solidify
Annapolis Mall's strong market position.
- Enfield Square in Enfield, Connecticut is a three anchor regional shopping
center with 87 Mall Stores. A new 58,000 sq. ft multi-screen Hoyts Cinema
is being added, with a planned opening in early spring 1999.
- South Shore Mall in Bayshore, New York, is a three anchor super-regional
center with 125 Mall Stores. South Shore Mall is adding a new Lord &
Taylor store with a planned Fall, 1998 opening.
- Meriden Square in Meriden, Connecticut is a three anchor regional mall
with 114 Mall Stores. The addition of a fourth anchor, Lord & Taylor and
70,000 square feet of new mall stores is planned to open in the Fall of
1999 which will differentiate Meriden Square from its competition and
solidify its market position.
- Crestwood Plaza in St. Louis, Missouri, is a three anchor super-regional
shopping center with 144 Mall Stores. Crestwood Plaza will add 27,000
square feet of new Mall Stores. Construction will begin in January 1999
with a fall 1999 anticipated completion.
In addition to the approved redevelopments, the Company has announced the
following redevelopment which the Company believes will result in future income
growth and capital appreciation:
- West County Center, in Des Peres, Missouri is a two anchor regional
shopping center with 66 Mall Stores. A $200 million redevelopment for West
County Center was announced in 1997. The redeveloped Center will feature
the addition of new anchors Nordstrom and Lord & Taylor. The existing
Famous-Barr store will be replaced with a new flagship store, and JCPenney
will be remodeled. The center will double in size to 1.2 million square
feet with more than 150 Mall Stores. The project will be phased, with
Famous-Barr opening in Fall 1999, and Nordstrom scheduled for completion
in 2001.
Capital expenditures were financed by external funding and recovery of costs
from retailers where applicable. The Company is currently involved in several
development projects and had outstanding commitments with contractors totaling
approximately $28.8 million as of June 30, 1998, which will be funded through
restricted cash and the unsecured revolving credit facility.
21
<PAGE>
The Company anticipates that its Funds from Operations will provide the
necessary funds on a short term and long term basis for its operating expenses,
interest expense on outstanding indebtedness and all distributions to the
shareholders in accordance with REIT requirements. Sources of recurring and non-
recurring capital expenditures on a short term and long term basis, such as
major building renovations and expansion, 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.
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 to expand and develop its business in accordance with its
strategy for growth.
DISTRIBUTIONS
A distribution was declared on June 19, 1998 to shareholders of record on
June 30, 1998, of $28.8 million which represents $0.355 per common share for the
quarter ended June 30, 1998, and equates to $1.42 per common share on an
annualized basis. The Company intends to continue to pay regular quarterly
distributions to the holders of its common stock.
IMPACT OF YEAR 2000
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
WMC is currently in the process of converting to a new computer system which
is anticipated to be completed by August 1998. In conjunction with the
conversion, the software and hardware will be replaced or modified so that the
computer system will function properly with respect to dates in the Year 2000
and thereafter. The Company believes that with WMC's conversion of its computer
system, the Year 2000 Issue will not pose significant operational problems for
the Company. The costs of the computer conversion will be incurred by WMC.
22
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report includes statements (other than the financial statements and
other statements of historical fact) that are subject to risks and
uncertainties. Forward-looking statements include the information concerning
possible future results of operations, earnings, expenses, cash flows, funds
from operations and other capital resources of the Company (including with
respect to increased revenues and rental rates, cost savings and operating
efficiencies) and market trends set forth under (a) "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Results of
Operations, "Portfolio Data," "Liquidity and Capital Resources,"
"Distributions," and "Impact of Year 2000," (b) "Legal Proceedings" and (c)
statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "intends," "plans," "estimates" or similar
expressions.
Forward-looking statements are made based on management's current
expectations and belief concerning future developments and their potential
effects on the Company. There can be no assurance that future developments will
be in accordance with management's expectations or that the effect of future
developments on the Company will be those anticipated by management. Many of the
factors that will determine these results are beyond the Company's ability to
control or predict.
The important factors described in the Company's Annual Report on form 10-K
for the year ended December 31, 1997, under "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Cautionary Statements
Concerning Forward-Looking Statements," and those important factors described
elsewhere in this report (including "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Legal Proceedings"), or in
other Securities and Exchange Commission filings, could affect (and in some
cases have affected) the Company's actual results and could cause such results
to differ materially from estimates or expectations reflected in such
forward-looking statements.
While the Company periodically reassesses material trends and uncertainties
affecting the operations and financial condition in connection with its
preparation of Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in its quarterly and annual reports, the Company
does not intend to review or revise any particular forward-looking statement
referenced in this report in light of future events, even if new information,
future events or other circumstances have made them incorrect or misleading.
The information referred to above should be considered by investors when
reviewing any forward-looking statements contained in this report, in any
documents incorporated herein by reference, in any of the Company's public
filings or press releases or in any oral statements made by the Company or any
of its officers or any other persons acting on its behalf. For those statements,
the Company intends to avail itself of the protection of the safe harbor
liability with respect to forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
23
<PAGE>
PART II--OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company currently is neither subject to any material litigation nor, to
management's knowledge, is any material litigation currently threatened against
the Company 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.
ITEM 2: CHANGES IN SECURITIES
None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of Shareholders was held on April 30, 1998 in Los
Angeles, California. The results of the shareholder vote was included in Part
II, Item 4 of the Company's Quarterly Report on Form 10-Q as filed with the
Securities and Exchange Commission on May 14, 1998 and is incorporated herein by
reference.
ITEM 5: OTHER INFORMATION
The Securities and Exchange Commission (the "Commission") recently amended
certain rules under the Securities Exchange Act of 1934 regarding the use of a
company's discretionary proxy voting authority with respect to shareholder
proposals submitted to the Company for consideration at the Company's next
annual meeting.
Shareholder proposals submitted to the Company outside the processes of Rule
14a-8 (i.e., the procedures for placing a shareholder's proposal in the
Company's proxy materials) with respect to the Company's 1999 annual meeting of
shareholders will be considered untimely if received by the Company before
December 28, 1998 or after January 26, 1999. Accordingly, the proxy with respect
to the Company's 1999 annual meeting of shareholders will confer discretionary
authority to vote on any shareholder proposals received by the Company after
January 26, 1999.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<S> <C>
3.1 Certificate of Designation for the Series C Preferred Shares.
3.2 Certificate of Designation for the Series D Preferred Shares.
10.1 Asset Purchase Agreement, dated as of April 6, 1998, between TrizecHahn
Centers, Inc. and The Rouse Company and Westfield America, Inc.
10.2 WAI Subscription Agreement, dated as of June 25, 1998, between Westfield
America, Inc., Westfield American Investments Pty Limited and Westfield
Holdings Limited.
10.3 WAT Subscription Agreement, dated as of June 25, 1998, between Westfield
America, Inc., Perpetual Trustee Company Limited and Westfield America
Management Limited.
</TABLE>
24
<PAGE>
<TABLE>
<S> <C>
10.4 Consolidated WEA Capital Note Trust Deed Incorporating the Deed of Variation
No.1, dated June 11, 1998, between Westfield America Inc. and Perpetual
Trustee Company (Canberra) Limited.
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
The Company filed the following reports on Form 8-K during the three months
ended June 30, 1998:
<TABLE>
<CAPTION>
DATE OF FILING ITEMS REPORTED FINANCIAL STATEMENT
- --------------------------------------------------------- ----------------- -----------------------
<S> <C> <C>
May 4, 1998.............................................. 5, 7 No
May 5, 1998.............................................. 5, 7 No
June 25, 1998............................................ 5, 7 No
</TABLE>
Form 8-K was filed on May 4, 1998. Under Item 5--Other Events, the Company
announced that it signed an underwriting agreement to issue $300 million of
unsecured subordinated notes to Australian investors, repayable in three
equal installments due in June 2001, 2002 and 2003.
Form 8-K was filed on May 5, 1998. Under Item 5--Other Events, the Company
reported that it had entered into an agreement for the acquisition of
interests in up to 13 shopping center properties from TrizecHahn Centers,
Inc. for a maximum purchase price of 1.44 billion.
Form 8-K was filed on June 25, 1998. Under Item 5--Other Events, the Company
announced that it proposes to sell $200 million of convertible preferred
stock.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C>
WESTFIELD AMERICA, INC.
Date: August 14, 1998 By: /s/ PETER S. LOWY
-----------------------------------------
Peter S. Lowy
CO-PRESIDENT
/s/ RICHARD E. GREEN
-----------------------------------------
Richard E. Green
CO-PRESIDENT
/s/ MARK A. STEFANEK
-----------------------------------------
Mark A. Stefanek
CHIEF FINANCIAL OFFICER AND TREASURER
</TABLE>
26
<PAGE>
Exhibit 3.1
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES C PREFERRED SHARES
AND FIXING PREFERENCES AND RIGHTS THEREOF"
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
PURSUANT TO THE PROVISIONS OF SECTION 351.180 (7) OF THE
GENERAL AND BUSINESS CORPORATION LAW OF THE STATE
OF MISSOURI, AS AMENDED
I, the undersigned, Co-President of Westfield America, Inc., a
Missouri corporation (hereinafter sometimes referred to as the
"CORPORATION"), hereby certify as follows:
FIRST: that under the provisions of Article Fourth of the
Restated Articles of Incorporation, as amended, of the Corporation, the total
number of shares of all classes of capital stock which the Corporation may
issue is 410,000,200 shares, of which (i) 200 shares shall be non-voting
senior preferred stock, par value $1.00 per share (the "SENIOR PREFERRED
SHARES"), (ii) 5,000,000 shares shall be Preferred Shares, with par value of
$1.00 per share (the "PREFERRED SHARES"), 940,000 of which have been
designated as Series A Preferred Shares, with liquidation value of $100 per
share (the "SERIES A PREFERRED SHARES") and 400,000 of which have been
designated as Series B Preferred Shares, with a liquidation value of $100 per
share (the "SERIES B PREFERRED SHARES"), (iii) 200,000,000 shall be shares of
common stock, par value $.01 per share (the "COMMON SHARES"), (iv)
205,000,000 will be shares of excess stock, par value $.01 ("EXCESS SHARES").
Any Excess Shares which are issued with respect to Common Stock shall be
"EXCESS COMMON SHARES" and, together with the Common Shares, the "COMMON
EQUITY SHARES" and any Excess Shares which are issued with respect to
Preferred Shares shall be "EXCESS PREFERRED SHARES", and, together with the
Preferred Shares, the "PREFERRED EQUITY SHARES" and under said Articles of
Incorporation (as amended, the "ARTICLES OF INCORPORATION"), the shares of
Preferred Stock are authorized to be issued by the Board of Directors and the
Board of Directors is expressly authorized to determine in the Resolution,
the designation, powers, rights, preferences and qualifications, limitations
or restrictions, not fixed and determined by the Articles of Incorporation.
SECOND: That the Board of Directors of the Corporation pursuant to
the authority so vested in it by Article Fourth of the Certificate of
Incorporation, and in accordance with the provisions of Section 351,180 (7)
of the General and Business Corporation Law of Missouri, as amended, adopted
on July 20, 1998 the following resolution creating a series of Preferred
Stock designated as "Series C Preferred Shares", which resolution has not
been amended, modified, rescinded or revoked and is in full force and effect
on the date hereof.
<PAGE>
"RESOLUTION OF THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING
'SERIES C PREFERRED SHARES'
AND FIXING PREFERENCES AND RIGHTS THEREOF"
BE IT RESOLVED, that pursuant to authority expressly granted to and
vested in the Board of Directors of Westfield America, Inc., hereinafter
called the "Corporation", by the provisions of the Articles of Incorporation,
as amended, the Board of Directors of the Corporation hereby fixes the
designation, voting powers, rights on liquidation or dissolution, and other
preferences and rights, and the qualifications, limitations or restrictions
thereof, of the shares of such series (in addition to the designations,
preferences and relative rights, and the qualifications, limitations or
restrictions thereof set forth in the Articles of Incorporation which are
applicable to the Series C Preferred Shares) as follows:
Section 1. NUMBER OF SHARES, DESIGNATION AND RANKING. This class
of preferred stock shall be designated as Series C Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute
such series shall not be more than 416,667 shares, par value $1.00 per share,
which number may be decreased (but not below the aggregate number thereof
then outstanding and/or which have been reserved for issuance) from time to
time by the Board of Directors and is hereafter in this resolution called the
"Series C Preferred Shares". Each Series C Preferred Share shall be
identical in all respects to each other Series C Preferred Share. Each
Excess Series C Preferred Share shall be identical in all respects to each
other Excess Series C Preferred Share, and except as otherwise provided
herein, shall be identical in all respects to each Series C Preferred Share
(the Series C Preferred Shares together with the Excess Series C Preferred
Shares being hereinafter referred to as the "SERIES C EQUITY SHARES").
Section 2. DEFINITIONS. For purposes of the Series C Preferred
Shares, the following terms shall have the meanings indicated:
"AFFILIATE" of, or Person "Affiliated" with, a specified Person,
shall mean a Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with the Person specified. For purposes of the Corporation, Affiliate shall
include, without limitation, Westfield Holdings Limited ("WHL"), Westfield
America Trust, Frank Lowy, David Lowy, Peter Lowy and Steven Lowy (such
individuals being the "LOWY FAMILY").
"BASE RATE" shall mean an annual dividend per Series C Equity Share
equal to 8.5% of the Liquidation Preference per Series C Equity Share.
2
<PAGE>
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to perform
any of its responsibilities with respect to the Series C Preferred Shares.
"BUSINESS DAY" shall mean any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions in
New York City, New York are authorized or required by law, regulation or
executive order to close.
"CALL DATE" shall mean the date specified in the notice to holders
required under Section 5(d) as the Call Date.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONSOLIDATED EBITDA" for any quarter shall mean the consolidated
net income of the Corporation (before extraordinary income or gains and less
equity in income of unconsolidated real estate partnerships), calculated in a
manner consistent with the Corporation's financial statements filed with the
Securities and Exchange Commission, increased by the sum of the following
(without duplication):
a. the Corporation's pro rata share of EBITDA from unconsolidated real
estate partnerships calculated in a manner consistent with this definition
of Consolidated EBITDA,
b. all income taxes paid or accrued according to GAAP for such quarter
(other than income taxes attributable to extraordinary, unusual or
non-recurring gains or losses except to the extent that such gains were not
included in Consolidated EBITDA),
c. all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of deferred
financing fees or amortization of original issue discount, but excluding
capitalized interest),
d. depreciation and depletion reflected in such net income,
e. amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only to the
extent that such amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to clause (c) above), goodwill, other
intangibles and management fees, and
f. any other non-cash charges, to the extent deducted from
consolidated net income (including, but not limited to, income allocated to
minority interests).
3
<PAGE>
"CONSOLIDATED FIXED CHARGES" for any quarter shall mean the sum of:
a. the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner consistent
with this definition of Consolidated Fixed Charges,
b. all interest expense paid or accrued in accordance with GAAP for
such quarter (including, without duplication, financing fees and
amortization of deferred financing fees or amortization of original issue
discount),
c. dividend and distribution requirements with respect to preferred
stock and any other preferred securities for such quarter (not including
any portion of preferred stock dividends the calculation of which is based
on the dividend paid in such quarter to the holders of Common Shares),
whether or not declared or paid,
d. regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity) and
e. all ground rent payments.
"CONSTITUENT PERSON" shall have the meaning set forth in Section 6(e).
"CONVERSION DATE" shall have the meaning set forth in Section 6(a).
"CONVERSION PRICE" shall mean the conversion price per Common
Equity Share for which the Series C Equity Share is convertible, as such
Conversion Price may be adjusted pursuant to Section 6. The initial
conversion price shall be $18.00.
"CURRENT MARKET PRICE" of publicly traded Common Shares or any
other class of stock or other security of the Corporation or any other issuer
for any day shall mean the last reported sales price, regular way, on such
day, or, if no sale takes place on such day, the average of the reported
closing bid and asked prices on such day, regular way, in either case as
reported on the New York Stock Exchange ("NYSE") or, if such security is not
listed or admitted for trading on the NYSE, on the principal national
securities exchange on which such security is listed or admitted for trading
or, if not listed or admitted for trading on any national securities
exchange, on the Nasdaq National Market ("NASDAQ") or, if such security is
not quoted on NASDAQ, the average of the closing bid and asked prices on such
day in the over-the-counter market as reported by the National Association of
Securities Dealers, Inc. (the "NASD") or, if bid and asked prices for such
security on such day shall not have been reported through the NASD, the
4
<PAGE>
average of the bid and asked prices on such day as furnished by any NYSE
member firm regularly making a market in such security selected for such
purpose by the Board of Directors.
"DIVIDEND PAYMENT DATE" shall mean (i) for any Dividend Period with
respect to which the Corporation pays a dividend on the Common Equity Shares,
the date on which such dividend is paid, or (ii) for any Dividend Period with
respect to which the Corporation does not pay a dividend on the Common Equity
Shares, a date to be set by the Board of Directors, which date shall not be
later than the thirtieth calendar day after the end of the applicable
Dividend Period.
"DIVIDEND PERIODS" shall mean quarterly dividend periods commencing
on January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period with respect to any Series C Equity Shares (other than the initial
Dividend Period, which shall commence on the Issue Date for such Series C
Equity Shares and end on and include the last day of the calendar quarter
immediately following such Issue Date, and other than the Dividend Period
during which any Series C Equity Shares shall be redeemed pursuant to Section
5 or converted pursuant to Section 6, which shall end on and include the Call
Date or Conversion Date with respect to the Series C Equity Shares being
redeemed or converted, as applicable).
"EXPIRATION TIME" shall have the meaning set forth in Section
6(d)(iv).
"FAIR MARKET VALUE" shall mean the average of the daily Current
Market Prices of a Common Share on the five (5) consecutive Trading Days
selected by the Corporation commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in question and the day
before the "ex date" with respect to the issuance or distribution requiring
such computation. The term "ex date," when used with respect to any issuance
or distribution, means the first day on which the Common Shares trade regular
way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
"FIXED CHARGE COVERAGE VIOLATION" shall have the meaning set forth
in Section 3(a).
"FULLY JUNIOR SHARES" shall mean the Common Shares and any other
class or series of stock of the Corporation now or hereafter issued and
outstanding over which the Series C Preferred Shares has preference or
priority in both (i) the payment of dividends and (ii) the distribution of
assets on any liquidation, dissolution or winding up of the Corporation.
"FUNDS FROM OPERATIONS" shall mean net income (loss) (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or
5
<PAGE>
minority interests (as reflected in the financial statements of the
Corporation) plus depreciation/amortization of assets unique to the real
estate industry, all computed in a manner consistent with the revised
definition of Funds From Operations adopted by the National Association of
Real Estate Investment Trusts (NAREIT), in its White Paper dated March 1995,
as such definitions may be modified from time to time.
"INVESTOR" shall mean Security Capital Preferred Growth
Incorporated and controlled Affiliates thereof.
"ISSUE DATE" shall mean the date on which the Series C Preferred
Shares are issued.
"JUNIOR SHARES" shall mean the Common Shares and any other class or
series of stock of the Corporation now or hereafter issued and outstanding
over which the Series C Preferred Shares has preference or priority in the
payment of dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"NON-ELECTING SHARE" shall have the meaning set forth in Section
6(e).
"OPERATING PARTNERSHIP" shall mean Westfield America Limited
Partnership, a Delaware limited partnership.
"PARITY SHARES" shall have the meaning set forth in Section 10(b).
"PERSON" shall mean any individual, firm, partnership, corporation,
limited liability company, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"PURCHASED SHARES" shall have the meaning set forth in
Section 6(d)(iv).
"REIT TERMINATION EVENT" shall mean the earliest to occur of:
(i) the filing of a federal income tax return by the Corporation for
any taxable year on which the Corporation does not compute its income as a
real estate investment trust;
(ii) the approval by the shareholders of the Corporation of a proposal
for the Corporation to cease to qualify as a real estate investment trust;
(iii) a determination by the Board of Directors of the Corporation,
based on the advice of counsel, that the Corporation has ceased to qualify
as a real estate investment trust; or
6
<PAGE>
(iv) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real estate investment
trust.
"SECURITIES" and "SECURITY" shall have the meanings set forth in
Section 6(d)(iii).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES C PREFERRED SHARES" shall have the meaning given such term in
the preamble to this Certificate of Designation.
"SET APART FOR PAYMENT" shall be deemed to include, without any
action other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of
stock of the Corporation; PROVIDED, HOWEVER, that if any funds for any class
or series of Junior Shares or any class or series of stock ranking on a
parity with the Series C Preferred Shares as to the payment of dividends are
placed in a separate account of the Corporation or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with respect to
the Series C Preferred Shares shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other similar
agent.
"TRADING DAY" shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not listed or
admitted for trading on the NYSE, on the principal national securities
exchange on which such securities are listed or admitted, or if not listed or
admitted for trading on any national securities exchange, on NASDAQ, or if
such securities are not quoted on NASDAQ, in the securities market in which
the securities are traded.
"TRANSACTION" shall have the meaning set forth in Section 6(e).
"TRANSFER AGENT" shall mean the Corporation, or such other agent or
agents of the Corporation as may be designated by the Board of Directors or
their designee as the transfer agent, registrar and dividend disbursing agent
for the Series C Preferred Shares.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Articles.
Section 3. DIVIDENDS.
(a) Subject to the preferential rights of the holders of any Preferred
Stock that ranks senior in the payment of dividends to the Series C Equity
Shares and subject to paragraph (b) of
7
<PAGE>
this Section 3, the holders of Series C Equity Shares shall be entitled to
receive, when, as and if declared by the Board of Directors, but only out of
funds legally available for the payment of dividends, cumulative preferential
dividends payable in cash 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) the Base Rate per share per
annum and (B) an amount per share equal to the Liquidation Preference of a
Series C Equity Share (exclusive of accrued but unpaid dividends) divided by
the Conversion Price (the "SERIES C COMMON EQUIVALENT FACTOR") times the
dollar amount of cash dividends declared with respect to each Common Equity
Share that does not result in an adjustment to the Conversion Price pursuant
to Subparagraph (d)(iii) of Section 6 (such product, the "SERIES C 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 C Equity Shares shall have received for any
calendar year more dividends than such Shares shall be entitled under clauses
(A) and (B) above (as adjusted pursuant to the third and eighth sentences of
this Section 3), the dividends payable in respect of Series C Equity 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
3 (a), the dividend paid in respect of each quarterly period in each calendar
year shall be determined as follows (in each case, excluding any additional
payment made pursuant to the following sentence) : (1) for the first quarter,
the greater of 25% of the Base Rate per share and the Series C Common
Equivalent Amount for the same quarter; (2) for the second quarter, an amount
such that the aggregate amount to be received per Series C Equity Share in
respect of the first two quarters of such calendar year shall be the greater
of 50% of the Base Rate per share and the Series C 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 C Equity Share in respect of the
first three quarters of such calendar year shall be the greater of 75% of the
Base Rate per share and the Series C 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 C Equity Share in respect of such
calendar year shall be the amount provided in the preceding sentence of this
Section 3(a). Notwithstanding the foregoing, for any quarter in which a
Fixed Charge Coverage Violation (as defined below) has occurred, the dividend
payable per Series C Equity Share shall be 1.20 TIMES the amount provided in
the preceding sentence. A "Fixed Charge Coverage Violation" shall occur for
any quarter that the ratio of the Corporation's Consolidated EBITDA to its
Consolidated Fixed Charges is below 1.40 to 1. The dividends shall begin to
accrue as set forth above and shall be fully cumulative from the first day of
the applicable Dividend Period, whether or not in any Dividend Period or
Periods there shall be funds of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly, when, as and if
declared by the Board of Directors, in arrears on Dividend Payment Dates.
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
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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. Any dividend
payment made on Series C Equity Shares shall first be credited against the
earliest accrued but unpaid dividend due with respect to Series C Equity
Shares which remains payable. Beginning with the quarter in which a REIT
Termination Event occurs, all dividends payable per Series C Equity Share
pursuant to this Section shall be multiplied by 2.5.
(b) The initial Dividend Period for the Series C Equity Shares will
include a partial dividend for the period from the Issue Date until the last
day of the calendar quarter immediately following such Issue Date. The
amount of dividends payable for such initial period, or any other period
shorter than a full quarterly Dividend Period, on the Series C Equity Shares
shall be computed by dividing the number of days in such period by 90 and
multiplying the result by the Series C Equity dividend determined in
accordance with Section 3(a). Holders of Series C Equity Shares shall not be
entitled to any dividends, whether payable in cash, property or shares, in
excess of cumulative dividends, as herein provided, on the Series C Equity
Shares. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series C Equity Shares
which may be in arrears.
(c) So long as any Series C Equity Shares remain outstanding, no
dividends, except as described in the immediately following sentence, shall
be declared or paid or set apart for payment on any class or series of Parity
Shares for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Series C Equity Shares
for all Dividend Periods terminating on or prior to the dividend payment date
on such class or series of Parity Shares. When dividends are not paid in
full or a sum sufficient for such payment is not set apart, as aforesaid, all
dividends declared upon Series C Equity Shares and all dividends declared
upon any other class or series of Parity Shares shall be declared ratably in
proportion to the respective amounts of dividends accumulated and unpaid on
the Series C Equity Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series C Equity Shares remain outstanding, no
dividends (other than dividends or distributions paid solely in Fully Junior
Shares, or options, warrants or rights to subscribe for or purchase, Fully
Junior Shares) shall be declared or paid or set apart for payment or other
distribution shall be declared or made or set apart for payment upon Junior
Shares, nor shall any Junior Shares be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of Common
Shares made for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid
to or made available for a sinking fund for the redemption of any Junior
Shares) by the Corporation, directly or indirectly (except by conversion into
or exchange for Fully Junior
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Shares), unless in each case the full cumulative dividends on all outstanding
Series C Equity Shares and any other Parity Shares of the Corporation shall
have been or contemporaneously are declared and paid or declared and set
apart for payment for all Dividend Periods terminating on or prior to the
date of declaration or payment with respect to the Series C Equity Shares and
all dividend periods terminating on or prior to the date of declaration or
payment with respect to such Parity Shares. Subject to the foregoing, and
not otherwise, such dividends and distributions 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 C Equity Shares shall
not be entitled to participate in any such dividends, whether payable in
cash, stock or otherwise.
(e) No distributions on Series C Equity Shares shall be declared by
the Board of Directors or paid or set apart for payment by the Corporation at
such time as the terms and provisions of any agreement of the Corporation,
including any agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
(f) In determining whether a distribution by dividend, redemption
or other acquisition of Shares or otherwise is permitted under Missouri law,
no effect shall be given to amounts that would be needed, if the Corporation
were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential
rights on dissolution are superior to those receiving the distribution.
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, subject to the prior preferences
and other rights of any series of stock ranking senior to the Series C Preferred
Shares upon liquidation, distribution or winding up of the Corporation, before
any payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of Junior Shares, the
holders of the Series C Equity Shares shall be entitled to receive One Hundred
Eighty Dollars ($180.00) (the "LIQUIDATION PREFERENCE") per share of Series C
Equity Shares plus an amount equal to all dividends (whether or not earned or
declared) accrued and unpaid thereon to the date of liquidation, dissolution or
winding up of the affairs of the Corporation (any such date, a "SERIES C
LIQUIDATION DATE") but such holders shall not be entitled to any further
payment; PROVIDED, that the dividend payable with respect to the Dividend Period
containing the Series C Liquidation Date shall be equal to the dividend
determined pursuant to Section 3 above for the preceding Dividend Period 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 C Liquidation
Date over 90 days. If, upon any liquidation, dissolution or winding up of the
Corporation, the
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assets of the Corporation, or proceeds thereof, distributable among the
holders of the Series C Equity Shares shall be insufficient to pay in full
the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Shares, then such assets, or the
proceeds thereof, shall be distributed among the holders of Series C Equity
Shares and any such other Parity Shares ratably in accordance with the
respective amounts that would be payable on such Series C Equity Shares and
any such other Parity Shares if all amounts payable thereon were paid in
full. For the purposes of this Section 4, (i) a consolidation or merger of
the Corporation with one or more corporations, real estate investment trusts
or other entities, (ii) a sale, lease or conveyance of all or substantially
all of the Corporation's property or business or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of shares of any series or
class or classes of stock ranking on a parity with or prior to the Series C
Equity Shares upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Corporation, after payment
shall have been made in full to the holders of the Series C Equity Shares, as
provided in this Section 4, the holders of Series C Equity Shares shall have
no other claim to the remaining assets of the Corporation and any other
series or class or classes of Junior Shares shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any
and all assets remaining to be paid or distributed, and the holders of the
Series C Equity Shares shall not be entitled to share therein.
Section 5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) The Series C Equity Shares shall not be redeemable by the
Corporation prior to August 12, 2008.(1) On and after August 12, 2008, the
Corporation, at its option, may redeem the Series C Equity Shares, in whole
at any time or from time to time in part, in minimum increments of $10.0
million of aggregate Liquidation Preference of such shares, out of funds
legally available therefor at a redemption price payable in cash equal to
100% of the Liquidation Preference per Series C Equity Shares (plus all
accumulated, accrued and unpaid dividends as provided in paragraph (b) below).
(b) Upon any redemption of Series C Equity Shares pursuant to this
Section 5, the Corporation shall pay all accrued and unpaid dividends, if
any, thereon to the Call Date, without interest. If the Call Date falls
after a dividend payment record date and prior to the corresponding Dividend
Payment Date, then each holder of Series C Equity Shares at the close of
business on such dividend payment record date shall be entitled to the
dividend payable on
- ---------------------------
(1) This date is the tenth anniversary of the Closing.
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<PAGE>
such shares on the corresponding Dividend Payment Date notwithstanding any
redemption of such shares before such Dividend Payment Date. Except as
provided above, the Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on Series C Equity Shares called for
redemption.
(c) If full cumulative dividends on the Series C Equity Shares and
any other class or series of Parity Shares of the Corporation have not been
declared and paid or declared and set apart for payment, the Series C Equity
Shares may not be redeemed under this Section 5 in part and the Corporation
may not purchase or acquire Series C Equity Shares, otherwise than pursuant
to a purchase or exchange offer made on the same terms to all holders of
Series C Equity Shares.
(d) Notice of the redemption of any Series C Equity Shares under
this Section 5 shall be mailed by first-class mail or recognized overnight
courier to each holder of record of Series C Equity Shares to be redeemed at
the address of each such holder as shown on the Corporation's records, not
less than 30 nor more than 90 days prior to the Call Date. Neither the
failure to mail any notice required by this paragraph (d), nor any defect
therein or in the mailing thereof, to any particular holder, shall affect the
sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Each such mailed notice shall state, as
appropriate: (1) the Call Date; (2) the number of Series C Equity Shares to
be redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (3) the
redemption price; (4) the place or places at which certificates for such
shares are to be surrendered; (5) the then-current Conversion Price; and (6)
that dividends on the shares to be redeemed shall cease to accrue on such
Call Date except as otherwise provided herein. Notice having been mailed as
aforesaid, from and after the Call Date (unless the Corporation shall fail to
make available an amount of cash necessary to effect such redemption), (i)
except as otherwise provided herein, dividends on the Series C Equity Shares
so called for redemption shall cease to accrue, (ii) such shares shall no
longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Series C Equity Shares shall cease (except the rights
to receive the cash payable upon such redemption, without interest thereon,
upon surrender and endorsement of their certificates if so required and to
receive any dividends payable thereon). The Corporation's obligation to
provide cash in accordance with the preceding sentence shall be deemed
fulfilled if, on or before the Call Date, the Corporation shall deposit with
a bank or trust company that has an office in the Borough of Manhattan, City
of New York, and that has capital and surplus of at least $150,000,000,
necessary for such redemption, in trust, with irrevocable instructions that
such cash be applied to the redemption of the Series C Equity Shares so
called for redemption. No interest shall accrue for the benefit of the
holders of Series C Equity Shares to be redeemed on any cash so set aside by
the Corporation. Subject to applicable escheat laws, any such cash unclaimed
at the end of two years from the Call Date shall revert to the general funds
of the Corporation, after which
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reversion the holders of such shares so called for redemption shall look only
to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with
such notice of the certificates for any such shares so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so require and if
the notice shall so state), such shares shall be exchanged for any cash
(without interest thereon) for which such shares have been redeemed. If
fewer than all the outstanding Series C Equity Shares are to be redeemed,
shares to be redeemed shall be selected by the Corporation from outstanding
Series C Equity Shares not previously called for redemption pro rata (as
nearly as may be), by lot or by any other method determined by the
Corporation in its sole discretion to be equitable. If fewer than all the
Series C Equity Shares evidenced by any certificate are redeemed, then new
certificates evidencing the unredeemed shares shall be issued without cost to
the holder thereof.
Section 6. CONVERSION. Holders of Series C Equity Shares shall
have the right to convert all or a portion of such shares into Common Equity
Shares, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 6, a holder of Series C Preferred Shares or Excess C Preferred Shares
shall have the right, at his or her option, at any time (such time being, the
"CONVERSION DATE"), to convert all or any portion of such shares into the
number of fully paid and non-assessable Common Shares or Excess Common
Shares, respectively obtained by dividing the aggregate Liquidation
Preference of such shares (inclusive of accrued but unpaid dividends) by the
Conversion Price (as in effect at the time and on the date provided for in
the last paragraph of paragraph (b) of this Section 6) by surrendering such
shares to be converted, such surrender to be made in the manner provided in
paragraph (b) of this Section 6; PROVIDED, HOWEVER, that the right to convert
shares called for redemption pursuant to Section 5 shall terminate at the
close of business on the fifth Business Day prior to the Call Date fixed for
such redemption, unless the Corporation shall default in making payment of
the cash payable upon such redemption under Section 5.
(b) In order to exercise the conversion right, the holder of each
share of Series C Equity Shares to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof irrevocably elects
to convert such Series C Equity Shares. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such Series
C Equity Shares are registered, each share surrendered for conversion shall
be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
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Holders of Series C Equity Shares at the close of business on a
dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date. However, Series C Equity
Shares surrendered for conversion during the period between the close of
business on any dividend payment record date and the opening of business on
the corresponding Dividend Payment Date (except shares converted after the
issuance of notice of redemption with respect to a Call Date during such
period, such Series C Equity Shares being entitled to such dividend on the
Dividend Payment Date) must be accompanied by payment of an amount equal to
the dividend payable on such shares on such Dividend Payment Date. A holder
of Series C Equity Shares on a dividend payment record date who (or whose
transferee) tenders any such shares for conversion into Common Equity Shares
on the corresponding Dividend Payment Date will receive the dividend payable
by the Corporation on such Series C Equity Shares on such date, and the
converting holder need not include payment of the amount of such dividend
upon surrender of Series C Equity Shares for conversion. Except as provided
above, the Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends on
the Common Equity Shares issued upon such conversion.
As promptly as practicable after the surrender of certificates for
Series C Equity Shares as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full Common Equity Shares
issuable upon the conversion of such shares in accordance with provisions of
this Section 6, and any fractional interest in respect of a Common Equity
Share arising upon such conversion shall be settled as provided in paragraph
(c) of this Section 6.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for
Series C Equity Shares shall have been surrendered and such notice shall have
been received by the Corporation as aforesaid (and if applicable, payment of
an amount equal to the dividend payable on such shares shall have been
received by the Corporation as described above), and the Person or Persons in
whose name or names any certificate or certificates for Common Equity Shares
shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby at such time on
such date and such conversion shall be at the Conversion Price in effect at
such time on such date unless the share transfer books of the Corporation
shall be closed on that date, in which event such Person or Persons shall be
deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such share transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date on which such shares shall have been surrendered and such notice
received by the Corporation.
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(c) No fractional shares or scrip representing fractions of Common
Equity Shares shall be issued upon conversion of the Series C Equity Shares.
Instead of any fractional interest in a Common Equity Share that would
otherwise be deliverable upon the conversion of a Series C Equity Share, the
Corporation shall pay to the holder of such share an amount in cash based
upon the Current Market Price of the Common Shares on the Trading Day
immediately preceding the date of conversion. If more than one share shall
be surrendered for conversion at one time by the same holder, the number of
full Common Equity Shares issuable upon conversion thereof shall be computed
on the basis of the aggregate number of Series C Equity Shares so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its Common Equity Shares in Common
Equity Shares, (B) subdivide its outstanding Common Equity Shares into a
greater number of shares, (C) combine its outstanding Common Equity
Shares into a smaller number of shares or (D) issue any shares of stock
by reclassification of its Common Equity Shares, the Conversion Price in
effect at the opening of business on the day following the date fixed
for the determination of shareholders entitled to receive such dividend
or distribution or at the opening of business on the Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be
adjusted so that the holder of any Series C Equity Shares thereafter
surrendered for conversion shall be entitled to receive the number of
Common Equity Shares that such holder would have owned or have been
entitled to receive after the happening of any of the events described
above as if such Series C Equity Shares had been converted immediately
prior to the record date in the case of a dividend or distribution or
the effective date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this subparagraph (i)
shall become effective immediately after the opening of business on the
Business Day next following the record date (except as provided in
paragraph (h) below) in the case of a dividend or distribution and shall
become effective immediately after the opening of business on the
Business Day next following the effective date in the case of a
subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Equity Shares entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Equity Shares at a price per
share less than 95% (100% if a stand-by underwriter is used and charges the
Corporation a commission) of the Fair Market Value per Common Share on the
record date for the determination of shareholders entitled to receive such
rights, options or warrants, then the Conversion Price in effect at the
opening of business on the Business Day next
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following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately
prior to the opening of business on the Business Day next following the
date fixed for such determination by (B) a fraction, the numerator of
which shall be the sum of (x) the number of Common Equity Shares
outstanding on the close of business on the date fixed for such
determination and (y) the number of shares that the aggregate proceeds
to the Corporation from the exercise of such rights, options or warrants
for Common Equity Shares would purchase at 95% of such Fair Market Value
(or 100% in the case of a stand-by underwriting), and the denominator of
which shall be the sum of (x) the number of Common Equity Shares
outstanding on the close of business on the date fixed for such
determination and (y) the number of additional Common Equity Shares
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall become effective immediately after the
opening of business on the day next following such record date (except
as provided in paragraph (h) below). In determining whether any rights,
options or warrants entitle the holders of Common Equity Shares to
subscribe for or purchase Common Equity Shares at less than 95% of such
Fair Market Value (or 100% in the case of a stand-by underwriting),
there shall be taken into account any consideration received by the
Corporation upon issuance and upon exercise of such rights, options or
warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors whose determination shall be
conclusive. To the extent that Common Equity Shares are not delivered
pursuant to such rights, options or warrants, upon the expiration or
termination of such rights, options or warrants, the Conversion Price
shall be readjusted to the Conversion Price which would then be in
effect had the adjustments made upon the issuance of such rights,
options or warrants been made on the basis of delivery of only the
number of Common Equity Shares actually delivered. In the event that
such rights, options or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be
in effect if such date fixed for the determination of stockholders
entitled to receive such rights, options or warrants had not been fixed.
(iii) If the Corporation shall distribute to all holders of its
Common Equity Shares any securities of the Corporation (other than Common
Equity Shares) or evidence of its indebtedness or assets (excluding
cumulative cash dividends or distributions paid with respect to the Common
Equity Shares after December 31, 1997 which are not in excess of the
following: the sum of (A) the Corporation's cumulative undistributed Funds
from Operations at December 31, 1997, plus (B) the cumulative amount of
Funds from Operations, as determined by the Board of Directors, after
December 31, 1997, minus (C) the cumulative amount of dividends accrued or
paid in respect of the Series C Equity Shares or any other class or series
of preferred stock of the Corporation after the Issue Date) or rights,
options or warrants to subscribe for or purchase any of its securities
(excluding those rights, options and warrants issued to all holders of
Common Equity Shares entitling
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<PAGE>
them for a period expiring within 45 days after the record date referred
to in subparagraph (ii) above to subscribe for or purchase Common Equity
Shares, which rights and warrants are referred to in and treated under
subparagraph (ii) above) (any of the foregoing being hereinafter in this
subparagraph (iii) collectively called the "SECURITIES" and individually
a "SECURITY"), then in each such case the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying (x)
the Conversion Price in effect immediately prior to the close of
business on the date fixed for the determination of shareholders
entitled to receive such distribution by (y) a fraction, the numerator
of which shall be the Fair Market Value per Common Share on the record
date mentioned below less the then fair market value (as determined by
the Board of Directors, whose determination shall be conclusive) of the
portion of the Securities or assets or evidences of indebtedness so
distributed or of such rights, options or warrants applicable to one
Common Equity Share, and the denominator of which shall be the Fair
Market Value per Common Share on the record date mentioned below. Such
adjustment shall become effective on the date of distribution
retroactive to the opening of business on the Business Day next
following (except as provided in paragraph (h) below) the record date
for the determination of shareholders entitled to receive such
distribution. For the purposes of this subparagraph (iii), the
distribution of a Security, which is distributed not only to the holders
of the Common Equity Shares on the date fixed for the determination of
shareholders entitled to such distribution of such Security, but also is
distributed with each Common Equity Share delivered to a Person
converting a share of Series C Equity Shares after such determination
date, shall not require an adjustment of the Conversion Price pursuant
to this subparagraph (iii); PROVIDED that on the date, if any, on which
a Person converting a share of Series C Equity Shares would no longer be
entitled to receive such Security with a Common Equity Share (other than
as a result of the termination of all such Securities), a distribution
of such Securities shall be deemed to have occurred and the Conversion
Price shall be adjusted as provided in this subparagraph (iii) (and such
day shall be deemed to be "the date fixed for the determination of the
shareholders entitled to receive such distribution" and "the record
date" within the meaning of the two preceding sentences). If any
dividend or distribution of the type described in this paragraph (iii)
is declared but not so paid or made, the Conversion Price shall again be
adjusted to the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
Rights or warrants distributed by the Corporation to all holders of
Common Equity Shares entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("TRIGGER EVENT"): (i) are deemed
to be transferred with such shares of Common Equity Shares; (ii) are not
exercisable; and (iii) are also issued in respect of future issuances of
Common Equity Shares, shall be deemed not to have been distributed for
purposes of this subparagraph (iii) (and no adjustment to the
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Conversion Price under this subparagraph (iii) will be required) until
the occurrence of the earliest Trigger Event. If such right or warrant
is subject to subsequent events, upon the occurrence of which such right
or warrant shall become exercisable to purchase different securities,
evidences of indebtedness or other assets or entitle the holder to
purchase a different number or amount of the foregoing or to purchase
any of the foregoing at a different purchase price, then the occurrence
of each such event shall be deemed to be the date of issuance and record
date with respect to a new right or warrant (and a termination or
expiration of the existing right or warrant without exercise by the
holder thereof to the extent not exercised). In addition, in the event
of any distribution (or deemed distribution) of rights or warrants, or
any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto, that resulted in an adjustment to the
Conversion Price under this Subparagraph (iii), (1) in the case of any
such rights or warrants which shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion
Price shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be,
as though it were a cash distribution (but not a distribution paid
exclusively in cash), equal to the per share redemption or repurchase
price received by a holder of Common Equity Shares with respect to such
rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Equity Shares as of the date of
such redemption or repurchase, and (2) in the case of such rights or
warrants all of which shall have expired or been terminated without
exercise, the Conversion Price shall be readjusted as if such rights and
warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the Corporation
or any subsidiary or controlled Affiliate of the Corporation for all or any
portion of the Common Equity Shares shall expire and such tender or
exchange offer shall require the payment by the Corporation or such
subsidiary or controlled Affiliate of consideration per Common Equity Share
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), at the last time (the "EXPIRATION
TIME") tenders or exchanges may be made pursuant to such tender or exchange
offer, that exceeds the Current Market Price per Common Share on the
Trading Day next succeeding the Expiration Time, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately prior to the effectiveness of
the Conversion Price reduction contemplated by this subparagraph, by a
fraction of which the numerator shall be the number of Common Equity Shares
outstanding (including any tendered or exchanged shares) at the Expiration
Time, multiplied by the Current Market Price per Common Share on the
Trading Day next succeeding the Expiration Time, and the denominator shall
be the sum of (A) the fair market value (determined as aforesaid) of the
aggregate consideration payable to
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shareholders based upon the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any maximum, being referred to as the
"PURCHASED SHARES") and (B) the product of the number of Common Equity
Shares outstanding (less any Purchased Shares) at the Expiration Time
and the Current Market Price per Common Share on the Trading Day next
succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the
Expiration Time. In the event the Corporation or any subsidiary or
controlled Affiliate is obligated to purchase shares pursuant to any
such tender offer, but the Corporation or such subsidiary or controlled
Affiliate is permanently prevented by applicable law from effecting any
such purchases, or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender offer had not been made.
(v) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least
1% in such price; PROVIDED, HOWEVER, that any adjustments that by reason of
this subparagraph (v) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment until made; and
PROVIDED, FURTHER, that any adjustment shall be required and made in
accordance with the provisions of this Section 6 (other than this
subparagraph (v)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of Common
Shares. Notwithstanding any other provisions of this Section 6, the
Corporation shall not be required to make any adjustment of the Conversion
Price for the issuance of any Common Equity Shares pursuant to any plan
providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional
amounts in Common Equity Shares under such plan. All calculations under
this Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-hundredth of a share (with .005 of a share
being rounded upward), as the case may be. Anything in this paragraph (d)
to the contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such reductions in the Conversion Price,
in addition to those required by this paragraph (d), as it in its
discretion shall determine to be advisable in order that any share
dividends, subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase shares or
securities, or distribution of other assets (other than cash dividends)
hereafter made by the Corporation to its shareholders shall not be taxable.
To the extent permitted by applicable law, the Corporation from time to
time may reduce the Conversion Price by any amount for any period of time
if the period is at least 20 days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Corporation, which
determination shall be conclusive. Whenever the Conversion Price is
reduced pursuant to the preceding sentence,
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the Corporation shall mail to the holder of each Series C Equity Share
at his or her last address appearing on the share register a notice of
reduction prior to the date the reduced Conversion Price takes effect
and such notice shall state the reduced Conversion Price and the period
during which it will be in effect.
(e) If the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation, statutory share
exchange, self tender offer for 40% or more of its Common Equity Shares, sale
of all or substantially all of the Corporation's assets or recapitalization
of the Common Equity Shares and excluding any transaction as to which
subparagraph (d)(i) of this Section 6 applies) (each of the foregoing being
referred to herein as a "TRANSACTION"), in each case as a result of which all
or substantially all of the Common Equity Shares are converted into the right
to receive different securities or other property (including cash or any
combination thereof), each Series C Equity Share which is not redeemed or
converted into the right to receive different securities or other property
prior to such Transaction shall thereafter be convertible, in lieu of Common
Equity Shares into the kind and amount of different securities and other
property (including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of Common Equity
Shares into which one Series C Equity Share was convertible immediately prior
to such Transaction, assuming such holder of Common Equity Shares (i) is not
a Person with which the Corporation consolidated or into which the
Corporation merged or which merged into the Corporation or to which such sale
or transfer was made, as the case may be ("CONSTITUENT PERSON"), or an
Affiliate of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of shares, securities and other
property (including cash) receivable upon such Transaction (provided that if
the kind or amount of shares, securities and other property (including cash)
receivable upon such Transaction is not the same for each Common Share held
immediately prior to such Transaction by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall
not have been exercised ("NON-ELECTING SHARE"), then for the purpose of this
paragraph (e) the kind and amount of shares, securities and other property
(including cash) receivable upon such Transaction by each Non-Electing Share
shall be deemed to be the kind and amount so receivable per share by holders
of a plurality of the Non-Electing Shares). The Corporation shall not be a
party to any Transaction unless the terms of such Transaction are consistent
with the provisions of this paragraph (e), and it shall not consent or agree
to the occurrence of any Transaction until the Corporation has entered into
an agreement with the successor or purchasing entity, as the case may be, for
the benefit of the holders of the Series C Equity Shares that will contain
provisions enabling the holders of the Series C Equity Shares that remain
outstanding after such Transaction to convert into the consideration received
by holders of Common Shares at the Conversion Price in effect immediately
prior to such Transaction. The provisions of this paragraph (e) shall
similarly apply to successive Transactions.
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(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Equity Shares (other than cash dividends or
distributions paid with respect to the Common Equity Shares after December
31, 1997 not in excess of the sum of the Corporation's cumulative
undistributed Funds from Operations at December 31, 1997, plus the
cumulative amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1997, minus the cumulative amount of
dividends accrued or paid in respect of the Series C Equity Shares or any
other class or series of preferred stock of the Corporation after the Issue
Date); or
(ii) the Corporation shall authorize the granting to all holders of
Common Equity Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or warrants;
or
(iii) there shall be any reclassification of the Common Equity Shares
(other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or merger to which the Corporation is a party
(other than a merger in which the Corporation is the surviving entity) and
for which approval of any shareholders of the Corporation is required, or a
statutory share exchange, or a self tender offer by the Corporation for all
or substantially all of its outstanding Common Shares or the sale or
transfer of all or substantially all of the assets of the Corporation as an
entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with the Transfer Agent and
shall cause to be mailed to the holders of Series C Equity Shares at their
addresses as shown on the records of the Corporation, as promptly as
possible, but at least 10 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken
for the purpose of such dividend, distribution or granting of rights,
options or warrants, or, if a record is not to be taken, the date as of
which the holders of Common Equity Shares of record to be entitled to such
dividend, distribution or rights, options or warrants are to be determined
or (B) the date on which such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Equity Shares of record shall be entitled
to exchange their Common Equity Shares for securities or other property, if
any, deliverable upon such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation, dissolution or
winding up. Failure to give or
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receive such notice or any defect therein shall not affect the legality
or validity of the proceedings described in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment and shall
mail such notice of such adjustment of the Conversion Price to the holder of
each share of Series C Equity Shares at such holder's last address as shown on
the records of the Corporation.
(h) In any case in which paragraph (d) of this Section 6 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any share of Series C Equity Shares converted after
such record date and before the occurrence of such event the additional Common
Equity Shares issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Equity Shares issuable upon such
conversion before giving effect to such adjustment and (B) paying to such holder
any amount of cash in lieu of any fraction pursuant to paragraph (c) of this
Section 6.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Equity Shares, other than action described in this Section 6, that in the
opinion of the Board of Directors would materially and adversely affect the
conversion rights of the holders of the Series C Equity Shares, the
Conversion Price for the Series C Equity Shares may be adjusted, to the
extent permitted by law, in such manner, if any, and at such time, as the
Board of Directors, in its sole discretion, may determine to be equitable in
the circumstances.
(k) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Equity Shares, for the purpose of effecting
conversion of the Series C Equity Shares, the full number of Common Equity
Shares deliverable upon the conversion of all outstanding Series C Equity
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Shares not theretofore converted. For purposes of this paragraph (k), the
number of Common Shares that shall be deliverable upon the conversion of all
outstanding Series C Preferred Shares shall be computed as if at the time of
computation all such outstanding shares were held by a single holder.
Any Common Equity Shares issued upon conversion of the Series C
Equity Shares shall be validly issued, fully paid and non-assessable. Before
taking any action that would cause an adjustment reducing the Conversion
Price below the then-par value of the Common Equity Shares deliverable upon
conversion of the Series C Equity Shares, the Corporation will take any
action that, in the opinion of its counsel, may be necessary in order that
the Corporation may validly and legally issue fully paid and (subject to any
customary qualification based upon the nature of a real estate investment
trust) non-assessable Common Equity Shares at such adjusted Conversion Price.
The Corporation shall use its best efforts to list the Common
Shares required to be delivered upon conversion of the Series C Equity
Shares, prior to such delivery, upon each national securities exchange, if
any, upon which the outstanding Common Shares are listed at the time of such
delivery.
The Corporation shall use its best efforts to comply with all
federal and state securities laws and regulations thereunder in connection
with the issuance of any securities that the Corporation shall be obligated
to deliver upon conversion of the Series C Equity Shares. The certificates
evidencing such securities shall bear such legends restricting transfer
thereof in the absence of registration under applicable securities laws or an
exemption therefrom as the Corporation may in good faith deem appropriate.
(l) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery
of Common Equity Shares or other securities or property on conversion of the
Series C Equity Shares pursuant hereto; PROVIDED, HOWEVER, that the
Corporation shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of Common Shares or
other securities or property in a name other than that of the holder of the
Series C Preferred Shares to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue or delivery
has paid to the Corporation the amount of any such tax or established, to the
reasonable satisfaction of the Corporation, that such tax has been paid.
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Section 7. CHANGE OF CONTROL.
(a) If a Change of Control (as defined below) occurs (a "CHANGE OF
CONTROL REPURCHASE EVENT"), the holders of Series C Equity Shares shall
have the right to require the Corporation, to the extent the Corporation
shall have funds legally available therefor, to redeem any or all of the
Series C Equity Shares held by such holder at a repurchase price payable in
cash (the "CHANGE OF CONTROL REPURCHASE PAYMENT") in an amount equal to
105% of the Liquidation Preference thereof, plus accrued and unpaid
dividends whether or not declared, if any, to the date of repurchase or the
date payment is made available (the "CHANGE OF CONTROL DATE") pursuant to
the offer described in SUBSECTION (B) below (the "CHANGE OF
CONTROL-REPURCHASE OFFER").
(b) Within 15 days following the Corporation becoming aware that a
Change of Control Repurchase Event has occurred, the Corporation shall mail
by first class mail or recognized overnight courier a notice to the each
holder of Series C Equity Shares stating (A) that a Change of Control
Repurchase Event has occurred and that such holder has the right to require
the Corporation to repurchase any or all of the Series C Equity Shares then
held by such holder, (B) the date of repurchase (which shall be a Business
Day, no earlier than 30 days and no later than 60 days from the date such
notice is mailed, or such later date as may be necessary to comply with the
requirements of the Exchange Act), (C) the repurchase price and (D) the
instructions determined by the Corporation, consistent with this
subsection, that such investor must follow in order to have the Series C
Equity Shares repurchased.
(c) On the Change of Control Repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series C Equity Shares or portions
thereof tendered by such holder pursuant to the Change of Control
Repurchase Offer and promptly by wire transfer of immediately available
funds to such holder, as directed by such holder, send an amount equal to
the Change of Control Repurchase Payment in respect of all Series C Equity
Shares or portions thereof so tendered.
(d) Notwithstanding anything else herein, to the extent they are
applicable to any Change of Control Repurchase Offer, the Corporation will
comply with any federal and state securities laws, rules and regulations
and all time periods and requirements shall be adjusted accordingly.
(e) For purposes hereof, "Change of Control" means the occurrence of
any of the following: (i) the first acquisition, directly or indirectly,
by any individual or entity or group (as such term is used in
Section 13(d)(3) of the Exchange Act) of beneficial ownership (as defined
in Rule 13d-3 under the Exchange Act, except that such individual or
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entity shall be deemed to have beneficial ownership of all shares that
any such individual or entity has the right to acquire, whether such
right is exercisable immediately or only after passage of time) of more
than 25% of the Corporation's or Westfield America Trust's outstanding
equity securities with voting power, under ordinary circumstances, to
elect Directors of the Corporation; (ii) other than with respect to the
election, resignation or replacement of any Director designated,
appointed or elected by the holders of any Series of Preferred Shares
(each a "PREFERRED DIRECTOR"), during any period of two consecutive
years, individuals who at the beginning of such period constituted the
Board of Directors of the Corporation (together with any new Directors
whose election by such Board of Directors or whose nomination for
election by the shareholders of the Corporation was approved by a vote
of 66 2/3% of the Directors of the Corporation (excluding Preferred
Directors) then still in office who were Directors at the beginning of
such period, or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the Board
of Directors then in office of the Corporation; and (iii) (A) Any of the
Corporation or Westfield America Trust consolidating with or merging
into another entity or conveying, transferring or leasing all or
substantially all of its assets (including, but not limited to, real
property investments) to any individual or entity, or (B) any entity
consolidating with or merging into the any of the Corporation or
Westfield America Trust, which in either event (A) or (B) is pursuant to
a transaction in which the outstanding voting securities of the
Corporation or Westfield America Trust is reclassified or changed into
or exchanged for cash, securities or other property; provided, however,
that the events described in clauses (i), (ii) and (iii) shall not be
deemed to be a Change of Control (a) in the case of the event described
in clause (iii), if the sole purpose of such event is that the
Corporation or Westfield America Trust is seeking to change its domicile
or to convert from a corporation to a trust or vice versa; (b) in the
case of the event described in clause (iii), if the holders of the
exchanged securities of the Corporation or Westfield America Trust
immediately after such transaction beneficially own at least a majority
of the securities of the merged or consolidated entity normally entitled
to vote in elections of Directors of the Corporation or Westfield
America Trust; (c) if any of Westfield Holdings Limited or its
wholly-owned subsidiaries remains as manager of the Corporation's
properties and as adviser of the Corporation, in each case, in a manner
substantially similar to that on the date hereof; or (d) if the Change
of Control results solely from the purchase or other acquisition of
equity securities by Westfield Holdings Limited, Westfield America
Trust, the Lowy Family or the Investor.
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Section 8. REDEMPTION AT THE OPTION OF THE HOLDER.
(a) At any time after August 12, 2008 (2), the holders of Series C
Equity Shares shall have the right at any time that the Corporation's common
stock has a Current Market Price at or below the Conversion Price per share, to
require the Corporation, to the extent the Corporation shall have funds legally
available therefor, to redeem any or all of the Series C Equity Shares held by
such holder at a repurchase price payable, at the option of the Corporation, in
either (i) cash, or (ii) such number of Common Equity Shares as shall have a
Current Market Price in the aggregate on the day prior to the day such holder
gives notice pursuant to Section 8(b) of its intention to redeem, equal to in
either case, 100% of the liquidation preference thereof plus accrued and unpaid
dividends whether or not declared, if any, to the date of repurchase or the date
payment is made available (in the aggregate, the "REDEMPTION PAYMENT").
(b) For purposes of this Section 8, redemption at the option of the
holder shall be deemed to occur upon receipt by the Corporation of written
notice that the holder of Series C Equity Shares wishes to tender shares to be
redeemed. The holders of such shares to be redeemed shall then have 30 days
from the date of such notice to deliver such shares to the Transfer Agent. Upon
the surrender of the certificate or certificates of Series C Preferred Shares to
be redeemed, duly endorsed or assigned to the Corporation or in blank, at the
office of the Transfer Agent, the Corporation shall promptly, either (i) by wire
transfer of immediately available funds to such holder, as directed by such
holder, send an amount equal to the Redemption Payment in respect of all Series
C Equity Shares or portions thereof so tendered or (ii) issue and deliver to
such holder, or on his or her written order, a certificate or certificates for
the number of full Common Equity Shares issuable in respect of all Series C
Equity Shares or portions thereof so tendered.
Section 9. SHARES TO BE RETIRED. All Series C Equity Shares which
shall have been issued and reacquired in any manner by the Corporation shall be
restored to the status of authorized but unissued preferred stock, without
discretion as to class or series, and subject to applicable limitations set
forth in the Articles may thereafter be reissued as shares of any series of
preferred stock.
Section 10. RANKING. Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Series C Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class
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(2) This date is the tenth anniversary of the Closing hereunder.
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or series shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of Series C Preferred
Shares, which shall expressly include the Corporation's non-voting
senior preferred stock, par value $1.00 per share;
(b) on a parity with the Series C Preferred Shares, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution
or winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof shall be different from
those of the Series C Preferred Shares, if the holders of such class or
series and the Series C Preferred Shares shall be entitled to the receipt
of dividends and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or
priority one over the other ("PARITY SHARES"), which shall expressly
include the Corporation's Series A Cumulative Redeemable Preferred Shares,
Series B Cumulative Redeemable Preferred Shares and Series D Cumulative
Convertible Redeemable Preferred Shares;
(c) junior to the Series C Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series C Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, if such class or series shall be Fully Junior
Shares.
Section 11. VOTING.(a) Except as expressly provided in this
Certificate of Designation, the holders of Series C Equity Shares shall have no
voting rights. If and whenever (i) for two consecutive quarterly Dividend
Periods the Corporation fails to pay dividends on the Series C Equity Shares
(which shall, with respect to any such quarterly dividend, mean that any such
dividend has not been paid in full), then the number of directors then
constituting the Board of Directors shall be increased by two and the holders of
Series C Equity Shares, voting as a single class, shall be entitled to elect the
two additional directors to serve on the Board of Directors or (ii) for two
consecutive quarterly Dividend Periods the Corporation fails to pay dividends on
the Common Shares in an amount per share at least equal to $0.32 (subject to
adjustment consistent with any adjustment of the Conversion Price pursuant to
Section 6(a) of this Article), then the number of directors then constituting
the Board of Directors shall be increased by one and the holders of Series C
Equity Shares, voting as a single class, shall be entitled to elect the one
additional director to serve on the Board of Directors, in either case, at any
annual meeting of shareholders or special meeting held in place thereof, or at a
special meeting of the holders of the Series C Equity Shares called as
hereinafter provided; PROVIDED, HOWEVER, that except as set
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forth in the next sentence hereto, the holders of Series C Equity Shares
shall not have the right to elect more than two directors. If, other than
through the operation of this Section 11(a) or pursuant to the provisions of
the Articles of Incorporation relating to the Corporation's Series A and B
Preferred Shares (but only with respect to one director elected by the
holders of the Series A and B Preferred Shares), the Board of Directors shall
be increased at any time to more than ten directors, then, upon the
occurrence or continuance of any of the events described in this Section
11(a), the Board of Directors shall be increased by such number of additional
directors, and the holders of Series C Equity Shares shall be entitled to
elect such number of additional directors, as shall be necessary to maintain
the ratio of directors elected by the holders of the Series C Shares to the
directors otherwise elected, as nearly as possible (rounding to the next
larger whole number), equal to the ratio that would have existed if the
holders of the Series C Equity Shares were able to elect the full number of
directors then permitted to be elected by them under this Section 11 and the
directors otherwise elected numbered only ten. Whenever, as the case may be,
(i) all arrears in dividends on the Series C Equity Shares then outstanding
shall have been paid and the Corporation has paid dividends thereon for two
consecutive quarters and (ii) the Corporation has paid dividends on the
Common Shares in an amount per share at least equal to $0.32 (subject to
adjustment consistent with any adjustment of the Conversion Price pursuant to
Section 6(a) of this Article) for two consecutive quarters, then the right of
the holders of the Series C Equity Shares to elect such additional directors
shall cease (but subject always to the same provision for the vesting of such
voting rights in the case of any similar future arrearage in quarterly
dividends), and the terms of office of all persons elected as Directors by
the holders of the Series C Equity Shares shall forthwith terminate and the
number of the Board of Directors shall be reduced accordingly. At any time
after such voting power shall have been so vested in the holders of Series C
Equity Shares, the Secretary of the Corporation may, and upon the written
request of any holders of 5% of the outstanding Series C Equity Shares
(addressed to the Secretary at the principal office of the Corporation)
shall, call a special meeting of the holders of the Series C Equity Shares
for the election of the Directors to be elected by them as herein provided,
such call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the shareholders or as required by law.
If any such special meeting required to be called as above provided shall not
be called by the Secretary within 20 days after receipt of any such request,
then any holder of Series C Equity Shares may call such meeting, upon the
notice above provided, and for that purpose shall have access to the records
of the Corporation. The directors elected at any such special meeting shall
hold office until the next annual meeting of the shareholders or special
meeting held in lieu thereof if such office shall not have previously
terminated as above provided. If any vacancy shall occur among the Directors
elected by the holders of the Series C Equity Shares, a successor shall be
elected by the Board of Directors, upon the nomination of the then-remaining
Director elected by the holders of the Series C Equity Shares or the
successor of such remaining Director (or, if there are then no such Directors
or Director elected by the holders of Series C Equity Shares, such Director
shall be elected by the holders of Series C Equity Shares as described
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above), to serve until the next annual meeting of the shareholders or special
meeting held in place thereof if the term of such director shall not have
previously terminated as provided above.
(b) The holders of the Series C Equity Shares, voting together with
the holders of the Common Shares as a single class, shall be entitled to vote
on any matter involving any transaction between the Corporation and any
Affiliate of the Corporation which is brought to a vote of the holders of the
Common Shares (other than any vote on the conversion of the Series D
Preferred Shares into Common Shares). In any matter for which a holder of
Series C Equity Shares is permitted to vote under this Section 11(b), such
holder shall have the number of votes equal to the number of Common Shares
into which the Series C Equity Shares of such holder is convertible on the
record date for such vote.
(c) So long as any Series C Equity Shares are outstanding, in
addition to any other vote or consent of shareholders required by law or by
the Articles, the affirmative vote of the holders of a majority of the Series
C Equity Shares, voting together as a class, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for the
purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions of
the Articles of Incorporation or this Certificate of Designation that
materially and adversely affects the voting powers, rights or preferences
of the holders of the Series C Equity Shares; or
(ii) Any merger or consolidation of the Corporation and another entity
in which the Corporation is not the surviving corporation and each holder
of Series C Equity Shares does not receive shares of the surviving
corporation with substantially similar rights, preferences and powers in
the surviving corporation as the Series C Equity Shares have with respect
to the Corporation (except for changes that do not materially and adversely
affect the holders of the Series C Equity Stock).
PROVIDED, HOWEVER, that no such vote of the holders of Series C Equity Shares
shall be required if, at or prior to the time when such amendment, alteration
or repeal is to take effect, or when the issuance of any such prior shares or
convertible security is to be made, as the case may be, provision is made for
the redemption of all Series C Equity Shares at the time outstanding to the
extent such redemption is authorized by Section 5 of this Certificate of
Designation.
(iii) For purposes of the foregoing provisions of this Section 11(c),
each share of Series C Equity Shares shall have one (1) vote per share,
except that when any other series of Equity Shares shall have the right to
vote with the Series C Equity Shares as a single class on any matter, then
the Series C Equity Shares and such other series shall have with respect to
such matters one (1) vote per $180.00 (or less pursuant to Section 4(a)) of
stated
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liquidation preference. Except as otherwise required by applicable law
or as set forth herein, the Series C Equity Shares shall not have any
relative, participating, optional or other special voting rights and
powers other than as set forth herein, and the consent of the holders
thereof shall not be required for the taking of any corporate action.
Section 12. RECORD HOLDERS. The Corporation and the Transfer Agent
may deem and treat the record holder of any Series C Preferred Shares as the
true and lawful owner thereof for all purposes, and neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
Section 13. TITLE. This resolution shall be known and may be
referred to as "A Resolution of the Board of Directors of Westfield America,
Inc. Designating Series C Preferred Shares and Fixing Preferences and Rights
Thereof".
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized and directed to execute and acknowledge a certificate setting
forth these resolutions and to cause such certificate to be filed and recorded,
all in accordance with the requirements of Section 351.046 of the General and
Business Corporation Law of the State of Missouri, as amended.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President this 10 day of
August, 1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
Name: Peter S. Lowy
Title: Co-President
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CORPORATE ACKNOWLEDGMENT
STATE OF CA )
) SS:
COUNTY OF LA )
I, Annie M. Gary, a notary public, do hereby certify that on
this 6 day of August, 1998, personally appeared before me Peter Lowy, and
being first duly sworn by me, declared that he is the Co-President of Westfield
America, Inc., that he signed the foregoing document as Co-President of the
corporation, and that the statements therein contained are true.
[SEAL] /s/ Annie M. Gary
------------------------
Notary Public
My Commission Expires:
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EXHIBIT 3.2
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES D PREFERRED SHARES
AND FIXING PREFERENCES AND RIGHTS THEREOF"
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
<PAGE>
Pursuant to the Provisions of Section 351.180 (7) of the
General and Business Corporation Law of the State
of Missouri, as amended,
I, the undersigned, Co-President of Westfield America, Inc., a
Missouri corporation (hereinafter sometimes referred to as the
"CORPORATION"), hereby certify as follows:
FIRST: that under the provisions of Article Fourth of the Restated
Articles of Incorporation, as amended, of the Corporation, the total number
of shares of all classes of capital stock which the Corporation may issue is
410,000,200 shares, of which (i) 200 shares shall be non-voting senior
preferred stock, par value $1.00 per share (the "SENIOR PREFERRED SHARES"),
(ii) 5,000,000 shares shall be Preferred Shares, with par value of $1.00 per
share (the "PREFERRED SHARES"), 940,000 of which have been designated as
Series A Preferred Shares, with a liquidation value of $100 per share (the
"SERIES A PREFERRED SHARES") and 400,000 of which have been designated as
Series B Preferred Shares, with a liquidation value of $100 per share (the
"SERIES B PREFERRED SHARES"), (iii) 200,000,000 shall be shares of common
stock, par value $.01 per share (the "Common Shares"), (iv) 205,000,000 will
be shares of excess stock, par value $.01 ("EXCESS SHARES"). Any Excess
Shares which are issued with respect to Common Stock shall be "EXCESS COMMON
SHARES" and, together with the Common Shares, the "COMMON EQUITY SHARES" and
any Excess Shares which are issued with respect to Preferred Shares shall be
"EXCESS PREFERRED SHARES", and, together with the Preferred Shares, the
""PREFERRED EQUITY SHARES", under said Articles of Incorporation (as amended,
the "ARTICLES OF INCORPORATION"), the shares of Preferred Stock are
authorized to be issued by the Board of Directors and the Board of Directors
is expressly authorized to determine in the Resolution, the designation,
powers, rights, preferences and qualifications, limitations or restrictions,
not fixed and determined by the Articles of Incorporation.
SECOND: That the Board of Directors of the Corporation pursuant to
the authority so vested in it by Article Fourth of the Certificate of
Incorporation, and in accordance with the provisions of Section 351.180 (7)
of the General and Business Corporation Law of the State of Missouri, as
amended, adopted on July 20, 1998 the following resolution creating a series
of Preferred Stock designated as "Series D
<PAGE>
Preferred Shares," which resolution has not been amended, modified, rescinded
or revoked and is in full force and effect on the date hereof.
"RESOLUTION OF THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING
'SERIES D PREFERRED SHARES'
AND FIXING PREFERENCES AND RIGHTS THEREOF"
BE IT RESOLVED, that pursuant to authority expressly granted to and
vested in the Board of Directors of Westfield America, Inc., hereinafter
called the "CORPORATION," by the provisions of the Articles of Incorporation,
as amended, the Board of Directors of the Corporation hereby fixes the
designation, voting powers, rights on liquidation or dissolution and other
preferences and rights, and the qualifications, limitations or restrictions
thereof, of the shares of such series (in addition to the designations,
preferences and relative rights, and the qualifications, limitations or
restrictions thereof set forth in the Articles of Incorporation which are
applicable to the Series D Preferred Shares) as follows:
Section 1. NUMBER OF SHARES, DESIGNATION AND RANKING. This class of
preferred stock shall be designated as Series D Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute
such series shall not be more than 694,445 shares, par value $1.00 per share,
which number may be decreased (but not below the aggregate number thereof
then outstanding and/or which have been reserved for issuance) from time to
time by the Board of Directors and is hereafter in this resolution called the
"SERIES D PREFERRED SHARES." Each Series D Preferred Share shall be
identical in all respects to each other Series D Preferred Share, and except
as otherwise provided herein, shall be identical in all respects to each
Series D Preferred Share (the Series D Preferred Shares together with the
Excess Series D Preferred Shares being hereinafter referred to as the "SERIES
D EQUITY SHARES").
Section 2. DEFINITIONS. For purposes of the Series D Preferred
Shares, the following terms shall have the meanings indicated:
"AFFILIATE" of, or Person "AFFILIATED" with, a specified Person,
shall mean a Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with the Person specified. For purposes of the Corporation, Affiliate shall
include, without limitation, Westfield Holdings Limited ("WHL"), Westfield
America Trust, Frank Lowy, David Lowy, Peter Lowy and Steven Lowy (such
individuals being the "LOWY FAMILY").
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"BASE RATE" shall mean an annual dividend per Series D Equity Share
equal to 8.5% of the Liquidation Preference per Series D Equity Share.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to perform
any of its responsibilities with respect to the Series D Preferred Shares.
"BUSINESS DAY "shall mean any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions in
New York City, New York are authorized or required by law, regulation or
executive order to close.
"CALL DATE" shall mean the date specified in the notice to holders
required under Section 5(d) as the Call Date.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONSOLIDATED EBITDA" for any quarter shall mean the consolidated net
income of the Corporation (before extraordinary income or gains and less
equity in income of unconsolidated real estate partnerships), calculated in a
manner consistent with the Corporation's financial statements filed with the
Securities and Exchange Commission, increased by the sum of the following
(without duplication):
a. the Corporation's pro rata share of EBITDA from unconsolidated
real estate partnerships calculated in a manner consistent with
this definition of Consolidated EBITDA,
b. all income taxes paid or accrued according to GAAP for such
quarter (other than income taxes attributable to extraordinary.
unusual or non-recurring gains or losses except to the extent
that such gains were not included in Consolidated EBITDA),
c. all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of
deferred financing fees or amortization of original issue
discount, but excluding capitalized interest),
d. depreciation and depletion reflected in such net income,
e. amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs
(only to the extent that such
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amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to clause (c) above), goodwill,
other intangibles and management fees, and
f. any other non-cash charges, to the extent deducted from
consolidated net income (including, but not limited to, income
allocated to minority interests).
"CONSOLIDATED FIXED CHARGES" for any quarter shall mean the sum of:
a. the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner
consistent with this definition of Consolidated Fixed Charges,
b. all interest expense paid or accrued in accordance with GAAP for
such quarter including, without duplication, financing fees and
amortization of deferred financing fees or amortization of
original issue discount),
c. dividend and distribution requirements with respect to preferred
stock (not including any portion of preferred stock dividends
the calculation of which is based on the dividend paid in such
quarter to the holders of common shares) whether or not declared
or paid,
d. regularly scheduled amortization of principal of debt during
such quarter (other than any balloon payments at maturity), and
e. all ground rent payments.
"CONSTITUENT PERSON" shall have the meaning set forth in Section 6(e).
"CONVERSION DATE" shall have the meaning set forth in Section 6(a).
"CONVERSION PRICE" shall mean the conversion price per Common Equity
Share for which the Series D Equity Share is convertible, as such Conversion
Price may be adjusted pursuant to Section 6. The initial conversion price
shall be $18.00.
"CURRENT MARKET PRICE" of publicly traded Common Shares or any other
class of stock or other security of the Corporation or any other issuer for
any day shall mean the last reported sales price, regular way, on such day,
or, if no sale takes place on such day, the average of the reported closing
bid and asked prices on such day, regular
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way, in either case as reported on the New York Stock Exchange ("NYSE") or,
if such security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any
national securities exchange, on the Nasdaq National Market ("NASDAQ") or, if
such security is not quoted on NASDAQ, the average of the closing bid and
asked prices on such day in the over-the-counter market as reported by the
National Association of Securities Dealers, Inc. (the "NASD") or, if bid and
asked prices for such security on such day shall not have been reported
through the NASD, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"DIVIDEND PAYMENT DATE" shall mean (i) for any Dividend Period with
respect to which the Corporation pays a dividend on the Common Equity Shares,
the date on which such dividend is paid, or (ii) for any Dividend Period with
respect to which the Corporation does not pay a dividend on the Common Equity
Shares, a date to be set by the Board of Directors, which date shall not be
later than the thirtieth calendar day after the end of the applicable
Dividend Period.
"DIVIDEND PERIOD" shall mean quarterly dividend periods commencing on
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period with respect to any Series D Equity Shares (other than the initial
Dividend Period, which shall commence on the Issue Date for such Series D
Equity Shares and end on and include the last day of the calendar quarter
immediately following such Issue Date, and other than the Dividend Period
during which any Series D Equity Shares shall be redeemed pursuant to Section
5 or converted pursuant to Section 6, which shall end on and include the Call
Date or Conversion Date with respect to the Series D Equity Shares being
redeemed or converted, as applicable).
"EXPIRATION TIME" shall have the meaning set forth in Section
6(d)(iv).
"FAIR MARKET VALUE" shall mean the average of the daily Current
Market Prices of a Common Share on the five (5) consecutive Trading Days
selected by the Corporation commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in question and the day
before the "ex date" with respect to the issuance or distribution requiring
such computation. The term "ex date," when used with respect to any issuance
or distribution, means the first day on which the Common Shares trade regular
way, without the right to receive such issuance or
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<PAGE>
distribution on the exchange or in the market, as the case may be, used to
determine that day's Current Market Price.
"FIXED CHARGE COVERAGE VIOLATION" shall have the meaning set forth in
Section 3(a).
"FULLY JUNIOR SHARES" shall mean the Common Shares and any other
class or series of stock of the Corporation now or hereafter issued and
outstanding over which the Series D Preferred Shares preference or priority
in both (i) the payment of dividends and (ii) the distribution of assets on
any liquidation, dissolution or winding up of the Corporation.
"FUNDS FROM OPERATIONS" shall mean net income (loss) (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment
Trusts (NAREIT), in its White Paper dated March 1995, as such definitions may
be modified from time to time.
"INVESTOR" shall mean Security Capital Preferred Growth Incorporated
and controlled affiliates thereof.
"ISSUE DATE" shall mean the date on which Series D Preferred Stock is
issued.
"JUNIOR SHARES" shall mean the Common Shares and any other class or
series of stock of the Corporation now or hereafter issued and outstanding
over which the Series D Preferred Shares have preference or priority in the
payment of dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"NON-ELECTING SHARE" shall have the meaning set forth in Section 6(e).
"OPERATING PARTNERSHIP" shall mean Westfield America Limited
Partnership, a Delaware limited partnership.
"PARITY SHARES" shall have the meaning set forth in Section 11(b).
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"PERSON" shall mean any individual, firm, partnership, corporation,
limited liability company, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"PURCHASED SHARES" shall have the meaning set forth in Section
6(d)(iv).
"REIT TERMINATION EVENT" shall mean the earliest to occur of:
(i) the filing of a federal income tax return by the Corporation for
any taxable year on which the Corporation does not compute its
income as a real estate investment trust,
(ii) the approval by the shareholders of the Corporation of a
proposal for the Corporation to cease to qualify as a real
estate investment trust,
(iii) a determination by the Board of Directors of the Corporation,
based on the advice of counsel, that the Corporation has ceased
to qualify as a real estate investment trust, or
(iv) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real estate
investment trust.
"SECURITIES" and "SECURITY" shall have the meanings set forth in
Section 6(d)(iii).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES D PREFERRED SHARES" shall have the meaning given such term in
the preamble to the Certificate of Designation.
"SET APART FOR PAYMENT" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of stock of the
Corporation; PROVIDED, HOWEVER, that if any funds for any class or series of
Junior Shares or any class or series of stock ranking on a parity with the
Series D Preferred Shares as to the payment of dividends are placed in a
separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series
D Preferred
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Shares shall mean placing such funds in a separate account or delivering such
funds to a disbursing, paying or other similar agent.
"TRADING DAY" shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which
such securities are listed or admitted, or if not listed or admitted for
trading on any national securities exchange, on NASDAQ, or if such securities
are not quoted on NASDAQ, in the securities market in which the securities
are traded.
"TRANSACTION" shall have the meaning set forth in Section 6(e).
"TRANSFER AGENT" shall mean the Corporation, or such other agent or
agents of the Corporation as may be designated by the Board of Directors or
their designee as the transfer agent, registrar and dividend disbursing agent
for Series D Preferred Shares and notified to the holders of the Series D
Preferred Stock.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Articles.
Section 3. DIVIDENDS. (a) Subject to the preferential rights of the
holders of any Preferred Stock that ranks senior in the payment of dividends
to the Series D Equity Shares and subject to paragraph (b) of this Section 3,
the holders of Series D Equity Shares shall be entitled to receive, when, as
and if declared by the Board of Directors, but only out of funds legally
available for the payment of dividends, cumulative preferential dividends
payable in cash 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) the Base Rate per share per annum
and (B) an amount per share equal to the Liquidation Preference of a Series D
Equity Share (exclusive of accrued but unpaid dividends) divided by the
Conversion Price (the "SERIES D COMMON EQUIVALENT FACTOR") times the dollar
amount of cash dividends declared with respect to each Common Equity Share
that does not result in an adjustment to the Conversion Price pursuant to
subparagraph (d)(iii) of Section 6 (such product, the "SERIES D 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 D Equity Shares shall have received for any
calendar year more dividends than such Shares shall be entitled under clauses
(A) and (B) above (as adjusted pursuant to the third and eighth sentences of
this Section 3), the dividends payable in respect of Series D Equity Shares
in subsequent calendar years
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shall be reduced to the extent of such overpayment. Subject to the proviso
of the preceding sentence of this Section 3(a), the dividend paid in respect
of each quarterly period in each calendar year shall be determined as follows
(in each case, excluding any additional payment made pursuant to the
following sentence): (1) for the first quarter, the greater of 25% of the
Base Rate per share and the Series D Common Equivalent Amount for the same
quarter; (2) for the second quarter, an amount such that the aggregate amount
to be received per Series D Equity Share in respect of the first two quarters
of such calendar year shall be the greater of 50% of the Base Rate per share
and the Series D 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 D Equity Share in respect of the first three quarters of such
calendar year shall be the greater of 75% of the Base Rate per share and the
Series D 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 D Equity Share in respect of such calendar year shall be the
amount provided in the preceding sentence of this Section 3(a).
Notwithstanding the foregoing, for any quarter in which a Fixed Charge
Coverage Violation (as defined below) has occurred, the dividend payable per
Series D Equity Share shall be 1.20 TIMES the amount provided in the
preceding sentence. A "Fixed Charge Coverage Violation" shall occur for any
quarter that the ratio of the Corporation's Consolidated EBITDA to its
Consolidated Fixed Charges is below 1.40 to 1. The dividends shall begin to
accrue as set forth above and shall be fully cumulative from the first day of
the applicable Dividend Period, whether or not in any Dividend Period or
Periods there shall be funds of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly, when, as and if
declared by the Board of Directors, in arrears on Dividend Payment Dates.
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 payment date, fixed for the purpose by
the Board of Directors in advance of payment of each particular dividend.
Any dividend payment made on Series D Equity Shares shall first be credited
against the earliest accrued but unpaid dividend due with respect to Series D
Equity Shares which remains payable. Beginning with the quarter in which a
REIT Termination Event occurs, all dividends payable per Series D Equity
Share pursuant to this Section shall be multiplied by 2.5.
(b) The initial Dividend Period for the Series D Equity Shares will
include a partial dividend for the period from the Issue Date until the last
day of the calendar quarter immediately following such Issue Date. The
amount of dividends payable for such initial period, or any other period
shorter than a full quarterly Dividend Period, on the Series D Equity Shares
shall be computed by dividing the number of days in
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such period by 90 and multiplying the result by the Series D Equity dividend
determined in accordance with Section 3(a). Holders of Series D Equity Shares
shall not be entitled to any dividends, whether payable in cash, property or
shares, in excess of cumulative dividends, as herein provided, on the Series
D Equity Shares. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series D Equity
Shares which may be in arrears.
(c) So long as any Series D Equity Shares remain outstanding, no
dividends, except as described in the immediately following sentence, shall
be declared or paid or set apart for payment on any class or series of Parity
Shares for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Series D Equity Shares
for all Dividend Periods terminating on or prior to the dividend payment date
on such class or series of Parity Shares. When dividends are not paid in
full or a sum sufficient for such payment is not set apart, as aforesaid, all
dividends declared upon Series D Equity Shares and all dividends declared
upon any other class or series of Parity Shares shall be declared ratably in
proportion to the respective amounts of dividends accumulated and unpaid on
the Series D Equity Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series D Equity Shares remain outstanding, no
dividends (other than dividends or distributions paid solely in Fully Junior
Shares, or options, warrants or rights to subscribe for or purchase, Fully
Junior Shares) shall be declared or paid or set apart for payment or other
distribution shall be declared or made or set apart for payment upon Junior
Shares, nor shall any Junior Shares be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of Common
Shares made for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid
to or made available for a sinking fund for the redemption of any Junior
Shares) by the Corporation, directly or indirectly (except by conversion into
or exchange for Fully Junior Shares), unless in each case the full cumulative
dividends on all outstanding Series D Equity Shares and any other Parity
Shares of the Corporation shall have been or contemporaneously are declared
and paid or declared and set apart for payment for all Dividend Periods
terminating on or prior to the date of declaration or payment with respect to
the Series D Equity Shares and all dividend periods terminating on or prior
to the date of declaration or payment with respect to such Parity Shares.
Subject to the foregoing, and not otherwise, such dividends and distributions
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 D Equity Shares shall not be
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entitled to participate in any such dividends, whether payable in cash, stock
or otherwise.
(e) No distributions on Series D Equity Shares shall be declared by
the Board of Directors or paid or set apart for payment by the Corporation at
such time as the terms and provisions of any agreement of the Corporation,
including any agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
(f) In determining whether a distribution by dividend, redemption or
other acquisition of Shares or otherwise is permitted under Missouri law, no
effect shall be given to amounts that would be needed, if the Corporation
were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential
rights on dissolution are superior to those receiving the distribution.
Section 4. LIQUIDATION PREFERENCE. (a) In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, subject to the prior preferences and other rights of any
series of stock ranking senior to the Series D Preferred Shares upon
liquidation, distribution or winding up of the Corporation, before any
payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of Junior Shares, the
holders of the Series D Equity Shares shall be entitled to receive One
Hundred Eighty Dollars ($180.00) (the "LIQUIDATION PREFERENCE") per Series D
Equity Share plus an amount equal to all dividends (whether or not earned or
declared) accrued and unpaid thereon to the date of liquidation, dissolution
or winding up of the affairs of the Corporation (any such date, a "SERIES D
LIQUIDATION DATE") but such holders shall not be entitled to any further
payment; PROVIDED, that the dividend payable with respect to the Dividend
Period containing the Series D Liquidation Date shall be equal to the
dividend determined pursuant to Section 3 above for the preceding Dividend
Period 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 D Liquidation Date over ninety days. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation,
or proceeds thereof, distributable among the holders of the Series D Equity
Shares shall be insufficient to pay in full the preferential amount aforesaid
and liquidating payments on any other shares of any class or series of Parity
Shares, then such assets, or the proceeds thereof, shall be distributed among
the holders of Series D Equity Shares and any such other Parity Shares
ratably
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in accordance with the respective amounts that would be payable on such
Series D Equity Shares and any such other Parity Shares if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations,
real estate investment trusts or other entities, (ii) a sale, lease or
conveyance of all or substantially all of the Corporation's property or
business or (iii) a statutory share exchange shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Subject to the rights of the holders of shares of any series or
class or classes of stock ranking on a parity with or prior to the Series D
Equity Shares upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Corporation, after payment
shall have been made in full to the holders of the Series D Equity Shares, as
provided in this Section 4, the holders of Series D Equity Shares shall have
no other claim to the remaining assets of the Corporation and any other
series or class or classes of Junior Shares shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any
and all assets remaining to be paid or distributed, and the holders of the
Series D Equity Shares shall not be entitled to share therein.
Section 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) The
Series D Equity Shares shall not be redeemable by the Corporation prior to
August 12, 2008.(1) On and after August 12, 2008, the Corporation, at
its option, may redeem the Series D Equity Shares, in whole at any time or
from time to time in part, in minimum increments of $10.0 million of
aggregate Liquidation Preference of such shares, out of funds legally
available therefor at a redemption price payable in cash equal to 100% of the
Liquidation Preference per Series D Equity Share (plus all accumulated,
accrued and unpaid dividends as provided in paragraph (d) below).
(b) In the event that WHL and its subsidiaries and the trustee of
Westfield America Trust on behalf of Westfield America Trust do not vote to
approve the conversion of the Series D Equity Shares into Common Equity
Shares at the Corporation's 1999 Annual Shareholder Meeting or at any other
meeting of the Corporation's shareholders at which such proposal is raised,
the Corporation shall have the right to redeem the Series D Equity Shares, in
whole or in part, out of funds legally available therefor at a redemption
price payable in cash equal to 100% of the Liquidation Preference per Series
D Equity Share (plus all accumulated, accrued and unpaid dividends as
provided in paragraph (c) below).
- --------------------
(1) This date is the tenth anniversary of the Closing.
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(c) Upon any redemption of Series D Equity Shares pursuant to this
Section 5, the Corporation shall pay all accrued and unpaid dividends, if
any, thereon to the Call Date, without interest. If the Call Date falls
after a dividend payment record date and prior to the corresponding Dividend
Payment Date, then each holder of Series D Equity Shares at the close of
business on such dividend payment record date shall be entitled to the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding any redemption of such shares before such Dividend Payment
Date. Except as provided above, the Corporation shall make no payment or
allowance for unpaid dividends, whether or not in arrears, on Series D Equity
Shares called for redemption.
(d) If full cumulative dividends on the Series D Equity Shares and any
other class or series of Parity Shares of the Corporation have not been
declared and paid or declared and set apart for payment, the Series D Equity
Shares may not be redeemed under this Section 5 in part and the Corporation
may not purchase or acquire Series D Equity Shares, otherwise than pursuant
to a purchase or exchange offer made on the same terms to all holders of
Series D Equity Shares.
(e) Notice of the redemption of any Series D Equity Shares under this
Section 5 shall be mailed by first-class mail or recognized overnight courier
to each holder of record of Series D Equity Shares to be redeemed at the
address of each such holder as shown on the Corporation's records, not less
than 30 nor more than 90 days prior to the Call Date. Neither the failure to
mail any notice required by this paragraph (e), nor any defect therein or in
the mailing thereof, to any particular holder, shall affect the sufficiency
of the notice or the validity of the proceedings for redemption with respect
to the other holders. Each such mailed notice shall state, as appropriate:
(1) the Call Date; (2) the number of Series D Equity Shares to be redeemed
and, if fewer than all the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder; (3) the redemption
price; (4) the place or places at which certificates for such shares are to
be surrendered; (5) the then-current Conversion Price; and (6) that dividends
on the shares to be redeemed shall cease to accrue on such Call Date except
as otherwise provided herein. Notice having been mailed as aforesaid, from
and after the Call Date (unless the Corporation shall fail to make available
an amount of cash necessary to effect such redemption), (i) except as
otherwise provided herein, dividends on the Series D Equity Shares so called
for redemption shall cease to accrue, (ii) such shares shall no longer be
deemed to be outstanding, and (iii) all rights of the holders thereof as
holders of Series D Equity Shares shall cease (except the rights to receive
the cash payable upon such redemption, without interest thereon, upon
surrender and endorsement of their certificates if so required and to receive
any dividends payable thereon). The Corporation's obligation
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to provide cash in accordance with the preceding sentence shall be deemed
fulfilled if, on or before the Call Date, the Corporation shall deposit with
a bank or trust company that has an office in the Borough of Manhattan, City
of New York, and that has capital and surplus of at least $150,000,000,
necessary for such redemption, in trust, with irrevocable instructions that
such cash be applied to the redemption of the Series D Equity Shares so
called for redemption. Notwithstanding the foregoing the Corporation shall,
in the first instance, send the money to any holder of Series D Equity Shares
that has notified the Corporation in writing of the location of delivery of
funds. No interest shall accrue for the benefit of the holders of Series D
Equity Shares to be redeemed on any cash so set aside by the Corporation.
Subject to applicable escheat laws, any such cash unclaimed at the end of two
years from the Call Date shall revert to the general funds of the
Corporation, after which reversion the holders of such shares so called for
redemption shall look only to the general funds of the Corporation for the
payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares so redeemed (properly endorsed
or assigned for transfer, if the Corporation shall so require and if the
notice shall so state), such shares shall be exchanged for any cash (without
interest thereon) for which such shares have been redeemed. If fewer than
all the outstanding Series D Equity Shares are to be redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding Series D
Equity Shares not previously called for redemption pro rata (as nearly as may
be), by lot or by any other method determined by the Corporation in its sole
discretion to be equitable. If fewer than all the Series D Equity Shares
evidenced by any certificate are redeemed, then new certificates evidencing
the unredeemed shares shall be issued without cost to the holder thereof.
Section 6. CONVERSION. The Series D Equity Shares shall not be
convertible into Common Equity Shares prior to (i) a vote of the shareholders
of the Corporation approving the conversion of Series D Equity Shares into
Common Equity Shares or (ii) the transfer of the Series D Equity Shares to an
individual to whom the Corporation is permitted to issue Common Equity Shares
without shareholder approval, in accordance with the rules of the NYSE.
Subject to the foregoing, holders of Series D Equity Shares shall have the
right to convert all or a portion of such shares into Common Equity Shares,
as follows:
(a) Subject to and upon compliance with the provisions of this Section
6, a holder of Series D Preferred Shares or Excess Series D Preferred Shares
shall have the right, at his or her option, at any time (such time being, the
"CONVERSION DATE"), to convert all or any portion of such shares into the
number of fully paid and non-
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assessable Common Shares or Excess Common Shares, respectively, obtained by
dividing the aggregate Liquidation Preference of such shares (inclusive of
accrued but unpaid dividends) by the Conversion Price (as in effect at the
time and on the date provided for in the last paragraph of paragraph (b) of
this Section 6) by surrendering such shares to be converted, such surrender
to be made in the manner provided in paragraph (b) of this Section 6;
PROVIDED, HOWEVER, that the right to convert shares called for redemption
pursuant to Section 5 shall terminate at the close of business on the fifth
Business Day prior to the Call Date fixed for such redemption, unless the
Corporation shall default in making payment of the cash payable upon such
redemption under Section 5.
(b) In order to exercise the conversion right, the holder of each
share of Series D Equity Shares to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof irrevocably elects
to convert such Series D Equity Shares. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such Series
D Equity Shares are registered, each share surrendered for conversion shall
be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
Holders of Series D Equity Shares at the close of business on a
dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date. However, Series D Equity
Shares surrendered for conversion during the period between the close of
business on any dividend payment record date and the opening of business on
the corresponding Dividend Payment Date (except shares converted after the
issuance of notice of redemption with respect to a Call Date during such
period, such Series D Equity Shares being entitled to such dividend on the
Dividend Payment Date) must be accompanied by payment of an amount equal to
the dividend payable on such shares on such Dividend Payment Date. A holder
of Series D Equity Shares on a dividend payment record date who (or whose
transferee) tenders any such shares for conversion into Common Equity Shares
on the corresponding Dividend Payment Date will receive the dividend payable
by the Corporation on such Series D Equity Shares on such date, and the
converting holder need not include payment of the amount of such dividend
upon surrender of Series D Equity Shares for conversion. Except as provided
above, the Corporation shall make no payment or allowance for unpaid
dividends,
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<PAGE>
whether or not in arrears, on converted shares or for dividends on the Common
Equity Shares issued upon such conversion.
As promptly as practicable after the surrender of certificates for
Series D Equity Shares as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full Common Equity Shares
issuable upon the conversion of such shares in accordance with provisions of
this Section 6, and any fractional interest in respect of a Common Equity
Share arising upon such conversion shall be settled as provided in paragraph
(c) of this Section 6.
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for Series D
Equity Shares shall have been surrendered and such notice shall have been
received by the Corporation as aforesaid (and if applicable, payment of an
amount equal to the dividend payable on such shares shall have been received
by the Corporation as described above), and the Person or Persons in whose
name or names any certificate or certificates for Common Equity Shares shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Price in effect at such time
on such date unless the share transfer books of the Corporation shall be
closed on that date, in which event such Person or Persons shall be deemed to
have become such holder or holders of record at the close of business on the
next succeeding day on which such share transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date on which
such shares shall have been surrendered and such notice received by the
Corporation.
(c) No fractional shares or scrip representing fractions of Common
Equity Shares shall be issued upon conversion of the Series D Equity Shares.
Instead of any fractional interest in a Common Equity Share that would
otherwise be deliverable upon the conversion of a Series D Equity Share, the
Corporation shall pay to the holder of such share an amount in cash based
upon the Current Market Price of the Common Shares on the Trading Day
immediately preceding the date of conversion. If more than one share shall
be surrendered for conversion at one time by the same holder, the number of
full Common Equity Shares issuable upon conversion thereof shall be computed
on the basis of the aggregate number of Series D Equity Shares so surrendered.
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<PAGE>
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its Common Equity Shares in Common
Equity Shares, (B) subdivide its outstanding Common Equity Shares
into a greater number of shares, (C) combine its outstanding Common
Equity Shares into a smaller number of shares or (D) issue any shares
of stock by reclassification of its Common Equity Shares, the
Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of shareholders
entitled to receive such dividend or distribution or at the opening
of business on the Business Day next following the day on which such
subdivision, combination or reclassification becomes effective, as
the case may be, shall be adjusted so that the holder of any Series D
Equity Shares thereafter surrendered for conversion shall be entitled
to receive the number of Common Equity Shares that such holder would
have owned or have been entitled to receive after the happening of
any of the events described above as if such Series D Equity Shares
had been converted immediately prior to the record date in the case
of a dividend or distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made
pursuant to this subparagraph (i) shall become effective immediately
after the opening of business on the Business Day next following the
record date (except as provided in paragraph (h) below) in the case
of a dividend or distribution and shall become effective immediately
after the opening of business on the Business Day next following the
effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Equity Shares entitling
them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase Common Equity Shares at
a price per share less than 95% (100% if a stand-by underwriter is
used and charges the Corporation a commission) of the Fair Market
Value per Common Share on the record date for the determination of
shareholders entitled to receive such rights, options or warrants,
then the Conversion Price in effect at the opening of business on the
Business Day next following such record date shall be adjusted to
equal the price determined by multiplying (A) the Conversion Price in
effect immediately prior to the opening of business on the Business
Day next following the date fixed for such determination by (B) a
fraction, the numerator of which shall be the sum of (x) the number of
Common Equity Shares outstanding on the close of business on the date
fixed for such determination and (y) the number of shares that the
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<PAGE>
aggregate proceeds to the Corporation from the exercise of such
rights, options or warrants for Common Equity Shares would purchase at
95% of such Fair Market Value (or 100% in the case of a stand-by
underwriting), and the denominator of which shall be the sum of (x)
the number of Common Equity Shares outstanding on the close of
business on the date fixed for such determination and (y) the number
of additional Common Equity Shares offered for subscription or
purchase pursuant to such rights, options or warrants. Such
adjustment shall become effective immediately after the opening of
business on the day next following such record date (except as
provided in paragraph (h) below). In determining whether any rights,
options or warrants entitle the holders of Common Equity Shares to
subscribe for or purchase Common Equity Shares at less than 95% of
such Fair Market Value (or 100% in the case of a stand-by
underwriting), there shall be taken into account any consideration
received by the Corporation upon issuance and upon exercise of such
rights, options or warrants, the value of such consideration, if other
than cash, to be determined by the Board of Directors whose
determination shall be conclusive. To the extent that Common Equity
Shares are not delivered pursuant to such rights, options or warrants,
upon the expiration or termination of such rights, options or
warrants, the Conversion Price shall be readjusted to the Conversion
Price which would then be in effect had the adjustments made upon the
issuance of such rights, options or warrants be made on the basis of
delivery of only the number of Common Equity Shares actually
delivered. In the event that such rights, options or warrants are not
so issued, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such date fixed for
the determination of stockholders entitled to receive such rights,
options or warrants had not been fixed.
(iii) If the Corporation shall distribute to all holders of its
Common Equity Shares any securities of the Corporation (other than
Common Equity Shares) or evidence of its indebtedness or assets
(excluding cumulative cash dividends or distributions paid with
respect to the Common Equity Shares after December 31, 1997) which are
not in excess of the following: the sum of (A) the Corporation's
cumulative undistributed Funds from Operations at December 31, 1997,
plus (B) the cumulative amount of Funds from Operations, as determined
by the Board of Directors, after December 31, 1997, minus (C) the
cumulative amount of dividends accrued or paid in respect of the
Series D Equity Shares or any other class or series of preferred stock
of the Corporation after the Issue Date) or rights, options or
warrants to subscribe for or purchase any of its securities (excluding
those rights, options and warrants issued to all holders of Common
Equity Shares entitling them for a period expiring within 45
18
<PAGE>
days after the record date referred to in subparagraph (ii) above to
subscribe for or purchase Common Equity Shares, which rights and
warrants are referred to in and treated under subparagraph (ii) above)
(any of the foregoing being hereinafter in this subparagraph (iii)
collectively called the "SECURITIES" and individually a "SECURITY"),
then in each such case the Conversion Price shall be adjusted so that
it shall equal the price determined by multiplying (x) the Conversion
Price in effect immediately prior to the close of business on the date
fixed for the determination of shareholders entitled to receive such
distribution by (y) a fraction, the numerator of which shall be the
Fair Market Value per Common Share on the record date mentioned below
less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of the portion of
the Securities or assets or evidences of indebtedness so distributed
or of such rights, options or warrants applicable to one Common Equity
Share, and the denominator of which shall be the Fair Market Value per
Common Share on the record date mentioned below. Such adjustment
shall become effective on the date of distribution retroactive to the
opening of business on the Business Day next following (except as
provided in paragraph (h) below) the record date for the determination
of shareholders entitled to receive such distribution. For the
purposes of this subparagraph (iii), the distribution of a Security,
which is distributed not only to the holders of the Common Equity
Shares on the date fixed for the determination of shareholders
entitled to such distribution of such Security, but also is
distributed with each Common Equity Share delivered to a Person
converting a share of Series D Equity Shares after such determination
date, shall not require an adjustment of the Conversion Price pursuant
to this subparagraph (iii); PROVIDED that on the date, if any, on
which a Person converting a Series D Equity Share would no longer be
entitled to receive such Security with a Common Equity Share (other
than as a result of the termination of all such Securities), a
distribution of such Securities shall be deemed to have occurred and
the Conversion Price shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the date fixed
for the determination of the shareholders entitled to receive such
distribution" and "the record date" within the meaning of the two
preceding sentences). If any dividend or distribution of the type
described in this paragraph (iii) is declared but not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price
which would then be in effect if such dividend or distribution had not
been declared.
Rights or warrants distributed by the Corporation to all holders
of Common Equity Shares entitling the holders thereof to subscribe for
or purchase shares of the Corporation's capital stock (either
initially or under certain
19
<PAGE>
circumstances), which rights or warrants, until the occurrence of a
specified event or events ("TRIGGER EVENT"): (i) are deemed to be
transferred with such shares of Common Equity Shares; (ii) are not
exercisable; and (iii) are also issued in respect of future issuances
of Common Equity Shares, shall be deemed not to have been distributed
for purposes of this subparagraph (iii) (and no adjustment to the
Conversion Price under this subparagraph (iii) will be required)
until the occurrence of the earliest Trigger Event. If such right or
warrant is subject to subsequent events, upon the occurrence of which
such right or warrant shall become exercisable to purchase different
securities, evidences of indebtedness or other assets or entitle the
holder to purchase a different number or amount of the foregoing or
to purchase any of the foregoing at a different purchase price, then
the occurrence of each such event shall be deemed to be the date of
issuance and record date with respect to a new right or warrant (and
a termination or expiration of the existing right or warrant without
exercise by the holder thereof to the extent not exercised). In
addition, in the event of any distribution (or deemed distribution)
of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto, that
resulted in an adjustment to the Conversion Price under this
subparagraph (iii), (1) in the case of any such rights or warrants
which shall all have been redeemed or repurchased without exercise by
any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were
a cash distribution (but not a distribution paid exclusively in
cash), equal to the per share redemption or repurchase price received
by a holder of Common Equity Shares with respect to such rights or
warrants (assuming such holder had retained such rights or warrants),
made to all holders of Common Equity Shares as of the date of such
redemption or repurchase, and (2) in the case of such rights or
warrants all of which shall have expired or been terminated without
exercise, the Conversion Price shall be readjusted as if such rights
and warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the
Corporation or any subsidiary or controlled Affiliate of the
Corporation for all or any portion of the Common Equity Shares shall
expire and such tender or exchange offer shall require the payment by
the Corporation or such subsidiary or controlled Affiliate of
consideration per Common Equity Share having a fair market value (as
determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the
Board of Directors), at the last time (the "EXPIRATION TIME") tenders
or exchanges may be made
20
<PAGE>
pursuant to such tender or exchange offer, that exceeds the Current
Market Price per Common Share on the Trading Day next succeeding the
Expiration Time, the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph, by a
fraction of which the numerator shall be the number of Common Equity
Shares outstanding (including any tendered or exchanged shares) at
the Expiration Time, multiplied by the Current Market Price per
Common Share on the Trading Day next succeeding the Expiration Time,
and the denominator shall be the sum of (A) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based upon the acceptance (up to any maximum specified
in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any maximum, being referred to
as the "PURCHASED SHARES") and (B) the product of the number of
Common Equity Shares outstanding (less any Purchased Shares) at the
Expiration Time and the Current Market Price per Common Share on the
Trading Day next succeeding the Expiration Time, such reduction to
become effective immediately prior to the opening of business on the
day following the Expiration Time. In the event the Corporation or
any subsidiary or controlled Affiliate is obligated to purchase
shares pursuant to any such tender offer, but the Corporation or such
subsidiary or controlled Affiliate is permanently prevented by
applicable law from effecting any such purchases, or all such
purchases are rescinded, the Conversion Price shall again be adjusted
to be the Conversion Price which would then be in effect if such
tender offer had not been made.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price; PROVIDED, HOWEVER, that any adjustments
that by reason of this subparagraph (v) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment until made; and PROVIDED, FURTHER, that any adjustment
shall be required and made in accordance with the provisions of this
Section 6 (other than this subparagraph (v)) not later than such time
as may be required in order to preserve the tax-free nature of a
distribution to the holders of Common Shares. Notwithstanding any
other provisions of this Section 6, the Corporation shall not be
required to make any adjustment of the Conversion Price for the
issuance of any Common Equity Shares pursuant to any plan providing
for the reinvestment of dividends or interest payable on securities of
the Corporation and the investment of additional optional amounts
21
<PAGE>
in Common Equity Shares under such plan. All calculations under this
Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-hundredth of a share (with .005 of a
share being rounded upward), as the case may be. Anything in this
paragraph (d) to the contrary notwithstanding, the Corporation shall
be entitled, to the extent permitted by law, to make such reductions
in the Conversion Price, in addition to those required by this
paragraph (d), as it in its discretion shall determine to be
advisable in order that any share dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or
warrants to purchase shares or securities, or distribution of other
assets (other than cash dividends) hereafter made by the Corporation
to its shareholders shall not be taxable. To the extent permitted by
applicable law, the Corporation from time to time may reduce the
Conversion Price by any amount for any period of time if the period
is at least 20 days, the reduction is irrevocable during the period
and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Corporation, which
determination shall be conclusive. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Corporation shall
mail to the holder of each Series D Equity Share at his or her last
address appearing on the share register a notice of reduction prior
to the date the reduced Conversion Price takes effect and such notice
shall state the reduced Conversion Price and the period during which
it will be in effect.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, self
tender offer for 40% or more of its Common Equity Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Equity Shares and excluding any transaction as to which subparagraph (d)(i) of
this Section 6 applies) (each of the foregoing being referred to herein as a
"TRANSACTION"), in each case as a result of which all or substantially all of
the Common Equity Shares are converted into the right to receive different
securities or other property (including cash or any combination thereof), each
Series D Equity Share which is not redeemed or converted into the right to
receive different securities or other property prior to such Transaction shall
thereafter be convertible, in lieu of Common Equity Shares into the kind and
amount of different securities and other property (including cash or any
combination thereof) receivable upon the consummation of such Transaction by a
holder of that number of Common Equity Shares into which one Series D Equity
Share was convertible immediately prior to such Transaction, assuming such
holder of Common Equity Shares (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or
22
<PAGE>
transfer was made, as the case may be ("CONSTITUENT PERSON"), or an Affiliate
of a Constituent Person and (ii) failed to exercise his rights of election,
if any, as to the kind or amount of shares, securities and other property
(including cash) receivable upon such Transaction (provided that if the kind
or amount of shares, securities and other property (including cash)
receivable upon such Transaction is not the same for each Common Share held
immediately prior to such Transaction by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall
not have been exercised ("NON-ELECTING SHARE"), then for the purpose of this
paragraph (e) the kind and amount of shares, securities and other property
(including cash) receivable upon such Transaction by each Non-Electing Share
shall be deemed to be the kind and amount so receivable per share by holders
of a plurality of the Non-Electing Shares). The Corporation shall not be a
party to any Transaction unless the terms of such Transaction are consistent
with the provisions of this paragraph (e), and it shall not consent or agree
to the occurrence of any Transaction until the Corporation has entered into
an agreement with the successor or purchasing entity, as the case may be, for
the benefit of the holders of the Series D Equity Shares that will contain
provisions enabling the holders of the Series D Equity Shares that remain
outstanding after such Transaction to convert into the consideration received
by holders of Common Equity Shares at the Conversion Price in effect
immediately prior to such Transaction. The provisions of this paragraph (e)
shall similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Equity Shares (other than cash dividends
or distributions paid with respect to the Common Equity Shares after
December 31, 1997 not in excess of the sum of the Corporation's
cumulative undistributed Funds from Operations at December 31, 1997,
plus the cumulative amount of Funds from Operations, as determined by
the Board of Directors, after December 31, 1997, minus the cumulative
amount of dividends accrued or paid in respect of the Series D Equity
Shares or any other class or series of preferred stock of the
Corporation after the Issue Date); or
(ii) the Corporation shall authorize the granting to all holders
of Common Equity Shares of rights, options or warrants to subscribe
for or purchase any shares of any class or any other rights, options
or warrants; or
(iii) there shall be any reclassification of the Common Equity
Shares (other than an event to which subparagraph (d)(i) of this
Section 6 applies) or any consolidation or merger to which the
Corporation is a party (other than a
23
<PAGE>
merger in which the Corporation is the surviving entity) and for
which approval of any shareholders of the Corporation is required, or
a statutory share exchange, or a self tender offer by the Corporation
for all or substantially all of its outstanding Common Shares or the
sale or transfer of all or substantially all of the assets of the
Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series D Equity Shares at their addresses
as shown on the records of the Corporation, as promptly as possible, but at
least 10 days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Equity
Shares of record to be entitled to such dividend, distribution or rights,
options or warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Equity
Shares of record shall be entitled to exchange their Common Equity Shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, statutory share exchange, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings described
in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment and shall
mail such notice of such adjustment of the Conversion Price to the holder of
each share of Series D Equity Shares at such holder's last address as shown on
the records of the Corporation.
(h) In any case in which paragraph (d) of this Section 6 provides
that an adjustment shall become effective on the day next following the record
date for an event, the Corporation may defer until the occurrence of such event
(A) issuing to the
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<PAGE>
holder of any share of Series D Equity Shares converted after such record
date and before the occurrence of such event the additional Common Equity
Shares issuable upon such conversion by reason of the adjustment required by
such event over and above the Common Equity Shares issuable upon such
conversion before giving effect to such adjustment and (B) paying to such
holder any amount of cash in lieu of any fraction pursuant to paragraph (c)
of this Section 6.
(i) There shall be no adjustment of the Conversion Price in case of
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Equity Shares, other than action described in this Section 6, that in the
opinion of the Board of Directors would materially and adversely affect the
conversion rights of the holders of the Series D Equity Shares, the
Conversion Price for the Series D Equity Shares may be adjusted, to the
extent permitted by law, in such manner, if any, and at such time, as the
Board of Directors, in its sole discretion, may determine to be equitable in
the circumstances.
(k) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Equity Shares, for the purpose of effecting
conversion of the Series D Equity Shares, the full number of Common Equity
Shares deliverable upon the conversion of all outstanding Series D Equity
Shares not theretofore converted. For purposes of this paragraph (k), the
number of Common Shares that shall be deliverable upon the conversion of all
outstanding Series D Preferred Shares shall be computed as if at the time of
computation all such outstanding shares were held by a single holder.
Any Common Equity Shares issued upon conversion of the Series D Equity
Shares shall be validly issued, fully paid and non-assessable. Before taking
any action that would cause an adjustment reducing the Conversion Price below
the then-par value of the Common Equity Shares deliverable upon conversion of
the Series D Equity Shares, the Corporation will take any action that, in the
opinion of its counsel, may be necessary in order that the Corporation may
validly and legally issue fully paid and (subject to any customary
qualification based upon the nature of a real estate investment trust)
nonassessable Common Equity Shares at such adjusted Conversion Price.
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The Corporation shall use its best efforts to list the Common Shares
required to be delivered upon conversion of the Series D Preferred Shares,
prior to such delivery, upon each national securities exchange, if any, upon
which the outstanding Common Shares are listed at the time of such delivery.
The Corporation shall use its best efforts to comply with all federal
and state securities laws and regulations thereunder in connection with the
issuance of any securities that the Corporation shall be obligated to deliver
upon conversion of the Series D Equity Shares. The certificates evidencing
such securities shall bear such legends restricting transfer thereof in the
absence of registration under applicable securities laws or an exemption
therefrom as the Corporation may in good faith deem appropriate.
(l) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of Common
Equity Shares or other securities or property on conversion of the Series D
Equity Shares pursuant hereto; PROVIDED, HOWEVER, that the Corporation shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of Common Shares or other securities or
property in a name other than that of the holder of the Series D Equity
Shares to be converted, and no such issue or delivery shall be made unless
and until the Person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
Section 7. CHANGE OF CONTROL. (a) If a Change of Control (as defined
below) occurs (a "CHANGE OF CONTROL REPURCHASE EVENT"), the holders of Series
D Equity Shares shall have the right to require the Corporation, to the
extent the Corporation shall have funds legally available therefor, to redeem
any or all of the Series D Equity Shares held by such holder at a repurchase
price payable in cash (the "CHANGE OF CONTROL REPURCHASE PAYMENT") in an
amount equal to 105% of the Liquidation Preference thereof, plus accrued and
unpaid dividends whether or not declared, if any, to the date of repurchase
or the date payment is made available (the "CHANGE OF CONTROL DATE"),
pursuant to the offer described in SUBSECTION (B) below (the "CHANGE OF
CONTROL REPURCHASE OFFER").
(b) Within 15 days following the Corporation becoming aware that a
Change of Control Repurchase Event has occurred, the Corporation shall mail
by first class mail or recognized overnight courier a notice to the each
holder of Series D Equity Shares stating (A) that a Change of Control
Repurchase Event has occurred and that such
26
<PAGE>
holder has the right to require the Corporation to repurchase any or all of
the Series D Equity Shares then held by such holder, (B) the date of
repurchase (which shall be a Business Day, no earlier than 30 days and no
later than 60 days from the date such notice is mailed, or such later date as
may be necessary to comply with the requirements of the Exchange Act), (C)
the repurchase price and (D) the instructions determined by the Corporation,
consistent with this subsection, that such investor must follow in order to
have the Series D Equity Shares repurchased.
(c) On the Change of Control Repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series D Equity Shares or portions
thereof tendered by such holder pursuant to the Change of Control Repurchase
Offer and promptly by wire transfer of immediately available funds to such
holder, as directed by such holder, send an amount equal to the Change of
Control Repurchase Payment in respect of all Series D Equity Shares or
portions thereof so tendered.
(d) Notwithstanding anything else herein, to the extent they are
applicable to any Change of Control Repurchase Offer, the Corporation will
comply with any federal and state securities laws, rules and regulations
and all time periods and requirements shall be adjusted accordingly.
(e) For purposes hereof, "CHANGE OF CONTROL" means the occurrence of
any of the following: (i) the first acquisition, directly or indirectly, by any
individual or entity or group (as such term is used in Section 13(d)(3) of the
Exchange Act) of beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act, except that such individual or entity shall be deemed to have
beneficial ownership of all shares that any such individual or entity has the
right to acquire, whether such right is exercisable immediately or only after
passage of time) of more than 25% of the Corporation's outstanding stock with
voting power, under ordinary circumstances, to elect Directors of the
Corporation, (ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Corporation (together with any new Directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Corporation was approved by a vote of 66 2/3% of the Directors of the
Corporation then still in office who were either Directors at the beginning of
such period, or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office of the Corporation; and (iii) (A) the Corporation
consolidating with or merging into another entity or conveying, transferring or
leasing all or substantially all of its assets (including, but not limited to,
real property investments) to any individual or entity, or (B) any entity
consolidating with or merging into the Corporation, which in either event (A) or
(B) is pursuant to a
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transaction in which the outstanding voting stock of the Corporation is
reclassified or changed into or exchanged for cash, securities or other
property; PROVIDED, HOWEVER, that the events described in clauses (i)(ii) and
(iii) shall not be deemed to be a Change of Control (a) in the case of an
event described in clause (iii), if the sole purpose of such event is that
the Corporation is seeking to change its domicile or to convert from a
corporation to a trust or vice versa; (b) in the case of an event described
in clause (iii), if the holders of the exchanged securities of the
Corporation immediately after such transaction beneficially own at least a
majority of the securities of the merged or consolidated entity normally
entitled to vote in elections of Directors of the Corporation; (c) if any of
WHL or its wholly-owned subsidiaries remain as manager of the Corporation's
properties and remains as adviser of the Corporation, in each case, in a
manner substantially similar to that on date hereof; or (d) if the Change of
Control results solely from the purchase or other acquisition of equity
securities by WHL or its wholly-owned subsidiaries, Westfield America Trust,
the Lowy Family or the Investor or the sale of equity securities by WHL or
any of its wholly-owned subsidiaries or Westfield America Trust.
Section 8. REDEMPTION AT THE OPTION OF THE HOLDER. (a) At any time
after August 12, 2008,(2) the holders of Series D Equity Shares thereof
shall have the right at any time that the Corporation's Common Shares has a
Current Market Price at or below and the Conversion Price per share, to
require the Corporation, to the extent the Corporation shall have funds
legally available therefor, to redeem any or all of the Series D Equity
Shares held by such holder at a repurchase price payable, at the option of
the Corporation, in either (i) cash, or (ii) such number of Common Equity
Shares as shall have a Current Market Price in the aggregate on the day prior
to the day such holder gives notice pursuant to Section 8(b) of its intention
to redeem, equal to in either case, 100% of the Liquidation Preference
thereof plus accrued and unpaid dividends whether or not declared, if any, to
the date of repurchase or the date payment is made available (in the
aggregate, the "REDEMPTION PAYMENT").
(b) Notwithstanding paragraph (a) of this Section 8, in the event that
WHL and its subsidiaries and the trustee of Westfield America Trust on behalf
of Westfield America Trust vote to approve the conversion of the Series D
Equity Shares into Common Equity Shares at a meeting of shareholders at which
such proposal is raised, but the shareholders of the Corporation as a whole
reject the foregoing proposal, then from and after the later of such
rejection date and the second anniversary of the Issue Date, the Series D
Equity Stock shall be redeemable at the option of the holder, to the
- -----------------------
(2) This date is the tenth anniversary of the Closing hereunder.
28
<PAGE>
extent that the Corporation shall have funds legally available therefor, at a
redemption price payable in cash equal to the product of (a) the Series D
Common Equivalent Factor times (b) the Current Market Price on the date of
the notice provided pursuant to paragraph (c) below, plus all accumulated,
accrued and unpaid dividends whether or not declared, if any, to the date of
repurchase or the date payment is made available.
(c) For purposes of this Section 8, redemption at the option of the
holder shall be deemed to occur upon receipt by the Corporation of written
notice that the holder of Series D Equity Shares wishes to tender shares to
be redeemed. The holders of such shares to be redeemed shall then have 30
days from the date of such notice to deliver such shares to the Transfer
Agent. Upon the surrender of the certificate or certificates of Series D
Equity Shares to be redeemed, duly endorsed or assigned to the Corporation or
in blank, at the office of the Transfer Agent, the Corporation shall
promptly, either (i) by wire transfer of immediately available funds to such
holder, as directed by such holder, send an amount equal to the Redemption
Payment in respect of all Series D Equity Shares or portions thereof so
tendered or (ii) issue and deliver to such holder, or on his or her written
order, a certificate or certificates for the number of full Common Equity
Shares issuable in respect of all Series D Equity Shares or portions thereof
so tendered.
Section 9. SHARES TO BE RETIRED. All Series D Equity Shares which
shall have been issued and reacquired in any manner by the Corporation shall
be restored to the status of authorized but unissued preferred stock, without
discretion as to class or series, and subject to applicable limitations set
forth in the Articles may thereafter be reissued as shares of any series of
preferred stock.
Section 10. RANKING. Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Series D Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to
the holders of Series D Preferred Shares, which shall expressly include the
Corporation's non-voting senior preferred stock, par value $1.00 per share;
(b) on a parity with the Series D Preferred Shares, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution
or winding up, whether or not the dividend rates, dividend payment dates or
redemption or
29
<PAGE>
liquidation prices per share thereof shall be different from those of the
Series D Preferred Shares, if the holders of such class or series and the
Series D Preferred Shares shall be entitled to the receipt of dividends
and of amounts distributable upon liquidation, dissolution or winding up
in proportion to their respective amounts of accrued and unpaid dividends
per share or liquidation preferences, without preference or priority one
over the other ("PARITY SHARES"), which shall expressly include the
Corporation's Series A Cumulative Redeemable Preferred Shares, Series B
Cumulative Redeemable Preferred Shares and Series C Cumulative Convertible
Preferred Stock;
(c) junior to the Series D Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series D Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, if such class or series shall be Fully Junior
Shares.
Section 11. VOTING. So long as any Series D Equity Shares are
outstanding, in addition to any other vote or consent of shareholders
required by law or by the Articles, the affirmative vote of the holders of a
majority of the Series D Equity Shares, voting together as a class, given in
person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or
validating:
(i) Any amendment, alteration or repeal of any of the provisions of
the Articles of Incorporation or this Certificate of Designation that
materially and adversely affects the voting powers, rights or preferences
of the holders of the Series D Equity Shares; or
(ii) Any merger or consolidation of the Corporation and another
entity in which the Corporation is not the surviving corporation and each
holder of Series D Equity Shares does not receive shares of the surviving
corporation with substantially similar rights, preferences and powers in
the surviving corporation as the Series D Equity Shares have with respect
to the Corporation (except for changes that do not materially and adversely
affect the holders of the Series D Equity Stock).
PROVIDED, HOWEVER, that no such vote of the holders of Series D Equity
Shares shall be required if, at or prior to the time when such amendment,
alteration or
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repeal is to take effect, or when the issuance of any such prior shares or
convertible security is to be made, as the case may be, provision is made
for the redemption of all Series D Equity Shares at the time outstanding
to the extent such redemption is authorized by Section 5 of this
Certificate of Designation.
(iii) For purposes of the foregoing provisions of this Section 13,
each share of Series D Equity Shares shall have one (1) vote per share,
except that when any other series of Equity Shares shall have the right to
vote with the Series D Equity Shares as a single class on any matter, then
the Series D Equity Shares and such other series shall have with respect to
such matters one (1) vote per $180.00 (or less pursuant to Section 4(a)) of
stated Liquidation Preference. Except as otherwise required by applicable
law or as set forth herein, the Series D Equity Shares shall not have any
relative, participating, optional or other special voting rights and powers
other than as set forth herein, and the consent of the holders thereof
shall not be required for the taking of any corporate action.
Section 12. RECORD HOLDERS. The Corporation and the Transfer Agent
may deem and treat the record holder of any Series D Preferred Shares as the
true and lawful owner thereof for all purposes, and neither the Corporation
nor the Transfer Agent shall be affected by any notice to the contrary.
Section 13. TITLE. This resolution shall be known and may be referred
to as "A Resolution of the Board of Directors of Westfield America, Inc.
Designating Series D Preferred Shares and Fixing Preferences and Rights
Thereof."
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized and directed to execute and acknowledge a certificate
setting forth these resolutions and to cause such certificate to be filed and
recorded, all in accordance with the requirements of Section 351.046 of the
General and Business Corporation Law of the State of Missouri, as amended.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President this 10 day of
August, 1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
Name: Peter S. Lowy
Title: Co-President
32
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF CA )
) SS:
COUNTY OF LA )
I, Annie M. Gary, a notary public, do hereby certify that on this
6 day of August, 1998, personally appeared before me Peter Lowy, and
being first duly sworn by me, declared that he is the Co-President of
Westfield America, Inc., that he signed the foregoing document as
Co-President of the corporation, and that the statements therein contained
are true.
[SEAL] /s/ Annie M. Gary
---------------------------
Notary Public
My Commission Expires:
<PAGE>
Exhibit 10.1
-----------------------------------------
ASSET PURCHASE AGREEMENT
-----------------------------------------
DATED AS OF APRIL 6, 1998
BETWEEN
TRIZECHAHN CENTERS INC.
AND
THE ROUSE COMPANY
AND
WESTFIELD AMERICA, INC.
<PAGE>
DISTRIBUTED APRIL 9, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. . . . . . . . . . . . . . . . . . . 2
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. ASSETS TO BE SOLD; CLOSINGS. . . . . . . . . . . . . . . . 15
SECTION 2.02. ASSUMPTION OF LIABILITIES. . . . . . . . . . . . . . . . . 18
SECTION 2.03. CLOSING DELIVERIES BY THCI . . . . . . . . . . . . . . . . 19
SECTION 2.04. CLOSING DELIVERIES BY THE ACQUIRORS. . . . . . . . . . . . 20
SECTION 2.05. DELIVERY OF POSSESSION . . . . . . . . . . . . . . . . . . 21
SECTION 2.06. MANAGEMENT COMPANY ACTS AND OMISSIONS. . . . . . . . . . . 21
SECTION 2.07. APPORTIONMENTS . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THCI
SECTION 3.01. INCORPORATION AND AUTHORITY; OWNERSHIP OF MANAGEMENT
COMPANY SHARES AND PARTNERSHIP INTERESTS . . . . . . . . . 26
SECTION 3.02. NO CONFLICT. . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.03. CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . 30
SECTION 3.04. PERSONAL PROPERTY. . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.05. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.06. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . 31
SECTION 3.07. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.08. REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.09. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS . . . . . . . . . 33
SECTION 3.10. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.11. FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . 34
SECTION 3.12. EMPLOYEE BENEFIT MATTERS . . . . . . . . . . . . . . . . . 34
i
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SECTION 3.13. LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.14. MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.15. THE MANAGEMENT COMPANY . . . . . . . . . . . . . . . . . . 37
SECTION 3.16. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.17. RENT ROLLS . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.18. OTHER ASSETS.. . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.19. NO MATERIAL DEFECTS. . . . . . . . . . . . . . . . . . . . 38
SECTION 3.20. PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRORS
SECTION 4.01. INCORPORATION AND AUTHORITY. . . . . . . . . . . . . . . . 38
SECTION 4.02. NO CONFLICT. . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.03. CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . 39
SECTION 4.04. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.05. FINANCING. . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.06. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.07. INVESTMENT INTENT. . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. THCI CONDUCT OF BUSINESS PRIOR TO THE APPLICABLE CLOSING . 40
SECTION 5.02. INVESTIGATION. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.03. ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . 44
SECTION 5.04. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.05. REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS. . . . . . . 46
SECTION 5.06. NOTIFICATION TO GOVERNMENTAL AUTHORITIES . . . . . . . . . 47
SECTION 5.07. BULK TRANSFER LAWS . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.08. USE OF NAME OR OTHER INTELLECTUAL PROPERTY . . . . . . . . 47
SECTION 5.09. PARTNERSHIP INTERESTS. . . . . . . . . . . . . . . . . . . 47
SECTION 5.10. SPECIAL PROVISIONS RELATING TO RIGHTS OF FIRST REFUSAL;
BUY/SELLS. . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.11. TENANCY-IN-COMMON INTERESTS. . . . . . . . . . . . . . . . 49
SECTION 5.12. LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.13. FURTHER ACTION . . . . . . . . . . . . . . . . . . . . . . 51
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SECTION 5.14. ENVIRONMENTAL REPORTS. . . . . . . . . . . . . . . . . . . 51
SECTION 5.15. RECORD OWNER APPORTIONMENTS. . . . . . . . . . . . . . . . 52
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.02. EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.03. EMPLOYEE PLANS . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.04. OTHER EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . 54
SECTION 6.05. WARN ACT . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.06. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.07. NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . 55
SECTION 6.08. REIMBURSEMENT FOR CERTAIN PAYMENTS . . . . . . . . . . . . 55
ARTICLE VII
TAX MATTERS
SECTION 7.01. CONVEYANCE TAXES; COSTS. . . . . . . . . . . . . . . . . . 55
SECTION 7.02. TREATMENT OF INDEMNITY PAYMENTS. . . . . . . . . . . . . . 55
SECTION 7.03. ALLOCATION OF CONSIDERATION. . . . . . . . . . . . . . . . 56
SECTION 7.04. EMPLOYEE WITHHOLDING . . . . . . . . . . . . . . . . . . . 56
SECTION 7.05. LIKE-KIND EXCHANGE . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.06. TAX INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.07. CONTESTS . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.08 SECTION 754 ELECTION . . . . . . . . . . . . . . . . . . . 58
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF THCI. . . . . . . . . . . . . 58
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF THE ACQUIRORS . . . . . . . . 60
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . 64
iii
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SECTION 9.02. INDEMNIFICATION BY THCI. . . . . . . . . . . . . . . . . . 65
SECTION 9.03. INDEMNIFICATION BY THE ACQUIRORS . . . . . . . . . . . . . 67
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.02. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . 70
SECTION 10.03. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XI
CASUALTY AND CONDEMNATION
SECTION 11.01. CASUALTY . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.02. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.03. PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . 73
SECTION 12.04. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.05. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.06. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.07. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.08. NO THIRD-PARTY BENEFICIARIES . . . . . . . . . . . . . . . 75
SECTION 12.09. AMENDMENT; WAIVER. . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.10. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.11. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.12. SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . 75
SECTION 12.13. NO RECORDATION . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.14. JOINT AND SEVERAL OBLIGATIONS. . . . . . . . . . . . . . . 75
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EXHIBITS
A THCI Subsidiaries and THCI Partnerships
B Special Property Provisions
1.01(a) Form of Assignment and Assumption Agreement
1.01(b) Form of Assignment of Ground Lease
1.01(c) Form of Bill of Sale
1.01(d) Excluded Computer Software
1.01(e) Form of Lease Assignment
1.01(f) Transferred Computer Software
1.01(g) Form of UTC Right of First Refusal Agreement
2.01(d)(i) Form of Initial Closing Date Notice
2.01(d)(ii) Form of Subsequent Closing Date Notice
5.01(a)(ii) Assets to be Transferred from the Management Company
5.01(a)(iii) Assets to be Transferred to the Management Company
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ASSET PURCHASE AGREEMENT, dated as of April 6, 1998, between
TrizecHahn Centers Inc., a California corporation ("THCI"), and The Rouse
Company, a Maryland corporation ("ROUSE"), and Westfield America, Inc., a
Missouri corporation ("WEA" and, together with Rouse, the "ACQUIRORS").
W I T N E S S E T H:
WHEREAS, THCI, the subsidiaries of THCI listed in Exhibit A
(collectively, the "THCI SUBSIDIARIES") and the partnerships listed on
Exhibit A (the "THCI PARTNERSHIPS") own or lease, or own Partnership
Interests (as defined in Article I) in the partnerships listed in the column
entitled "Partnership" in Section 1.01(A) of the THCI Disclosure Schedule
(collectively, the "PARTNERSHIPS") that own or lease, or own partnership
interests in partnerships (the "SECOND TIER PARTNERSHIPS") listed in the
column entitled "Second Tier Partnership" in Section 1.01(A) of the THCI
Disclosure Schedule that own or lease, the shopping centers listed in the
column entitled "Property" in Section 1.01(A) of the THCI Disclosure Schedule
(the "PROPERTIES");
WHEREAS, TrizecHahn Centers Management Inc., a California corporation
and a direct, wholly owned subsidiary of THCI (the "MANAGEMENT COMPANY"),
performs management services for certain Properties;
WHEREAS, THCI and the THCI Subsidiaries desire to transfer to the
Acquirors, and the Acquirors desire to acquire from THCI, the Properties and
certain related assets or the Partnership Interests and, in connection
therewith, the Acquirors are willing to assume certain liabilities of THCI
and the THCI Subsidiaries relating thereto, all upon the terms and subject to
the conditions set forth herein;
WHEREAS, THCI desires that the transfers described above be effected
in transactions that will qualify, to the extent permissible, as "like-kind
exchanges" under Section 1031 of the Internal Revenue Code of 1986, as
amended (the "CODE"), and applicable Treasury Regulations, and the Acquirors
are willing to cooperate in structuring such transfers to so qualify; and
WHEREAS, THCI desires to transfer to the Acquirors, and the Acquirors
desire to acquire from THCI, all of the outstanding capital stock of the
Management Company;
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, THCI and the Acquirors hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ACQUIRORS" has the meaning specified in the preamble to this
Agreement.
"ACQUIRORS INDEMNIFIED PARTY" has the meaning specified in Section
9.02(a).
"AD VALOREM TAXES" has the meaning specified in Section 2.07(a).
"ADJUSTED ALLOCATED PURCHASE PRICE" means:
(a) for any Property, the amount by which (i) the sum of (A) the
Allocated Purchase Price for such Property, plus (B) any prepayment
premiums, breakage costs or similar payments required as a result of a
Qualified Prepayment of Existing Debt associated with such Property prior
to the Applicable Closing Date for such Property, plus (C) the Capital
Costs paid on or prior to the Applicable Closing with respect to such
Property under leases and construction contracts that are executed and
delivered after the date of this Agreement and renewals and extensions,
exercised or executed after the date of this Agreement, of leases executed
on or prior to the date of this Agreement (or the applicable Co-Tenant's
Share thereof), in each case in accordance with the terms of this
Agreement, plus (D) in the case of any Expansion Property, the Expansion
Costs incurred after December 31, 1997 and on or prior to the Applicable
Closing Date for such Property, exceeds (ii) the Assumed Debt Amount for
such Property; and
(b) for any Partnership Interest, the sum of (i) the Partnership
Interest Amount for such Partnership Interest plus (ii) any prepayment
premiums, breakage costs or similar payments required to be made by THCI or
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the related Partner (or, if made by the applicable Partnership or Second
Tier Partnership, the applicable Partner's share thereof) as a result of a
Qualified Prepayment of Existing Debt associated with the associated
Property, plus (iii) the Capital Costs paid on or prior to the Applicable
Closing by THCI or the applicable Partner (or, if by the Partnership or
Second Tier Partnership, the Partner's share thereof), with respect to such
Property under leases and construction contracts that are executed and
delivered after the date of this Agreement and renewals and extensions,
exercised or executed after the date of this Agreement, of leases executed
on or prior to the date of this Agreement, in each case in accordance with
the terms of this Agreement, plus (iv) in the case of Partnership Interests
for any Expansion Property, the applicable Partner's share of Expansion
Costs incurred after December 31, 1997 and on or prior to the Applicable
Closing Date for such Partnership Interest.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
"AGREEMENT" means this Asset Purchase Agreement, dated as of April 6,
1998, between THCI and the Acquirors, including, without limitation, the
Schedules and Exhibits hereto, as the same may be amended pursuant to the terms
hereof.
"ALLOCATED PURCHASE PRICE" means (a) for each Property and each
Partnership Interest to be transferred pursuant to this Agreement, the amount
set forth as the Allocated Purchase Price in Section 1.01(A) of the THCI
Disclosure Schedule and (b) for the Management Company Shares, US$20,000.
"ANCILLARY AGREEMENTS" means the Bills of Sale, the Deeds, the
Assignment and Assumption Agreements, the Lease Assignments and the Assignments
of Ground Lease.
"APPLICABLE CLOSING" means, with respect to any purchase contemplated
by this Agreement, the Closing at which such purchase occurs.
"APPLICABLE CLOSING DATE" means, with respect to any purchase
contemplated by this Agreement, the Closing Date on which such purchase occurs.
"ARTICLE VI LIABILITIES" means any and all Liabilities to be assumed
by the Acquirors or retained by THCI or its Affiliates pursuant to Article VI.
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"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the assignment and
assumption agreement to be executed on each Applicable Closing Date,
substantially in the form of Exhibit 1.01(a).
"ASSIGNMENT OF GROUND LEASE" means the assignment and assumption
agreement to be executed on each Applicable Closing Date, substantially in the
form of Exhibit 1.01(b).
"ASSUMED DEBT AMOUNT" means, with respect to any Property, the amount
of indebtedness for borrowed money assumed by the Acquirors in accordance with
this Agreement, whether or not secured by such Property.
"ASSUMED PROPERTY LIABILITIES" means, with respect to any Property or
Partnership Interest, (a) all indebtedness of THCI, the THCI Subsidiaries and
the THCI Partnerships for borrowed money, whether or not secured by a Property,
outstanding on the Applicable Closing and (b) all other Liabilities of THCI and
each THCI Subsidiary or THCI Partnership relating to or arising out of such
Property or Partnership Interest, accruing or arising on or after the Applicable
Closing, except for Capital Costs incurred or to be incurred (i) under leases
and construction contracts relating to such Property that are executed and
delivered on or prior to the date of this Agreement (other than in connection
with renewals or extensions, exercised or executed after the date of this
Agreement, of leases executed on or prior to the date of this Agreement or in
connection with improvements or replacements to such Property made after
completion of the applicable tenant's initial fit-out work unless the same are
required to be performed prior to the Applicable Closing Date) or (ii) in
connection with the improvements and other items described in Section 1.01 of
the THCI Disclosure Schedule, which THCI shall continue to be obligated to pay
(or, to the extent paid by the Acquirors, shall be obligated to reimburse the
Acquirors).
"BILL OF SALE" means the bill of sale and assignment to be executed on
each Closing Date, substantially in the form of Exhibit 1.01(c).
"BRIDGEWATER PARTNERSHIP" means Bridgewater Commons Associates.
"BRIDGEWATER PARTNERSHIP INTERESTS" has the meaning specified in
Section 2.01(b)(ii).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized to be closed in the City of New
York.
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"CAPITAL COSTS" means all costs and expenses paid by THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership with
respect to a Property for improvements or replacements, tenant allowances,
leasing commissions, takeover obligations and other leasing costs, and all other
costs that are capital in nature, but excluding Expansion Costs.
"CLOSING" means the Initial Closing or a Subsequent Closing, as
applicable.
"CLOSING DATE" means the date of the Initial Closing or a Subsequent
Closing, as applicable.
"CO-TENANT" means a THCI Subsidiary, THCI Partnership or Partnership
that holds a TC Interest.
"CODE" has the meaning specified in the recitals to this Agreement.
"CONFIDENTIALITY AGREEMENTS" has the meaning specified in Section
5.04.
"CONTEST" has the meaning specified in Section 7.07(b).
"CONTRACTS" means contracts, agreements, leases, subleases, purchase
or sale orders, notes, bonds, mortgages, indentures, licenses, permits,
franchises, instruments, undertakings, commitments and other binding
arrangements.
"CURRENT REPORTING PERIOD" has the meaning specified in
Section 2.07(a)(v).
"DEED" means a quitclaim deed or its equivalent (or, if required to
obtain title insurance, a limited warranty deed) to be executed with respect to
each Owned Real Property on the Applicable Closing Date, in the customary form
for the jurisdiction in which the applicable Property is located.
"DPA" means DPA-H, Inc., the general partner of Plaza.
"EMPLOYEE PLANS" has the meaning specified in Section 3.12(a).
"EMPLOYEE-RELATED LIABILITIES" has the meaning specified in Section
6.01(a).
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"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge or
encumbrance.
"ENVIRONMENTAL LAW" means any Law relating to pollution or protection
of the environment, health, safety or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EWH" means EWH 1979 Development Company, L.P., the general partner of
Midway Associates.
"EXCLUDED PROPERTY ASSETS" means, with respect to any Property:
(a) all cash, marketable securities and bank accounts, except
security deposits of tenants of such Property;
(b) all THCI Names and Marks;
(c) all insurance policies relating to the Properties or the Property
Assets and all rights of THCI or a THCI Subsidiary of every nature and
description under or arising out of such insurance policies, other than the
right to the proceeds thereunder attributable to Assumed Property
Liabilities covered by such policies or to the extent assigned to the
Acquirors pursuant to Article XI;
(d) subject to Section 2.07, all claims for refunds of Taxes paid by
THCI or any Affiliate of THCI attributable to such Property relating to any
period, or any portion of any period, ending on or prior to the Applicable
Closing Date;
(e) all claims for Tenant Delinquent Rents that are delinquent as of
the Applicable Closing Date and are payable under leases that terminated on
or prior to such Applicable Closing Date;
(f) the computer software, including, without limitation, source
code, operating systems and specifications, data, data bases, files,
documentation and other materials related thereto set forth in Exhibit
1.01(d);
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(g) all rights of THCI, the THCI Subsidiaries and the THCI
Partnerships under this Agreement and the Ancillary Agreements; and
(h) all other assets of THCI not identified in this Agreement as a
Property Asset with respect to such Property that is not necessary for the
operation of such Property.
"EXCLUSION NOTICE" has the meaning specified in Section 2.01(e).
"EXISTING DEBT" has the meaning specified in Section 3.14(a)(ii).
"EXPANSION COSTS" means, with respect to the Expansion Properties, all
costs and expenses, whether or not capitalized, paid by THCI or any THCI
Subsidiary or THCI Partnership in connection with the proposed renovations and
expansions of such Properties previously described to the Acquirors, including,
without limitation, cost of construction, grading, obtaining permits and
approvals, feasibility and parking studies, marketing and environmental analyses
and development fees (but, as to each Expansion Property, only to the extent of
an amount equal to the product of the applicable development fee times a
fraction, the numerator of which is the budgeted Expansion Costs, exclusive of
development fees, incurred after December 31, 1997 and on or prior to the
Applicable Closing Date and the denominator of which is all of the budgeted
Expansion Costs, exclusive of development fees), but excluding the purchase
price of any land or ground leasehold interest forming a part of such
Properties.
"EXPANSION PROPERTIES" means the Bridgewater Commons, Fashion Place,
Valley Fair and University Towne Centre Properties.
"FASHION OUTLET" means the Property located in Nevada known as Fashion
Outlet of Las Vegas, which is under construction as of the date hereof.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body.
"GROUND LEASES" has the meaning specified in Section 3.08(a).
"HAZARDOUS MATERIALS" means (a) petroleum and petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials and polychlorinated biphenyls and (b) any other chemicals, materials
or substances that are regulated as to disposal, storage, use or quantity or
identified as
7
<PAGE>
toxic or hazardous or as a pollutant, contaminant or waste under any applicable
Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INITIAL CLOSING" has the meaning specified in Section 2.01(b).
"INITIAL CLOSING DATE" has the meaning specified in Section 2.01(b).
"INITIAL CLOSING DATE NOTICE" has the meaning specified in Section
2.01(d).
"INITIAL PROPERTIES" means the Properties described in Section
2.01(b)(i) of the THCI Disclosure Statement.
"IRS" means the U.S. Internal Revenue Service.
"KNOWLEDGE OF THCI" or "THCI'S KNOWLEDGE" means the actual knowledge,
after inquiry of the managers of the Properties, of the President of the
Management Company, the Chief Financial Officer of THCI, the General Counsel of
THCI and the Senior Vice President of THCI in charge of asset management.
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, judgment or decree, and any judicial
or administrative interpretation thereof, and any other requirement or rule of
law.
"LEASE ASSIGNMENT" means the assignment and assumption agreement, to
be executed with respect to such Leased Real Property on the Applicable Closing
Date, substantially in the form of Exhibit 1.01(e).
"LEASED REAL PROPERTY" means each parcel of real property ground
leased, as ground lessee, by THCI, a THCI Subsidiary, a THCI Partnership, a
Partnership or a Second Tier Partnership, included in the Properties; PROVIDED
that, upon the conversion of ownership of the ground leasehold interest in the
North County Fair Property into a Tenancy in accordance with Section 5.01(e),
Leased Real Property with respect to the North County Fair Property means the TC
Interest of the Co-Tenant in the ground leasehold interest in the North County
Fair Property.
8
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"LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law or any Contract.
"LOSSES" of a Person means any and all losses, liabilities, damages,
claims, awards, judgments, costs and expenses (including, without limitation,
reasonable attorneys' fees) actually suffered or incurred by such Person.
"MANAGEMENT COMPANY" has the meaning specified in the recitals to this
Agreement.
"MANAGEMENT COMPANY SHARES" has the meaning specified in Section
3.01(b).
"MATERIAL ADVERSE EFFECT" means any change in, or effect on, the
Properties, taken as a whole, that is (individually or in the aggregate with any
other changes therein or effects thereon that would be specifically addressed by
a representation or warranty contained in this Agreement but for a "Material
Adverse Effect" exception or qualification thereto), materially adverse to the
Properties, taken as a whole, or to the results of operations of the Properties,
taken as a whole, other than any such changes or effects resulting from
(a) changes in general (national, regional or local) economic, regulatory or
political conditions or changes that affect owners or managers of shopping
centers in general, (b) the termination or expiration of any service contract,
management agreement or space or anchor tenant lease, (c) any defaults by any
tenants (including the bankruptcy of any tenants) under a lease or any other
termination of any lease on or after the date hereof, (d) any notice of
violation from any Governmental Authority having jurisdiction over any Property
received on or after the date hereof with respect to any condition existing on
the date hereof or (e) this Agreement or the transactions contemplated hereby or
the announcement thereof other than, in the case of clauses (b) and (c), a
termination (i) resulting from a default by THCI, a THCI Subsidiary, a THCI
Partnership, a Partnership or a Second Tier Partnership or (ii) of a space lease
resulting from a default by an anchor tenant under an anchor tenant lease;
PROVIDED, HOWEVER, that if either Acquiror determines that any event or
circumstance causes a Material Adverse Effect, such Acquiror shall notify THCI
of such matter and THCI shall have the right to take such actions as may be
necessary to cure and, upon such cure, such event or circumstance shall no
longer to be deemed to have caused a Material Adverse Effect.
"MATERIAL CONTRACT" has the meaning specified in Section 3.14(a).
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"MAXIMUM AMOUNT" has the meaning specified in Section 9.02(b).
"MULTIEMPLOYER PLAN" has the meaning specified in Section 3.12(b).
"MULTIPLE EMPLOYER PLAN" has the meaning specified in Section 3.12(b).
"NEW ENTITY" has the meaning specified in Section 5.01(d).
"NOI" means, for any Property for any period, (a) all gross rental
income of such Property during such period (including, without limitation, fixed
rents, percentage rents and common area maintenance and tax reimbursements) and
all other income of such Property from all other sources during such period,
including, without limitation, parking and concessions, minus (b) all operating
expenses for such Property during such period, including, without limitation,
ground lease rent, taxes, insurance, maintenance costs, electricity and
management fees and cost reimbursements, but excluding debt service on any
indebtedness, costs of obtaining leases (including, without limitation,
brokerage commissions and costs of tenant improvement work), property
depreciation and amortization or any other capital costs, all as determined in
accordance with Canadian generally accepted accounting principles.
"OPTION EXPIRATION DATE" has the meaning specified in Section
2.01(b)(ii).
"OTHER PARTNER" has the meaning specified in Section 5.10.
"OWNED REAL PROPERTY" means each parcel of real property owned in fee
by THCI, a THCI Subsidiary, a THCI Partnership, a Partnership or a Second Tier
Partnership included in the Properties, together with all buildings and other
structures, facilities and improvements located thereon, all fixtures, systems
and equipment attached or appurtenant thereto and all easements, licenses,
rights and appurtenances relating to any of the foregoing; PROVIDED that, upon
the conversion of ownership of the Fashion Show Property into a Tenancy in
accordance with Section 5.01(e), Owned Real Property with respect to the Fashion
Show Property means the TC Interest of the Co-Tenant in the Fashion Show
Property.
"PARTNER" means THCI, a THCI Subsidiary or a THCI Partnership in its
capacity as a partner in a Partnership.
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"PARTNERSHIP INTEREST" means a general partner or limited partner
interest held by a Partner in a Partnership and all rights pertaining thereto,
including all rights to receive distributions and allocations and all other
rights pertaining thereto.
"PARTNERSHIP INTEREST AMOUNT" means, for each Partnership Interest,
the amount that would be payable to the Partner holding the Partnership Interest
pursuant to the terms of the applicable partnership agreement if the applicable
Property Assets were sold for a purchase price (assuming no brokerage
commissions, transfer taxes or other transfer costs) equal to the amount set
forth as the "100% Amount" in Section 1.01(A) of the THCI Disclosure Schedule
(or, in the case of a Partnership Interest for which, as a result of the
operation of Section 5.09, there is no "100% Amount", for a purchase price equal
to the Allocated Purchase Price for the related Property) where (a) prorations
of the type specified in Section 2.07 were made, (b) the principal amount of,
and current interest on, all loans to the Partnership and all other partnership
debts of the Partnership (and, if applicable, the Second Tier Partnership) were
paid in full (assuming that payment in full of all outstanding principal of, and
current interest on, indebtedness for money borrowed constitutes payment in full
of such indebtedness), (c) no reserves were established for contingent or
unasserted claims, (d) the Partnership (and, if applicable, the Second Tier
Partnership) were dissolved and liquidated and (e) to the extent of available
proceeds from the sale of such Property Assets, all loans made by the Partner to
another partner in the Partnership or by another partner in the Partnership to
the Partner were repaid.
"PARTNERSHIPS" has the meaning specified in the recitals to this
Agreement.
"PERMITS" means permits, licenses, authorizations, certificates,
exemptions and approvals of Governmental Authorities.
"PERMITTED ENCUMBRANCES" means (a) mortgages, deeds of trust, liens,
security interests, claims and other charges and encumbrances in favor of any
lender and given in connection with indebtedness that is assumed by either
Acquiror hereunder or to which such Acquiror take subject; (b) inchoate
mechanic, construction and materialmen liens for completed construction or
construction in progress; (c) (i) department store leases, reciprocal easement
agreements and other agreements described in Section 1.01 of the THCI Disclosure
Schedule, (ii) other easements that do not have a Material Adverse Effect and
(iii) all other leases and subleases (A) set forth on the Rent Rolls, (B)
entered into in the ordinary course of business between the respective dates of
the Rent Rolls and the date of this Agreement or (C) entered into pursuant to
the terms of this Agreement; (d) building restrictions and zoning and other
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regulations, resolutions and ordinances and any amendments thereto in effect on
the date of this Agreement or hereafter adopted; (e) any state of facts that a
survey would show, PROVIDED such facts would not have a Material Adverse Effect;
(f) consents previously granted by THCI or any former owner of the property for
the erection of any structure or structures on, under or above any street or
streets on which the Property may abut; (g) easements or rights of use of record
in favor of any utility company for construction, use, maintenance or repair of
utility lines, wires, terminal boxes, mains, pipes, cables, conduits, poles and
other equipment and facilities on, under and across the Property; (h) liens for
any unpaid real estate tax, water charge, sewer rent and assessment, PROVIDED
the same are adjusted at the Applicable Closing; (i) standard printed exclusions
from coverage contained in the form of title insurance policy then issued by the
title company providing title insurance for either Acquiror (other than the
survey exception and the rights of tenants generally); (j) liens or encumbrances
encumbering the property as to which THCI shall deliver to either Acquiror, or
to the title company providing title insurance for either Acquiror, if any, at
or prior to the Applicable Closing, proper instruments, in recordable form,
either canceling such liens or encumbrances, together with any other instruments
necessary thereto and the cost of recording and canceling the same or causing
the title insurance company to insure over such lien or encumbrance; (k) the
revocable nature of the right, if any, to maintain street and sidewalk vaults
and other vault spaces, coal chutes, excavations, canopies, marquees and signs;
(l) any matter that is the responsibility of any tenant (other than THCI, a THCI
Subsidiary, THCI Partnership, a Partnership or a Second Tier Partnership, as the
case may be) under any lease of a Property or of any party to any reciprocal
easement agreement affecting any Property (other than THCI, a THCI Subsidiary, a
THCI Partnership, a Partnership or a Second Tier Partnership, as the case may
be); and (m) any other leases, liens or encumbrances which would not have a
Material Adverse Effect.
"PLAZA" means DPA, L.P., a California limited partnership.
"PERSON" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"PRO RATA NOI" means the pro rata share of total NOI for a Property
that is allocable to the Partner in the related Partnership or Second Tier
Partnership based on the nominal percentage interest of such Partner in such
Partnership (taking into account the Partnership's nominal percentage interest
in the Second Tier Partnership).
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"PROPERTIES" has the meaning specified in the recitals to this
Agreement.
"PROPERTY ASSETS" means, with respect to a Property, all the right,
title and interest of THCI, the THCI Subsidiaries, the THCI Partnerships, the
Partnerships, the Second Tier Partnerships and the Co-Tenants in, to and under
the following assets and properties, in each case other than items that
constitute Excluded Property Assets with respect to such Property:
(a) where the Property is Owned Real Property, all rights in the
land, improvements, fixtures and other real property forming a part of such
Owned Real Property;
(b) where the Property is Leased Real Property, all rights in the
tenant's leasehold estate in such Leased Real Property;
(c) all machinery, equipment, furniture, supplies and other similar
property located in such Property;
(d) all leases, subleases and licenses of such Property and all
amendments thereto, to the extent assignable or otherwise transferable;
(e) all service, maintenance, construction, leasing and other
contracts with respect to such Property, to the extent assignable or
otherwise transferable;
(f) all accounts receivable with respect to such Property, subject to
Section 2.07(a)(iv) as to Tenant Delinquent Rents and Section 2.07(a)(ii)
as to certain tax refunds and credits;
(g) the Real Estate Records with respect to such Property and all
financial records, personnel records and other files and records pertaining
solely to such Property, including all "as-built" building plans,
specifications and drawings for such Property to the extent in the
possession or under the control of THCI, any THCI Subsidiary or any THCI
Partnership;
(h) all municipal, state and federal franchises, permits, licenses,
agreements, waivers and authorizations held or used by THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership
solely in connection with, or required for, the operation of such Property,
to the extent assignable or otherwise transferable;
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(i) the computer software, including, without limitation, source
code, operating systems and specifications, data, data bases, files,
documentation and other materials related thereto set forth in
Exhibit 1.01(f), to the extent transferable;
(j) all security deposits (including letters of credit) posted by
tenants;
(k) all tradenames, service marks, tradedress, logos and trademarks,
whether or not registered, including all common law rights thereto,
relating to such Property other than the THCI Names and Marks; and
(l) any other matter or item necessary for the operation of such
Property and owned by THCI, any THCI Subsidiary or any THCI Partnership.
"QUALIFIED INTERMEDIARY" has the meaning specified in Section 7.05(a).
"QUALIFIED PREPAYMENT" has the meaning specified in
Section 5.01(a)(vi).
"REAL ESTATE RECORDS" means, for any Property, all of the documents,
including, without limitation, all instruments, notices, agreements, contracts,
bills, invoices, surveys, engineering reports, environmental reports, leases,
assignments and plans and specifications that relate to such Property and are in
the possession of THCI or an Affiliate of THCI, except for memoranda that are
confidential and are not reasonably required for the operation of the
Properties.
"RECORD OWNER" means, with respect to any Partnership Interest, (a)
THCI, the THCI Subsidiary or the THCI Partnership that is the record owner of
such Partnership Interest or (b) a newly created wholly owned direct or indirect
subsidiary of THCI to which a prior Record Owner transfers such Partnership
Interest.
"RECORD OWNER PARTNERSHIP INTEREST" means, with respect to a Record
Owner that is a partnership, the partnership interests in such partnership.
"RECORD OWNER SHARES" means, with respect to a Record Owner that is a
corporation, the shares of capital stock of such corporation.
"RENT ROLLS" has the meaning specified in Section 3.17.
"RENTS" has the meaning specified in Section 2.07(a).
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"ROUSE" has the meaning specified in the preamble to this Agreement.
"SECOND TIER PARTNERSHIPS" has the meaning specified in the recitals
to this Agreement.
"SECTION 1031 TREATMENT" has the meaning specified in Section 7.05(a).
"SUBSEQUENT CLOSING" has the meaning specified in Section 2.01(c).
"SUBSEQUENT CLOSING DATE" has the meaning specified in Section
2.01(c).
"SUBSEQUENT CLOSING DATE NOTICE" has the meaning specified in Section
2.01(d).
"TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind whatsoever (together with any
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any governmental or taxing authority, including,
without limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs duties, tariffs and
similar charges.
"TAX RETURN" means any return, form or other report required to be
filed with respect to Taxes, including any declaration of estimated tax and
information return.
"TC INTEREST" means a tenancy-in-common interest in a Tenancy
"TEACHERS" means Teachers Insurance and Annuity Association.
"TENANCY" means the tenancy-in-common form of ownership of an interest
in real property.
"TENANT DELINQUENT RENTS" has the meaning specified in Section
2.07(a)(iv).
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"THCI" has the meaning specified in the preamble to this Agreement.
"THCI DISCLOSURE SCHEDULE" means the Disclosure Schedule, dated as of
the date hereof, delivered to the Acquirors by THCI.
"THCI FINANCIAL ADVISORS" has the meaning specified in Section 3.16.
"THCI INDEMNIFIED PARTY" has the meaning specified in Section 9.03(a).
"THCI NAMES AND MARKS" means the names "Trizec", "Hahn", "TrizecHahn"
and variants thereof and all related trademarks, service marks, trade dress,
logos, trade names and corporate names, whether or not registered, including all
common law rights thereto, and registrations and applications for registration
thereof.
"THCI PARTNERSHIPS" has the meaning set forth in the preamble to this
Agreement.
"THCI SUBSIDIARIES" has the meaning specified in the recitals to this
Agreement.
"THRESHOLD AMOUNT" has the meaning specified in Section 9.02(b).
"TRANSFERRED EMPLOYEES" has the meaning specified in Section 6.01(a).
"TREASURY REGULATIONS" means the regulations promulgated under the
Code by the United States Treasury Department.
"UTC RIGHT OF FIRST REFUSAL AGREEMENT" means an agreement in the form
of Exhibit 1.01(g) pursuant to which the Acquirors grant to THCI a right of
first refusal in the event that, at any time prior to the third anniversary of
the Applicable Closing Date for the University Towne Centre Property, the
Acquirors elect to (a) sell or ground lease any portion of such Property to any
third party for the development of one or more office buildings on such property
or (b) engage or retain a developer to develop for the Acquirors one or more
office buildings on such property.
"WARN" means the Workers Adjustment and Retraining Notification Act.
"WEA" has the meaning specified in the preamble to this Agreement.
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"WEA FINANCIAL ADVISORS" has the meaning specified in Section 4.06.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. ASSETS TO BE SOLD; CLOSINGS. (a) ASSETS TO BE SOLD.
Subject to Sections 5.09 and 5.10 and the other terms and conditions of this
Agreement, the parties hereto agree that THCI shall sell, assign, transfer,
convey and deliver, or cause to be sold, assigned, transferred, conveyed and
delivered, to the Acquirors, and the Acquirors shall purchase, all of THCI's and
the THCI Subsidiaries' right, title and interest in and to (i) the Property
Assets associated with the Properties for which a transfer of Property Assets is
specified in Section 1.01(A) of the THCI Disclosure Schedule, (ii) the
Partnership Interests held by Partners with respect to the Properties for which
a transfer of Partnership Interests is specified in Section 1.01(A) of the THCI
Disclosure Schedule and (iii) the Management Company Shares, for an aggregate
purchase price for such Property Assets, Partnership Interests and Management
Company Shares, of US$2,550,000,000, payable in cash, as adjusted in accordance
with the provisions of this Agreement.
(b) INITIAL CLOSING. (i) Subject to the terms and conditions of
this Agreement, at the Initial Closing, (A) the Property Assets associated with
the Properties and Partnership Interests specified in Section 2.01(b) of the
THCI Disclosure Schedule and the Property Assets associated with the Properties
and Partnership Interests, if any, specified in the Initial Closing Date Notice
shall be purchased by the Acquirors for an aggregate purchase price, payable in
cash, equal to the aggregate Adjusted Allocated Purchase Price for such
Properties and Partnership Interests and (B) the Management Company Shares shall
be purchased by the Acquirors for an aggregate purchase price, payable in cash,
equal to the Allocated Purchase Price therefor. Subject to the terms and
conditions of this Agreement, the transactions contemplated by this Section
2.01(b) shall take place at a closing (the "INITIAL CLOSING") to be held at the
offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York at
10:00 a.m., New York City time, on a Closing Date specified in the Initial
Closing Date Notice, which shall not be less than 15 Business Days or more than
30 Business Days following delivery of the Initial Closing Date Notice to the
Acquirors but not later than August 31, 1998 or at such other place or at such
other time or on such other date as THCI and the Acquirors may mutually agree
upon in writing (the day on which the Initial Closing takes place being the
"INITIAL CLOSING DATE").
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(ii) In the event that, as a result of the operation of Section 5.09,
THCI does not transfer to the Acquirors the Bridgewater Property at the Initial
Closing, THCI shall have the right to elect to deliver or assign to the
Acquirors, and the Acquirors shall accept, at the Initial Closing, either (A)
the Partnership Interests in the Bridgewater Partnership held by Command
Properties Corporation and THCI in Midway Associates (the "BRIDGEWATER
PARTNERSHIP INTERESTS") in consideration of the Adjusted Allocated Purchase
Price therefor payable at the Initial Closing, or (B) a binding purchase and
sale agreement with the Bridgewater Partnership (that is not subject to a right
of first refusal) pursuant to which the Bridgewater Property shall be sold to
the Acquirors on or before December 31, 1998 for a purchase price in an amount
not to exceed the Adjusted Allocated Purchase Price for the Bridgewater Property
(unless THCI agrees to pay any amount in excess thereof), in which case THCI
shall not be required to convey the Bridgewater Partnership Interests to the
Acquirors, and the Acquirors shall not be obligated to pay any separate
consideration to THCI for the Bridgewater Property other than pursuant to such
purchase and sale agreement. If THCI delivers the Bridgewater Partnership
Interests to the Acquirors, (W) from and after the Initial Closing, to the
extent permitted by the terms of the partnership agreement governing, and any
other agreements relating to, the Bridgewater Partnership, THCI agrees to act in
such manner as the Acquirors shall direct in exercising any management and
voting rights held by EWH in its capacity as a general partner in the
Bridgewater Partnership; PROVIDED that the Acquirors agree fully to indemnify
THCI for any loss, cost or damage incurred by THCI as a result thereof (provided
that in no event shall the Acquirors be liable for consequential damages
pursuant to such indemnity), (X) at any time prior to the expiration of the
six-month period after the earliest of (1) the twenty-first anniversary of the
ceremonial opening of the Bridgewater Property, (2) the date on which the
Acquirors or any of their respective Affiliates acquires at least an additional
26% interest in the Bridgewater Partnership or (3) receipt of the consent of the
Other Partner to the transfer of such interest to the Acquirors without being
subjected to the right of first refusal (which consent the Acquirors agree to
use commercially good faith efforts to obtain, but without obligation to expend
funds or to commence legal proceedings)(the earliest of such dates being the
"Option Expiration Date"), the Acquirors shall have the option, subject to
Section 5.10, to require THCI to transfer to the Acquirors, and THCI shall cause
EWH to transfer, and, at any time subsequent to the Option Expiration Date, THCI
shall have the right, subject to Section 5.10, to transfer to the Acquirors, and
the Acquirors shall acquire, EWH's Partnership Interest in the Bridgewater
Partnership in consideration of the Adjusted Allocated Purchase Price therefor,
(Y) until the Option Expiration Date, THCI shall not sell, assign, pledge or
otherwise transfer EWH's Partnership Interest without the consent of the
Acquirors, and (Z) until such time as THCI transfers EWH's Partnership Interest
to the Acquirors, THCI shall have the right
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to receive and retain all distributions and other economic entitlements payable
in respect thereto. The agreements set forth above shall be set forth in an
agreement reasonably acceptable to THCI and the Acquirors, which shall be
executed by the parties at the time of the Initial Closing.
(c) SUBSEQUENT CLOSINGS. Subject to the terms and conditions of this
Agreement, the transactions contemplated by this Agreement that do not occur at
the Initial Closing shall take place at one or more closings (each a "SUBSEQUENT
CLOSING") to be held at the offices of Shearman & Sterling, 599 Lexington
Avenue, New York, New York at 10:00 a.m., New York City time, on a Closing Date
specified in a Subsequent Closing Date Notice, which shall not be less than 15
Business Days or more than 30 Business Days following delivery of such
Subsequent Closing Date Notice to the Acquirors or at such other place or at
such other time or on such other date as THCI and the Acquirors may mutually
agree upon in writing (the day on which a Subsequent Closing takes place being a
"SUBSEQUENT CLOSING DATE"). The Property Assets or Partnership Interests
associated with the Properties set forth in the Subsequent Closing Date Notice
for such Subsequent Closing shall be sold to the Acquirors for an amount of cash
equal to the aggregate Adjusted Allocated Purchase Prices for such Properties
and Partnership Interests.
(d) CLOSING NOTICES; FINAL CLOSING. THCI shall deliver a notice (the
"INITIAL CLOSING DATE NOTICE"), substantially in the form of Exhibit 2.01(d)(i),
to the Acquirors as promptly as practicable after THCI determines, in good
faith, the date on which it expects the conditions to the obligations of the
parties to consummate the Initial Closing to be satisfied, and the Acquirors
shall cooperate with THCI in making such determination. THCI may deliver a
notice (a "SUBSEQUENT CLOSING DATE NOTICE"), substantially in the form of
Exhibit 2.01(d)(ii), to the Acquirors at any time after THCI determines, in good
faith, the date on which it expects the conditions to the obligations of the
parties to consummate a Subsequent Closing with respect to one or more
Properties or Partnership Interests to be satisfied and the Acquirors shall
cooperate with THCI in making such determination. The parties shall cooperate
to schedule and hold a final Closing not later than December 31, 1998 with
respect to all Properties and Partnership Interests for which the conditions to
the obligations of the parties to consummate a Closing have been satisfied or
waived by the applicable parties, it being understood that THCI shall have no
further obligation to sell, and the Acquirors shall have no further obligation
to purchase, any Properties or Partnership Interests for which such conditions
have not been satisfied on or prior to such date. The Initial Closing Date
Notice and each Subsequent Closing Date Notice shall specify the Properties and
the Partnership Interests , if any, to be transferred, shall contain an estimate
of the Adjusted Allocated Purchase Prices for such Properties and Partnership
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Interests and the basis for THCI's estimates thereof and may, at the election of
THCI, identify one or more Qualified Intermediaries and the Property or
Properties with respect to which each such Qualified Intermediary is to receive
payment.
(e) EXCLUSION NOTICES. At or prior to any Closing held prior to
December 31, 1998, THCI may deliver a notice (an "EXCLUSION NOTICE") with
respect to any Property or Partnership Interest included in the Initial Closing
Date Notice or a Subsequent Closing Date Notice, as the case may be, for such
Closing, stating that there are one or more conditions to the obligations of the
Acquirors to purchase such Property or Partnership Interest that THCI no longer
expects to be satisfied at or prior to such Closing. Unless the Acquirors
deliver, at or prior to such Closing, a waiver of such conditions, the Initial
Closing Date Notice or Subsequent Closing Date Notice for such Closing shall,
for all purposes under this Agreement, be deemed to be amended to remove such
Property or Partnership Interest from the list of Properties and Partnership
Interests to be transferred at such Closing. Such Property or Partnership
Interest may be included in a subsequent Closing Date Notice at any later time
that THCI determines, in good faith, the date on which it expects the conditions
to the obligations of the parties to consummate a Closing with respect to such
Property or Partnership Interest to be satisfied.
(f) CASH PAYMENTS. Cash payments to be made by the Acquirors to THCI
shall be made to THCI or a THCI Subsidiary (or to one or more Qualified
Intermediaries if THCI so elects by notice to the Acquirors) by wire transfer in
immediately available funds to a bank account or accounts designated by THCI in
a written notice to the Acquirors, such notice to be delivered not later than
the second Business Day prior to the Applicable Closing Date.
SECTION 2.02. ASSUMPTION OF LIABILITIES. (a) On the terms and
subject to the conditions of this Agreement, the Acquirors shall, on each
Closing Date, assume and shall agree to pay, perform, fulfill, and discharge
when due the Assumed Property Liabilities with respect to each Property and
Partnership Interest transferred to the Acquirors on such Closing Date other
than Article VI Liabilities (which shall be assumed or retained in accordance
with Article VI); PROVIDED, HOWEVER, that, with respect to limited recourse
debt, the Acquirors shall be required to assume such debt only to the extent of
recourse thereunder but shall in any event take Properties transferred hereunder
subject to such debt.
(b) The Acquirors agree to use their commercially reasonable efforts
to obtain releases of the obligations of THCI, each THCI Subsidiary, each THCI
Partnership and each of their respective Affiliates (including all guarantees
and
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indemnities) with respect to the Assumed Debt Amount for each Property;
PROVIDED, HOWEVER, that the Acquirors shall not in any event be required to pay
any transfer fees or prepay any Existing Debt in order to obtain any such
releases.
SECTION 2.03. CLOSING DELIVERIES BY THCI. (a) INITIAL CLOSING. At
the Initial Closing, THCI shall deliver or cause to be delivered to the
applicable Acquirors:
(i) stock certificates evidencing the Management Company Shares, duly
endorsed in blank, or accompanied by stock powers duly executed in blank,
and with all required stock transfer tax stamps affixed;
(ii) with respect to each Property being transferred at such Closing:
(A) the Bill of Sale and the Deed (with respect to Owned Real
Property) and duly executed counterparts of the other Ancillary
Agreements with respect to such Property and such other instruments as
may be reasonably requested by such Acquiror to transfer the Property
Assets with respect to such Property to such Acquiror or to evidence
such transfer on the public records or to provide notice to third
parties of such transfer; PROVIDED, HOWEVER, that in no event shall
THCI be required to provide indemnities, guaranties or other recourse
assurances other than customary affidavits and assurances given to the
such Acquiror's title insurance company to permit it to issue the
title insurance policy referred to in Section 8.02; and
(B) if in the possession of THCI or a THCI Subsidiary, a
complete set of keys and combinations for the Property;
(iii) with respect to each Partnership Interest being transferred
at such Closing:
(A) duly executed counterparts of customary documents required
to cause the transfer of such Partnership Interest, to be registered
on the books of the applicable Partnership or the public records or to
notify third parties of such transfer; and
(B) original, executed counterparts of the partnership agreement
relating to such Partnership Interest being transferred or, if
unavailable, photocopies thereof;
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(iv) one or more receipts for the aggregate Adjusted Allocated
Purchase Price and any other payments made by such Acquiror to THCI or a
Qualified Intermediary at such Closing;
(v) executed counterparts of the appropriate transfer tax
returns to be filed by such Acquiror pursuant to Section 7.01;
(vi) affidavits of THCI, each THCI Subsidiary and each THCI
Partnership transferring a Property or a Partnership Interest pursuant
to (A) Section 1445(b)(2) of the Code and (B) Section 18662 of the
California Revenue and Taxation Code (if applicable), stating that the
transferor is not a foreign person within the meaning of such Sections;
and
(vii) the certificates and other documents required to be
delivered at the Initial Closing pursuant to Section 8.02.
(b) SUBSEQUENT CLOSINGS. At each Subsequent Closing, THCI
shall deliver or cause to be delivered to the Acquirors, (i) with respect to
each Property being transferred, the items specified in Section 2.03(a)(ii),
(ii) with respect to each Partnership Interest being transferred, the items
specified in Section 2.03(a)(iii) and (iii) the items specified in Sections
2.03(a)(iv) through (vi).
SECTION 2.04. CLOSING DELIVERIES BY THE ACQUIRORS. (a) At each
Closing, the Acquirors shall deliver or cause to be delivered to THCI:
(i) duly executed counterparts of the Ancillary Agreements
with respect to the Property Assets being transferred at such Closing to
the Acquirors other than the Bills of Sale and the Deeds;
(ii) duly executed counterparts of customary documents
required to cause the transfer of any Partnership Interests being
transferred at such Closing to be registered on the books of the
applicable Partnerships and the public records;
(iii) appropriate transfer tax returns of the Acquirors, duly
completed and executed, together with certified checks, payable to the
order of the appropriate Governmental Authorities, in payment of the
transfer taxes payable by the Acquirors pursuant to Section 7.01;
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(iv) the certificates and other documents required to be
delivered pursuant to Section 8.01; and
(v) the aggregate Adjusted Allocated Purchase Price and any
other payments to be made by the Acquirors with respect to such Closing
(all or a portion of which shall be paid to a Qualified Intermediary if
so directed by THCI in the Initial Closing Date Notice or a Subsequent
Closing Date Notice, as applicable).
(b) At the Closing for the University Towne Centre Property
only, the Acquirors shall deliver or cause to be delivered to THCI the UTC Right
of First Refusal Agreement.
SECTION 2.05. DELIVERY OF POSSESSION. Coincident with the
transfer at a Closing of Property Assets associated with a Property, THCI shall
deliver possession of such Property to the Acquirors, subject to Permitted
Encumbrances.
SECTION 2.06. MANAGEMENT COMPANY ACTS AND OMISSIONS. From and
after the transfer of the Management Company Shares at the Initial Closing, no
representation or warranty of THCI contained herein shall be deemed to be untrue
and no covenant or agreement of THCI contained herein shall be deemed to be
breached as a result of any act or omission of the Management Company first
occurring after such transfer.
SECTION 2.07. APPORTIONMENTS. (a) At each Closing, the
following items shall, with respect to the Properties being transferred, be
apportioned between THCI (which, for purposes of this Section 2.07(a), shall
include THCI and, as applicable, the THCI Subsidiaries) and the Acquirors on a
per diem basis, so that THCI shall be responsible for those items of expense and
credited with those items of income that are attributable to the period prior to
the Applicable Closing Date and the Acquirors shall be responsible for those
items of expense and credited with those items of income that are attributable
to the period on or after the Applicable Closing Date: rents (including without
limitation ground lease rent (if applicable), base rent, common area maintenance
reimbursements, marketing fund contributions, operating expense and tax
reimbursements, percentage rent and other additional rent) (collectively
"RENTS"); prepaid and accrued expenses (including, without limitation, interest,
ground rent, utility charges, water and sewer charges (unless such payment is to
be made directly by any tenant), fees for licenses and permits, fuel, steam, gas
and electricity charges, annual license, permit and inspection fees, payments
under reciprocal easement agreements and payments to merchants associations
and/or promotional funds
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maintained by THCI, and obligations under the Contracts assumed by the
Acquirors; and real and personal ad valorem and other taxes and assessments ("AD
VALOREM TAXES") against such Property; PROVIDED that:
(i) If the Ad Valorem Taxes for the tax year in which the
Applicable Closing occurs are not known or cannot reasonably be
estimated, they shall be adjusted based on an estimate obtained using
the then current assessed value of such Property as of the Applicable
Closing Date and the tax rate and multiplier reflected by the most
recent Ad Valorem Taxes due. After the Ad Valorem Taxes for the year in
which the Applicable Closing occurs are known, adjustments shall be
made between the parties.
(ii) THCI shall have the right to control all tax certiorari
and tax reduction proceedings relating to Properties conveyed (or the
Properties associated with the Partnership Interests transferred) for
tax years prior to and including the tax year in which the Applicable
Closing Date occurs and shall keep the Acquirors informed with respect
thereto. Any tax refund or credit obtained by THCI (net of any costs of
obtaining such refund) attributable (A) to the period prior to the tax
year in which the Applicable Closing Date occurs shall be paid, FIRST,
to any tenants of the Properties entitled thereto and, SECOND, to THCI
and (B) to the tax year in which the Applicable Closing Date occurs
shall be apportioned between THCI and the Acquirors, with the portion
allocable to THCI to be applied as provided in clause (A) and the
balance paid to the Acquirors, subject, however, to the rights of
tenants of the Properties entitled thereto. With respect to any
proceeding in respect of a tax year in which the Applicable Closing Date
occurs, THCI shall coordinate its efforts with the Acquirors, shall keep
the Acquirors informed with respect thereto and shall not settle the
same without the consent of the Acquirors, which consent shall not be
unreasonably withheld or delayed. From and after the expiration of the
tax year in which the Applicable Closing Date occurs, the Acquirors
shall have the right to control all tax certiorari and tax reduction
proceedings relating to Properties conveyed for tax years commencing
with the tax year following the tax year in which the Applicable Closing
Date occurs.
(iii) The Acquirors shall take all steps necessary to
effectuate the transfer of all utilities to an Acquiror's name as of the
Applicable Closing Date and, where necessary, the Acquirors shall post
deposits with the utility companies. THCI shall pay all utility charges
accruing prior to the Applicable Closing Date and all utilities
thereafter shall be paid for by the Acquirors. THCI shall be entitled
to recover any and all deposits held by utility companies
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as of the Applicable Closing Date. To the extent that the Acquirors
fail to make, where required, deposits to any such utility companies (or
to make any deposits with other service providers) so as to prevent the
timely release of THCI's deposits by the utility companies (or such
other service providers) on the Applicable Closing Date, the aggregate
amount of such deposits shall be credited to THCI. In such event,
THCI's deposits shall be assigned to an Acquiror, which shall have the
right to have the deposits released to it upon satisfaction of the
conditions imposed by the utility companies (or such other service
providers).
(iv) THCI shall, at the Applicable Closing, credit the
Acquirors for any Rents paid to THCI by the tenants of the applicable
Property with respect to the period beginning on the Applicable Closing
Date. No proration shall be made for Rents from tenants that are
delinquent as of the Applicable Closing Date (the "TENANT DELINQUENT
RENTS"). All Tenant Delinquent Rents collected on or after the
Applicable Closing Date shall be allocated, FIRST, to the then current
month, NEXT, to any other delinquency after the Applicable Closing Date,
and, FINALLY, to any other delinquency prior to the Applicable Closing
Date. Any Tenant Delinquent Rents collected by the Acquirors after the
Applicable Closing which are allocable to the period prior to the
Applicable Closing Date shall be held in trust and forthwith paid by the
Acquirors to THCI subject to and in accordance with the foregoing
allocation provision. The Acquirors shall use their commercially
reasonable efforts to collect all Tenant Delinquent Rents (other than
the Tenant Delinquent Rents described in clause (e) of the definition of
Excluded Property Assets), but in no event shall the Acquirors be
obligated to commence legal proceedings for collection against any
tenant. All rights to pursue collection of Tenant Delinquent Rents
(other than the Tenant Delinquent Rents described in clause (e) of the
definition of Excluded Property Assets) shall vest solely in the
Acquirors. Any Rents paid to THCI by the tenants of the applicable
Property on or after the Applicable Closing Date, other than Tenant
Delinquent Rents described in clause (e) of the definition of Excluded
Property Assets, shall be held in trust and forthwith paid by THCI to
the Acquirors (subject, however, to the allocation of the same as set
forth above). At the Applicable Closing, THCI shall deliver to the
Acquirors a written certification identifying any Tenant Delinquent
Rents.
(v) All percentage rents for tenants' annual sales reporting
periods (as defined in the tenant leases) ending prior to the Applicable
Closing Date, including tenant leases terminated before the Applicable
Closing, shall belong solely to THCI. Any percentage rent paid with
respect to any tenant's annual
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sales reporting period that is in effect on the Applicable Closing Date
(the "CURRENT REPORTING PERIOD") shall be adjusted by and between THCI
and the Acquirors as hereinafter described. Percentage rent earned
during each tenant's Current Reporting Period shall be prorated on the
basis of the number of days in such annual sales reporting period that
the Applicable Property was owned by THCI or the Acquirors and payments
of THCI's share shall be made by the Acquirors following the end of the
applicable sales reporting period, PROVIDED that (i) there shall be
deducted from the amounts payable to THCI hereunder with respect to any
tenant any sums previously collected by THCI from such tenant on account
of percentage rent for the Current Reporting Period and (ii) if it shall
be determined by the parties that THCI has collected more than its share
of the percentage rent from such tenant, THCI shall immediately pay over
the surplus to the Acquirors. After the Applicable Closing Date, the
Acquirors shall deliver to THCI monthly status reports detailing
collections of percentage rents for the Current Reporting Period.
(vi) All security deposits (including any interest thereon to
the extent payable to the applicable tenants) not theretofore properly
applied to obligations under the applicable leases shall be delivered by
THCI to the Acquirors at the Applicable Closing, or, in the alternative,
THCI may elect to give the Acquirors a credit in the amount of such
security deposits. THCI shall either assign its rights under all
letters of credit security deposits to the Acquirors or, if any such
letters of credit are not assignable, shall cooperate with the Acquirors
in arranging for the transfer thereof to the Acquirors, and, pending
such transfer, THCI shall act as the Acquirors' agent in presenting any
draws under, and in otherwise administering such letters of credit.
(vii) [INTENTIONALLY OMITTED]
(viii) THCI shall receive a credit for all reserves, deposits
and escrows for taxes, insurance, interest, capital expenditures, tenant
improvements, claims and any other reserves, deposits and escrows on
deposit with any lender with respect to any indebtedness assumed by the
Acquirors (or to which the Acquirors take subject) or any other Person
other than any of the foregoing that is held (A) by insurers or (B) by
Teachers as security for capital improvement obligations that remain
unsatisfied as of the Applicable Closing Date.
(ix) THCI's insurance policies on the applicable Property
shall not be assumed by the Acquirors, but shall be canceled effective
as of the Applicable Closing Date. The amount of the refunds payable to
THCI in respect of such
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early cancellation of insurance policies on the applicable Property
shall be the property of THCI. The Acquirors shall purchase and place
their own insurance on the applicable Property as of Applicable Closing
Date.
(x) Common area maintenance reimbursements and charges
payable under leases at the applicable Property with respect to the 1998
calendar year shall initially be apportioned between the parties at the
Applicable Closing based on the 1998 budgeted amounts of common area
maintenance reimbursement and other charges for such Property and on the
number of days THCI owned the applicable Property during the 1998
calendar year. THCI shall prepare a statement showing the amounts
collected from the tenants in respect of common area maintenance
reimbursements and charges for the portion of the 1998 calendar year
prior to the Applicable Closing Date, and shall furnish a copy of such
statement to the Acquirors. To the extent the amount owing to THCI
attributable to the portion of the 1998 calendar year prior to the
Applicable Closing Date determined by means of such estimate shall be
more than the amounts collected by THCI in respect of such 1998 calendar
year common area maintenance reimbursements and charges, then the
difference will be paid by the Acquirors to THCI at the Applicable
Closing. To the extent the amount owing to THCI attributable to the
portion of the 1998 calendar year through the Applicable Closing Date
determined by means of such estimate shall be less than the amounts
collected by THCI in respect of such 1998 calendar year common area
maintenance reimbursements and charges, then the difference will be paid
by THCI to the Acquirors at the Applicable Closing. A final
recalculation of the actual amounts payable for common area maintenance
reimbursements and other charges shall be made within 120 days after the
end of the 1998 calendar year.
(xi) The Acquirors shall receive a credit for unpaid tenant
allowances (which shall include tenant improvement allowances, landlord
contributions, lease takeover obligations and other payments to or for
the benefit of tenants and periods of free rent after the Applicable
Closing Date) and lease commissions applicable to all leases at the
Property that were executed and delivered prior to the date of this
Agreement (other than in connection with renewals or extensions,
exercised or executed after the date of this Agreement, of leases
executed on or prior to the date of this Agreement), the Acquirors shall
assume all responsibility for the payment of such tenant allowances and
lease commissions and all of the same shall constitute Assumed Property
Liabilities.
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(xii) Amounts subject to redemption under gift certificates
issued by THCI prior to the Applicable Closing Date and still
outstanding as of the Applicable Closing shall be described in a
schedule prepared by THCI and delivered to the Acquirors at the
Applicable Closing. At the Applicable Closing, the aggregate amount of
such issued and outstanding scheduled gift certificates shall be
deposited in the bank accounts maintained by THCI and to be transferred
over to the Acquirors at the Applicable Closing, to fund the redemption
of such scheduled gift certificates. The Acquirors shall assume all
liability for the redemption of such scheduled gift certificates.
(xiii) To the extent that the interest being transferred in a
Property at any Applicable Closing is an interest in a Partnership, the
amounts to be apportioned hereunder shall be adjusted to reflect the
amounts that THCI would receive or pay if such items of income or
expense were paid by the applicable owner of the Property.
(b) At each Applicable Closing, the net credit to THCI or the
Acquirors, as applicable, resulting from the apportionments made pursuant to
subsection (a) of this Section 2.07 for all Properties being transferred on such
Applicable Closing Date shall be paid to THCI or the Acquirors, as applicable,
by wire transfer of immediately available funds to a bank account or accounts
designated by THCI or the Acquirors, such notice to be delivered not later than
the second Business Day prior to such Applicable Closing Date.
(c) In the event that any amounts to be prorated pursuant to
Section 2.07(a) have not been finally determined on the Applicable Closing Date,
a mutually satisfactory estimate of such amounts made on the basis of THCI's
records or public records shall be used as a basis for settlement at the
Applicable Closing, and the amounts finally determined will be prorated as of
the Applicable Closing Date and appropriate settlement made as soon as
practicable after such final determination, but in no event later than 120 days
after the later of (i) the last day in the calendar year in which the Applicable
Closing Date occurs or (ii) the last day of the Current Reporting Period that is
the last Current Reporting Period to expire.
(d) At the Initial Closing, the current assets and current
liabilities of the Management Company shall be estimated in good faith by THCI,
and THCI shall pay to the Acquirors the excess, if any, of such current
liabilities over such current assets, or the Acquirors shall pay to THCI the
excess, if any, of such current assets over such current liabilities. To the
extent not known on the Initial Closing Date, the current assets and current
liabilities shall be estimated on the best available information
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at the time and appropriate settlement made from time to time as the same are
liquidated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THCI
THCI represents and warrants to the Acquirors as follows:
SECTION 3.01. INCORPORATION AND AUTHORITY; OWNERSHIP OF
MANAGEMENT COMPANY SHARES AND PARTNERSHIP INTERESTS. (a) THCI is a corporation
duly incorporated, validly existing and in good standing under the Laws of
California and has all necessary corporate power and authority to enter into
this Agreement and each Ancillary Agreement to which it is to be a party, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each THCI Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
Laws of its jurisdiction of organization and has all necessary corporate power
and authority to enter into each Ancillary Agreement to which it is to be a
party, to carry out its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery by THCI of this
Agreement and each Ancillary Agreement to which it is to be a party, the
performance by THCI of its obligations hereunder and thereunder and the
consummation by THCI of the transactions contemplated hereby and thereby have
been approved by all necessary action of the Board of Directors and stockholders
of THCI. The execution and delivery by each THCI Subsidiary of each Ancillary
Agreement to which it is to be a party, the performance by each THCI Subsidiary
of its obligations thereunder and the consummation by each THCI Subsidiary of
the transactions contemplated thereby will, prior to the Applicable Closing,
have been approved by all necessary action of the Board of Directors and
stockholders of such THCI Subsidiary. This Agreement has been and, at each
Closing, each Ancillary Agreement delivered at such Closing to which THCI is a
party will be, duly executed and delivered by THCI, and (assuming due
authorization, execution and delivery by the Acquirors of this Agreement and of
each Ancillary Agreement) this Agreement and such Ancillary Agreements
constitute or will constitute, as the case may be, legal, valid and binding
obligations of THCI enforceable against THCI in accordance with their respective
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency (including, without limitation, all Laws relating to fraudulent
transfers), moratorium or similar Laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to the effect of general principles
of equity (regardless of whether such enforceability is
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considered in a proceeding in equity or at law). At each Closing, each
Ancillary Agreement delivered at such Closing to which a THCI Subsidiary is a
party will be duly executed and delivered by such THCI Subsidiary and (assuming
due authorization, execution and delivery by the Acquirors of such Ancillary
Agreement) will constitute the legal, valid and binding obligation of such THCI
Subsidiary enforceable against such THCI Subsidiary in accordance with its
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency (including, without limitation, all Laws relating to fraudulent
transfers), moratorium or similar Laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to the effect of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). Each THCI Partnership (i) is duly organized
and validly existing under the laws of its jurisdiction of organization,
(ii) has all necessary power and authority to enter into each Ancillary
Agreement to which it is to be a party, to carry out its obligations thereunder
and to consummate the transactions contemplated thereby. The execution and
delivery by each THCI Partnership of each Ancillary Agreement to which it is to
be a party, the performance by each THCI Partnership of its obligations
thereunder and the consummation by each THCI Partnership of the transactions
contemplated thereby will, prior to the Applicable Closing, be approved by all
necessary action on the part of such THCI Partnership. At each Closing, each
Ancillary Agreement delivered at such Closing to which a THCI Partnership is a
party will be duly executed and delivered by such THCI Partnership and (assuming
due authorization, execution and delivery by the Acquirors of such Ancillary
Agreement) will constitute the legal, valid and binding obligation of such THCI
Partnership enforceable against such THCI Partnership in accordance with its
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency (including, without limitation, all Laws relating to fraudulent
transfers), moratorium or similar Laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to the effect of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(b) The authorized capital stock of the Management Company
consists of 75,000 shares of Common Stock, par value US$1.00 per share, 10,000
shares of which (the "MANAGEMENT COMPANY SHARES") are issued and outstanding.
THCI owns the Management Company Shares, free and clear of all Encumbrances,
other than any Encumbrances arising out of, under or in connection with this
Agreement and Encumbrances that will be released at or prior to the Initial
Closing. The Management Company Shares are validly issued, fully paid and
nonassessable. None of the Management Company Shares was issued in violation of
any preemptive rights. There are no options, warrants, convertible securities
or other rights, agreements, arrangements or commitments of any character
relating to the capital stock
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of the Management Company or obligating THCI or the Management Company to issue
or sell any shares of capital stock of, or any other interest in, the Management
Company. Upon consummation of the transactions contemplated by this Agreement
and registration of the Management Company Shares in the name of the Acquirors
in the stock records of the Management Company and assuming that the Acquirors
shall have purchased the Management Company Shares for value, in good faith and
without notice of any adverse claim, the Acquirors will own all the issued and
outstanding capital stock of the Management Company free and clear of all
Encumbrances, other than any Encumbrances resulting from any facts or
circumstances relating solely to either Acquiror.
(c) In the case of a transfer by a Partner of its Partnership
Interest to the Acquirors, THCI represents and warrants to the Acquirors that
such Partner owns such Partnership Interest in the applicable Partnership free
and clear of all Encumbrances, other than any Encumbrances arising out of, under
or in connection with this Agreement and Encumbrances that will be released at
or prior to the Applicable Closing and inchoate Encumbrances under the
applicable partnership agreement.
(d) THCI or another THCI Subsidiary owns or, prior to the
Applicable Closing, will own all of the outstanding capital stock of each THCI
Subsidiary. In the case of a transfer by THCI or a THCI Subsidiary of Record
Owner Shares to the Acquiror, THCI represents and warrants to the Acquirors that
(i) THCI or a THCI Subsidiary owns such Record Owner Shares, free and clear of
all Encumbrances, other than any Encumbrances arising out of, under or in
connection with this Agreement and Encumbrances that will be released at or
prior to the Applicable Closing, (ii) such Record Owner Shares are validly
issued, fully paid and nonassessable, (iii) none of such Record Owner Shares was
issued in violation of any preemptive rights, (iv) there are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments of any character relating to the capital stock of the Record Owner
or obligating THCI, the Record Owner or any other THCI Subsidiary to issue or
sell any shares of capital stock of, or any other interest in, the Record Owner,
(v) upon consummation of the transactions contemplated by this Agreement and
registration of the Record Owner Shares in the name of the Acquirors in the
stock records of the Record Owner and assuming that the Acquirors shall have
purchased the Record Owner Shares for value, in good faith and without notice of
any adverse claim, the Acquirors will own all the issued and outstanding capital
stock of the Record Owner free and clear of all Encumbrances, other than any
Encumbrances resulting from any facts or circumstances relating solely to the
Acquirors and (vi) the applicable Record Owner has not conducted any activities
other than in connection with
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its ownership of Properties, Partnerships and Second Tier Partnerships, as the
case may be, that shall have been transferred to the Acquirors prior to or at
the same time as the transfer of such Record Owner Shares.
(e) THCI or a THCI Subsidiary owns or, prior to the
Applicable Closing, will own all of the Partnership Interests of each Record
Owner that is a THCI Partnership. In the case of a transfer by THCI or a THCI
Subsidiary of any Record Owner Partnership Interest to the Acquirors, THCI
represents and warrants to the Acquirors that (i) THCI or a THCI Subsidiary owns
such Record Owner Partnership Interest free and clear of all Encumbrances, other
than any Encumbrances arising out of, under or in connection with this Agreement
and Encumbrances that will be released at or prior to the Applicable Closing and
inchoate Encumbrances under the partnership agreement of the applicable THCI
Partnership and (ii) the applicable Record Owner has not conducted any
activities other than in connection with its ownership of Properties,
Partnerships and Second Tier Partnerships, as the case may be, that shall have
been transferred to the Acquirors prior to, or are being transferred to the
Acquirors at the same time as, the transfer of the Record Owner Partnership
Interests in such Record Owner.
SECTION 3.02. NO CONFLICT. Assuming that all consents,
approvals, authorizations and other actions described in Section 3.03 have been
obtained and all filings and notifications listed in Sections 3.03(a) and (b) of
the THCI Disclosure Schedule have been made, and except as may result from any
facts or circumstances relating solely to an Acquiror, the execution, delivery
and performance by THCI of this Agreement and by THCI, each THCI Partnership and
each THCI Subsidiary of each Ancillary Agreement to which they are to be parties
do not and will not (a) violate or conflict with the certificate of
incorporation or by-laws (or similar organizational documents) of THCI, such
THCI Partnership or such THCI Subsidiary, (b) except as would not have a
Material Adverse Effect or a material adverse effect on the ability of THCI to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements to which it is a party or to perform any of its material obligations
hereunder or thereunder, conflict with or violate any Law applicable to THCI,
any THCI Partnership, any THCI Subsidiary, the Properties, the Management
Company Shares or the Partnership Interests, or (c) except as described in
Section 3.02 of the THCI Disclosure Schedule or as would not have a Material
Adverse Effect or a material adverse effect on the ability of THCI to consummate
the transactions contemplated by this Agreement or the Ancillary Agreements to
which it is a party or to perform any of its material obligations hereunder or
thereunder, result in any breach of, or constitute a default (or event that,
with the giving of notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination,
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amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on, the Management Company Shares, the Partnership Interests or any
of the Properties pursuant to, any Contract relating to the Management Company
Shares, the Partnership Interests or the Properties to which THCI or any THCI
Subsidiary, any THCI Partnership, any Partnership or any Second Tier Partnership
is a party or by which the Management Company Shares, the Partnership Interests
or any of the Properties is bound.
SECTION 3.03. CONSENTS AND APPROVALS. (a) The execution and
delivery by THCI of this Agreement and by THCI, each THCI Partnership and each
THCI Subsidiary of each Ancillary Agreement to which they are to be parties do
not or will not, as the case may be, and the performance by THCI of this
Agreement and by THCI, each THCI Partnership and each THCI Subsidiary of each
Ancillary Agreement to which they are to be parties will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority, except (i) as described in
Section 3.03(a) of the THCI Disclosure Schedule, (ii) the notification
requirements of the HSR Act, if applicable, (iii) where failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification, would not have a Material Adverse Effect or a material adverse
effect on the ability of THCI to consummate the transactions contemplated by
this Agreement or the Ancillary Agreements to which it is a party or to perform
any of its material obligations hereunder or thereunder and (iv) as may be
necessary as a result of any facts or circumstances relating solely to an
Acquiror.
(b) The execution and delivery by THCI of this Agreement and
by THCI, each THCI Partnership and each THCI Subsidiary of each Ancillary
Agreement to which they are to be parties do not or will not, as the case may
be, and the performance by THCI of this Agreement and by THCI, each THCI
Partnership and each THCI Subsidiary of each Ancillary Agreement to which they
are to be parties will not, require any third-party consents, approvals,
authorizations or actions, except (i) as described in Section 3.03(b) of the
THCI Disclosure Schedule or (ii) where failure to obtain such consents,
approvals, authorizations or actions would not have a Material Adverse Effect or
a material adverse effect on the ability of THCI to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements to which it is a
party or to perform any of its material obligations hereunder or thereunder.
SECTION 3.04. PERSONAL PROPERTY. THCI, a THCI Subsidiary, a
THCI Partnership, a Partnership or a Second Tier Partnership owns, leases or has
the legal right to use all personal property (whether tangible or intangible)
currently employed in the operation of the applicable Property to be transferred
pursuant to this
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Agreement, free and clear of all Encumbrances, except (a) as described in
Section 3.04 of the THCI Disclosure Schedule or (b) where the failure to own,
lease or have the legal right to use, or the Encumbrances on, such property
would not have a Material Adverse Effect.
SECTION 3.05. LITIGATION. As of the date hereof, except as
described in Section 3.05 of the THCI Disclosure Schedule, there are no claims,
actions, proceedings or investigations pending before any Governmental Authority
or, to the knowledge of THCI, threatened against THCI or any THCI Subsidiary,
THCI Partnership, Partnership, Second Tier Partnership or the Management Company
and relating to the Properties, the Management Company Shares or the Partnership
Interests that, if adversely determined, (a) would have a Material Adverse
Effect, (b) would delay or prevent the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements to which THCI or any
THCI Subsidiary, THCI Partnership, Partnership or Second Tier Partnership is a
party or (c) would have a material adverse effect on the ability of THCI to
consummate the transactions contemplated hereby or thereby or to perform any of
its material obligations hereunder or thereunder. Except as described in
Section 3.05 of the THCI Disclosure Schedule, to the knowledge of THCI, neither
THCI nor the Management Company or any THCI Partnership, THCI Subsidiary,
Property, or Partnership Interest is subject to any order, writ, judgment,
injunction, decree, determination or award relating to the Management Company or
such Property or Partnership Interest that would have a Material Adverse Effect
or a material adverse effect on the ability of THCI to consummate the
transactions contemplated by this Agreement or the Ancillary Agreements to which
it is a party or to perform any of its material obligations hereunder or
thereunder.
SECTION 3.06. COMPLIANCE WITH LAWS. All Permits required for
the current use of each Property have been issued and are currently in effect
without violation, except (a) as described in Section 3.06 of the THCI
Disclosure Schedule, (b) for the Expansion Properties (but only to the extent
arising out of the expansion thereof) and for Fashion Outlet or (c) where the
absence or violation of such Permits would not have a Material Adverse Effect.
To the knowledge of THCI, no Property is under investigation for failure to
comply with any Laws of any Governmental Authority pertaining to the use or
occupancy of such Property, except where the matter being investigated, if
adversely determined, would not have a Material Adverse Effect, and each
Property is in compliance with, and not in violation of, any applicable Laws,
except where the absence or failure to comply would not have a Material Adverse
Effect. Except as described in Section 3.06 of the THCI Disclosure Schedule, to
the knowledge of THCI, it has not received any written notice from any
Governmental Authority or any other Person of a violation of the Americans with
Disabilities Act
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and, notwithstanding anything to the contrary contained in this Section 3.06,
THCI makes no other representation herein with respect to compliance with the
Americans with Disabilities Act or any rule, regulation or interpretation
promulgated thereunder.
SECTION 3.07. TAXES. (a) Except as described in
Section 3.07(a) of the THCI Disclosure Schedule, (i) THCI or an Affiliate of
THCI has filed or will file all material Tax Returns required to be filed with
respect to Taxes pertaining to the ownership of the Property Assets or the
operation of the Properties and the Partnerships and Second Tier Partnerships in
which THCI, a THCI Subsidiary, or a THCI Partnership is the managing general
partner, (ii) all Taxes shown thereon as due have been or will be paid, (iii)
neither THCI nor any Affiliate of THCI has received from any Governmental
Authority any written notice of proposed adjustment, deficiency or underpayment
of any Taxes pertaining to the ownership of the Property Assets or the operation
of the Properties, which notice has not been satisfied by payment or been
withdrawn, and to the knowledge of THCI, there are no claims with respect
thereto that have been asserted or threatened against THCI or any Affiliate of
THCI, and (iv) there are no agreements for the extension of time for the
assessment of any such Taxes.
(b) Except as described in Section 3.07(b) of the THCI
Disclosure Schedule, (i) the Management Company has timely filed or been
included in, or will timely file or be included in, all Tax Returns required to
be filed by it or in which it is to be included with respect to Taxes for any
period ending on or before the Initial Closing Date, taking into account any
extension of time to file granted to or obtained on behalf of THCI, any
Affiliate of THCI or the Management Company, (ii) all Taxes shown thereon as due
have been timely paid and (iii) no deficiency for any material amount of Tax has
been asserted or assessed by any Governmental Authority against the Management
Company.
SECTION 3.08. REAL PROPERTY. (a) Subject only to Permitted
Encumbrances and as described in Section 3.08(a) of the THCI Disclosure
Schedule, THCI, a THCI Subsidiary, a THCI Partnership, a Partnership or a Second
Tier Partnership, as the case may be, has good and valid leasehold interests in
each Leased Real Property pursuant to valid and subsisting ground leases
(collectively, the "GROUND LEASES"). Section 3.08(a) of the THCI Disclosure
Schedule contains a list of the Ground Leases, true and complete copies of which
have been made available to the Acquirors. Except as described in Section
3.08(a) of the THCI Disclosure Schedule, to THCI's knowledge (i) there exists no
default (or event, condition or act that, with the giving of notice or lapse of
time, or both, would become a default) of THCI, a THCI Subsidiary, a THCI
Partnership, a Partnership or a Second Tier Partnership under any Ground Lease
other than a default that would not have a Material Adverse Effect,
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(ii) each Ground Lease is in full force and effect and (iii) all rents,
additional rents and sums payable pursuant to each Ground Lease that were or are
due and payable have been paid.
(b) THCI, a THCI Subsidiary, a THCI Partnership, a
Partnership or a Second Tier Partnership, as the case may be, holds fee title to
each Owned Real Property free and clear of all Encumbrances, other than
(i) Encumbrances described in Section 3.08(b) of the THCI Disclosure Schedule
and (ii) Permitted Encumbrances.
(c) Except as described in Section 3.08(c) of the THCI
Disclosure Schedule, no proceeding is pending or, to the knowledge of THCI,
threatened for the taking or condemnation of all or any part of any Property.
SECTION 3.09. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS. Except
as described in Section 3.09 of the THCI Disclosure Schedule, (a) THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership, as
applicable, holds all the environmental, health and safety Permits necessary for
the use, occupancy or operation of each Property, except for such Permits the
absence of which would not have a Material Adverse Effect, (b) THCI, the THCI
Subsidiaries, the THCI Partnerships and the Partnerships are in compliance with
Environmental Laws and all of their environmental, health and safety Permits
with respect to the Properties, except as would not have a Material Adverse
Effect, (c) except as would not have a Material Adverse Effect, neither THCI nor
a THCI Subsidiary or a THCI Partnership, a Partnership or a Second Tier
Partnership or, to the knowledge of THCI, any other Person, has released
Hazardous Materials on or affecting on any of the Properties and (d) no Property
is listed or proposed for listing on the "National Priorities List" under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or on the Comprehensive Environmental Response, Compensation and
Liability Information System list maintained by the United States Environmental
Protection Agency or any similar state list of sites requiring investigation or
cleanup , nor is THCI, any THCI Subsidiaries, THCI Partnerships, Partnerships or
Second Tier Partnerships subject to any order to contribute to the remediation
of such sites. Other than as set forth in Section 3.09 of the THCI Disclosure
Schedule, neither THCI nor any THCI Subsidiary, or any THCI Partnership,
Partnership, Second Tier Partnership or Property or, to the knowledge of THCI,
any tenant or other occupant at a Property, is currently subject to an
enforcement action, consent order, voluntary site remediation or similar
proceeding related to Hazardous Materials or health and safety compliance
brought by any federal, state or local agency having jurisdiction over such
claims. Other than as set forth in Section 3.09 of the THCI Disclosure
Schedule, none of THCI, any THCI Subsidiary, any THCI Partnership, any
Partnership or any Second
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Tier Partnership is currently subject to any order to undertake, or is currently
undertaking, the remediation or clean-up of any release of Hazardous Materials
or violation of Environmental Laws in which the total costs (including
remediation, fines, penalties, and fees of attorneys and consultants) exceed
US$500,000.
SECTION 3.10. INSURANCE. Insurance policies or binders of
insurance or programs of self-insurance in the types and amounts listed in
Section 3.10 of the THCI Disclosure Schedule are valid and currently in effect.
THCI has paid, or caused to be paid, all premiums due under such policies and is
not in default with respect to its obligations under any such policies in any
material respect.
SECTION 3.11. FINANCIAL INFORMATION. For the year ended
December 31, 1997, the NOI for Park Meadow, Horton Plaza, Parkway Plaza and
Solano Mall, the NOI and the Pro Rata NOI for Bridgewater Commons, Towson Town
Center, University Towne Centre, Fashion Place Mall, Oakridge Mall, Los Cerritos
Center and Fox Hills Mall and the Pro Rata NOI for Valley Fair Mall, The Fashion
Show Mall, The Village at Corte Madera, North County Fair, Santa Anita Fashion
Park, Downtown Plaza, Capital Mall and Westdale Mall are, in each case, in all
material respects as set forth in Section 3.11 of the THCI Disclosure Schedule.
SECTION 3.12. EMPLOYEE BENEFIT MATTERS. (a) Section 3.12(a) of
the THCI Disclosure Schedule lists all employee benefit plans (as defined in
Section 3(3) of ERISA) and all bonus, stock option, stock purchase, restricted
stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements for the benefit of any person who will be an employee, officer or
director of the Management Company immediately prior to the Initial Closing or
in which the Management Company participates or to which it makes contributions
immediately prior to the Initial Closing (collectively, the "EMPLOYEE PLANS").
(b) Except as set forth in Section 3.12(b) of the THCI
Disclosure Schedule, none of the Employee Plans (i) is a multiemployer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "MULTIEMPLOYER
PLAN") or a single employer pension plan (within the meaning of
Section 4001(a)(15) of ERISA) for which THCI, any THCI Partnership, any THCI
Subsidiary or the Management Company could incur liability under Section 4063 or
4064 of ERISA (a "MULTIPLE EMPLOYER PLAN"), (ii) provides for the payment by the
Management Company of separation, severance, termination or similar-type
benefits to any Person or obligates the Management Company to pay separation,
severance, termination or similar-type
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benefits solely as a result of any transaction contemplated by this Agreement or
as a result of a "change in control", within the meaning of such term under
Section 280G of the Code or (iii) provides for or promises retiree, medical,
disability or life insurance benefits from the Management Company to any current
or former employee, officer or director of the Management Company. Each
Employee Plan is subject only to the laws of the United States or a political
subdivision thereof.
(c) Except as described in Section 3.12(c) of the THCI
Disclosure Schedule, each Employee Plan is now and always has been operated in
all material respects in accordance with the requirements of all applicable
Laws, including, without limitation, ERISA and the Code. The Management Company
has performed all material obligations required to be performed by it under and
is not in any material respect in default under or in violation of any Employee
Plan. To the knowledge of THCI, there is no default or violation by any party
to any Employee Plan. No legal action, suit or claim is pending or, to the
knowledge of THCI, threatened with respect to any Employee Plan (other than
claims for benefits in the ordinary course) that could reasonably be expected to
give rise to any material liability to the Management Company and, to the
knowledge of THCI, no fact or event exists that could reasonably be expected to
give rise to any such action, suit or claim.
(d) Except as described in Section 3.12(d) of the THCI
Disclosure Schedule, each Employee Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has received a
favorable determination letter from the IRS that it is so qualified and each
trust established in connection with any such Employee Plan that is intended to
be exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such determination letter from the IRS
that could reasonably be expected to adversely affect the qualified status of
any such Employee Plan or the exempt status of any such trust.
(e) Except as described in Section 3.12(e) of the THCI
Disclosure Schedule, none of THCI, any THCI Subsidiary, THCI Partnership or the
Management Company has incurred any material liability under, arising out of or
by operation of Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course), including,
without limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or
(ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and
no fact or event exists that could reasonably be expected to give rise to any
such liability. No reportable event (within the meaning of Section 4043 of
ERISA) has occurred or, to the knowledge of THCI, is expected to
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occur with respect to any Employee Plan subject to Title IV of ERISA. No
Employee Plan is subject to Title IV of ERISA.
SECTION 3.13. LABOR MATTERS. (a) Set forth in Section 3.13(a)
of the THCI Disclosure Schedule is a list of each collective bargaining
agreement or other labor union contract applicable to Transferred Employees.
(b) Except as described in Section 3.13(b) of the THCI
Disclosure Schedule, (i) there are no material controversies pending or, to the
knowledge of THCI, threatened between the Management Company and any of its
employees, (ii) there are no material grievances outstanding against the
Management Company under any such agreement or contract, (iii) there are no
material unfair labor practice complaints pending against the Management Company
before the National Labor Relations Board and (iv) as of the date of this
Agreement, there are no strikes, slowdowns, work stoppages or lockouts pending
or, to the knowledge of THCI, threatened, by or with respect to any employees of
the Management Company.
SECTION 3.14. MATERIAL CONTRACTS. (a) Section 3.14(a) of the
THCI Disclosure Schedule lists each of the following contracts and agreements of
THCI, the THCI Partnerships, the THCI Subsidiaries, the Management Company and
the Partnerships (each such contract and agreement, being a "MATERIAL
CONTRACT"):
(i) all management contracts with respect to the Properties
and all amendments, supplements and modifications thereto;
(ii) all documents evidencing or creating indebtedness secured
by the Properties outstanding on the date of this Agreement ("EXISTING
DEBT") and all related security agreements, mortgages and guarantees;
(iii) the partnership agreements and all amendments,
modifications and supplements thereto with respect to the Partnerships;
(iv) all leases and all amendments, modifications and
supplements thereto of major department stores that are tenants on the
Properties;
(v) all reciprocal easement agreements and reciprocal
operating agreements and all amendments, modifications and supplements
thereto with anchor tenants at the Properties; and
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(vi) all material disposition and development agreements and
owner participation agreements with any Governmental Authority.
(b) True and complete copies of the Material Contracts have
been made available to the Acquirors. Except with respect to Material Contracts
described in Section 3.14(a)(vi), as to which no representation or warranty is
made, and except as disclosed in Section 3.14(b) of the THCI Disclosure Schedule
or as would not have a Material Adverse Effect (i) each Material Contract is
valid and binding on the respective parties thereto and is in full force and
effect, (ii) upon consummation of the transactions contemplated by this
Agreement, except to the extent that any consents set forth in Section 3.03(b)
of the THCI Disclosure Schedule are not obtained, each Material Contract shall
continue in full force and effect without penalty or other adverse consequence,
(iii) neither THCI nor any THCI Subsidiary or any THCI Partnership is in breach
of, or default under, any Material Contract and (iv) to the knowledge of THCI,
no other party to any Material Contract is in breach thereof or default
thereunder.
(c) The aggregate amount of Existing Debt outstanding as of
March 31, 1998 with respect to each of the Properties is set forth in
Section 3.14(c) of the THCI Disclosure Schedule.
SECTION 3.15. THE MANAGEMENT COMPANY. Except as would not have
a Material Adverse Effect, the Management Company will, on the Initial Closing
Date, own or lease or have the legal right to use all such properties, assets
and rights as are necessary in the conduct of its business as currently
conducted. The Management Company's assets are maintained in accordance with
business practices generally accepted in the industry, and are in all material
respects in good operating condition and repair, ordinary wear and tear
excepted, and are suitable for the purposes for which they are used.
SECTION 3.16. BROKERS. Except for Merrill Lynch & Co. and J.P.
Morgan Securities Inc. (collectively, the "THCI FINANCIAL ADVISORS"), no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of THCI, any THCI Partnership or
any THCI Subsidiary. THCI is solely responsible for the fees and expenses of
the THCI Financial Advisors.
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SECTION 3.17. RENT ROLLS. THCI has delivered to Acquirors a
rent roll for each Property, copies of which are attached as Section 3.17 of the
THCI Disclosure Schedule (collectively, the "RENT ROLLS"), which Rent Rolls are
true, accurate and complete in all material respects as to all matters set forth
therein as of the respective dates thereof.
(a) As of the respective dates of the Rent Rolls, all of the
leases reflected in the Rent Rolls are in full force and effect except as
specifically identified in the Rent Rolls;
(b) As of the respective dates of the Rent Rolls, except as
disclosed in the rent roll or in Section 3.17 of the THCI Disclosure Schedule,
no tenant has delivered written notice (not heretofore substantially complied
with in all material respects or withdrawn) asserting any material claim or
basis for any material claim for reduction, deduction, or set-off against the
rent under any lease;
(c) As of the respective dates of the Rent Rolls, except as
disclosed in the Rent Rolls or in Section 3.17 of the THCI Disclosure Schedule,
to the knowledge of THCI, there is no material default by THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership in
the performance of any material obligations under any lease or events that, but
for the lapse of time or the giving of notice, or both, would constitute such a
default by THCI, such THCI Subsidiary, THCI Partnership, Partnership or Second
Tier Partnership;
(d) No tenant has an option, right of refusal or other
contractual right to purchase all of any portion of any Property.
SECTION 3.18. OTHER ASSETS. Except for the Excluded Assets,
neither THCI nor any THCI Subsidiary or THCI Partnership or any of their
respective Affiliates owns any interest, or has an option to acquire any
interest in (i) any of the Properties, Partnerships or Second Tier Partnerships
that is not subject to the terms of this Agreement, or (ii) any land adjacent to
the Properties that was acquired for purposes of the expansion of any of the
Properties.
SECTION 3.19. NO MATERIAL DEFECTS. To THCI's knowledge, and
except as set forth on Section 3.19 of the THCI Disclosure Schedule, there are
no defects in the roof, foundation, structural, mechanical or HVAC systems and
masonry walls in any of the Properties that would have a Material Adverse
Effect.
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SECTION 3.20. PARTICIPATIONS. Except as disclosed in Section
3.20 of the THCI Disclosure Schedule, no third party is entitled to receive any
interest, rent or other payments from THCI or any THCI Subsidiary, THCI
Partnership, any Partnership or Second Tier Partnership calculated based on the
cash flow, receipts or income of any of the Properties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRORS
Each Acquiror, severally but not jointly, represents and warrants
to THCI as follows:
SECTION 4.01. INCORPORATION AND AUTHORITY. Such Acquiror is a
corporation duly incorporated, validly existing and in good standing under the
laws of the its jurisdiction of incorporation and has all necessary corporate
power and authority to enter into this Agreement and each Ancillary Agreement to
which it is to be a party, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by such Acquiror of this Agreement and each Ancillary
Agreement to which it is to be a party, the performance by such Acquiror of its
obligations hereunder and thereunder and the consummation by such Acquiror of
the transactions contemplated hereby and thereby have been approved by all
necessary action of the Board of Directors and stockholders of such Acquiror.
This Agreement has been, and, at each Closing, each Ancillary Agreement
delivered at such Closing to which such Acquiror is a party will be, duly
executed and delivered by such Acquiror, and (assuming due authorization,
execution and delivery by THCI of this Agreement and by THCI, a THCI Partnership
or a THCI Subsidiary, as the case may be, of such Ancillary Agreement) this
Agreement and such Ancillary Agreements constitute or will constitute, as the
case may be, legal, valid and binding obligations of such Acquiror enforceable
against such Acquiror in accordance with their respective terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency (including,
without limitation, all Laws relating to fraudulent transfers), moratorium or
similar Laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 4.02. NO CONFLICT. Assuming that all consents,
approvals, authorizations and other actions described in Section 4.03 have been
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obtained, and except as may result from any facts or circumstances relating
solely to THCI, any THCI Partnership or any THCI Subsidiary, the execution,
delivery and performance by such Acquiror of this Agreement and by such Acquiror
of the respective Ancillary Agreements to which it is a party do not and will
not (a) violate or conflict with the certificate of incorporation or by-laws (or
similar organizational documents) of such Acquiror, (b) except as would not have
a material adverse effect on the ability of such Acquiror to consummate the
transactions contemplated by this Agreement or the Ancillary Agreements to which
it is a party or to perform any of its material obligations hereunder or
thereunder, conflict with or violate any Law applicable to such Acquiror, or
(c) except as would not have a material adverse effect on the ability of such
Acquiror to consummate the transactions contemplated by this Agreement or the
Ancillary Agreements to which it is a party or to perform any of its material
obligations hereunder or thereunder, result in any breach of, or constitute a
default (or event which, with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on, any of the assets or properties of such Acquiror pursuant to,
any Contract relating to such assets or properties to which such Acquiror or any
of its subsidiaries is a party or by which any of such assets or properties is
bound.
SECTION 4.03. CONSENTS AND APPROVALS. (a) The execution and
delivery by such Acquiror of this Agreement and each Ancillary Agreement to
which it is a party do not or will not, as the case may be, and the performance
by such Acquiror of this Agreement and each Ancillary Agreement to which it is
to be a party will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any Governmental Authority, except
(i) the notification requirements of the HSR Act, if applicable, (ii) where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not have a material adverse effect on the
ability of such Acquiror to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements to which it is a party or to perform any
of its material obligations hereunder or thereunder and (iii) as may be
necessary as a result of any facts or circumstances relating solely to THCI, any
THCI Partnership or any THCI Subsidiary.
(b) The execution and delivery by such Acquiror of this
Agreement and the Ancillary Agreements to which it is to be a party do not or
will not, as the case may be, and the performance by such Acquiror of this
Agreement and the Ancillary Agreements to which it is to be a party will not,
require any third-party consents, approvals, authorizations or actions, except
where failure to obtain such consents, approvals, authorizations or actions
would not have a material adverse effect on the
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ability of such Acquiror to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements to which it is a party or to perform any
of its material obligations hereunder or thereunder.
SECTION 4.04. LITIGATION. There are no claims, actions,
proceedings or investigations pending or, to the knowledge of such Acquiror,
threatened against such Acquiror that seek to delay or prevent the consummation
of the transactions contemplated by this Agreement or the Ancillary Agreements
to which it is a party or which would have a material adverse effect on the
ability of such Acquiror to consummate the transactions contemplated hereby or
thereby or to perform any of its material obligations hereunder or thereunder.
SECTION 4.05. FINANCING. Such Acquiror has or has available to
it all funds necessary to consummate the transactions contemplated by this
Agreement.
SECTION 4.06. BROKERS. Except for Goldman Sachs & Co. (the "WEA
FINANCIAL ADVISORS"), which is acting as financial advisor to WEA in connection
with the transactions contemplated by this Agreement, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of either Acquiror. WEA is solely
responsible for the fees and expenses of the WEA Financial Advisors.
SECTION 4.07. INVESTMENT INTENT. Such Acquiror is acquiring the
Management Company Shares and, if transferred to such Acquiror, the Partnership
Interests solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. THCI CONDUCT OF BUSINESS PRIOR TO THE APPLICABLE
CLOSING. (a) THCI covenants and agrees that, between the date hereof and the
Initial Closing Date, THCI shall operate the Management Company and the
Properties managed by the Management Company or any other Affiliate of THCI in
the ordinary course and consistent with THCI's prior practice, including by
keeping the Properties insured substantially as described in Section 3.10,
except:
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(i) as described in Section 5.01(a)(i) of the THCI Disclosure
Schedule or as otherwise contemplated by this Agreement;
(ii) the assets described on Exhibit 5.01(a)(ii) may be
transferred from the Management Company prior to the Initial Closing;
(iii) the assets described on Exhibit 5.01(a)(iii) may be
transferred to the Management Company prior to the Initial Closing;
(iv) management contracts may be amended to provide that, in
the event that any Property or Partnership Interest is not transferred
to the Acquirors pursuant to this Agreement, the management contract
relating to the applicable Property may be terminated at any time by the
applicable Partnership or Second Tier Partnership upon 30 days' prior
written notice;
(v) THCI and any THCI Partnership, THCI Subsidiary,
Partnership and Second Tier Partnership may each enter into, amend,
modify, or terminate any lease, sublease, reciprocal easement agreement,
easement or other agreement relating to any Property if (A) failure to
do so would result in a breach of a contractual obligation to a third
party or breach of a fiduciary obligation to another partner, (B) the
agreement is approved by the Acquirors, which approval may not be
unreasonably withheld or delayed with respect to leases (other than
anchor tenant leases) or (C) such leases (other than anchor tenant
leases) are consistent with leasing guidelines approved by the
Acquirors, which approval, may not be unreasonably withheld or delayed,
provided that with respect to an anchor tenant, no anchor tenant
agreement may be entered into, modified, amended or terminated without
the consent of the Acquirors, which may be withheld in their sole
discretion; and
(vi) THCI and any THCI Partnership, THCI Subsidiary,
Partnership and Second Tier Partnership may repay or refinance all or
any portion of any Existing Debt (other than in respect of Solano Mall,
where a prepayment is prohibited by the terms thereof or Existing Debt
in Partnerships where the interest to be acquired is a Partnership
Interest) regardless of any prepayment restrictions that may apply;
PROVIDED, HOWEVER, that (A) the terms and conditions of any refinancing
shall be at least as favorable as such terms and conditions as are
generally available in the market at the time of refinancing for similar
loans, (B) the principal amount of the Existing Debt on the date hereof
shall not be increased as a result of any such refinancing and (c) the
refinancing shall provide that the interest to be paid shall be a
floating rather than a fixed
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rate and that there shall be no prepayment fee thereunder (a prepayment
permitted under this clause with respect to the Existing Debt described
in Section 5.01(a)(vi) of the THCI Disclosure Schedule being referred to
as a "QUALIFIED PREPAYMENT").
(b) In furtherance and not in limitation of the foregoing,
THCI covenants and agrees that, except as described in Section 5.01(a), in
Section 5.01(d) or in Section 5.01(a) of the THCI Disclosure Schedule, it will
not, prior to the Applicable Closing, without the consent of the Acquirors,
(i) make any material change in operating policies and procedures used by THCI
with respect to the Properties managed by THCI, any THCI Partnership or any THCI
Subsidiary, (ii) in the case of the Expansion Properties, incur Expansion Costs
in excess of the aggregate amount specified in the budget described in
Section 5.01(b) of the THCI Disclosure Schedule, (iii) commence any new
expansion or redevelopments; (iv) sell or contract to sell any of the Properties
or Partnership Interests; (v) apply for or consent to the modification of any
zoning of a Property; or (vi) amend, modify or terminate any of the Material
Contracts.
(c) THCI shall continue to be solely responsible for, and
THCI shall use its commercially reasonable efforts in, continuing to completion
the construction of Fashion Outlet, generally in accordance with the development
plan for Fashion Outlet previously delivered by THCI to the Acquirors. The
Closing for Fashion Outlet shall not occur prior to completion of construction
of Fashion Outlet by THCI. THCI shall be obligated to pay for all hard and soft
costs incurred in connection with the construction of Fashion Outlet. As THCI
is not the general contractor of Fashion Outlet, THCI shall not warrant the
workmanship, design or construction of all or any part of Fashion Outlet, it
being expressly understood that the Acquirors are assuming the risk thereof, but
all warranties and guaranties of the general contractor shall be assigned to the
Acquirors at the Applicable Closing and THCI shall advise the Acquirors of the
times when the final punch list is to be prepared so as to permit the Acquirors
to participate in the preparation thereof. In addition, at the Applicable
Closing, THCI shall pay to the Acquirors in respect of any space that is not
leased at that time the budgeted cost for the initial lease up of such portion
of the Property, including, without limitation, tenant allowances and brokerage
commissions.
(d) THCI shall have the right to cause Midway Associates to
transfer its interest in the Corte Madera Partnership to an entity that is
wholly owned, directly or indirectly, by THCI (the "NEW ENTITY"), and, in such
event, from and after the date of transfer, the New Entity shall be deemed for
all purposes of this Agreement to be the Partner in the Corte Madera
Partnership.
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(e) As promptly as is reasonably practicable after the date
hereof, provided that there is no material adverse consequence to either
Acquiror as a result thereof and that all requisite lender consents and other
third party consents have been obtained, the Acquirors and THCI shall cause the
dissolution of EWH Escondido Associates, L.P. (North County Fair) and H-S Las
Vegas Associates (Fashion Show) and cause the applicable Properties to be
distributed to the partners in such Partnerships as tenants-in-common. Each of
THCI and the Acquirors shall cause its respective co-tenants to enter into
tenancy-in-common agreements for such Properties that contain the same
substantive terms as the applicable partnership agreements for such Properties,
except for such modifications as are reasonably required to reflect the
difference in ownership structure so as to create, to the extent practicable,
the same types of rights and obligations as the parties had as partners in the
Partnerships (including, without limitation, restrictions on the mortgaging of
such tenancy-in-common interests and waivers of the rights of partition). THCI
shall pay any transfer taxes and legal fees and other fees of consultants
incurred in connection with any transfers of such TC Interest which occur prior
to the 6 month anniversary of the Applicable Closing Date other than the
transfer taxes, legal fees and other fees of consultants that would have been
incurred by the Aquirors had the Partnership Interest been transferred instead
of the TC Interest. At the Applicable Closing, the Acquirors shall cause an
Affiliate of either Acquiror to purchase the TC Interest of the applicable
Co-Tenant (and, at such time, all amounts owed between the co-tenants shall be
settled) and, thereafter, the Acquirors shall cause each associated Property to
continue to be held as a Tenancy under the applicable tenancy-in-common
agreement until the earlier of the sale to an unaffiliated third party by the
applicable Acquiror's associated co-tenants of the entire Property Assets
associated with such Property or January 1, 2001; PROVIDED that nothing
contained herein shall prevent Acquiror's associated co-tenants from
transferring partial co-tenancy interests in each associated Property. In the
event that the conversion of either such Property to a Tenancy has not been
consummated on or prior to November 15, 1998, then, in lieu of transferring the
TC Interest in such Tenancy, THCI shall be obligated to transfer to the
Acquirors, and the Acquirors shall be obligated to purchase, the Partnership
Interest associated with such Property, and in determining the Adjusted
Allocated Purchase Price for such Partnership Interest, the amount in clause
(b)(i) of the definition of Adjusted Allocated Purchase Price shall be the "100%
Amount" for such TC Interest.
SECTION 5.02. INVESTIGATION. (a) The Acquirors acknowledge and
agree that they (i) have made their own inquiry and investigation into, and,
based thereon, have formed an independent judgment concerning, the Properties,
the Management Company and the Partnership Interests and (ii) will not assert
any claim against THCI or any THCI Subsidiary or THCI Partnership or any of
their respective
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directors, officers, employees, agents, stockholders, Affiliates, consultants,
investment bankers or representatives, or hold THCI or any such Persons liable,
for any inaccuracies, misstatements or omissions with respect to such
information furnished by THCI or such Persons concerning the Properties, the
Management Company or the Partnership Interests, other than any inaccuracies or
misstatements in the representations and warranties contained in this Agreement.
The Acquirors acknowledge that THCI has not made any representation or warranty
with respect to any estimates, projections, forecasts, plans or budgets that may
have been made available to or discussed with the Acquirors.
(b) The Acquirors acknowledge and agree that, except as
expressly set forth in this Agreement, the Acquirors are acquiring each
Property, the Management Company Shares and each Partnership Interest in its "as
is" condition "subject to all faults" and specifically and expressly without any
warranties, representations or guarantees, either express or implied, of any
kind, nature, or type whatsoever from or on behalf of THCI. The Acquirors
acknowledge that, except as expressly set forth in this Agreement, the Acquirors
have not relied and are not relying on any information, document, reports, sales
brochure or other literature, maps or sketches, financial information,
projections, estimates, forecasts, plans, budgets, pro formas or statements that
may have been given by or made by or on behalf of THCI. The Acquirors further
acknowledge that, except as otherwise expressly set forth herein, all materials
relating to the Properties, the Management Company Shares and the Partnership
Interests that have been provided by THCI (including, without limitation, the
Real Estate Records and any reports prepared by any consultants) have been
provided without any warranty or representation, expressed or implied, as to
their content, suitability for any purpose, accuracy, truthfulness or
completeness, and the Acquirors shall not have any recourse against THCI, any
THCI Partnership or any THCI Subsidiary or any of their respective directors,
officers, employees, agents, stockholders, Affiliates, consultants, investment
bankers or representatives for any information in the event of any errors
therein or omissions therefrom.
SECTION 5.03. ACCESS TO INFORMATION. (a) Within 15 days after
the date of this Agreement, THCI shall deliver to the Acquirors a list setting
forth, to the knowledge of THCI, all corporations, partnerships, limited
liability companies and other entities in which a THCI Subsidiary, a THCI
Partnership, a Partnership or a Second Tier Partnership owns a beneficial
interest that may be directly or indirectly acquired by the Acquirors pursuant
to the terms of this Agreement. From the date hereof until the Applicable
Closing, upon reasonable notice, THCI shall, and shall cause each THCI
Partnership and THCI Subsidiary and each of their respective officers,
directors, employees, auditors and agents to, (i) afford the officers,
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employees, authorized agents and representatives of the Acquirors reasonable
access, during normal business hours, to the offices, properties, books and
records of THCI, the THCI Partnerships and the THCI Subsidiaries relating to the
Properties, the Management Company and the Partnership Interests and
(ii) furnish to the officers, employees and authorized agents and
representatives of the Acquirors such additional financial and operating data
and other information regarding the Properties, the Management Company and the
Partnership Interests as the Acquirors may from time to time reasonably request;
PROVIDED, HOWEVER, that (A) such investigation shall not unreasonably interfere
with any of the businesses or operations of THCI or any of its Affiliates
(including the THCI Partnerships and the THCI Subsidiaries) or the Properties,
the Partnerships or the Second Tier Partnerships, (B) the Acquirors shall not,
prior to the Applicable Closing, have any contact whatsoever with respect to the
Properties or the Partnership Interests or with respect to the transactions
contemplated by this Agreement with any partner, lender, ground lessor, anchor
department store or other tenant of THCI or any THCI Partnership, THCI
Subsidiary, Partnership or Second Tier Partnership except in consultation with
THCI and then only with the express prior approval of THCI, which approval shall
not be unreasonably withheld, and (C) all requests by the Acquirors for access
or information pursuant to this Section 5.03 shall be submitted or directed
exclusively to an individual to be designated by THCI. The Acquirors shall not
be permitted to conduct any invasive tests on any Property without THCI's prior
written consent. The Acquirors agree to indemnify THCI from and against any and
all losses, damages or claims suffered by THCI as a result of any investigations
or inspections made by the Acquirors.
(b) In order to allow THCI to investigate whether the
payments required pursuant to Section 2.07(c) have been made correctly, to
facilitate the resolution of any third party claims and to prepare documents
required to be filed by THCI with Governmental Authorities, after an Applicable
Closing, upon reasonable notice, the Acquirors shall (i) afford the officers,
employees and authorized agents and representatives of THCI reasonable access,
during normal business hours, to the books and records of the Acquirors relating
to the assets transferred and the liabilities assumed at such Closing,
(ii) furnish to the officers, employees and authorized agents and
representatives of THCI such additional financial and other information
regarding such assets and liabilities as THCI may from time to time reasonably
request and (iii) make available to THCI (at THCI's cost and expense) the
employees of the either Acquiror whose assistance, testimony or presence is
deemed necessary by THCI, in its reasonable judgment, to assist THCI in
evaluating or defending any such claims, including as witnesses in hearings or
trials for such purposes.
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(c) The Acquirors agree that they shall preserve and keep all
books and records in respect of the Properties, the Management Company and the
Partnership Interests in the Acquirors' possession for a period of at least five
years from the last Closing Date. After such five-year period, before either
Acquiror shall dispose of any of such books and records, at least 90 calendar
days' prior written notice to such effect shall be given by such Acquiror to
THCI, and THCI shall be given an opportunity, at its cost and expense, to remove
and retain all or any part of such books and records as THCI may select. During
such five-year period, duly authorized representatives of THCI shall, upon
reasonable notice, have access thereto during normal business hours to examine,
inspect and copy such books and records.
SECTION 5.04. CONFIDENTIALITY. The terms of the letter
agreements dated March 4, 1998 and March 3, 1998, respectively (together, the
"CONFIDENTIALITY AGREEMENTS") between each of Rouse and WEA, on the one hand,
and TrizecHahn Corporation, on the other hand, are hereby incorporated by
reference and shall continue in full force and effect until the last Closing, at
which time such Confidentiality Agreements and the obligations of the parties
under this Section 5.04 shall terminate, PROVIDED that the provisions relating
to the solicitation of employees shall survive in accordance with the provisions
of the Confidentiality Agreement, except with respect to Transferred Employees.
If this Agreement is, for any reason, terminated prior to the Initial Closing,
the Confidentiality Agreements shall continue in full force and effect
thereafter in accordance with their respective terms.
SECTION 5.05. REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS.
(a) THCI shall use its good faith commercially reasonable efforts to obtain the
authorizations, consents, orders and approvals necessary for its execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and each Ancillary Agreement (including, without limitation, the consent of
(i) Governmental Authorities, (ii) landlords under the Ground Leases,
(iii) lenders (including lenders of Existing Debt or any refinancings thereof),
(iv) partners in any Partnership or Second Tier Partnership, (v) redevelopment
authorities and (vi) tenants at any Property), and the Acquirors shall cooperate
fully with THCI in promptly seeking to obtain all such authorizations, consents,
orders and approvals. If required by the HSR Act, each party hereto agrees to
make an appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated by this Agreement within five
Business Days after the date hereof and to supply promptly any additional
information and documentary material that may be requested pursuant to the
HSR Act. The parties hereto will not take any action that will have the effect
of delaying, impairing or impeding the receipt of any required approvals.
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(b) The Acquirors shall use their good faith commercially
reasonable efforts to assist THCI in obtaining the consents of third parties
listed in Section 3.03(b) of the THCI Disclosure Schedule, including (i)
providing to such third parties such financial statements and other financial
information as such third parties may reasonably request, (ii) agreeing to
commercially reasonable adjustments to the terms of the Contracts with such
third parties (PROVIDED that neither party hereto shall be required to agree to
any increase in the amount payable with respect to, or any modification that
makes more burdensome, in any material respect, any Liabilities assumed by such
party with respect to such Contracts) and (iii) executing agreements to effect
the assumption of such Contracts on or before the Applicable Closing.
(c) In the event that THCI is unable to obtain any consent
referred to in Section 5.05(a) or (b) prior to December 31, 1998, THCI may elect
not to sell the affected Property or Partnership Interest, as applicable, and
such Property or Partnership Interest shall no longer be subject to this
Agreement, and the terms of this Agreement shall be modified accordingly.
(d) The Acquirors shall use their good faith, commercially
reasonable efforts to cause THCI and each of its Affiliates to be released as of
the Applicable Closing, or as soon thereafter as possible, from all guaranties,
guaranty obligations, indemnities and indemnity obligations of THCI and such
Affiliates relating principally to the transferred Properties and applicable to
the period subsequent to the Applicable Closing. The Acquirors shall cause to
be issued as of the Applicable Closing, or as soon thereafter as possible,
letters of credit, surety bonds and similar instruments in substitution of
letters of credit, surety bonds and similar instruments furnished by THCI and
any of its Affiliates relating principally to the Properties. The Acquirors
agree to indemnify THCI and each of its Affiliates for any and all Losses
incurred by THCI and any such Affiliate arising out of any such guaranties,
guaranty obligations, indemnities, indemnity obligations, letters of credit,
surety bonds and similar instruments, except to the extent related to
occurrences prior to the Applicable Closing.
SECTION 5.06. NOTIFICATION TO GOVERNMENTAL AUTHORITIES. The
Acquirors and THCI shall cooperate to provide notification, promptly after each
Closing, and in any event not later than when due, to each Governmental
Authority responsible for the regulatory supervision and administration of the
Properties.
SECTION 5.07. BULK TRANSFER LAWS. The Acquirors hereby waive
compliance by THCI, each THCI Partnership and each THCI Subsidiary with the
provisions of any so-called bulk transfer Laws of any jurisdiction in connection
with
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the sale to the Acquirors of the Property Assets. THCI shall indemnify and hold
harmless the Acquirors against any and all liabilities (including Tax
liabilities) that may be asserted by third parties against the Acquirors as a
result of noncompliance by THCI, a THCI Partnership or a THCI Subsidiary with
any such bulk transfer Law (except for those assumed by the Acquirors hereunder
or in any Assumption Agreement).
SECTION 5.08. USE OF NAME OR OTHER INTELLECTUAL PROPERTY. The
Acquirors acknowledge that they are not acquiring, pursuant to this Agreement,
any rights with respect to any of the THCI Names and Marks. Within 60 calendar
days after the Applicable Closing, the Acquirors shall remove or obliterate from
all of the Property Assets and all assets of the Management Company (including
signs, stationery, packaging, labels and other materials) all THCI Names and
Marks. The Acquirors shall not use or put into use after the Applicable Closing
any signs, stationery, labels or other materials that bear any THCI Names and
Marks. Any signs, stationery, labels and other materials containing any THCI
Names and Marks shall, at the option of THCI upon due notification, be promptly
returned to THCI, in which case the cost of their removal and return shall be
shared equally between the Acquirors and THCI, or, with THCI's written consent,
destroyed or otherwise permanently disposed of. Immediately after the Initial
Closing, the Acquirors shall change the name of the Management Company to a name
that does not include any of the THCI Names and Marks.
SECTION 5.09. PARTNERSHIP INTERESTS. THCI will use good faith,
commercially reasonable efforts (but without obligation, except as contemplated
by this Agreement, to expend funds or to commence legal proceedings) to cause
each Property listed in Section 5.09 of the THCI Disclosure Schedule to be sold
to Acquirors, including the initiation of buy-sell arrangements, requests for
waivers or consents and/or direct negotiations. Notwithstanding the foregoing,
THCI gives no assurance as to the outcome of such actions. In the event that
THCI is unsuccessful in arranging for a sale to the Acquirors of any such
Property, THCI shall, subject to Section 5.10, sell to the Acquirors its
Partnership Interest related to such Property and, if applicable, the provisions
of Exhibit B shall apply thereto.
SECTION 5.10. SPECIAL PROVISIONS RELATING TO RIGHTS OF FIRST
REFUSAL; BUY/SELLS. (a) The Acquirors hereby waive and agree to cause their
respective Affiliates to waive, any rights of first refusal such Persons may
have under the partnership agreements or any other agreements relating to the
Fashion Show Partnership and the North County Fair Partnership with respect to
the transactions contemplated by this Agreement. The Acquirors acknowledge
that, as a condition to
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the applicable Partner's ability to transfer to the Acquirors certain Properties
or the related Partnership Interests, such Partner may be required to (or in the
case of a buy/sell, may elect but is not obligated to) either (i) offer the
Partnership Interest for sale to one or more partners of such Partner (each, an
"OTHER PARTNER") in accordance with certain rights of first refusal or buy/sell
provisions contained in the applicable partnership agreement or (ii) obtain the
consent of one or more Other Partners to the sale of the Property to the
Acquirors and, in either such case, one or more Other Partners has the right to
purchase the Partnership Interest of such Partner in accordance with the
applicable partnership agreement. THCI agrees to offer the applicable
Partnership Interests to the Other Partner or Other Partners in accordance with
the applicable partnership agreement or to request the consent of the Other
Partner or Other Partners, as the case may be, in each case in accordance with
and is required by the applicable partnership agreement. THCI will use
commercially reasonable good faith efforts (but without obligation to expend
funds or to commence legal proceedings) to obtain all required consents. With
respect to each Property identified in Section 5.10 of the THCI Disclosure
Schedule, the terms of this Agreement are hereby modified and amended in the
manner provided in Section 5.10 of the THCI Disclosure Schedule. In addition,
for purposes of clarification, in the event that an Other Partner elects to
purchase the Partnership Interest of such Partner, then, with respect to such
Partnership Interest and the related Property only, (X) the Threshold Amount (as
used with respect to the purchase of the Partnership Interest by such Other
Partner) shall be an amount equal to 1% of the Adjusted Allocated Purchase Price
for such Partnership Interest and the Maximum Amount shall be an amount equal to
10% of such Adjusted Allocated Purchase Price and (Y) the definition of Material
Adverse Effect (as used with respect to the purchase of the Partnership Interest
by such Other Partner) shall mean any change in or effect on the applicable
Property (and not the Properties taken as a whole) that is (individually or in
the aggregate with any other changes therein or effects thereon that would be
specifically addressed by a representation or warranty about such Property
contained in this Agreement but for a "Material Adverse Effect" exception or
qualification thereto), materially adverse to such Property or to the results of
operations of such Property, other than changes resulting from the matters
specified in clauses (a) through (e) of the definition of Material Adverse
Effect. In addition, in the event that an Other Partner elects to purchase the
Partnership Interest of such Partner, the terms of this Agreement shall
automatically be modified and amended as follows with respect to such
Partnership Interest and the related Property only:
(1) THCI (and such Partner) shall not be obligated to sell to
the Acquirors, and the Acquirors shall not be obligated to purchase from
THCI, such Property or Partnership Interest;
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(2) the purchase price payable by the Acquirors at the
Applicable Closing shall be reduced accordingly; and
(3) if the Other Partner elects not to purchase such
Partnership Interest, then the Acquirors shall be obligated to purchase
such Partnership Interest or the related Property, as the case may be,
subject to all of the terms and conditions of this Agreement but
excluding the terms of this Section 5.10.
(b) THCI, by notice to the Acquirors to such effect, shall
have the right to elect to have the Acquirors acquire the Partnership Interest
of DPA in "Plaza" in lieu of the stock of DPA if the consent of the Other
Partners in said Partnership to the substitution of the Acquirors as partners in
said Partnership is obtained. In such event, THCI shall have the right to
submit such interest to the right of first refusal in favor of the Other
Partners in such Partnership in accordance with the terms of the applicable
partnership agreement.
SECTION 5.11. TENANCY-IN-COMMON INTERESTS. (a) In the case of
Partnership Interests to be transferred hereunder, THCI may elect, in its sole
discretion, to dissolve and liquidate the assets of any Partnership or Second
Tier Partnership as a result of which the applicable Partner will become a
Co-Tenant and receive a TC Interest in the applicable Property in lieu of a
Partnership Interest in such Property. In that event, THCI shall be obligated
to convey to the Acquirors, and the Acquirors shall be obligated to purchase
from THCI, such TC Interest, subject to all the other terms and conditions of
this Agreement relating to the transfer by THCI to the Acquirors of a
Partnership Interest, with the following modifications:
(i) the TC Interest shall be held by the Co-Tenant pursuant
to a tenancy-in-common agreement that contains the same substantive
terms as the applicable partnership agreement for such Property, except
for such modifications as are reasonably required to reflect the
difference in ownership structure so as to create, to the extent
practicable, the same types of rights and obligations as the parties had
as partners in the Partnership or Second Tier Partnership (including,
without limitation, restrictions on the mortgaging of such TC Interest
and waivers of the right of partition);
(ii) the purchase price for the TC Interest shall be
calculated in accordance with the definition of Adjusted Allocated
Purchase Price as it relates to Partnership Interests, except that the
amount in clause (b)(i) thereof shall be calculated by determining the
amount that would be payable to a Co-Tenant holding a TC Interest
pursuant to the terms of the applicable
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tenancy-in-common agreement, if the applicable Property Assets had been
sold for a purchase price (assuming no brokerage commissions, transfer
taxes or other transfer costs) equal to the applicable amount set forth
in Section 1.01(A) of the THCI Disclosure Schedule in a sale where
(A) apportionments of the type specified in Section 2.07 had been made
and (B) all joint and several indebtedness of the Co-Tenant and its
co-tenant (and all indebtedness secured by a mortgage on the entire
Property) had been paid in full;
(iii) the Assumed Debt Amount for the TC Interest shall include
all indebtedness of the Co-Tenant, other than indebtedness for which the
Co-Tenant and its co-tenant are jointly and severally liable and
indebtedness secured by a mortgage on the entire Property;
(iv) for purposes of THCI's representations and warranties
hereunder and THCI's closing deliveries, the TC Interest shall be
treated as Owned Real Property or Leased Real Property, as applicable,
and the rights of the other co-tenant shall be deemed a Permitted
Encumbrance; and
(v) THCI shall pay any transfer taxes, legal fees and other
fees of consultants incurred in connection with transfers of such TC
Interest which occur prior to the six-month anniversary of the
Applicable Closing Date other than transfer taxes, legal fees and other
fees of consultants that would have been incurred by the Acquirors had
the Partnership Interest been transferred instead of the TC Interest.
(b) In the case of a transfer of Property Assets hereunder
that are currently owned by a Partnership or a Second Tier Partnership, prior to
the Closing for such Property Assets, THCI shall have the right to cause the
applicable Partnership or Second Tier Partnership that holds such Property
Assets to dissolve and liquidate the assets of such Partnership or Second Tier
Partnership and distribute to the partners tenancy-in-common interests in the
Property Assets. In such event, (i) THCI shall cause all such tenancy-in-common
interests in such Property Assets to be transferred to the applicable Acquiror
at the Applicable Closing in consideration of the Adjusted Allocated Purchase
Price for such Property, (ii) the Assumed Debt Amount and all of THCI's
representations and warranties hereunder shall apply with respect to all such
tenancy-in-common interests as if such tenancy-in-common interests were a
Property, and (iii) THCI shall pay any transfer taxes, legal fees and other fees
of consultants incurred in connection with transfers of such tenancy-in-common
interests which occur prior to the six-month anniversary of the Applicable
Closing Date other than transfer taxes, legal fees
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and other fees of consultants that would have been imposed had the Property been
transferred instead of the tenancy-in-common interests.
SECTION 5.12. LIQUIDATED DAMAGES. If, after receiving the
Initial Closing Date Notice or a Subsequent Closing Date Notice, the Acquirors
shall, in breach of this Agreement, fail to acquire the Properties and
Partnership Interests specified therein on the Closing Date therefor specified
pursuant to Section 2.01, the Acquirors shall pay to THCI an amount equal to 10%
of the aggregate Allocated Purchase Price for such Properties and Partnership
Interests. THCI and the Acquirors agree that actual damages accruing from such
a breach of this Agreement are incapable of precise estimation and would be
difficult to prove, that the payments stipulated in this Section 5.12 bear a
reasonable relationship to the potential injury likely to be sustained in the
event of such a breach and that the payments stipulated in this Section 5.12 are
intended by the parties to provide just compensation in the event of such a
breach and are not intended to compel performance or to constitute a penalty for
nonperformance. If the Acquirors fail promptly to pay to THCI any amounts due
under this Section 5.12, the Acquirors shall be obligated to pay the costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee from the date
such amount was required to be paid at an interest rate equal to the prime rate
published by THE WALL STREET JOURNAL from time to time. THCI's rights pursuant
to this Section 5.12 are in addition to, and may be pursued concurrently with,
THCI's rights pursuant to Section 12.12. The parties hereby acknowledge that
the agreements contained in this Section 5.12 are an integral part of the
transactions contemplated by this Agreement.
SECTION 5.13. FURTHER ACTION. (a) Each of the parties hereto
shall use its commercially reasonable efforts to take or cause to be taken all
appropriate action, do or cause to be done all things necessary, proper or
advisable, and execute and deliver such documents and other papers, as may be
required to carry out the provisions of this Agreement and consummate and make
effective the transactions contemplated by this Agreement.
(b) After the Initial Closing, the Acquirors shall cause the
Management Company to comply with the terms of the management agreements to
which it is a party with respect to any Properties that have not been
transferred (and for which Partnership Interests have not been transferred).
SECTION 5.14. ENVIRONMENTAL REPORTS. Within 30 days of the date
hereof, THCI shall deliver to the Acquirors Phase I Environmental Reports for
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each Property. If such reports recommend Phase II investigations, the Acquirors
may conduct such investigations in accordance with the procedures contemplated
by Section 5.03. In the event that any such Environmental Reports shall
disclose the release of any Hazardous Materials in any of the Properties that
shall have caused a Material Adverse Effect, then unless THCI shall agree, at
its expense, to remediate such condition to the extent required by Environmental
Law or to indemnify the Acquirors against any loss, cost, liability or expense
resulting therefrom, the Acquirors shall not be obligated to acquire the
Property or Properties so affected. The Acquirors shall notify THCI of their
decision as to the acquisition of such Property or Properties promptly after
receipt of the notification of THCI's decision as to remediation or
indemnification, and if, in the absence of remediation or indemnification, the
Acquirors shall elect not to acquire the Property or Properties, THCI shall have
no obligation to convey them pursuant to this Agreement.
SECTION 5.15. RECORD OWNER APPORTIONMENTS. At any Closing at
which Record Owner Shares or Record Owner Partnership Interests are transferred
to the Acquirors, the then-current assets and then-current liabilities of the
Record Owner thereof shall be estimated in good faith by THCI, and THCI shall
pay to the Acquirors the excess, if any, of such current liabilities over such
current assets, or the Acquirors shall pay to THCI the excess, if any, of such
current assets over such current liabilities. To the extent not known on the
Applicable Closing Date, the current assets and liabilities shall be estimated
on the best available information at the time and appropriate settlement made
from time to time as the same are liquidated.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. EMPLOYEES. (a) Except as otherwise expressly
provided in this Article VI or as set forth in Section 6.01(a) of the THCI
Disclosure Schedule, from and after the Initial Closing Date, the Acquirors and
the Management Company shall be responsible for (i) all Employee-related
Liabilities incurred on or after the Initial Closing Date with respect to the
individuals who are employed by the Management Company (including employees on
disability, leave of absence or layoff with recall rights) as of the Initial
Closing Date (collectively referred to herein as the "TRANSFERRED EMPLOYEES")
and their respective dependents and beneficiaries, and (ii) all Employee-related
Liabilities incurred prior to the Initial Closing Date with respect to the
Transferred Employees and their respective dependants and beneficiaries to the
extent such liabilities arise under Employee Plans sponsored by the Management
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Company immediately prior to the Initial Closing Date. The Management Company
shall not be responsible, and shall be reimbursed or indemnified by THCI, for
all Employee-related Liabilities accrued but unpaid prior to the Initial Closing
Date that are not referred to in clause (ii) of the immediately preceding
sentence. "EMPLOYEE-RELATED LIABILITIES" shall include, without limitation,
Liabilities for salaries, bonuses, vacations, workers' compensation, medical and
life insurance benefit claims and other welfare benefits and all Liabilities
arising under the continuation coverage requirements of Section 4980(B)(f) of
the Code and Section 601 of ERISA.
(b) To the extent that service is relevant for purposes of
eligibility, vesting, calculation of any benefit, or benefit accrual under any
employee benefit plan, program or arrangement established or maintained by the
Acquirors or the Management Company (other than any defined benefit pension
plan) following the Initial Closing Date for the benefit of Transferred
Employees, such plan, program or arrangement shall credit such employees for
service on or prior to the Initial Closing Date that was recognized by THCI or
any THCI Subsidiary for purposes of employee benefit plans, programs or
arrangements maintained by any of them. In addition, with respect to any
welfare benefit plan (as defined in Section 3(1) of ERISA) established or
maintained by the Acquirors or the Management Company following the Initial
Closing Date for the benefit of Transferred Employees, such plan shall waive any
pre-existing condition exclusions and provide that any covered expenses incurred
on or before the Initial Closing Date by a Transferred Employee or by a covered
dependent shall be taken into account for purposes of satisfying applicable
deductible coinsurance and maximum out-of-pocket provisions after the Initial
Closing Date.
SECTION 6.02. EMPLOYEE BENEFITS. For a period of one year
following the Initial Closing Date, the Acquirors shall cause the Management
Company to provide Transferred Employees with benefits (including, without
limitation, retirement and welfare benefits) that either are (i) substantially
comparable, in the aggregate, to the benefits provided under the Employee Plans
as in effect immediately prior to the Initial Closing Date or (ii) the same as
the benefits generally made available to either of the Acquirors' similarly
situated employees.
SECTION 6.03. EMPLOYEE PLANS. From and after the Initial
Closing Date, the Management Company shall be responsible for the Employee Plans
it sponsored immediately prior to such date (which plans are listed in
Section 6.03 of the THCI Disclosure Schedule), and the Acquirors shall cause the
Management Company to comply with the terms and conditions of such plans. With
respect to any Employee Plan which is qualified under Section 401(a) of the Code
and was not sponsored by the Management Company prior to the Initial Closing
Date, the Acquirors shall either
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cause the Management Company to establish a plan having substantially similar
terms or designate a plan maintained by an Acquiror or one of its subsidiaries
or affiliates to receive a transfer of the accrued benefits of each Transferred
Employee from such Employee Plan, which plan must also satisfy the requirements
of such Section 401(a) of the Code. Any such transfers shall be effected as
soon as practicable after the Initial Closing Date, be effective as of the later
of the Initial Closing Date or the last valuation date immediately preceding
such transfer, and shall be subject to the delivery by an Acquiror to THCI of a
determination letter indicating the qualified status of such plan or an opinion
of counsel to such Acquiror that the terms of such plan meet the applicable
requirements of such Section 401(a).
SECTION 6.04. OTHER EMPLOYEE BENEFITS. With respect to the
severance plans listed on Section 6.03 of the THCI Disclosure Schedule, THCI
agrees that no severance shall be payable thereunder to any participant who
voluntarily resigns from his or her employment with the Management Company
without Good Reason. For this purpose, "Good Reason" means (a) a reduction in a
participant's base salary as in effect immediately prior to the Initial Closing
Date, (b) a participant ceasing to be eligible for an annual cash bonus
opportunity of at least the same potential amount as immediately prior to the
Initial Closing Date or, with respect to a participant, with a target bonus
opportunity expressed as a percentage of base salary, a reduction in the
participant's annual cash bonus opportunity (expressed as a percentage of base
salary) from that in effect immediately prior to the Initial Closing Date, (c) a
failure to provide a participant benefits at the level required under Section
6.02 hereof, (d) a failure to provide a participant with a title of comparable
status to his or her title immediately prior to the Initial Closing Date, (e) an
adverse change in the scope or nature of a participant's responsibilities in
comparison to those in effect immediately prior to the Initial Closing Date, or
(f) a relocation of a participant's principal place of business by 25 miles or
more from the location immediately prior to the Initial Closing Date.
SECTION 6.05. WARN ACT. In the event that the Acquirors do not
continue all the operations of the Properties and/or do not employ all of the
Transferred Employees on and after the Initial Closing Date, the Acquirors shall
be liable and responsible for any notification required to be provided under the
WARN Act (or under any similar state or local Law), and the Acquirors shall
indemnify THCI and the THCI Subsidiaries and their respective Affiliates for any
claims arising out of a breach of this covenant.
SECTION 6.06. INDEMNITY. Anything in this Agreement to the
contrary notwithstanding, the Acquirors hereby agree to indemnify THCI, the THCI
Partnerships and the THCI Subsidiaries and their respective Affiliates against
and hold
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THCI and the THCI Subsidiaries and their respective Affiliates harmless from any
and all Losses arising out of or otherwise in respect of (a) any claim made by
any Transferred Employee against THCI, any THCI Partnership or any THCI
Subsidiary or any of their Affiliates for any severance or termination benefits
pursuant to the provisions of any plan, program or arrangement or any applicable
federal or state Law, (b) any action taken after the Initial Closing by the
Acquirors or the Management Company with respect to any plan (including any
Employee Plan), (c) any claim for payments or benefits by Transferred Employees
or their beneficiaries under any plan (including any Employee Plan) sponsored by
the Management Company or either Acquiror, and (d) any failure of the Acquirors
to discharge their obligations under this Article VI. The provisions of
Sections 9.03(c) and 9.03(d) shall apply to the Acquirors' indemnification
obligations under this Section 6.06.
SECTION 6.07. NO THIRD PARTY BENEFICIARIES. Notwithstanding
anything else contained herein to the contrary, nothing in this Article VI shall
be construed to create any third party beneficiary rights in any person who is
not a party to this Agreement.
SECTION 6.08. REIMBURSEMENT FOR CERTAIN PAYMENTS. THCI shall
reimburse the Acquirors for any payments made pursuant to the Employee Plans
listed in Section 6.03 of the THCI Disclosure Schedule other than
Section 6.03(I)(A) and (II)(A) thereof to the extent that the aggregate payments
made under such plans by the Management Company on or following the Initial
Closing Date exceed US$6.6 million and, with respect to the Employee Plans
listed in Section 6.03(I)(A) and (II)(A) thereof, to the extent that any
payments are required to be made under such plans by the Management Company.
ARTICLE VII
TAX MATTERS
SECTION 7.01. CONVEYANCE TAXES; COSTS. Except as set forth in
Sections 5.01(e) and 5.11(a) and (b), the Acquirors shall be liable for and
shall hold THCI harmless against any real property transfer or gains, sales,
use, transfer, value added, excise, stock transfer, stamp, recording,
registration and any similar Taxes that become payable in connection with the
acquisitions by Acquirors contemplated hereby, and the applicable parties shall
file such applications and documents as shall permit any such Tax to be assessed
and paid on or prior to the Applicable Closing Date in accordance with any
available pre-sale filing procedure. THCI agrees to cooperate
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with the Acquirors and, subject to the other terms of this Agreement and
provided the same does not prohibit or adversely affect in any manner the
ability of THCI or any THCI Subsidiary to qualify for Section 1031 Treatment, to
take any action reasonably requested by the Acquirors in order to minimize the
amount of such Taxes. The parties shall execute and deliver all instruments and
certificates necessary to permit compliance with the foregoing. Each party
shall be responsible for its own attorneys' fees. The Acquirors shall pay the
entire cost of any title insurance (for itself or any lender, including lenders
of indebtedness assumed by the Acquirors hereunder), surveys, title inspections,
environmental reports, engineering reports and appraisals that the Acquirors
elect to obtain in connection with the transactions contemplated hereby. The
Acquirors shall pay any and all attorneys' fees of its lenders and lenders of
indebtedness assumed by the Acquirors hereunder.
SECTION 7.02. TREATMENT OF INDEMNITY PAYMENTS. All payments
made by THCI or the Acquirors, as the case may be, to or for the benefit of the
other party pursuant to any indemnification obligations under this Agreement
shall be treated as adjustments to the consideration for Tax purposes, and such
agreed treatment shall govern for purposes of this Agreement.
SECTION 7.03. ALLOCATION OF CONSIDERATION. Neither THCI nor any
of its Affiliates or the Acquirors or any of their respective Affiliates shall
file any Tax Return, or take a position with a Tax authority in any refund
claim, in any litigation or otherwise, that is inconsistent with the Adjusted
Allocated Purchase Price determined hereunder for any Property or Partnership
Interest or the Allocated Purchase Price for the Management Company Shares, or
that treats the transactions contemplated by this Agreement in a manner
inconsistent with the terms of this Agreement. THCI and the Acquirors shall
inform each other promptly of any challenge by any Tax authority to such
Adjusted Allocated Purchase Price or Allocated Purchase Price, and neither party
shall agree to any adjustment asserted by such Tax authority without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.
SECTION 7.04. EMPLOYEE WITHHOLDING. THCI and the Acquirors
agree that, pursuant to and to the extent permitted by the "Alternative
Procedure" provided in Section 5 of Revenue Procedure 84-77, 1984-2 C.B. 753,
with respect to filing and furnishing IRS Forms W-2, W-3 and 941, (a) THCI and
the Acquirors shall each report on a "predecessor-successor" basis, as set forth
therein, (b) THCI shall be relieved from furnishing Forms W-2 to any of THCI's
employees that become employees of the Acquirors and (c) the Acquirors shall
assume the obligations of THCI to furnish such Forms W-2 to such employees for
the full 1998 calendar year.
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SECTION 7.05. LIKE-KIND EXCHANGE. (a) The parties hereto agree
that, no later than two Business Days prior to an Applicable Closing Date, THCI
may, for the purpose of treating all or part of the sale of Properties hereunder
as a like-kind exchange of property ("SECTION 1031 TREATMENT") under Section
1031 of the Code, assign certain rights that it has under this Agreement,
including its right to receive all or part of the cash consideration it is
entitled to receive at such Closing pursuant to this Agreement, to one or more
qualified intermediaries, as defined in Treasury Regulations Section
1.1031(k)-1(g)(4) (each a "QUALIFIED INTERMEDIARY"), and provide notice of such
assignment to the Acquirors, provided that no such assignment shall release THCI
from its obligations hereunder. In such case, the Acquirors agree to pay such
cash consideration directly to a Qualified Intermediary. In such case, on or
before the day that is 45 days following the Applicable Closing Date, THCI shall
have the right to identify one or more properties to the Qualified Intermediary
as replacement properties for the Properties with respect to which the Qualified
Intermediary received such cash consideration, and, if a property or properties
is so identified, shall have the right to have such property or properties so
identified purchased by the Qualified Intermediary and transferred to THCI on or
before the day that is 180 days following the Applicable Closing Date. In no
event shall the Acquirors have any right to any cash deposited with the
Qualified Intermediary.
(b) The Acquirors agree to cooperate with THCI in taking such
further actions that THCI shall determine are reasonable and necessary in
securing Section 1031 Treatment for all or part of the Properties. THCI agrees
to indemnify the Acquirors against and hold the Acquirors harmless from any
Losses arising from such cooperation.
SECTION 7.06. TAX INDEMNITY. (a) From and after the Initial
Closing Date, THCI agrees to indemnify the Acquirors and the Management Company
against all Taxes imposed on the Management Company with respect to any taxable
period or portion thereof that ends on or before the Initial Closing Date and
against all Taxes imposed on any member of any affiliated group with which the
Management Company has filed a Tax Return on a consolidated basis for any
taxable period or portion thereof based on an interim closing of the books
methodology prior to or including the Initial Closing Date; PROVIDED, HOWEVER,
that no indemnity shall be provided under this Agreement for any Tax resulting
from (i) an actual or deemed election under Section 338 of the Code with respect
to the transactions contemplated by this Agreement; (ii) a reduction in any net
operating loss, capital loss or tax credit carryover allocable to the Management
Company; or (iii) any transaction of the Management Company occurring on the
Initial Closing Date but after the Closing that is not in the ordinary course of
business.
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(b) Payment by THCI of any amounts due under this Section
7.06 in respect of Taxes shall be made within thirty days following written
notice by either of the Acquirors that payment of such amounts to the
appropriate Tax authority is due, PROVIDED that THCI shall not be required to
make any payment earlier than five days before such payment is due to the
appropriate Tax authority. In the case of a Tax that is contested in accordance
with the provisions of Section 7.07, payment of the Tax to the appropriate Tax
authority shall not be considered to be due earlier than the date a final
determination to such effect is made by the appropriate Tax authority or a court
of competent jurisdiction.
SECTION 7.07. CONTESTS. (a) After the Closing Date, the
Acquirors shall promptly notify THCI in writing of the commencement of any Tax
audit or administrative or judicial proceeding or of any demand or claim on the
Acquirors or any of their respective Affiliates which, if determined adversely
to the taxpayer or after the lapse of time, would be grounds for indemnification
under Section 7.06. Such notice shall contain factual information (to the
extent known to the Acquirors or the relevant Affiliate) describing the asserted
Tax liability in reasonable detail and shall include copies of any notice or
other document received from any Tax authority in respect of any such asserted
Tax liability. If the Acquirors fail to give THCI prompt notice of an asserted
Tax liability as required by this Section 7.07 and if THCI is precluded by the
failure to give prompt notice from contesting the asserted Tax liability in both
the administrative and judicial forums, then THCI shall not have any obligation
to indemnify for any loss arising out of such asserted Tax liability to the
extent that THCI was prejudiced as a result of such failure.
(b) THCI may elect to direct, through counsel of its own
choosing and at its own expense, any audit, claim for refund and administrative
or judicial proceeding involving any asserted liability with respect to which
indemnity may be sought under Section 7.06 relating to any taxable period ending
on or before the Closing Date (any such audit, claim for refund or proceeding
relating to an asserted Tax liability is referred to herein as a "CONTEST"). If
THCI elects to direct a Contest, it shall within 30 calendar days of receipt of
the notice of asserted Tax liability notify the Acquirors in writing of its
intent to do so, and the Acquirors shall cooperate and shall cause their
respective Affiliates or their respective successors to cooperate, at THCI's
expense, in each phase of such Contest. In each such case, neither the
Acquirors nor any of their respective Affiliates may settle or compromise any
asserted Tax liability over the objection of THCI. If THCI elects not to direct
the Contest or fails to notify the Acquiror of its election as herein provided,
the Acquirors or any of their respective Affiliates may contest, at their own
expense, such asserted Tax liability or pay or compromise such asserted Tax
liability at THCI's expense.
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SECTION 7.08 SECTION 754 ELECTION. With respect to each
transfer by a Partner of its Partnership Interest to the Acquirors, THCI agrees,
if THCI, a THCI Subsidiary or a THCI Partnership is a managing general partner
of a Partnership at the time that a year-end tax return is filed and if
permitted by the applicable partnership agreement, unless otherwise notified by
the Acquirors, to cause the Partnership and, if applicable, the Second Tier
Partnership, to make an election under section 754 of the Code with respect to
the transferred interest and to make any available election under substantially
similar state or local laws.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF THCI. (a) The
obligations of THCI to consummate the transactions contemplated by this
Agreement for the Initial Closing shall be subject to the satisfaction or
waiver, at or prior to the Initial Closing, of each of the following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Acquirors contained in this Agreement that are
qualified as to materiality shall be true and correct as of the Initial
Closing Date (other than such representations and warranties as are made
as of a certain date, which shall be true and correct as of such certain
date) and the representations and warranties of the Acquirors contained
in this Agreement that are not so qualified shall be true and correct in
all material respects as of the Initial Closing Date (other than such
representations and warranties as are made as of a certain date, which
shall be true and correct in all material respects as of such certain
date), and THCI shall have received a certificate of the Acquirors to
such effect signed by a duly authorized officer of each Acquiror;
(ii) COVENANTS. All covenants contained in this Agreement to
be complied with by the Acquirors on or before the Initial Closing shall
have been complied with in all material respects, and THCI shall have
received a certificate of the Acquirors to such effect signed by a duly
authorized officer of each Acquiror;
(iii) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the transactions to be consummated at
the Initial Closing shall have expired or been terminated;
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(iv) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and has
the effect of making the transactions contemplated by this Agreement for
the Initial Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; PROVIDED, HOWEVER, that the
provisions of this Section 8.01(a)(iv) shall not apply unless THCI has
used its commercially reasonable efforts to have any such order or
injunction vacated;
(v) CONSENTS. The Acquirors, THCI, the THCI Partnerships,
the THCI Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to THCI, with
respect to the Properties and Partnership Interests to be transferred;
and
(vi) ANCILLARY AGREEMENTS. The Acquirors shall have duly
executed and delivered to THCI counterparts of each Ancillary Agreement
to which it they are parties with respect to the Properties to be
transferred.
(b) The obligations of THCI to consummate the transactions
contemplated by this Agreement for each Subsequent Closing shall be subject to
the satisfaction or waiver, at or prior to such Subsequent Closing, of each of
the following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Acquirors contained in this Agreement that are
qualified as to materiality shall be true and correct as of such
Subsequent Closing Date (other than such representations and warranties
as are made as of a certain date, which shall be true and correct as of
such certain date) and the representations and warranties of the
Acquirors contained in this Agreement that are not so qualified shall be
true and correct in all material respects as of such Subsequent Closing
Date (other than such representations and warranties as are made as of a
certain date, which shall be true and correct in all material respects
as of such certain date), and THCI shall have received a certificate of
the Acquirors to such effect signed by a duly authorized officer of each
Acquiror;
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(ii) COVENANTS. All covenants contained in this Agreement to
be complied with by the Acquiror on or before such Subsequent Closing
shall have been complied with in all material respects, and THCI shall
have received a certificate of the Acquirors to such effect signed by a
duly authorized officer of each Acquiror;
(iii) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and has
the effect of making the transactions contemplated by this Agreement for
such Subsequent Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; PROVIDED, HOWEVER, that the
provisions of this Section 8.01(b)(iii) shall not apply unless THCI has
used its commercially reasonable efforts to have any such order or
injunction vacated;
(iv) CONSENTS. The Acquirors, THCI, the THCI Partnerships,
the THCI Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to THCI, with
respect to the Properties and Partnership Interests to be transferred;
and
(v) ANCILLARY AGREEMENTS. The Acquirors shall have duly
executed and delivered to THCI counterparts of each Ancillary Agreement
to which it is a party with respect to the Properties to be transferred
at such Subsequent Closing.
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF THE ACQUIRORS.
(a) The obligations of the Acquirors to consummate the transactions
contemplated by this Agreement for the Initial Closing shall be subject to the
satisfaction or waiver, at or prior to the Initial Closing, of each of the
following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of THCI contained in this Agreement that are qualified as to
materiality shall be true and correct as of the Initial Closing Date
(other than such representations and warranties as are made as of a
certain date, which shall be true and correct as of such certain date),
and the representations and warranties of THCI contained in this
Agreement that are not so qualified shall
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be true and correct in all material respects as of the Initial Closing
Date (other than such representations and warranties as are made as of a
certain date, which shall be true and correct in all material respects
as of such certain date), and the Acquirors shall have received a
certificate of THCI to such effect signed by a duly authorized officer
thereof;
(ii) COVENANTS. All covenants contained in this Agreement to
be complied with by THCI on or before the Initial Closing shall have
been complied with in all material respects, and the Acquirors shall
have received a certificate of THCI to such effect signed by a duly
authorized officer thereof;
(iii) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the transactions to be consummated at
the Initial Closing shall have expired or been terminated;
(iv) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and has
the effect of making the transactions contemplated by this Agreement for
the Initial Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; PROVIDED, HOWEVER, that the
provisions of this Section 8.02(a)(iv) shall not apply unless the
Acquirors have used its commercially reasonable efforts to have any such
order or injunction vacated;
(v) CONSENTS. The Acquirors, THCI, the THCI Partnerships,
the THCI Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to the
Acquirors, with respect to the Properties and Partnership Interests to
be transferred;
(vi) ANCILLARY AGREEMENTS. THCI, a THCI Partnership or a THCI
Subsidiary, as appropriate, shall have duly executed and delivered to
the Acquirors counterparts of each Ancillary Agreement with respect to
the Properties to be transferred at the Initial Closing;
(vii) Subject to the other terms and provisions of this
Agreement, all of the Initial Properties shall be included in the
Initial Closing; and
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(viii) The Acquirors, at their expense and provided they have
ordered the same promptly following the date hereof, shall have received
an ALTA owner or leasehold owner (or equivalent), or commitment to issue
the same, as applicable, title insurance policy with extended coverage
(to the extent available) with respect to each Property included in the
Initial Closing, at standard market rates, subject only to Permitted
Exceptions.
(b) At the Initial Closing, if there is a failure of
condition with respect to one or more of the Properties or Partnership Interests
to be conveyed at the Initial Closing and, with respect to Properties other than
the Initial Properties, the same are not withdrawn by THCI as Properties to be
conveyed at the Initial Closing, then, subject to THCI's right to a reasonable
postponement of the Initial Closing in order to cure the same, the Acquirors may
at their option (i) terminate this Agreement, in which event no party hereto
shall have any further obligations hereunder; (ii) waive the condition and
purchase such Property or Partnership Interest; or (iii) elect not to purchase
such Property or Partnership Interest and purchase the remainder of the
Properties or Partnership Interests to be delivered at the Initial Closing, in
which case the Acquirors shall remain obligated to purchase such Property or
Partnership Interest and the remainder of the Properties and Partnership
Interests to be delivered at Subsequent Closings in accordance with the terms of
this Agreement.
(c) The obligations of the Acquirors to consummate the
transactions contemplated by this Agreement for each Subsequent Closing shall be
subject to the satisfaction or waiver, at or prior to such Subsequent Closing,
of each of the following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of THCI contained in Sections 3.01(a) and 3.16 of this
Agreement that are qualified as to materiality shall be true and correct
as of such Subsequent Closing Date and the representations and
warranties of THCI contained in Sections 3.01(a) and 3.16 of this
Agreement that are not so qualified shall be true and correct in all
material respects as of such Subsequent Closing Date, and the
representations and warranties of THCI contained in Sections 3.01(c),
3.01(d), 3.01(e), 3.02, 3.03, 3.04, 3.05, 3.06, 3.07(a), 3.08, 3.09,
3.10, 3.11, 3.14, 3.17, 3.18, 3.19 and 3.20 of this Agreement that are
qualified as to materiality shall be true and correct with respect to
the Properties and the Partnership Interests, if any, to be transferred
at such Subsequent Closing as of such Subsequent Closing Date (other
than such representations and warranties as are made as of a certain
date, which shall be true and correct as of such certain date) and the
representations and warranties of THCI contained in
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Sections 3.01(c), 3.01(d), 3.01(e), 3.02, 3.03, 3.04, 3.05, 3.06,
3.07(a), 3.08, 3.09, 3.10, 3.11, 3.14, 3.17, 3.18, 3.19 and 3.20 of this
Agreement that are not so qualified shall be true and correct with
respect to the Properties and Partnership Interests, if any, to be
transferred at such Subsequent Closing in all material respects as of
such Subsequent Closing Date (other than such representations and
warranties as are made as of a certain date, which shall be true and
correct in all material respects as of such certain date); and the
Acquirors shall have received a certificate of THCI to such effect
signed by a duly authorized officer thereof;
(ii) COVENANTS. All covenants contained in this Agreement to
be complied with by THCI on or before such Subsequent Closing with
respect to the Properties and the Partnership Interests, if any, to be
transferred at such Subsequent Closing shall have been complied with in
all material respects; and the Acquirors shall have received a
certificate of THCI to such effect signed by a duly authorized officer
thereof;
(iii) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and has
the effect of making the transactions contemplated by this Agreement for
such Subsequent Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; PROVIDED, HOWEVER, that the
provisions of this Section 8.02(b)(iii) shall not apply unless the
Acquirors have used their commercially reasonable efforts to have any
such order or injunction vacated;
(iv) CONSENTS. The Acquirors, THCI, the THCI Partnerships,
the THCI Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to the
Acquirors, with respect to the Properties and Partnership Interests to
be transferred;
(v) ANCILLARY AGREEMENTS. THCI or a THCI Subsidiary, as
appropriate, shall have duly executed and delivered to the Acquirors
counterparts of each Ancillary Agreement with respect to the Properties
to be transferred at such Subsequent Closing; and
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(vi) The Acquirors, at their expense and provided they have
ordered the same promptly following the date hereof, shall have received
an ALTA owner or leasehold owner (or equivalent), or commitment to issue
the same, as applicable, title insurance policy with extended coverage
(to the extent available) with respect to each Property included in the
Subsequent Closing, at standard market rates, subject only to Permitted
Exceptions.
(d) The obligations of the Acquirors to consummate the
transactions contemplated by this Agreement for the Applicable Closing for the
Partnership Interest in the Corte Madera Partnership or Second Tier Partnership
shall be subject to the satisfaction or waiver, at or prior to such Applicable
Closing, of the following additional conditions:(i) the Existing Debt with
respect to such Property shall have been paid in full and (ii) the Acquirors
shall not, as a result of the acquisition of such Partnership Interest, acquire
a direct or indirect interest in the capital stock of Hahn JMB Institutional
Funding Corp.
(e) At a Subsequent Closing, if there is a failure of
condition with respect to the applicable Property or Partnership Interests to be
conveyed at the Subsequent Closing, subject to THCI's right to a reasonable
postponement of the Applicable Closing in order to cure the same, the Acquirors
may at their option (i) waive the condition and purchase each Property or
Partnership Interest or (ii) elect not to purchase such Property or Partnership
Interest, in which case the Acquirors shall remain obligated to purchase such
Property or Partnership Interest and the remainder of the Properties or
Partnership Interests to be delivered at Subsequent Closings in accordance with
the terms of this Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. SURVIVAL. (a) Subject to the limitations and
other provisions of this Agreement, the representations and warranties of the
parties hereto contained herein, to the extent covered in a certificate
delivered at the Applicable Closing pursuant to Section 8.01(a)(i), 8.01(b)(i),
8.02(a)(i) or 8.02(b)(i), as the case may be, shall survive the Applicable
Closing and shall remain in full force and effect, regardless of any
investigation made by or on behalf of THCI or the Acquirors, for a period of one
year after the Applicable Closing Date; PROVIDED, HOWEVER, that (i) the
representations and warranties set forth in Section 3.07 shall survive the
Applicable Closing and remain in full force and effect until the termination of
all liabilities arising
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from the subject matter thereof pursuant to all applicable statutes of
limitations and (ii) the representations and warranties set forth in
Sections 3.04, 3.08 and 3.10 shall not survive the Applicable Closing with
respect to the Properties, Management Company Shares and Partnership Interests
that are transferred at such Closing.
(b) Subject to the limitations and other provisions of this
Agreement, each covenant and agreement, including, without limitation, the
indemnity obligations set forth in Section 7.06, of the parties hereto contained
herein shall survive the Applicable Closing and shall remain in full force and
effect for the shortest of the following: (i) an indefinite period after the
Applicable Closing Date; (ii) until the termination of all liabilities arising
from the subject matter thereof pursuant to all applicable statutes of
limitations and (iii) until the end of the applicable period specified elsewhere
in this Agreement with respect to such covenant or agreement.
SECTION 9.02. INDEMNIFICATION BY THCI. (a) THCI agrees,
subject to the other terms and conditions of this Agreement, to indemnify the
Acquirors and their Affiliates, officers, directors, employees, agents,
successors and assigns (each an "ACQUIRORS INDEMNIFIED PARTY") against and hold
them harmless from all Losses arising out of (i) the breach of any
representation or warranty of THCI contained herein, (ii) any breach of any
covenant or agreement of THCI contained herein (other than any covenant or
agreement contained in Article VI, it being understood that all rights to
indemnification under Article VI are pursuant to its terms), (iii) all
Liabilities of the Management Company arising prior to the Initial Closing other
than Liabilities for which the Acquirors receive a credit pursuant to Section
2.07 (other than Liabilities of the Management Company referred to in Article
VI, it being understood that all rights with respect to indemnification for such
Liabilities are pursuant to Article VI), (iv) with respect to any Property or
Partnership Interest for which a Closing has occurred, any Liability of THCI,
the THCI Partnerships and the THCI Subsidiaries relating to or arising out of
such Property or Partnership Interest, arising or accruing prior to the
Applicable Closing for such Property or Partnership Interest which is not an
Assumed Property Liability and (v) with respect to any Record Owner whose Record
Owner Shares or Record Owner Partnership Interests are transferred to the
Acquirors pursuant to this Agreement, all Liabilities of such Record Owner
arising prior to the Applicable Closing other than Liabilities for which the
Acquirors receive a credit pursuant to Section 5.15. Anything in Section 9.01
to the contrary notwithstanding, no claim may be asserted nor any action
commenced against THCI for breach of any representation or warranty contained
herein, unless written notice of such claim or action is received by THCI
describing in detail the facts and circumstances with respect to the subject
matter of such claim or action on or prior to the 30th day after the date on
which the representation or warranty on which such claim or action is based
ceases to
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survive as set forth in Section 9.01, and such claim or action on or prior to
the date such representation or warranty ceased to survive, in which case such
representation or warranty will survive as to such claim until such claim has
been finally resolved
(b) The indemnification obligations of THCI pursuant to
Section 9.02(a)(i) and (a)(ii) shall not be effective until the aggregate dollar
amount of all Losses that would otherwise be indemnifiable pursuant to this
Section 9.02 exceeds 1% of the aggregate Allocated Purchase Price for the
Properties, Partnership Interests and Management Company Shares (the "THRESHOLD
AMOUNT"), and then only to the extent such aggregate amount exceeds the
Threshold Amount. The indemnification obligations of THCI pursuant to Section
9.02(a)(i) shall be effective only until the dollar amount paid in respect of
the Losses indemnified against under Section 9.02(a)(i) aggregates an amount
equal to 10% of the aggregate Allocated Purchase Price for the Properties,
Partnership Interests and Management Company Shares transferred pursuant to this
Agreement (the "MAXIMUM AMOUNT"). For purposes of this Section 9.02(b), in
computing such individual or aggregate amounts of claims, the amount of each
claim shall be deemed to be an amount net of any insurance proceeds and any
indemnity, contribution or other similar payment actually reserved by the
Acquirors Indemnified Parties from any third party with respect thereto.
(c) Payments by THCI pursuant to Section 9.02(a) shall be
limited to the amount of any liability or damage that remains after deducting
therefrom any insurance proceeds and any indemnity, contribution or other
similar payment actually reserved by the Acquirors Indemnified Parties from any
third party with respect thereto.
(d) An Acquirors Indemnified Party shall give THCI written
notice of any claim, assertion, event or proceeding by or in respect of a third
party as to which such Acquirors Indemnified Party may request indemnification
hereunder or as to which the Threshold Amount may be applied as soon as is
practicable and in any event within 30 days of the time that such Acquirors
Indemnified Party learns of such claim, assertion, event or proceeding;
PROVIDED, HOWEVER, that the failure to so notify THCI shall not affect rights to
indemnification hereunder except to the extent that THCI is actually prejudiced
by such failure. THCI shall have the right to direct, through counsel of its
own choosing, the defense or settlement of any such claim or proceeding at its
own expense, provided that THCI shall not settle any such claim or proceeding
without getting the release of the managing general partner of any Partnership
that is an Acquirors Indemnified Party. If THCI elects to assume the defense of
any such claim or proceeding, THCI shall consult with the Acquirors Indemnified
Party and the Acquirors Indemnified Party may participate in such
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defense, but in such case the expenses of the Acquirors Indemnified Party shall
be paid by the Acquirors Indemnified Party. The Acquirors Indemnified Party
shall provide THCI with access to its records and personnel relating to any such
claim, assertion, event or proceeding during normal business hours and shall
otherwise cooperate with THCI in the defense or settlement thereof, and THCI
shall reimburse the Acquirors Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith. If THCI elects to direct the
defense of any such claim or proceeding, the Acquirors Indemnified Party shall
not pay, or permit to be paid, any part of any claim or demand arising from such
asserted liability unless THCI consents in writing to such payment or unless
THCI, subject to the last sentence of this Section 9.02(d), withdraws from the
defense of such asserted liability or unless a final judgment from which no
appeal may be taken by or on behalf of THCI is entered against the Acquirors
Indemnified Party for such liability. If THCI fails to defend or if, after
commencing or undertaking any such defense, THCI fails to prosecute or withdraws
from such defense, the Acquirors Indemnified Party shall have the right to
undertake the defense or settlement thereof, at THCI's expense. If the
Acquirors Indemnified Party assumes the defense of any such claim or proceeding
pursuant to this Section 9.02(d) and proposes to settle such claim or proceeding
prior to a final judgment thereon or to forego any appeal with respect thereto,
then the Acquirors Indemnified Party shall give THCI prompt written notice
thereof, and THCI shall have the right to participate in the settlement or
assume or reassume the defense of such claim or proceeding.
(e) The Acquirors hereby acknowledge and agree that, except
as provided in Section 12.12, from and after each Closing, its sole and
exclusive remedy with respect to any and all claims relating to the Properties,
Partnership Interests and other assets transferred at such Closing shall be
pursuant to the indemnification provisions set forth in this Article IX and in
Article VII; it being understood that the Acquirors shall retain all of their
other rights and remedies under this Agreement with respect to any and all
Properties, Partnership Interests and other assets not transferred under this
Agreement on or prior to such Closing. In furtherance of the foregoing and
except as specified therein, the Acquirors hereby waive, to the fullest extent
permitted under applicable Law, any and all rights, claims and causes of action
relating to the subject matter of this Agreement that they may have against THCI
arising under or based upon any Law (including, without limitation, any such
rights, claims or causes of action arising under or based upon common law or
otherwise).
(f) Except as set forth in this Agreement, THCI is not making
any representation, warranty, covenant or agreement with respect to the matters
contained herein. Anything herein to the contrary notwithstanding, no breach of
any representation, warranty, covenant or agreement contained herein shall give
rise to any
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right on the part of the Acquirors, after the consummation of the transactions
contemplated hereby, to rescind this Agreement or any of the transactions
contemplated hereby.
(g) THCI shall have no liability under any provision of this
Agreement for and in no event shall the Threshold Amount be applied to any
consequential damages. The Acquirors shall take all reasonable steps to
mitigate Losses for which indemnification may be claimed pursuant to this
Agreement upon and after becoming aware of any event that could reasonably be
expected to give rise to any such Losses.
(h) THCI agrees that until December 31, 1999 it, together
with any guarantor of the obligations of THCI under this Article IX pursuant to
a guaranty in form and substance reasonably acceptable to the Acquiror, shall
maintain a net worth, determined in accordance with Canadian generally accepted
accounting principles, at least equal to the Maximum Amount. THCI shall have
the right to designate one or more such guarantors from time to time, which
guarantors shall become jointly and severally liable with THCI and each other
guarantor at such time as such guarantor delivers the guaranty referred to
above. The Acquirors shall respond promptly to any proposed form of guaranty
submitted by THCI.
SECTION 9.03. INDEMNIFICATION BY THE ACQUIRORS. (a) The
Acquirors agree, subject to the other terms and conditions of this Agreement,
jointly and severally to indemnify THCI and its Affiliates, officers, directors,
employees, agents, successors and assigns (each a "THCI INDEMNIFIED PARTY")
against and hold them harmless from all Losses arising out of (i) the breach of
any representation or warranty of the Acquirors contained herein, (ii) any
breach of any covenant or agreement of the Acquirors contained herein (other
than any covenant or agreement contained in Article VI, it being understood that
all rights to indemnification under Article VI are pursuant to its terms) and
(iii) the Assumed Property Liabilities with respect to the Properties and
Partnership Interests as to which a Closing has occurred. Anything in
Section 9.01 to the contrary notwithstanding, no claim may be asserted nor may
any action be commenced against the Acquirors for breach of any representation
or warranty contained herein, unless written notice of such claim or action is
received by the Acquirors describing in detail the facts and circumstances with
respect to the subject matter of such claim or action on or prior to the 30th
day after the date on which the representation or warranty on which such claim
or action is based ceases to survive as set forth in Section 9.01, and such
claim or action arose on or prior to the date such representation or warranty
ceased to survive, in which case such
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representation or warranty will survive as to such claim until such claim has
been finally resolved.
(b) The indemnification obligations of the Acquirors pursuant
to Section 9.03(a)(i) and (a)(ii) shall not be effective until the aggregate
dollar amount of all Losses that would otherwise be indemnifiable pursuant to
this Section 9.03 exceeds the Threshold Amount, and then only to the extent such
aggregate amount exceeds the Threshold Amount. The indemnification obligations
of the Acquirors pursuant to Section 9.03(a)(i) shall be effective only until
the dollar amount paid in respect of the Losses indemnified against under
Section 9.03(a)(i) aggregates the Maximum Amount. For purposes of this
Section 9.03(b), in computing such individual or aggregate amounts of claims,
the amount of each claim shall be deemed to be an amount net of any insurance
proceeds and any indemnity, contribution or other similar payment actually
recovered by THCI Indemnified Parties from any third party with respect thereto.
(c) Payments by the Acquirors pursuant to Section 9.03(a)
shall be limited to the amount of any liability or damage that remains after
deducting therefrom any insurance proceeds and any indemnity, contribution or
other similar payment actually recovered by THCI Indemnified Parties from any
third party with respect thereto.
(d) A THCI Indemnified Party shall give the Acquirors written
notice of any claim, assertion, event or proceeding by or in respect of a third
party as to which such THCI Indemnified Party may request indemnification
hereunder or as to which the Threshold Amount may be applied as soon as is
practicable and in any event within 30 days of the time that such THCI
Indemnified Party learns of such claim, assertion, event or proceeding;
PROVIDED, HOWEVER, that the failure to so notify the Acquirors shall not affect
rights to indemnification hereunder except to the extent that the Acquirors are
actually prejudiced by such failure. The Acquirors shall have the right to
direct, through counsel of its own choosing, the defense or settlement of any
such claim or proceeding at its own expense. If the Acquirors elects to assume
the defense of any such claim or proceeding, the Acquirors shall consult with
the THCI Indemnified Party, the THCI Indemnified Party may participate in such
defense, but in such case the expenses of the THCI Indemnified Party shall be
paid by the THCI Indemnified Party. The THCI Indemnified Party shall provide
the Acquirors with access to its records and personnel relating to any such
claim, assertion, event or proceeding during normal business hours and shall
otherwise cooperate with the Acquirors in the defense or settlement thereof, and
the Acquirors shall reimburse the THCI Indemnified Party for all the reasonable
out-of-pocket expenses of such THCI
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Indemnified Party in connection therewith. If the Acquirors elect to direct the
defense of any such claim or proceeding, the THCI Indemnified Party shall not
pay, or permit to be paid, any part of any claim or demand arising from such
asserted liability, unless the Acquirors consent in writing to such payment or
unless the Acquirors, subject to the last sentence of this Section 9.03(d),
withdraws from the defense of such asserted liability, or unless a final
judgment from which no appeal may be taken by or on behalf of the Acquirors is
entered against the THCI Indemnified Party for such liability. If the Acquirors
fail to defend or if, after commencing or undertaking any such defense, the
Acquirors fail to prosecute or withdraws from such defense, the THCI Indemnified
Party shall have the right to undertake the defense or settlement thereof, at
the Acquirors' expense. If the THCI Indemnified Party assumes the defense of
any such claim or proceeding pursuant to this Section 9.03(d) and proposes to
settle such claim or proceeding prior to a final judgment thereon or to forego
appeal with respect thereto, then such THCI Indemnified Party shall give the
Acquirors prompt written notice thereof and the Acquirors shall have the right
to participate in the settlement or assume or reassume the defense of such claim
or proceeding.
(e) THCI hereby acknowledges and agrees that, except as
provided in Section 12.12, from and after each Closing, its sole and exclusive
remedy with respect to any and all claims relating to the Properties,
Partnership Interests and other assets transferred at such Closing shall be
pursuant to the indemnification provisions set forth in this Article IX and in
Articles VI and VII; it being understood that THCI shall retain all of its other
rights and remedies under this Agreement with respect to any and all Properties,
Partnership Interests and other assets not transferred under this Agreement on
or prior to such Closing. In furtherance of the foregoing and except as
specified therein, THCI hereby waives, to the fullest extent permitted under
applicable Law, any and all rights, claims and causes of action relating to the
subject matter of this Agreement that they may have against the Acquirors
arising under or based upon any Law (including, without limitation, any such
rights, claims or causes of action arising under or based upon common law or
otherwise).
(f) Except as set forth in this Agreement, the Acquirors are
not making any representation, warranty, covenant or agreement with respect to
the matters contained herein. Anything herein to the contrary notwithstanding,
no breach of any representation, warranty, covenant or agreement contained
herein shall give rise to any right on the part of THCI, after the consummation
of the transactions contemplated by this Agreement, to rescind this Agreement or
any of the transactions contemplated hereby.
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(g) The Acquirors shall have no liability under any provision
of this Agreement for and in no event shall the Threshold Amount be applied to
any consequential damages. THCI shall take all reasonable steps to mitigate
Losses for which indemnification may be claimed pursuant to this Agreement upon
and after becoming aware of any event that could reasonably be expected to give
rise to any such Losses.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. TERMINATION. This Agreement may be terminated:
(a) at any time, by the mutual written consent of THCI and
the Acquirors; or
(b) by either THCI or the Acquirors, if the Initial Closing
shall not have occurred prior to September 30, 1998; PROVIDED, HOWEVER,
that the right to terminate this Agreement under this Section 10.01(b)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement shall have been the cause of, or shall
have resulted in, the failure of the Initial Closing to occur prior to
such date.
Time shall be of the essence for the purposes of this Section 10.01.
SECTION 10.02. EFFECT OF TERMINATION. In the event of
termination of this Agreement as provided in Section 10.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except (a) as set forth in Sections 3.16, 4.06, 5.04 and 12.01 and
(b) nothing herein shall relieve either party from liability for any willful
breach hereof.
SECTION 10.03. WAIVER. At any time prior to the Closing, the
Acquirors and THCI hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant hereto or
(c) waive compliance with any of the agreements of the other party or conditions
to its own obligations contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Waiver of any term or condition of this
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Agreement by a party shall not be construed as a waiver of any subsequent breach
or waiver of the same term or condition by such party, or a waiver of any other
term or condition of this Agreement by such party.
ARTICLE XI
CASUALTY AND CONDEMNATION
SECTION 11.01. CASUALTY. In the event of any damage or
destruction with respect to any Property, (a) the Acquirors may not exclude such
Property (or Partnership Interest, if applicable) from the assets being
purchased by the Acquirors hereunder; (b) the Adjusted Allocable Purchase Price
for such Property or Partnership Interest shall not be adjusted; and (c) THCI
shall assign to the Acquirors at the Applicable Closing all insurance proceeds
or awards received by THCI in respect of such damage or destruction (and any
rights to receive same) net of any costs incurred by THCI in obtaining such
proceeds or awards or used by THCI to rebuild or protect the Property and shall
pay to the Acquirors the amount of any deductible under such insurance policy;
PROVIDED that in the case of a casualty where the cost to repair or rebuild, as
reasonably estimated by THCI, exceeds 25% of the Allocated Purchase Price
applicable to such Property, the Acquirors may, at their sole option at any time
within 30 days following notice from THCI of such estimated cost, elect not to
purchase the Property.
SECTION 11.02. CONDEMNATION. In the event of any condemnation
with respect to any Property, (a) the Acquirors may not exclude such Property
(or Partnership Interest, if applicable) from the assets being purchased by the
Acquirors hereunder; (b) the Adjusted Allocable Purchase Price for such Property
or Partnership Interest shall not be adjusted; and (c) THCI shall assign to the
Acquirors at the Applicable Closing all condemnation proceeds or awards received
by THCI in respect of such condemnation (and any rights to receive same) net of
any costs incurred by THCI in obtaining such proceeds or awards or used by THCI
to protect the Property or to integrate the balance of the Property into a
functional unit; PROVIDED that in the case of a condemnation where the value of
the portion of the Property so taken is greater than 25% of the Allocated
Purchase Price applicable to such Property, the Acquiror may, at its sole option
at any time written 30 days following notice from THCI of such taking, elect not
to purchase the Property.
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ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01. EXPENSES. Except as provided in Section 7.01, all
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Initial Closing shall have
occurred.
SECTION 12.02. NOTICES. (a) All notices and other
communications given or made pursuant hereto or pursuant to any Ancillary
Agreement shall, subject to Section 12.02(b), be deemed to have been duly given
or made upon receipt or refusal of notice and shall be in writing and shall be
sent by an overnight courier service that provides proof of receipt or
telecopied to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) if to THCI:
TrizecHahn Centers Inc.
c/o TrizecHahn Corporation
BCE Place, 181 Bay Street
Suite 3900, Box 800
Toronto, Ontario M5J 2T3
Canada
Telecopy No.: (416) 364-5491
Attention: General Counsel
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy No.: (212) 848-7179
Attention: Bonnie Greaves, Esq.
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(ii) if to the Acquirors:
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
Telecopy No.: (410) 992-6392
Attention: Bruce Rothschild, Esq.
General Counsel
and
Westfield America, Inc.
c/o Westfield Corporation, Inc.
11601 Wilshire Blvd., 12th Floor
Los Angeles, California 90025-1748
Telecopy No.: (310) 478-8776
Attention: Irv Hepner, Esq.
General Counsel
with copies to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy No.: (212) 909-6836
Attention: Barry Mills, Esq.
(b) If this Agreement requires the exercise of a right by
notice on or before a certain date or within a designated period, such right
shall be deemed exercised on the date of delivery to the courier service or
telecopying of the notice pursuant to which such right is exercised.
(c) Notices of changes of address shall be effective only
upon receipt.
(d) Any notices or other communications given by either
Acquiror shall be deemed given by both Acquirors and THCI shall be entitled to
rely thereon.
SECTION 12.03. PUBLIC ANNOUNCEMENTS. Except as required by Law
or the rules of any securities exchange on which the securities of either party
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hereto may be traded (in which case the disclosing party shall use all
reasonable efforts to provide prior notification to the other party), no party
to this Agreement shall make any public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without giving prior notification thereof to the other party, and
the parties shall each consult with the other as to the timing and contents of
any such announcement.
SECTION 12.04. HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 12.05. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
SECTION 12.06. ENTIRE AGREEMENT. This Agreement and the
Ancillary Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, other than the Confidentiality Agreements
with respect to the subject matter thereof and except as otherwise expressly
provided herein.
SECTION 12.07. ASSIGNMENT. This Agreement shall not be assigned
by operation of Law or otherwise without the express written consent of THCI and
the Acquirors (which consent may be granted or withheld in the sole discretion
of THCI on the one hand and the Acquirors, on the other hand); PROVIDED,
HOWEVER, that (a) THCI may, without the consent of the Acquirors, assign this
Agreement in accordance with Section 7.05, (b) each Acquiror may assign any or
all of its rights hereunder to the other Acquiror, but no such assignment shall
relieve either Acquiror of any of its obligations hereunder and (c) any party
may assign any or all of its rights and interests hereunder to one or more of
its Affiliates, but no such assignment shall relieve such party of any of its
obligations hereunder. Each of WEA and Rouse may elect to have title to any
Property or any Partnership Interest conveyed directly to any entity which is
wholly owned or controlled by WEA or Rouse if the same would not cause THCI to
be
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in violation of the representation set forth in Section 3.14(b). Any action
required to be taken by THCI pursuant to this Agreement shall be deemed to be
taken if THCI causes one of its Affiliates or another Person to take such
action.
SECTION 12.08. NO THIRD-PARTY BENEFICIARIES. This Agreement
shall be binding upon the Acquiror and THCI and shall inure to the sole benefit
of the Acquirors, THCI, and, in the case of Article IX, THCI Indemnified Parties
and the Acquirors Indemnified Parties, and their respective successors, heirs,
legal representatives and permitted assigns. Nothing herein, express or
implied, is intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 12.09. AMENDMENT; WAIVER. This Agreement may not be
amended or modified except by an instrument in writing signed by THCI and the
Acquiror.
SECTION 12.10. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of New York;
PROVIDED, HOWEVER, that all matters related to conveying any Property shall be
governed by, and construed in accordance with, the Laws of the State in which
such Property is located. All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any state or federal
court sitting in the City of New York, and the parties hereto hereby irrevocably
submit to the exclusive jurisdiction of such courts in any such action or
proceeding and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding.
SECTION 12.11. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 12.12. SPECIFIC PERFORMANCE. The parties hereto agree
that the remedy at law for any breach of this Agreement will be inadequate and
that any party by whom this Agreement is enforceable shall be entitled to
specific performance in addition to any other appropriate relief or remedy.
SECTION 12.13. NO RECORDATION. The Acquirors shall not be
permitted to record this Agreement or any memorandum hereof. To the extent any
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such recording is made, the Acquirors shall indemnify THCI, each THCI
Partnership and each THCI Subsidiary against any damages incurred by any of them
in connection therewith.
SECTION 12.14. JOINT AND SEVERAL OBLIGATIONS. The obligation of
the Acquirors pursuant to this Agreement shall be joint and several.
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IN WITNESS WHEREOF, THCI and the Acquiror have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TrizecHahn Centers Inc.
By /s/ Richard Steets
-------------------------------
Name: Richard Steets
Title: Executive Vice President
The Rouse Company
By /s/ Robert Minutoli
-------------------------------
Name: Robert Minutoli
Title: Senior Vice President
Westfield America, Inc.
By /s/ Peter S. Lowy
-------------------------------
Name: Peter S. Lowy
Title: Co-President
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EXHIBIT 10.2
WAI SUBSCRIPTION AGREEMENT
WAI SUBSCRIPTION AGREEMENT, dated as of June 25, 1998, between
Westfield America, Inc.(ARBN 082 554 541), a Missouri corporation (the
"COMPANY") and Westfield American Investments Pty Limited (ACN 003 161 475), a
company organized under the laws of Australia ("WAI"), a subsidiary of Westfield
Holdings Limited (ACN 001 671 496), an Australian public company ("WHL") and
with respect to Section 5(b), WHL.
W I T N E S S E T H:
WHEREAS, the Company wishes to sell and Security Capital Preferred
Growth Incorporated ("SECURITY CAPITAL") wishes to purchase $75,000,060 (U.S.)
of Series C Cumulative Convertible Redeemable Preferred Stock of the Company
pursuant to a Series C Stock Purchase Agreement (the "SERIES C STOCK PURCHASE
AGREEMENT");
WHEREAS, Westfield America Management Limited, an Australian company
(the "MANAGER") has directed Perpetual Trustee Company Limited, an Australian
company (the "TRUSTEE") on behalf of Westfield America Trust, an Australian
public property trust,("WAT") to subscribe for and purchase, and the Company
desires to sell to the Trustee on behalf of WAT, 416,667 shares of Series D
Cumulative Convertible Redeemable Preferred Stock (the "SERIES D PREFERRED
STOCK"); and
WHEREAS, the Company wishes to sell and WAI wishes to buy 277,778
shares of Series D Stock of the Company, par value $1.00 (the "SHARES"),subject
to the terms and conditions contained herein.
NOW, THEREFORE, to implement the foregoing and in consideration of the
mutual agreements contained herein, the parties hereto hereby agree as follows:
<PAGE>
1. PURCHASE AND SALE OF THE SHARES. Subject to all of the terms and
conditions of this Agreement, the Company agrees to sell and WAI agrees to
purchase the Shares on the Closing Date (as defined in Section 2) for a purchase
price of $50,000,040 (U.S.) The Shares shall have the rights set forth in the
Series D Certificate of Designation, in substantially the form attached as
Exhibit A hereto.
2. CLOSING.
(a) TIME AND PLACE. Subject to the satisfaction of the conditions
contained herein, the closing of the sale of the Shares (the "CLOSING") shall
take place simultaneously with the closing under the Series C Preferred Stock
Agreement (the "CLOSING DATE"). The Closing shall occur at the offices of
Westfield America, Inc., 11601 Wilshire Boulevard, 12th Floor, Los Angeles,
California 90025.
(b) DELIVERY BY THE COMPANY. At the Closing, the Company shall
deliver to WAI a stock certificate registered in the WAI's name and representing
the Shares to be delivered at the Closing.
(c) DELIVERY BY WAI. At the Closing, WAI shall pay or cause to be
paid to the Company $50,000,040 (U.S.), by wire transfer of immediately
available funds to the account of the Company to a bank in New York City
designated by the Company, by notice to the WAI at least two Business Days prior
to Closing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to WAI as follows:
(a) AUTHORIZATION. The Company has full power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the
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transactions contemplated hereby have been or will be duly authorized by the
Company.
(b) THE SHARES. The Shares, to be delivered by the Company at the
Closing, as of the Closing Date, will have been duly authorized for issuance
and, when delivered in accordance with this Agreement, will be validly issued,
fully paid and non-assessable.
(c) SERIES C PREFERRED STOCK PURCHASE AGREEMENT. The representations
and warranties of the Company contained in the Series C Preferred Stock Purchase
Agreement are true and correct in all material respects;
4. REPRESENTATIONS AND WARRANTIES OF WAI. WAI hereby represents and
warrants to the Company as follows:
(a) AUTHORIZATION. If Shareholder Approval is obtained, then WAI
will have full power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will be, if Shareholder Approval is
obtained, duly authorized by or on behalf of each of WAI.
"Shareholder Approval" means the passing by a meeting of shareholders
of WHL of a resolution authorizing and empowering WAI to, amongst other things,
enter into the transactions contemplated by this Agreement for the purposes of
the Listing Rules of the Australian Stock Exchange Limited.
(b) ACQUISITION FOR INVESTMENT: SOPHISTICATION: SOURCE OF FUNDS.
(i) WAI is acquiring the Shares for its own account for the purpose
of investment and not with a view to or for sale in connection with any
distribution thereof, and WAI has no present intention or plan to
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effect any distribution of Shares. WAI understands that the Company
will offer and sell the Shares to WAI pursuant to the exemption from
registration under the Securities Act contained in Rule 506 of
Regulation D promulgated thereunder. WAI is an "accredited investor" as
defined in Regulation D and is able to bear the economic risk of
acquisition of the Shares, can afford to sustain a total loss on such
investment and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risk of
the proposed investment. WAI has received copies of all of the periodic
reports filed with the Securities and Exchange Commission (the
"COMMISSION") since December 31, 1997, pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended and the Company's
Registration Statement on Form S-3 (Reg. No. 333-52977) as filed with
the Commission on June 1, 1998 (collectively the "DISCLOSURE DOCUMENTS")
and has been furnished the opportunity to ask questions of and receive
answers from representatives of the Company concerning the Disclosure
Documents and the business and financial affairs of the Company.
(ii) WAI understands that the Shares and the common stock to be
issued upon conversion thereof (the "CONVERSION STOCK") have not been
registered under the Securities Act or applicable state securities laws and
agrees not to sell, pledge or otherwise transfer any of the Shares or in
the absence of such registration or an opinion of counsel reasonably
satisfactory to the Company that such registration is not required. WAI
acknowledges that the Company is not required to register the Shares or the
Conversion Stock.
(c) LEGENDS
WAI acknowledges and agrees that any certificates evidencing the
Series D Preferred Stock purchased pursuant to this Agreement and the Conversion
Stock issuable upon
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conversion thereof shall be stamped or endorsed with legends in substantially
the following form and shall be subject to the provisions of such legends:
"THE SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM AND AS SET FORTH HEREIN.
"THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (2) IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO (i) THE RECEIPT BY THE
ISSUER OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER THAT
SUCH REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, AND (ii) THE RECEIPT BY THE ISSUER OF SUCH OTHER EVIDENCE
REASONABLY ACCEPTABLE TO THE ISSUER THAT SUCH REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS, (3) TO THE ISSUER, ITS AFFILIATES, AND (4) IN THE CASE OF
A TRANSFER UNDER (1), (2) OR (3) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
WAI acknowledges and agrees that each certificate in respect of the
Series D Preferred Stock shall bear the following additional legend:
"THE PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER
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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 SHARE 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."
WAI acknowledges and agrees that the certificates in respect of the
Conversion Stock shall bear the following additional 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 ON OWNERSHIP AND TRANSFER, WILL BE SENT WITHOUT CHARGE TO EACH
SHAREHOLDER WHO SO REQUESTS. IF
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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.
5. COVENANTS.
(a) COVENANTS OF THE COMPANY. The Company hereby covenants to submit
to a shareholder vote at its 1999 Annual Meeting (the "1999 ANNUAL MEETING") or
at a special shareholder meeting held prior to such time, the question of
whether the Series D Preferred Stock shall be convertible into common stock, par
value $0.01 per share, of the Company (the "PROPOSITION").
(b) COVENANTS BY WHL AND WAI.
(i) WHL SHAREHOLDER MEETING. WHL hereby agrees to convene a
meeting of shareholders of WHL for the purpose of seeking Shareholder Approval
as soon as practicable, but in no event later than August 1, 1998.
(ii) 1999 ANNUAL MEETING. WHL agrees to attend and to cause its
subsidiaries holding common stock, par value $0.01 per share, of the Company to
attend, in person or by proxy, the 1999 Annual Meeting or at a special
shareholder meeting held prior to such time, and to vote upon the Proposition.
(iii) Registration Rights Waiver. WHL hereby (i) waives its right
under the Registration Rights Agreement, dated as of May 21, 1997, between
the Company and WHL (the "WHL REGISTRATION RIGHTS AGREEMENT") to have
included its Registrable Securities (as defined in the WHL Registration
Rights Agreement) in the Company's Registration Statement on Form S-3 (No.
333-52977) and (ii) consents, under Sections 2.1 and 2.2 of the WHL
Registration Rights Agreement, to the rights granted under Registration
Rights Agreement,
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between the Company and Security Capital, dated the date hereof, (the
"SECURITY CAPITAL REGISTRATION RIGHTS AGREEMENT", to the holders of
Registrable Shares (as defined therein). The Company and WHL hereby
agree that the Sections 2.1 and 2.2 of the WHL Registration Rights
Agreement are hereby amended to the limited extent necessary to ensure
that such Agreement does not conflict with, or limit in any way, the
rights granted to the holders of Registrable Shares under the Security
Capital Registration Rights Agreement.
6. CONDITIONS.
(a) CONDITIONS TO THE OBLIGATIONS OF THE TRUSTEE. The
obligation of the Trustee to purchase the Shares at the Closing is subject to
the satisfaction or waiver at or prior to the Closing Date of the following
conditions:
(i) Shareholder Approval;
(ii) The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects at and as
of the date hereof, and true and correct in all material respects at and as
of the Closing Date as if made at and as of such time;
(iii) No Bankruptcy Event or Acceleration Event with respect to the
Company shall have occurred and be continuing, and WAI shall have received
a certificate of the president or a co-president, chief financial officer
or a vice president of the Company, dated as of the Closing Date, to the
effect that no such Bankruptcy Event or Acceleration Event has occurred and
is continuing (in each case, subject to clause (y) of the definition of
"Acceleration Event").
A "BANKRUPTCY EVENT" shall occur with respect to the Company if (x) a
court of appropriate jurisdiction enters an order or decree under any
Bankruptcy Law that
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(A) is for relief against the Company in an involuntary case, (B)
appoints a Receiver of the Company or for all or substantially all of
its property or (C) orders the liquidation of the Company; or (y) the
Company pursuant to or within the meaning of any Bankruptcy Law (A)
commences a voluntary case, (B) consents to the entry of an order for
relief in an involuntary case, (C) consents to the appointment of a
Receiver of it or for all or substantially all of its property, or (D)
makes a general assignment for the benefit of its creditors.
An "ACCELERATION EVENT" shall occur with respect to the Company if the
Company defaults under the terms of any agreement or instrument evidencing
or under which the Company has at the date of this Agreement or hereafter
outstanding any Senior Indebtedness that is full recourse to the Company
and such Senior Indebtedness shall be accelerated so that the same shall be
or become due and payable prior to the date on which the same would
otherwise become due and payable and the aggregate principal amount thereof
so accelerated exceeds U.S.$150,000,000 and such acceleration is not
rescinded or annulled within 90 Business Days; PROVIDED, HOWEVER, that (x)
if such default under such agreement or instrument is remedied or cured by
the Company or waived by the holders of such Senior Indebtedness, then the
Acceleration Event hereunder by reason thereof shall be deemed likewise to
have been thereupon remedied, cured or waived or (y) if the Company
provides to WAI a certificate of the president or a co-president, chief
financial officer or a vice president of the Company to the effect that the
Company holds sufficient funds, or has sufficient availability under its
credit facilities, to discharge such Senior Indebtedness, then for all
purposes of this Agreement the Acceleration Event shall be deemed not to
have occurred.
For the purposes of this Section 6:
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"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which banking institutions in New York are authorized or obligated by law
or executive order to close.
"INDEBTEDNESS" means (i) the principal obligations of the Company for
borrowed money (other than (x) the deferred purchase price of property or
services and (y) indebtedness to trade creditors and service providers
incurred in the ordinary course of business) and (ii) the principal
obligations of the Company evidenced by bonds, notes, debentures or other
similar instruments.
"RECEIVER" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Company that is
not subordinated in right of payment to any other Indebtedness of the
Company.
(iv) The Company shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior
to the Closing Date pursuant to the terms hereof;
(v) The closing under the Series C Preferred Stock Purchase Agreement
shall be occurring simultaneously with the Closing of the Shares; and
(vi) The Company shall have delivered a legal opinion in a form to be
mutually agreed by WAI and the Company.
(b) CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation of
the Company to sell the Shares at the
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Closing is subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(i) The representations and warranties of WAI contained in this
Agreement shall be true and correct in all material respects at and as of
the date hereof, and true and correct in all material respects at and as of
the Closing Date as if made at and as of such time; and
(ii) WAI shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior
to the Closing Date pursuant to the terms hereof.
7. MAINTENANCE OF REIT STATUS.
(a) So long as WHL or any of its wholly-owned subsidiaries (a "WHL
Entity") owns any of the Series D Equity Shares, the Company will continue to be
taxed as a real estate investment trust pursuant to Sections 856 through 860 of
the Code.
(b) If the Company shall fail to continue to be taxed as a real
estate investment trust pursuant to Sections 856 through 860 of the Code (a
"REIT-TERMINATION EVENT"), each WHL Entity shall have the right to require
the Company, to the extent the Company shall have funds legally available
therefor, to repurchase any or all of the Series D Equity Shares held by such
WHL Entity at a repurchase price payable in cash (the "REIT-REPURCHASE
PAYMENT") in an amount equal to 115% of the Liquidation Preference thereof,
plus accrued and unpaid dividends whether or not declared, if any to the date
of repurchase or the date payment is made available (the "REIT-REPURCHASE
DATE").
(c) Within 15 days following the Company becoming aware that a
REIT-Termination Event has occurred, the Company shall mail by first class
mail or recognized overnight courier a notice to each WHL Entity holding
Series
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D Equity Shares stating (A) that a REIT-Termination Event has occurred and
that such holder has the right to require the Company to repurchase any or
all of the Series D Equity Shares, (B) the date of repurchase (which shall be
a Business Day, no earlier than 30 days and no later than 60 days from the
date such notice is mailed, or such later date as may be necessary to comply
with the requirements of the Exchange Act), (C) the repurchase price and (D)
the instructions determined by the Company, consistent with this subsection,
that such holder must follow in order to have the Series D Equity Shares
repurchased.
(d) On the REIT-Repurchase Date, the Company, to the extent lawful,
shall accept for payment Series D Equity Shares or portions thereof tendered by
the WHL Entities pursuant to the REIT-Repurchase Offer and promptly, by wire
transfer of immediately available funds to such holders, as directed by such
holders, send an amount equal to the REIT-Repurchase Payment in respect of all
Series D Equity Shares, or portions thereof so tendered.
(e) Notwithstanding anything else herein, to the extent they are
applicable to any REIT-Repurchase Offer, the Company will comply with any
federal and state securities laws, rules and regulations and all time periods
and requirements shall be adjusted accordingly.
8. MISCELLANEOUS.
(a) NOTICES. All notices and other communications made in
connection with this Agreement shall be in writing and shall be (A) sent by
facsimile, with a copy mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or (B) transmitted by hand delivery,
addressed as follows (or at such other address as may be specified in writing to
the other party hereto):
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(i) if to the Company, to:
Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Telecopy: 310-478-8776
Attention: Irv Hepner, Secretary
(ii) if to WAI, to:
Westfield Holdings Limited
Level 24 Westfield Towers
100 William Street
Sydney NSW 2011 Australia
Telecopy: 011 612 93587077
Attention: Craig van der Laan
All such notices and communications shall be deemed to have been
received on the date of delivery.
(b) BINDING EFFECT; BENEFITS, ETC. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors or assigns any benefit
or any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained herein.
(c) WAIVER; AMENDMENT. (i) WAIVER. 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. Any
such waiver or instance shall constitute a waiver, modification or discharge, as
the case may be, only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any
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<PAGE>
other time.
(ii) AMENDMENT. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Company and WAI.
(d) ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or WAI without the prior written consent of the other
party.
(e) SEPARABILITY. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(f) GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF, OTHER THAN
ANY MANDATING THE APPLICATION OF SUCH LAWS).
The Company and WAI each irrevocably submits to the non-exclusive
jurisdiction of any New York State or United States Federal court sitting in the
City of New York over any suit, action or proceeding arising out of or relating
to this Agreement. The Company and WAI each irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in any such court and any
claim that any such proceeding brought in such court has been brought in an
inconvenient forum. The Company and WAI each agree that final judgment in any
such suit, action or proceeding brought in such a court shall be conclusive and
binding on it and may be enforced in any court to the jurisdiction of which it
is subject by a suit upon such judgment. The Company and WAI each hereby
irrevocably consent to service of copies of the summonses and complaints and any
other process. Such service may be
14
<PAGE>
made by mailing or delivering a copy of such process to their respective
addresses set forth above or by any other means provided for by applicable
law.
(g) SECTION AND OTHER HEADINGS, ETC. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Subscription
Agreement by their authorized representatives as of the date first above
written.
WESTFIELD AMERICA, INC.
By:/s/ Peter S. Lowy
-----------------
Name: Peter S. Lowy
Title: Co-President
WESTFIELD AMERICAN INVESTMENTS PTY
LIMITED
By:/s/ Craig Van Der Laan De Vries
-------------------------------
Name: Craig van der Laan de Viries
Title:
Agreed with respect to
Section 5 (b).
WESTFIELD HOLDINGS LIMITED
By:/s/ Craig Van Der Laan De Vries
-------------------------------
Name: Craig van der Laan de Vries
Title:
16
<PAGE>
WAT SUBSCRIPTION AGREEMENT
WAT SUBSCRIPTION AGREEMENT, dated as of June 25, 1998, between
Westfield America, Inc.(ARBN 082 554 541), a Missouri corporation (the
"COMPANY"), Perpetual Trustee Company Limited (ACN 000 001 007), an Australian
company (the "TRUSTEE"), and Westfield America Management Limited
(ACN 072 780 619), an Australian company (the "MANAGER").
W I T N E S S E T H:
WHEREAS, pursuant to the Trust Deed, dated March 28, 1996, as amended
(the "TRUST DEED"), between the Trustee and the Manager, Westfield America
Trust, an Australian public property trust ("WAT"), was created; and the Trustee
and the Manager have authority to act on behalf of WAT under the Trust Deed;
WHEREAS, the Company wishes to sell and Security Capital Preferred
Growth Incorporated wishes to purchase $75,000,060 (U.S.) of Series C Cumulative
Convertible Redeemable Preferred Stock of the Company pursuant to a Series C
Stock Purchase Agreement (the "SERIES C STOCK PURCHASE AGREEMENT");
WHEREAS, the Company wishes to sell and Westfield American Investments
Pty. Limited wishes to buy 277,778 shares of Series D Cumulative Convertible
Redeemable Preferred Stock of the Company, par value $1.00 (the "SERIES D
PREFERRED STOCK"); and
WHEREAS, the Manager has directed the Trustee on behalf of WAT to
subscribe for and purchase, and the Company desires to sell to the Trustee on
behalf of WAT, 416,667 shares of Series D Preferred Stock (the "SHARES"),
subject to the terms and conditions contained herein.
<PAGE>
NOW, THEREFORE, to implement the foregoing and in consideration of the
mutual agreements contained herein, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF THE SHARES. Subject to all of the terms and
conditions of this Agreement, the Company agrees to sell and the Trustee on
behalf of WAT agrees to purchase the Shares on the Closing Date (as defined in
Section 2) for consideration as provided in Section 2(b). The Shares shall have
the rights set forth in the Series D Certificate of Designation, substantially
in the form attached as Exhibit A hereto.
2. CLOSING.
(a) TIME AND PLACE. Subject to the satisfaction of the conditions
contained herein, the closing of the sale of the Shares (the "CLOSING") shall
take place simultaneously with the closing under the Series C Preferred Stock
Agreement (the "CLOSING DATE"). The Closing shall occur at the offices of
Westfield America Inc., 11601 Wilshire Boulevard, 12th Floor, Los Angeles,
California 90025.
(b) DELIVERY BY THE TRUSTEE. At the Closing, the Trustee shall
deliver to the Company its rights to the Money Market Term Deposit with Bankers
Trust Company ("BT") to be acquired by the Trustee on June 30, 1998 in an amount
of $75,000,060, in form and substance satisfactory to the Company, and duly
assigned to the Company (the "BT DEPOSIT").
(c) DELIVERY BY THE COMPANY. At the Closing, the Company shall
deliver to the Trustee on behalf of WAT, a stock certificate registered in the
Trustee's name and representing Shares to be delivered at the Closing, provided
that the Company shall not issue the Shares and shall retain such certificates
until such time as the Company receives from the BT cash in payment of the BT
Deposit of an amount equal to $75,000,060.
2
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Trustee as follows:
(a) AUTHORIZATION. The Company has full power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been or will be duly authorized by the Company.
(b) THE SHARES. The Shares, to be delivered by the Company at the
Closing, as of the Closing Date, will have been duly authorized for issuance
and, when delivered in accordance with this Agreement, will be validly issued,
fully paid and non-assessable.
(c) SERIES C PREFERRED STOCK PURCHASE AGREEMENT. The representations
and warranties of the Company contained in the Series C Preferred Stock Purchase
Agreement are true and correct in all material respects.
4. REPRESENTATIONS AND WARRANTIES OF TRUSTEE AND MANAGER. The Manager
and the Trustee hereby represent and warrant to the Company as follows:
(a) AUTHORIZATION. If UnitHolder Approval is obtained, then each of
the Trustee and the Manager will have full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms hereof and on behalf of WAT. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will be, if UnitHolder Approval is obtained, duly authorized by or on
behalf of each of WAT, the Trustee and the Manager.
"UnitHolder Approval" means the passing by a meeting of unitholders of
WAT of a resolution authorizing and empowering the Manager and the Trustee to,
amongst other
3
<PAGE>
things, enter into the transactions contemplated by this Agreement for the
purposes of the Listing Rules of the Australian Stock Exchange Limited.
(b) ACQUISITION FOR INVESTMENT.
(i) The WAT Trustee is acquiring the Shares in its capacity as
Trustee of WAT for investment on behalf of WAT and not with a view to or
for sale in connection with any distribution thereof, and WAT has no
present intention or plan to effect any distribution thereof within the
meaning of the Securities Act of 1933, as amended (the "SECURITIES ACT").
(ii) The Trustee and the Manager understand that the Shares and the
common stock to be issued upon conversion thereof (the "CONVERSION STOCK")
have not been registered under the Securities Act or applicable state
securities laws and agree not to sell, pledge or otherwise transfer any of
the Shares or Conversion Stock in the absence of such registration or an
opinion of counsel reasonably satisfactory to the Company that such
registration is not required. The Trustee and the Manager acknowledge that
the Company is not required to register the Shares or the Conversion Stock.
5. LEGENDS
The Manager acknowledges and agrees that any certificates evidencing
the Series D Preferred Stock purchased pursuant to this Agreement and the
Conversion Stock issuable upon conversion thereof shall be stamped or endorsed
with legends in substantially the following form and shall be subject to the
provisions of such legends:
"THE SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
4
<PAGE>
REGISTRATION OR AN EXEMPTION THEREFROM AND AS SET FORTH HEREIN.
"THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (2) IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO (i) THE RECEIPT BY THE
ISSUER OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER THAT
SUCH REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, AND (ii) THE RECEIPT BY THE ISSUER OF SUCH OTHER EVIDENCE
REASONABLY ACCEPTABLE TO THE ISSUER THAT SUCH REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS, (3) TO THE ISSUER, ITS AFFILIATES, AND (4) IN THE CASE OF
A TRANSFER UNDER (1), (2) OR (3) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
The Manager acknowledges and agrees that each certificate in
respect of the Series D Preferred Stock shall bear the following additional
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. NO INDIVIDUAL MAY BENEFICIALLY
OWN SHARE 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
5
<PAGE>
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."
The Manager acknowledges and agrees that the certificates in respect
of the Conversion Stock shall bear the following additional 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 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."
6
<PAGE>
6. COVENANTS.
(a) COVENANTS OF THE COMPANY. The Company hereby covenants to
submit to a shareholder vote at its 1999 Annual Meeting (the "1999 ANNUAL
MEETING") or at a special shareholder meeting held prior to such time, the
question of whether the Series D Preferred Stock shall be convertible into
common stock, par value $0.01 of the Company (the "PROPOSITION").
(b) COVENANTS BY MANAGER.
WAT UNITHOLDER MEETING. The Manager hereby agrees to convene a
meeting of unitholders of WAT for the purpose of seeking UnitHolder Approval
as soon as practicable, but in no event later than August 1, 1998.
(c) COVENANTS BY THE TRUSTEE. 1999 ANNUAL MEETING. Subject to the
receipt by the Trustee of a legal opinion stating that the Trustee may vote
at such meeting, the Trustee agrees to attend, in person or by proxy, the
1999 Annual Meeting or any special shareholder meeting held prior to such
time, and to vote upon the Proposition.
7. CONDITIONS.
(a) CONDITIONS TO THE OBLIGATIONS OF THE TRUSTEE. The obligation
of the Trustee to purchase the Shares at the Closing is subject to the
satisfaction or waiver at or prior to the Closing Date of the following
conditions:
(i) UnitHolder Approval;
(ii) The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects at and as
of the date hereof, and true and correct in all material respects at and as
of the Closing Date as if made at and as of such time;
7
<PAGE>
(iii) No Bankruptcy Event or Acceleration Event with respect to the
Company shall have occurred and be continuing, and the Trustee shall have
received a certificate of the president or a co-president, chief financial
officer or a vice president of the Company, dated as of the Closing Date,
to the effect that no such Bankruptcy Event or Acceleration Event has
occurred and is continuing (in each case, subject to clause (y) of the
definition of "Acceleration Event").
A "BANKRUPTCY EVENT" shall occur with respect to the Company if (X) a
court of appropriate jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Receiver of the Company or for all or substantially
all of its property or (C) orders the liquidation of the Company; or (Y)
the Company pursuant to or within the meaning of any Bankruptcy Law (A)
commences a voluntary case, (B) consents to the entry of an order for
relief in an involuntary case, (C) consents to the appointment of a
Receiver of it or for all or substantially all of its property, or (D)
makes a general assignment for the benefit of its creditors.
An "ACCELERATION EVENT" shall occur with respect to the Company if the
Company defaults under the terms of any agreement or instrument evidencing
or under which the Company has at the date of this Agreement or hereafter
outstanding any Senior Indebtedness that is full recourse to the Company
and such Senior Indebtedness shall be accelerated so that the same shall be
or become due and payable prior to the date on which the same would
otherwise become due and payable and the aggregate principal amount thereof
so accelerated exceeds U.S.$150,000,000 and such acceleration is not
rescinded or annulled within 90 Business Days; PROVIDED, HOWEVER, that (X)
if such default under such agreement or instrument is remedied or cured by
the Company or waived by the holders of such Senior Indebtedness, then the
Acceleration Event
8
<PAGE>
hereunder by reason thereof shall be deemed likewise to have been thereupon
remedied, cured or waived or (Y) if the Company provides to the Trustee a
certificate of the president or a co-president, chief financial officer or
a vice president of the Company to the effect that the Company holds
sufficient funds, or has sufficient availability under its credit
facilities, to discharge such Senior Indebtedness, then for all purposes of
this Agreement the Acceleration Event shall be deemed not to have occurred.
For the purposes of this Section 6:
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which banking institutions in New York are authorized or obligated by law
or executive order to close.
"INDEBTEDNESS" means (I) the principal obligations of the Company for
borrowed money (other than (X) the deferred purchase price of property or
services and (Y) indebtedness to trade creditors and service providers
incurred in the ordinary course of business) and (II) the principal
obligations of the Company evidenced by bonds, notes, debentures or other
similar instruments.
"RECEIVER" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Company that is
not subordinated in right of payment to any other Indebtedness of the
Company.
(iv) The Company shall have performed in all material respects its
obligations under this Agreement
9
<PAGE>
required to be performed by it at or prior to the Closing Date pursuant to
the terms hereof;
(v) The closing under the Series C Preferred Stock Purchase Agreement
shall be occurring simultaneously with the Closing of the Shares.
(b) CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation of
the Company to sell the Shares at the Closing is subject to the satisfaction or
waiver at or prior to the Closing Date of the following conditions:
(i) The representations and warranties of the Manager and the Trustee
contained in this Agreement shall be true and correct in all material
respects at and as of the date hereof, and true and correct in all material
respects at and as of the Closing Date as if made at and as of such time;
and
(ii) Each of the Trustee and the Manager shall have performed in all
material respects its obligations under this Agreement required to be
performed by it at or prior to the Closing Date pursuant to the terms
hereof.
8. CONDITIONS TO EFFECTIVENESS.
(a) This Agreement shall not be binding on any party hereto and is to have
no legal effect unless and until the Manager of WAT allots and issues 82.2
million units on June 30, 1998 pursuant to the underwriting agreement entered
into concurrently with this Agreement with SBC Warburg Dillon Read Australia
Limited.
(b) The Trustee shall have no obligation to purchase the Shares until the
Trustee receives all of the following opinions in a form reasonably acceptable
to the Trustee: an Australian legal opinion and United States legal opinion, an
Australian taxation opinion and a United States tax opinion.
10
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9. MAINTENANCE OF REIT STATUS.
(a) So long as the Trustee on behalf of WAT owns any of the Shares of
Series D Preferred Stock, the Company will continue to be taxed as a real estate
investment trust pursuant to Sections 856 through 860 of the Code.
(b) If the Company shall fail to continue to be taxed as a real estate
investment trust pursuant to Sections 856 through 860 of the Code (a
"REIT-TERMINATION EVENT"), the Trustee on behalf of WAT shall have the right to
require the Company, to the extent the Company shall have funds legally
available therefor, to repurchase any or all of the Series D Preferred Shares
held by the Trustee on behalf of WAT at a repurchase price payable in cash (the
"REIT-REPURCHASE PAYMENT") in an amount equal to 115% of the Liquidation
Preference (as defined in the Series D Certificate of Designation) thereof, plus
accrued and unpaid dividends whether or not declared, if any to the date of
repurchase or the date payment is made available (the "REIT-REPURCHASE DATE").
(c) Within 15 days following the Company becoming aware that a
REIT-Termination Event has occurred, the Corporation shall mail by first
class mail or recognized overnight courier a notice to the Trustee and the
Manager stating (A) that a REIT-Termination Event has occurred and that the
Trustee on behalf of WAT has the right to require the Company to repurchase
any or all of the Series D Preferred Shares then held by the Trustee on
behalf of WAT, (B) the date of repurchase (which shall be a Business Day (as
defined in the Series D Certificate of Designation), no earlier than 30 days
and no later than 60 days from the date such notice is mailed, or such later
date as may be necessary to comply with the requirements of the Securities
Exchange Act of 1934, as amended), (C) the repurchase price and (D) the
instructions determined by the Company, consistent with this subsection, that
the Trustee must follow in order to have the Series D Preferred Shares
repurchased.
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(d) On the REIT-Repurchase Date, the Company, to the extent lawful,
shall accept for payment Series D Preferred Shares or portions thereof
tendered by the holders thereof pursuant to the REIT-Repurchase Offer and
promptly, by wire transfer of immediately available funds to such holders, as
directed by such holders, send an amount equal to the REIT-Repurchase Payment
in respect of all Series D Preferred Shares, or portions thereof so tendered.
(e) Notwithstanding anything else herein, to the extent they are
applicable to any REIT-Repurchase Offer, the Company will comply with any
federal and state securities laws, rules and regulations and all time periods
and requirements shall be adjusted accordingly.
10. TRUSTEE'S LIMITATION OF LIABILITY.
(a) The Trustee enters into this Agreement only in its capacity as
trustee of WAT and in no other capacity. Any liability arising under or in
connection with this Agreement will be limited to, and can be enforced
against the Trustee only to the extent to which such liability can be
satisfied out of, the property or assets of WAT from which the Trustee is
actually indemnified for such liability. This limitation of the Trustee's
liability under this Agreement will apply despite any other provision of this
Agreement and extends to all liabilities and obligations of the Trustee in
any way related to any representation, warranty, conduct, omission, agreement
or transaction related to this Agreement, subject to paragraph (c)(i) of this
Section 10.
(b) Neither the Company nor the Manager may sue the Trustee in any
capacity other than as trustee of WAT, including to seek the appointment of a
receiver (except in relation to the property or assets of WAT), a liquidator, an
administrator or any similar person with respect to the Trustee or to prove in
any liquidation, administration or arrangement of or affecting the Trustee
(except in relation
12
<PAGE>
to the property or assets of WAT), subject to paragraph (c)(i) of this
Section 10.
(c) Notwithstanding the foregoing paragraphs (a) and (b), the
provisions of this Section 10 shall not: (i) apply to any obligation or
liability of the Trustee to the extent that it is not satisfied because under
the Trust Deed establishing WAT or by operation of law there is a reduction
in the extent of the Trustee's indemnification out of the property or assets
of WAT as a result of the Trustee's fraud, negligence or breach of trust; or
(ii) in any way limit the right of the Company to bring any action or
proceeding for the performance by the Trustee (in its capacity as trustee of
WAT) or the Manager of any of their respective obligations under this
Agreement or the Company's right to recover damages from the property or
assets of WAT.
11. MISCELLANEOUS.
(a) NOTICES. All notices and other communications made in
connection with this Agreement shall be in writing and shall be (A) sent by
facsimile, with a copy mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or (B) transmitted by hand
delivery, addressed as follows (or at such other address as may be specified
in writing to the other party hereto):
(i) if to the Company, to:
Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Telecopy: 310-478-8776
Attention: Irv Hepner, Secretary
(ii) if to the Manager, to:
Westfield America Management Limited
Level 24 Westfield Towers
13
<PAGE>
100 William Street
Sydney NSW 2011 Australia
Telecopy: 011 612 93587077
Attention: Craig Van der Laan, Secretary
(iii) if to the Trustee, to:
Perpetual Trustee Company Limited
39 Hunter Street
Sydney NSW 2000 Australia
Telecopy: 011 612 92315606
Attention: Allan Cowper, National Manager-
Property Trusts
All such notices and communications shall be deemed to have been
received on the date of delivery.
(b) BINDING EFFECT; BENEFITS, ETC. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors or assigns any benefit
or any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained herein.
(c) WAIVER; AMENDMENT. (i) WAIVER. 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. Any
such waiver or instance shall constitute a waiver, modification or discharge, as
the case may be, only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time.
(ii) AMENDMENT. This Agreement may be amended,
14
<PAGE>
modified or supplemented only by a written instrument executed by the
Company, the Trustee and the Manager.
(d) ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company, the Manager or the Trustee without the prior written
consent of the other parties.
(e) SEPARABILITY. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(f) GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF, OTHER THAN
ANY MANDATING THE APPLICATION OF SUCH LAWS).
The Company, the Trustee and the Manager each irrevocably submits to
the non-exclusive jurisdiction of any New York State or United States Federal
court sitting in the City of New York over any suit, action or proceeding
arising out of or relating to this Agreement. The Company, the Trustee and the
Manager each irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in any such court and any claim that any such proceeding
brought in such court has been brought in an inconvenient forum. The Company,
the Trustee and the Manager each agree that final judgment in any such suit,
action or proceeding brought in such a court shall be conclusive and binding on
it and may be enforced in any court to the jurisdiction of which it is subject
by a suit upon such judgment. The Company, the Trustee and the Manager each
hereby irrevocably consent to service of copies of the summonses and complaints
and any other process. Such service may be made by mailing or delivering a copy
of such
15
<PAGE>
process to their respective addresses set forth above or by any other means
provided for by applicable law.
(g) SECTION AND OTHER HEADINGS, ETC. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
16
<PAGE>
IN WITNESS WHEREOF, the Company, the Manager and the Trustee have duly
executed this WAT Subscription Agreement by their authorized representatives as
of the date first above written.
WESTFIELD AMERICA, INC.
By:/s/ Peter S. Lowy
-----------------
Name: Peter S. Lowy
Title: Co-President
WESTFIELD AMERICA MANAGEMENT LIMITED, As
Manager of Westfield America Trust
By:/s/ Craig Van Der Laan De Vries
-------------------------------
Name: Craig van der Laan de Vries
Title: Attorney Appointed under Power
of Attorney date 25 June 1998
PERPETUAL TRUSTEE COMPANY LIMITED, As
Trustee of Westfield America Trust
By:/s/ Allan Cowper
----------------
Name: Allan Cowper
Title: National Manager Property
Trusts
17
<PAGE>
Exhibit 10.4
WESTFIELD AMERICA, INC.
("BORROWER")
PERPETUAL TRUSTEE COMPANY (CANBERRA) LIMITED ("TRUSTEE")
CONSOLIDATED WEA CAPITAL NOTE TRUST DEED
INCORPORATING THE DEED OF VARIATION NO 1
DATED 11 JUNE 1998
MINTER ELLISION
Lawyers
Minter Ellison Building
44 Martin Place
SYDNEY NSW 2000
DX 117 Sydney
Telephone (02) 9210 4444
Facsimile (02) 9235 2711
Ref:10659259
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . . . . . . . . 1
1.2 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.5 References to legislation. . . . . . . . . . . . . . . . . . . . . 9
1.6 Inconsistency with Listing Rules . . . . . . . . . . . . . . . . . 9
1.7 Place of Actions . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.8 Knowledge of the Trustee . . . . . . . . . . . . . . . . . . . . . 10
2. ISSUE OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. COVENANT TO PAY AND DURATION OF TRUST . . . . . . . . . . . . . . . . . 10
3.1 Covenant to Pay. . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Payment to Noteholders . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Appointment of the Trustee . . . . . . . . . . . . . . . . . . . . 11
3.4 Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. ALLOTMENT CERTIFICATES AND VALIDITY . . . . . . . . . . . . . . . . . . 11
4.1 Issue of certificates. . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Conditions of Issue. . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Validity of Notes Issued . . . . . . . . . . . . . . . . . . . . . 11
4.4 Continuing obligations . . . . . . . . . . . . . . . . . . . . . . 12
4.5 Cleared funds. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5. PAYMENT OF COMMISSION, BROKERAGE ETC. . . . . . . . . . . . . . . . . . 12
6. PURCHASE AND CANCELLATION OF NOTES. . . . . . . . . . . . . . . . . . . 12
6.1 Purchase of Notes. . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Cancellation of Notes. . . . . . . . . . . . . . . . . . . . . . . 13
7. SUBORDINATION OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 In favour of Senior Creditors. . . . . . . . . . . . . . . . . . . 13
7.2 Senior Creditors Payment Default . . . . . . . . . . . . . . . . . 14
7.3 Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.4 Trustee may prove in winding up. . . . . . . . . . . . . . . . . . 14
7.5 Freeze on payments if Trustee declares Moneys Owing Due. . . . . . 15
<PAGE>
8. COVENANTS BY THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . 15
9. ADDITIONAL AMOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.1 Default Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2 Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.3 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 22
11. REMUNERATION AND EXPENSES OF TRUSTEE. . . . . . . . . . . . . . . . . . 22
11.1 Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.3 Priority to Noteholders. . . . . . . . . . . . . . . . . . . . . . 23
12. TRUSTEE'S POWERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.1 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.2 Action on Breach . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.3 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.4 Trustee not to interfere . . . . . . . . . . . . . . . . . . . . . 24
12.5 Independent Rights . . . . . . . . . . . . . . . . . . . . . . . . 24
12.6 Directions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.7 Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13. TRUSTEE'S DISCRETION. . . . . . . . . . . . . . . . . . . . . . . . . . 25
14. TRUSTEE'S INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15. LIABILITY OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.1 Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.2 Certificate by Borrower. . . . . . . . . . . . . . . . . . . . . . 27
15.3 Not bound to give notice . . . . . . . . . . . . . . . . . . . . . 27
16. RETIREMENT AND REMOVAL OF TRUSTEE . . . . . . . . . . . . . . . . . . . 28
17. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
18. REGISTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
18.1 Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
<PAGE>
18.2 Registered Owners . . . . . . . . . . . . . . . . . . . . . . 30
18.3 No Notice of any trust. . . . . . . . . . . . . . . . . . . . 30
18.4 Inscription Conclusive. . . . . . . . . . . . . . . . . . . . 31
18.5 Particulars . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.6 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.7 Closure of Register . . . . . . . . . . . . . . . . . . . . . 31
18.8 Change of Details . . . . . . . . . . . . . . . . . . . . . . 31
18.9 Situs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.10 Copy to the Trustee . . . . . . . . . . . . . . . . . . . . . 31
18.11 Manifest Error. . . . . . . . . . . . . . . . . . . . . . . . 32
18.12 No Certificate. . . . . . . . . . . . . . . . . . . . . . . . 32
19. JOINT NOTEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
20. TRANSFER OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
21. SURVIVORSHIP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
22. DECEASED NOTEHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . 34
23. MEETINGS OF NOTEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 34
24. ALTERATION OF DEED. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
25. INVALIDITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
26. DISCHARGE AND RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . 36
27. NO RECOURSE AGAINST OTHERS. . . . . . . . . . . . . . . . . . . . . . . 36
28. SERVICE OF PROCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
29. CURRENCY INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
32. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
<PAGE>
WEA CAPITAL NOTE TRUST DEED
DEED dated 29 May 1998
BETWEEN WESTFIELD AMERICA, INC. ARBN 082 554 541 a corporation incorporated in
the State of Missouri, United States of America of 11601 Wilshire
Boulevard, Los Angeles, California 90025 ('BORROWER')
AND PERPETUAL TRUSTEE COMPANY (CANBERRA) LIMITED ACN 008 393 806 a company
incorporated in the Australian Capital Territory of Level 4, 10 Rudd
Street, Canberra City, Australian Capital Territory ('TRUSTEE')
RECITALS
The Borrower has duly authorised the execution and delivery of this Deed to
provide for the issuance of the Notes.
The Trustee has agreed, on the terms and conditions contained in this Deed,
to act as trustee of this Deed for the benefit of the holders for the time
being of the Notes.
The Notes have not been and will not be registered under the UNITED STATES
SECURITIES ACT OF 1933, as amended ('SECURITIES ACT'), or under the
securities or blue sky laws of any state of the United States. The Notes
are being offered and sold only in the Commonwealth of Australia to
entities which are not US persons within the meaning of REGULATION S under
the Securities Act. The underwriter for the Notes has agreed in the
underwriting agreement related to the Notes that no Notes may be offered,
sold or delivered, directly or indirectly, within the United States or to,
or for the account of, US persons.
AGREEMENT
<PAGE>
1. DEFINITIONS AND INTERPRETATION
1.1 In this Deed, and all documents issued under or pursuant to this Deed,
unless the context otherwise requires:
'ADDITIONAL AMOUNTS' has the meaning specified in CLAUSE 9.1;
'ALLOTMENT CERTIFICATE' in relation to Notes means a document in a form
approved by the Company specifying the person or persons to whom the Notes
are allotted and is merely a record of allotment and is not evidence of
title or ownership of the Notes;
'ASX' means Australian Stock Exchange Limited ACN 008 624 691;
'AUTHORISATION' includes a consent, authorisation, approval, licence,
permit, franchise, permission, filing, registration, resolution, direction,
declaration and exemption;
'BANKRUPTCY LAW' means Title 11, US Code, or any similar Federal or State
law in the United States of America for relief of debtors;
'BOARD OF DIRECTORS' means either the board of directors of the Borrower or
any duly authorised committee of that Board;
'BORROWER' means Westfield America, Inc. until a successor Person shall
have become the issuer of the Notes pursuant to the applicable provisions
of this Deed;
'BUSINESS DAY' means a day other than: Saturday, Sunday, New Years Day,
Good Friday, Easter Monday, Christmas Day, Boxing Day and any other day
which the ASX shall declare and publish is not a business day;
'CODE' means the United States Internal Revenue Code of 1986, as amended;
'CONDITIONS OF ISSUE' means the conditions specified in the FIRST SCHEDULE
to this Deed;
'CURRENT VALUE', on any day, means in respect of any Portfolio Property,
the fair market value thereof as determined by the Borrower, whose
determination shall be conclusive and final;
2
<PAGE>
'DEFAULT NOTICE' means a notice in writing issued by the Trustee under CLAUSE
10.1 to the Borrower in substantially the same form as in the THIRD SCHEDULE;
'DIRECT FINANCING LEASE RECEIVABLES' means receivables under the May Company
Finance Leases;
'EVENT OF DEFAULT' means any of the events listed in paragraphs (a) to (g) of
CLAUSE 10.1;
'INDEBTEDNESS' means, with respect to any Person:
(a) all obligations to repay principal of such Person for borrowed money other
than:
(i) the deferred purchase price of property or services; and
(ii) indebtedness to trade creditors and service providers incurred in the
ordinary course of business; and
(b) all obligations to repay principal of such Persons evidenced by bonds,
notes, debentures or other similar instruments;
'INTEREST PAYMENT DATE' has the meaning stated in the First Schedule;
'INTEREST RECORD DATE' has the meaning stated in the First Schedule;
'JURISDICTION' means the Australian Capital Territory;
'KNOWLEDGE' means in respect of a thing, actual knowledge, actual awareness or
actual notice of that thing, or grounds or reason to believe that thing (and
similar references will be interpreted in this way);
'LAW' means the CORPORATIONS LAW;
'LIEN' means, with respect to any asset of a Person:
(a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security
interest of, in, or on such asset; and
(b) the interest of a vendor or lessor under any conditional sale agreement,
3
<PAGE>
capital lease or title retention agreement relating to such asset, but not
does include a Permitted Lien;
'LISTING RULES' means the Listing Rules of ASX and any other rules of ASX which
are applicable while the Borrower is admitted to the Official List of ASX, each
as amended or replaced from time to time, except to the extent of any express
written waiver by ASX;
'MARKETABLE SECURITIES' has the same meaning as the expression 'marketable
securities' in SECTION 9 of the Law;
'MAY COMPANY FINANCE LEASES' means the financial leases under which 13
department store properties were net leased to the May Company by the Borrower
in 1988 including property substitution thereafter;
'MONEYS OWING' means the Principal Moneys, interest and all other moneys payable
to the Trustee on its own account or on account of the Noteholders in respect of
the Notes from time to time;
'NON-UNITED STATES HOLDER' means an initial purchaser and beneficial owner of
the Notes that, for the United States federal income tax purpose is not a
'United States Person';
'NOTE' means a subordinated unsecured note issued or to be issued on the terms
of the First Schedule and a reference to a Note that is outstanding as at a
particular date means a Note that has not been redeemed or repaid in full or
otherwise cancelled prior to that date;
'NOTEHOLDERS' means the several persons whose names are for the time being
inscribed in the Register of Noteholders of Notes kept in accordance with this
Deed;
'OFFICER'S CERTIFICATE' means a certificate signed by a Co-President, the Chief
Financial Officer or a Secretary of the Borrower;
'OPINION OF COUNSEL' means a written opinion of legal counsel, who may be:
(a) a senior attorney employed by the Borrower who shall be reasonably
acceptable to the Trustee; or
4
<PAGE>
(b) other counsel designated by the Borrower and who shall be reasonably
acceptable to the Trustee;
'ORDINARY CREDITORS' means all present or future creditors of the Borrower whose
claims against the Borrower arise in connection with:
(a) any accounts payable or other liability to trade creditors arising in the
Borrower's ordinary course of business (including guarantees of instruments
evidencing such liabilities);
(b) amounts owed by the Borrower for services rendered; and
(c) any obligation of the Borrower to any wholly owned Subsidiary of the
Borrower;
'OUTSTANDING PRINCIPAL AMOUNT' has the meaning stated in the First Schedule;
'PERMITTED LIENS' means, collectively, the following:
(a) liens for taxes, assessments or charges not yet delinquent or the
nonpayment of which in the aggregate would not reasonably be expected to
have a material adverse effect on the ability of the Borrower to repay the
Outstanding Principal Amount on the Notes in accordance with this Deed, or
that are being contested in good faith by appropriate proceedings and
(unless the amount thereof is not material to the Borrower's consolidated
financial condition) for which adequate reserves are being maintained (in
accordance with general accepted accounting principles of the United States
of America);
(b) deposits, pledges or other liens to secure obligations under or in
connection with workers' compensation, social security or similar laws, or
unemployment or other insurance arrangements;
(c) deposits, pledges or other liens to secure bids, tenders, contracts (other
than contracts constituting Indebtedness), obligations for utilities,
leases, statutory obligations, surety, performance, replevin, judgment and
appeal bonds and other obligations of like nature arising in the ordinary
course of business;
(d) mechanics', workers', materialmen's, landlords', carriers',
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warehousemen's, repairmen's or similar liens arising in the ordinary course
of business with respect to obligations which are not overdue for a period
of more than 60 days or which are being contested in good faith by
appropriate proceedings or which in the aggregate would not reasonably be
expected to have a material adverse effect on the ability of the Borrower
to repay the Notes in accordance with this Deed;
(e) liens securing any judgments;
(f) zoning restrictions, easements, rights-of-way, restrictions on use of
property, other similar encumbrances incurred in the ordinary course of
business and minor imperfections of title on real estate that do not
interfere materially with the use of such property or render title
unmarketable;
(g) any lien upon or in any asset or property hereafter acquired by the
Borrower or any of its Subsidiaries, PROVIDED that such lien is created
contemporaneously with (or has been previously created in relation to) such
acquisition or the financing or refinancing thereof to secure or provide
for the payment, financing or refinancing of any part of the cost
(including construction costs) thereof and, PROVIDED FURTHER that such lien
attaches only to the asset or property so acquired and fixed improvements
thereon; and
(h) any purchase option, call or similar right in favour of another
stockholder, partner or joint venturer or other Person with respect to any
capital stock or other equity interest of or in any associate of the
Borrower or other joint venture or entity pursuant to any related
stockholder, partnership, joint venture or similar agreement or
arrangement.
'PERPETUAL COMPANY' means any Related Body Corporate of the Trustee and the
Trustee acting in any capacity other than as trustee of the trust constituted
under this Deed;
'PERSON' includes individuals, partnerships, bodies corporate, associations or
any Public Authority;
'PORTFOLIO PROPERTY' means any property in which the Borrower has a direct or
indirect ownership interest, other than any property subject to any of the May
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Company Finance Leases;
'PRINCIPAL MONEYS' means the principal payable on the Notes outstanding from
time to time;
'PUBLIC AUTHORITY' means any Australian or foreign government or minister, or
any governmental, semi-governmental or judicial entity, department,
instrumentality or authority;
'RECEIVER' means any receiver, trustee, assignee liquidator or similar official
under any Bankruptcy Law;
'REGISTER OF NOTEHOLDERS' means the separate register of Noteholders kept by or
on behalf of the Borrower under this Deed and includes every principal and
branch register of Noteholders;
'REGISTERED ADDRESS' in respect of a Noteholder, means the address of the
Noteholder entered in the Register of Noteholders;
'RELATED BODY CORPORATE' means a body corporate related to another body
corporate by virtue of SECTION 50 of the Law;
'RESOLUTION OF THE NOTEHOLDERS' means a resolution passed at a meeting of
Noteholders duly convened and held (or by postal ballot) in accordance with the
provisions contained in the Second Schedule and:
(a) carried by a majority consisting of not less than 50% of the persons voting
at the meeting on a show of hands;
(b) if a poll is duly demanded then by a majority consisting of the holders of
Notes representing not less than 50% of the Outstanding Principal Amount of
the Notes held by the holders of Notes who are present at the meeting in
person, by attorney, by proxy or by representatives; or
(c) if the meeting is by postal ballot, by a majority consisting of the holders
of Notes representing not less than 50% of the Outstanding Principal Amount
of all of the Notes;
'SCH BUSINESS RULES' has the same meaning as 'SCH business rules' in SECTION 9
of the Law;
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'SEC' means the United States Securities Exchange Commission;
'SECURED DEBT' means Indebtedness secured by a Lien (as set out in an Officer's
Certificate);
'SENIOR CREDITORS' means all present or future creditors (but not including
Ordinary Creditors) of the Borrower, whose claims are not, or are not by their
terms expressed to be, subordinated to the claims of any other creditors (or
indebtedness) of the Borrower (and including without limitation the Trustee in
respect of its rights of remuneration, reimbursement and indemnity under this
Deed including without limitation those contemplated in CLAUSES 11, 14, 26 AND
29) and the expression 'its Senior Creditors' is to be construed accordingly;
'SPECIAL RESOLUTION' means a resolution passed on a poll at a meeting of
Noteholders duly convened and held in accordance with the provisions contained
in the SECOND SCHEDULE by a majority consisting of the holders of Notes
representing not less than 75% of the Outstanding Principal Amount of the Notes
held by the holders of the Notes provided that at least 50% of the Outstanding
Principal Amount of the Notes are voted on the resolution, whether by
Noteholders present at the meeting in person, by attorney, by proxy or by
representatives;
'SUBSIDIARY', with respect to any Person, means any entity the shares of, stock,
or other ownership interests of, which having ordinary voting power to elect a
majority of the board of directors or other managers of such entity are at the
time owned directly or indirectly by such Person;
'TAX' includes any tax, levy, impost, charge, fee, deduction, or withholding of
whatever nature which is levied, collected, assessed or imposed by a Public
Authority, and any interest, penalty, charge, fee, or other amount imposed,
collected, withheld, assessed or made on or in respect of any of the above;
'TOTAL ASSETS' means, at any date of determination, the total assets of the
Borrower and its Subsidiaries as shown on the consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of the latest period for which
financial statements are available, PLUS:
(i) the Borrower's proportionate interest in the Current Value of Portfolio
Properties (as set out in an Officer's Certificate); and
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(ii) the amount of money (as set out in an Officer's Certificate) spent by the
Borrower and its Subsidiaries since the date of such consolidated balance
sheets in relation to:
(A) the acquisition of assets; or
(B) construction work in relation to their assets,
and MINUS:
(a) the value at which the Portfolio Properties are reflected in such balance
sheets;
(b) Direct Financing Lease Receivables (net of Indebtedness associated
therewith) as shown on such balance sheets; and
(c) any amounts excluded from the definition of Total Secured Debt as a result
of the application of paragraph (g) of the definition of Permitted Liens
(as set out in an Officer's Certificate);
'TOTAL SECURED DEBT' means, at any date of determination, the aggregate
Indebtedness of the Borrower secured by Liens and its proportionate interest (as
set out in an Officer's Certificate) in Indebtedness of its Subsidiaries secured
by Liens, excluding any Indebtedness relating to the May Company Finance Leases
and any cash held by the Borrower or its Subsidiaries on deposit;
'TOTAL SHAREHOLDERS FUNDS' means, at any date of determination, the total
shareholders' equity of the Borrower and its Subsidiaries as shown on the
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of the latest period for which financial statements are available, plus the
Borrower's proportionate interest (as set out in an Officer's Certificate) in
the Current Value of Portfolio Properties and minus the value at which the
Portfolio Properties are reflected in such balance sheets, adjusted if necessary
to reflect the current market value of the Borrower and its Subsidiaries;
'TRUST DEED' or 'DEED' includes this deed, the schedules attached to this deed,
and any document or documents supplemental to this Deed;
'TRUST' means the WEA Capital Note Trust established under CLAUSE 3 of the Trust
Deed;
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'TRUSTEE' means Perpetual Trustee Company (Canberra) Limited or any
successor in its capacity as trustee for the Noteholders pursuant to this
Deed;
'UNITED STATES' means the United States of America, any state thereof, the
District of Columbia and its territories and possessions and areas subject
to its control;
'UNITED STATES PERSON' means a citizen or resident of the United States, a
corporation, partnership or other entity created or organised in the United
States or under the laws of the United States or any political subdivision
thereof, an estate whose income is includable in gross income for United
States federal income tax purposes regardless of its source, or a trust
whose administration is subject to the primary supervision of the United
States court and which has one or more United States fiduciaries who have
the authority to control all substantial decisions of the trust;
'WRITING' includes printing, typing, lithography and other modes of
reproducing words in a visible form and 'written' has a corresponding
meaning.
1.2 SCHEDULES
The Schedules to this Deed are part of this Deed.
1.3 INTERPRETATION
In this Deed, unless the context otherwise requires:
(a) the singular includes the plural and vice versa;
(b) words importing a gender include the other genders;
(c) other grammatical forms of defined words or phrases have corresponding
meanings;
(d) a reference to a clause, part of a clause, schedule or annexure is a
reference to that clause or part of a clause of or schedule or
annexure to this Deed;
(e) a reference to this 'DEED' includes its recitals, schedules and any
annexures as it may from time to time be amended and except to the
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extent that the context clearly otherwise indicates includes all
supplemental or collateral deeds whether or not they are expressly
incorporated in such reference;
(f) unless otherwise defined in this Deed, terms defined in the
CORPORATIONS LAW have the same meanings as in the CORPORATIONS LAW;
(g) a reference to a party is a reference to a party to this Deed;
(h) a reference to a party to this Deed includes that party's successors
and permitted assigns;
(i) a reference to a document or agreement, including this Deed, includes
a reference to that document or agreement as novated, altered or
replaced from time to time and, in the case of this Deed, to any
supplemental or collateral document to this Deed;
(j) a reference to 'dollar', '$', '$A', or 'A$' is a reference to
Australian currency and a reference to 'US$' is a reference to the
currency of the United States of America;
(k) a reference to a specific time for the performance of an obligation is
a reference to that time in the State or Territory where the
obligation is to be performed;
(l) use of a term (including, without limitation, Moneys Owing) denoting
subject matter which comprises more than one part or aspect includes a
reference to each or any part or aspect of the subject matter; and
(m) a reference to a group of Persons is a reference to all of them
collectively, to any 2 or more of them collectively and to each of
them individually.
1.4 HEADINGS
Headings are for reference only and do not form part of this Deed.
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1.5 REFERENCES TO LEGISLATION
Legislation (including, without limitation, the Corporations Law, the
Listing Rules, or the SCH Business Rules) referred to in this Deed is as
amended or replaced from time to time.
1.6 INCONSISTENCY WITH LISTING RULES
This Deed is to be interpreted subject to the Listing Rules and the SCH
Business Rules and accordingly if the Borrower is admitted to the Official
List of the ASX, the following clauses apply:
(a) notwithstanding anything contained in this Deed, if the Listing Rules
prohibit an act being done, the act shall not be done;
(b) nothing contained in this Deed prevents an act being done that the
Listing Rules require to be done;
(c) if the Listing Rules require an act to be done or not to be done,
authority is given for that act to be done or not to be done (as the
case may be);
(d) if the Listing Rules require this Deed to contain a provision and it
does not contain such a provision, this Deed is deemed to contain that
provision;
(e) if the Listing Rules require this Deed not to contain a provision and
it contains such a provision, this Deed is deemed not to contain that
provision;
(f) if any provision of this Deed is or becomes inconsistent with the
Listing Rules, this Deed is deemed not to contain that provision to
the extent of the inconsistency.
The obligations imposed by this clause are additional to those imposed by
any other clause of this Deed.
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1.7 PLACE OF ACTIONS
Despite any provision of this Deed or the Conditions of Issue or both:
(a) any matter or thing done or to be done by the Borrower in Australia
under this Deed or the Conditions of Issue or both (whether the
exercise of a power or discretion, the performance of a function, the
observance or performance of a covenant, liability or obligation, or
otherwise) must be done by or on behalf of the Borrower in the
Jurisdiction; and
(b) any matter or thing done or to be done by the Trustee under this Deed
or the Conditions of Issue or both (whether the exercise of a power or
discretion, the performance of a function, the observance or
performance of a covenant, liability or obligation, or otherwise) must
be done by or on behalf of the Trustee in the Jurisdiction; but
(c) no matter or thing done or to be done by the Borrower or the Trustee
(or either of them) under this Deed or the Conditions of Issue (or
both) which is in fact done by or on behalf of (including anything
done by a Perpetual Company on or behalf of, or as agent of the
Trustee) the Borrower or the Trustee (or either of them) in Australia
but out of the Jurisdiction will by reason solely of that fact, be
invalid, ineffective, void or voidable at the option of any Person;
(d) this clause does not in any way restrict the actions of the Borrower
or the Trustee outside of Australia;
(e) where in this Deed provision is made for or reference is made to the
production, surrender, lodgment or delivery of instruments of transfer
or transmission of Notes or other documents or the giving of notice in
each case by Noteholders to the Borrower, the same will be deemed not
to have been produced, surrendered, lodged, delivered or given to the
Borrower by any Noteholder unless and until it is actually received by
the Trustee, on behalf of the Borrower, at the Trustee's office in the
Jurisdiction or such other place as the Borrower and the Trustee may
reasonably nominate for the purposes of this clause.
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1.8 KNOWLEDGE OF THE TRUSTEE
The Trustee will only be considered to have Knowledge of anything, by
virtue of the officers of the Trustee having day to day responsibility for
the administration of the WEA Capital Note Trust having Knowledge. In
addition, Knowledge of an Event of Default means Knowledge of the
occurrence of the events or circumstances constituting an Event of Default
and that those events or circumstances do constitute an Event of Default.
2. ISSUE OF NOTES
2.1 The Borrower may issue Notes to any Person on the terms of this Deed and
the Conditions of Issue.
2.2 Entitlement to a Note is determined by inscription in the Register of
Noteholders and on such inscription, a Note will be deemed to be issued.
3. COVENANT TO PAY AND DURATION OF TRUST
3.1 COVENANT TO PAY
The Borrower:
(a) covenants and agrees that it will duly and punctually pay to the
Trustee the Moneys Owing from time to time; and
(b) must pay to the Trustee in the Jurisdiction (or such other place as
the Trustee and the Borrower, may from time to time agree):
(i) the Principal Moneys represented by the Notes or, as the case may
be, that part of the Notes as are to be redeemed on the date due
for repayment in accordance with the Conditions of Issue; and
(ii) until the whole of the Notes have been redeemed in accordance
with the Conditions of Issue, interest on the Outstanding
Principal Amount on each Note in accordance with the Conditions
of Issue.
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3.2 PAYMENT TO NOTEHOLDERS
Except as otherwise required under this Deed, the Trustee must pay the
Principal Moneys and interest received pursuant to CLAUSE 3.1 to the
Noteholders in accordance with the rights attaching to the Notes.
3.3 APPOINTMENT OF THE TRUSTEE
The Trustee is hereby appointed as the trustee for the Noteholders and
agrees for the consideration expressed in this Deed to act in the interests
and for the benefit of the Noteholders on the terms contained in this Deed.
3.4 DURATION
The Trustee declares that it holds the rights of Noteholders under this
Deed on trust for them. The trust established pursuant to this Deed:
(a) commences on the date of this Deed and ends 80 years less one day
after the date of this Deed or at such earlier time as the law or this
Deed provides; and
(b) shall be known as the 'WEA CAPITAL NOTE TRUST'.
3.5 STATUS
The Notes constitute unsecured subordinated obligations of the Borrower as
provided in this Deed.
4. ALLOTMENT CERTIFICATES AND VALIDITY
4.1 ISSUE OF CERTIFICATES
The Borrower may issue, to any Person who is issued a Note, an Allotment
Certificate.
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4.2 CONDITIONS OF ISSUE
The Conditions of Issue are deemed to be included or endorsed on the
Allotment Certificate (if any) without the need for any specific mention or
words of incorporation.
4.3 VALIDITY OF NOTES ISSUED
Despite any breach of or non-compliance by the Borrower, with any of the
provisions of this Deed, all Notes issued under this Deed will as between:
(a) the relevant Noteholder and the Borrower;
(b) the relevant Noteholder and the Trustee;
(c) the relevant Noteholder and any Receiver of the Borrower; and
(d) the relevant Noteholder and all other Noteholders,
be deemed to have been validly issued under this Deed.
4.4 CONTINUING OBLIGATIONS
Nothing in this CLAUSE 4 will exonerate or relieve or be deemed to
exonerate or relieve the Borrower or the Trustee from any of their
respective covenants, liabilities and obligations under this Deed.
4.5 CLEARED FUNDS
If:
(a) the Borrower is for any reason obliged to repay any money paid as
consideration for a Note to be issued; or
(b) the Borrower has issued a Note against the receipt of uncleared funds
and does not receive value for those funds,
then:
(i) the payment will be taken not to have been made;
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(ii) the Note will be void from the time of issue;
(iii) the Note issued to that Person shall be cancelled; and
(iv) the Borrower shall ensure that the Register of Noteholders is
amended to reflect such cancellation.
5. PAYMENT OF COMMISSION, BROKERAGE ETC.
The Borrower may pay a commission procuration fee or brokerage to any
Person for subscribing or underwriting the subscription of or obtaining
subscription for the Notes.
6. PURCHASE AND CANCELLATION OF NOTES
6.1 PURCHASE OF NOTES
The Borrower may at any time and from time to time purchase (on market or
by private treaty) any of the issued Notes.
6.2 CANCELLATION OF NOTES
All Notes purchased in accordance with this clause may be cancelled or
resold at the option of the Borrower subject to compliance with all legal
and regulatory requirements.
SUBORDINATION OF NOTES
7.1 IN FAVOUR OF SENIOR CREDITORS
Subject to applicable laws, in the event of:
(a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganisation or other similar case or proceeding in
connection therewith, relating to the Borrower or to its assets; or
(b) any liquidation, dissolution or other winding-up of the Borrower
whether voluntary or involuntary,
then and in any such event:
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(c) the rights of the Noteholders and the Trustee on the Noteholders'
behalf against the Borrower in respect of the Notes and this Deed will
be postponed to the claims of the Senior Creditors and no amount will
be payable to the Noteholders, or the Trustee on the Noteholders'
behalf, in respect of the Notes or the Deed until the claims of the
Senior Creditors have been satisfied in full; and
(d) the rights of the Noteholders under the Notes and this Deed will be
held by the Trustee on trust together with the proceeds of enforcement
of such rights which will be applied in the following order:
(i) first, for payment in full to the Senior Creditors (including
without limitation, to the Trustee in relation to its rights
of remuneration, indemnity and reimbursement under this Deed)
of all amounts due to the Senior Creditors;
(ii) second, pari passu and ratably in or towards payment of the
Principal Moneys and interest owing in respect of the Notes
and all moneys owing to Ordinary Creditors; and
(iii) third, in payment of any balance to the Borrower or the
Receiver of the Borrower,
PROVIDED THAT the Trustee shall have the power to make such
determinations and allocations in respect of any amount held by it at
the end of a year of income to ensure that, to the extent possible, no
liability to Tax in respect of that amount will be imposed on the
Trustee under sections 99 or 99A of the INCOME TAX ASSESSMENT ACT,
1936 (or any similar provision of any replacement Act).
7A.1 CLAUSE 7.1(c) does not apply to subordinate the fees, costs, charges,
expenses and liabilities payable to the Trustee (and not on behalf of any
Noteholder) under this Deed (including, without limitation, any
remuneration of the Trustee under CLAUSE 11 and any indemnity and
reimbursement in favour of the Trustee under clauses 14, 26 and 29).
7.2 SENIOR CREDITORS PAYMENT DEFAULT
Unless one of the events in PARAGRAPH (a) or PARAGRAPH (b) of CLAUSE 7.1
applies, if there is a default by the Borrower in the payment of money
owing to
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Senior Creditors (including without limitation, any money owing to the
Trustee in respect of its rights of remuneration, indemnity and
reimbursement under this Deed) when due and payable ('PAYMENT DEFAULT'),
then no direct or indirect payment or distribution of any assets of the
Borrower of any kind or character will be made by, or on behalf of, the
Borrower on account of any amounts payable to the Noteholders in respect
of the Notes and the Deed, the purchase or redemption or other acquisition
of any Notes unless and until:
(a) the Payment Default has been cured or waived or has ceased to exist;
or
(b) all amounts owing to Senior Creditors (including without limitation,
to the Trustee in relation to its rights of remuneration, indemnity
and reimbursement under this Deed) have been discharged or paid in
full in cash or in cash equivalents,
after which, subject to CLAUSE 7.1, the Borrower must resume making any and
all required payments in respect of the Notes and this Deed, including any
missed payments. Nothing in this clause prejudices the rights of the
Trustee in its own capacity to remuneration, reimbursement or indemnity.
7.3 EVIDENCE
The Trustee will be entitled and is authorised by the Borrower to call for
(and will be entitled to accept as conclusive evidence thereof) a
certificate from any Receiver of the Borrower as to:
(a) the amounts of the claims of the Senior Creditors which have been
admitted in any liquidation, dissolution or other winding up and which
will not have been satisfied in full out of the other resources of the
Borrower; and
(b) the Persons entitled thereto and their respective entitlements.
Any such certificate given by any such Receiver will be conclusive and
binding on the Trustee and all Noteholders.
7.4 TRUSTEE MAY PROVE IN WINDING UP
The Trustee will be entitled, on the issuing of a Default Notice by the
Trustee in accordance with this Deed, to file such proofs of claim, or
proofs of debts and
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other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee and the holders of the Notes allowed in any
judicial proceedings relating to the Borrower or their respective creditors
or properties. No Noteholder will be entitled to take any such action
unless the Trustee, having become entitled to take any such actions in
accordance with this Deed, fails to do so within 10 Business Days, in which
case any Noteholder may himself take in his or her own name the actions
which the Trustee could have taken.
7.5 FREEZE ON PAYMENTS IF TRUSTEE DECLARES MONEYS OWING DUE
If the Moneys Owing become immediately due and payable as a result of the
Trustee issuing a Default Notice in accordance with this Deed, then unless
the Trustee revokes the Default Notice:
(a) the payment of all Principal Moneys or interest which are then owing
or payable or thereafter become owing or payable in relation to the
Notes by the Borrower will be postponed until the Senior Creditors
(including without limitation, the Trustee in relation to its rights
of remuneration, indemnity and reimbursement under this Deed) have
been paid or satisfied in full; and
(b) so long as any such liability of the Borrower to Senior Creditors
(including without limitation, to the Trustee in relation to its
rights of remuneration, indemnity and reimbursement under this Deed)
remains outstanding, a Noteholder will not in respect of any Note held
by it in any circumstances whatever:
(i) demand or accept payment of any part of the Moneys Owing; or
(ii) set off or attempt to set off any part of the Moneys Owing
against any moneys which may at any time be due from the
Noteholder to the Borrower.
8. COVENANTS BY THE BORROWER
8.1 The Borrower covenants with the Trustee that it will:
(a) strive to carry on and conduct the Borrower's business in a proper and
efficient manner;
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(b) make available for the inspection by the Trustee or any auditor
appointed by the Trustee the whole of its accounting or other records
and will give to the Trustee such information as the Trustee requires
with respect to all matters relating to its accounting or other
records;
(c) on request in writing of the holders of Notes representing not less
than 10% of the Outstanding Principal Amount of all Notes delivered to
the Borrower's registered office, summon a meeting of Noteholders by
giving notice to each Noteholder at the Noteholder's address as
specified in the Register of Noteholders:
(i) to consider the accounts and balance sheets that were laid
before the last preceding annual general meeting of the
Borrower; and
(ii) to give to the Trustee directions in relation to the exercise
of the Trustee's powers; and
being a meeting to be held in accordance with the provisions of the
SECOND SCHEDULE at a time and place specified in the notice and to be
presided over by a person nominated by the Trustee or, if the Trustee
does not nominate a person to preside at the meeting, by a person
appointed for that purpose by the Noteholders present at the meeting;
and
(d) so long as any of the Notes remain outstanding, notify the Trustee
after it becomes aware that any material condition of this Deed cannot
be fulfilled or after it becomes aware of an event which would
require the Trustee issuing a notice or a Default Notice under
CLAUSE 10, such notice to be given within 30 Business Days of the
Borrower becoming so aware.
8.2 The Borrower covenants with the Trustee that, so long as any of the Notes
are outstanding, the Borrower will not incur Secured Debt, if at the time
of incurrence thereof, Total Secured Debt exceeds 75% of Total Assets.
8.3 The Borrower covenants with the Trustee that it will not (without the
approval of the Trustee, which may only be given if the Trustee is so
directed by a Resolution of the Noteholders to give such an approval)
repurchase, redeem or
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buy back common stock of the Borrower if as a result of such an action
Total Shareholders Funds would fall below US$700,000,000.
8.4 The Borrower covenants with the Trustee and with each Noteholder, subject
to the Law and to any declarations made and exemptions granted by the
Australian Securities Commission at any time and which are continuing in
force and applicable ('RELIEF'), in terms of and to comply in all material
respects with:
(a) the covenants required by section 1054 of the Law;
(b) Division 4 of Part 7.12 of the Law;
(c) any conditions of, and any covenants required to be contained in this
Deed as a condition of, the Relief;
(d) the Listing Rules; and
(e) the SCH Business Rules.
8.5 A meeting of Noteholders convened in accordance with the SECOND SCHEDULE
may, by Resolution of the Noteholders, direct the Trustee to waive
compliance by the Borrower with any covenant, whether or not the Borrower
is in breach of that covenant.
9. ADDITIONAL AMOUNTS
9.1.1 The Borrower will pay to the Trustee for payment to the holder of
a Note who is a Non-United States Holder such additional amounts
(the 'ADDITIONAL AMOUNTS') as may be necessary in order that
every net payment of the principal of and interest on such Note,
after deduction or withholding for or on account of any present
or future tax, assessment or governmental charge imposed upon or
as a result of any change in any law or regulation or in the
interpretation thereof by any court, administrative or
governmental authority charged with the administration thereof
upon or as a result of such payment by the United States or any
political subdivision or taxing authority thereof or therein,
will not be less than the amount provided for in such Note to be
then due and payable; PROVIDED, HOWEVER, that neither the
Borrower nor the Trustee shall be obliged to pay Additional
Amounts in respect of any one or more of the following:
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(a) any tax, assessment or other governmental charge which would not have
been so imposed but for:
(i) the existence of any present or former connection between such
holder (or between a fiduciary, settlor, beneficiary or member
of such holder, if such holder is an estate, a trust or a
partnership) and the United States, including, without
limitation, such holder (or such fiduciary, settler,
beneficiary or member) being or having been a citizen or
resident or treated as a resident thereof, or being or having
been engaged in trade or business or present therein, or
having had a permanent establishment therein; or
(ii) such holder's present or former status as a passive foreign
investment company, a personal holding company, foreign
personal holding company, or a controlled foreign corporation
for United States tax purposes or a corporation which
accumulates earnings to avoid United States federal income
tax,
(b) any tax, assessment or other governmental charge imposed on interest
received by reason of such:
(i) holder's past or present status as the actual or constructive
owner (taking into account applicable attribution of ownership
rules under SECTION 871 (h) (3) (C) of the Code), of 10% or
more of the total combined voting power of all classes of
stock of the Borrower entitled to vote or 10% or more of the
capital or profits interest in the Borrower; or
(ii) holder's status as a bank which, with respect to the Note, has
extended credit to the Borrower in the ordinary course of
business within the meaning of SECTION 881(c)(3)(A) of the
Code;
(c) any tax, assessment or other governmental charge which would not have
been imposed but for failure to comply with any certification,
identification or other reporting requirements concerning the
nationality, residence, identity, classification, or connection with
the United States of the holder or beneficial owner of such Note, if
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compliance is required by statute, regulation, notice, or announcement
of the United States Treasury Department as a precondition to
exemption from such tax, assessment or other governmental charge;
(d) any estate, inheritance, gift, sales, transfer, personal property or
any similar tax, assessment or other governmental charge;
(e) any tax, assessment or other governmental charge which is payable
otherwise than by deduction or withholding from payments of principal
of or interest on such Note; or
(f) any tax, assessment or other governmental charge which would not have
been so imposed but for the presentation by the holder of such Note
for payment on a date more than 15 days after the date on which such
payment became due and payable or the date on which payment thereof is
duly provided for, whichever occurs later;
nor will Additional Amounts be paid with respect to any payment of
principal of or interest on any such Note to any Non-United States Holder
who is a fiduciary or partnership or other than the sole beneficial owner
of any such payment to the extent that a beneficiary or settlor with
respect to such fiduciary, a member of such a partnership or the beneficial
owner would not have been entitled to the Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the holder of such
Note;
PROVIDED FURTHER that neither the Borrower nor the Trustee shall be obliged
to pay Additional Amounts to any Noteholder unless such Noteholder has
provided written notice to the Borrower and the Trustee establishing that
none of the foregoing exceptions apply to such Noteholder.
9.1.2 Nothing in CLAUSE 9.1.1 shall result in Additional Amounts
being paid to a Noteholder who is not a Tax Resident of
Australia in respect of any Tax or other amount that would not
have otherwise been paid or be payable by reason only that
such Noteholder were a Tax Resident of Australia. In this
clause, 'TAX RESIDENT OF AUSTRALIA' means any person regarded
as a resident of Australia for the purposes of the Convention
between the government of Australia and the government of the
United States of America for the avoidance of Double Taxation
and the Prevention of Fiscal Evasion with respect to Taxes on
Income.
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9.1.3 Upon any such payment of Additional Amounts to the holder of a
Note, such holder shall be deemed to have assigned to the
Borrower, (for purposes of collection and enforcement only)
all rights to any refund, reimbursement or repayment of any
tax, assessment or charge so paid or withheld. The foregoing
shall not give rise to any right by the Borrower against such
holder or reduce the obligation of the Borrower to pay the
full amount of principal of and interest on any Note when and
as the same shall become due and payable.
9.1.4 Whenever in this Deed or the Notes there is mentioned, in any
context, the payment of the principal of or interest on, or in
respect of, any Note, such mention shall be deemed to include
mention of the payment of Additional Amounts provided for in
this CLAUSE 9 to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof
pursuant to the provisions of this CLAUSE 9 and express
mention of the payment of Additional Amounts (if applicable)
in any provision hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such
express mention is not made.
9.2 In the event that withholding for or on account of any tax, assessment or
other governmental charge described in CLAUSE 9.1.1 shall be required to be
made for or on behalf of holders of Notes who are Non-United States Holders
in respect of any payment of principal of or interest on the Notes, at
least 10 days prior to the first Interest Payment Date on which such
withholding becomes required (or, if first required on any Principal
Payment Date, at least 10 days prior to such date), the Borrower shall
furnish to the Trustee an Officer's Certificate to the effect that such
withholding is required and, to the extent practicable under United Stated
federal income tax law, specifying by country the amount, if any, required
to be withheld on such payments to holders. In the event that at any time
there is any change with respect to the matters set forth in a certificate
delivered pursuant to this CLAUSE 9.2, at least 10 days prior to the first
Interest Payment Date to which such change is applicable (or, if such
change is first applicable on any principal instalment date, at least 10
days prior to such date) the Borrower, shall furnish to the Trustee an
Officer's Certificate describing such change. Any Officer's Certificate
delivered pursuant to this CLAUSE 9.2 shall be accompanied by an Opinion of
Counsel with respect to all matters of law set forth in the Officer's
Certificate. The Trustee will not be bound to pay any Additional Amounts
unless it receives the Officer's Certificate and the Opinion of Counsel
referred to in this clause.
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9.3 The Borrower covenants to indemnify the Trustee (including every attorney,
agent or other person appointed by it under this Deed) for, and to hold it
harmless against, any loss, liability or expenses reasonably incurred to
the extent such loss, liability or expenses do not arise from bad faith,
negligence, fraud or breach of trust on its part arising out of or in
connection with actions taken or omitted to be taken by it in reliance upon
any Officer's Certificate or Opinion of Counsel furnished pursuant to
CLAUSE 9.2.
9.4 For the avoidance of doubt, this CLAUSE 9 does not apply in relation to any
withholding or other taxes, assessments or other governmental charges of a
jurisdiction other than the United States of America.
10. EVENTS OF DEFAULT
10.1 DEFAULT NOTICE
If any one or more of the following events occurs:
(a) the Borrower makes default in the payment to the Trustee of any:
(i) interest due on any of the Notes (and the default continues
unremedied for a period of 30 Business Days after notice by
the Trustee to the Borrower of non-payment); or
(ii) Principal Moneys owing in respect of the Notes (and the
default continues unremedied for a period of 10 Business Days
after notice by the Trustee to the Borrower of non-payment);
(b) a court of appropriate jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Borrower in an involuntary case;
(ii) appoints a Receiver of the Borrower or for all or
substantially all of its property; or
(iii) orders the liquidation of the Borrower,
and the decree or order remains unstayed and in effect for 90
consecutive days;
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(c) the Borrower pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief in an involuntary
case;
(iii) consents to the appointment of a Receiver of it or for all or
substantially all of its property; or
(iv) makes a general assignment for the benefits of its creditors;
(d) breach by the Borrower of the covenant in CLAUSE 8.1(c), and such
breach continues for a period of 30 Business Days after there has been
given written notice to the Borrower by the Trustee specifying such
breach and requiring it to be remedied;
(e) the Borrower defaults under the terms of any agreement or instrument
evidencing or under which the Borrower has at the date of the Deed or
hereafter outstanding any Indebtedness of Senior Creditors that is
full recourse to the Borrower and:
(i) such Indebtedness shall be accelerated so that the same shall
be or become due and payable prior to the date on which the
same would otherwise become due and payable; or
(ii) any principal amount of any such Indebtedness remains unpaid
when due and payable,
and where the aggregate principal amount thereof exceeds US
$150,000,000 and
(A) in the case of paragraph (i), such acceleration is not
rescinded or annulled; and
(B) in the case of paragraph (ii) such Indebtedness is not
repaid,
within 90 Business Days after there has been given written notice to
the
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Borrower by the Trustee specifying such default and requiring it to be
remedied provided that if before the expiration of that 90 Business
Day period such acceleration is no longer subsisting or the
Indebtedness has been repaid, then there will be deemed to be no such
default under this paragraph;
(f) breach by the Borrower of the covenant in CLAUSE 8.2 and such default
continues for a period of 90 Business Days after there has been given
written notice to the Borrower by the Trustee specifying such default
and requiring it to be remedied provided that if before the expiration
of that 90 Business Day period:
(i) Total Secured Debt does not exceed 75% of Total Assets where
Total Assets is determined by reference to the current market
value of those assets instead of by reference to the financial
statements referred to in the definition of Total Assets in
clause 1.1 of this Deed;
(ii) the Borrower prepares an updated consolidated balance sheet of
the Borrower and its Subsidiaries, which shows that Total
Secured Debt does not exceed 75% of the Total Assets; or
(iii) the relevant Indebtedness is repaid or becomes unsecured,
then there will be deemed to be no such default under this paragraph;
(g) breach by the Borrower of the covenant in clause 8.3;
PROVIDED, HOWEVER, that if any such default specified in the foregoing
paragraphs (a) through (g) is remedied or cured or waived by the Trustee or
the Noteholders in accordance with the terms of this Trust Deed or, in the
case of paragraph (e) (without limiting the foregoing), waived by the
holders of such Indebtedness, then the Event of Default hereunder by reason
thereof shall be deemed to have been thereupon remedied, cured or waived
for all purposes of this Trust Deed;
then, unless the Trustee waives the occurrence of the Event of Default, the
Trustee must issue a Default Notice to the Borrower, declaring that the
Moneys Owing are immediately due and payable, provided that such Default
Notice may only be issued if:
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(i) where the Event of Default is in respect of a matter
stated in paragraph (a) of this clause, a Noteholder in
writing directs the Trustee to issue a Default Notice;
(ii) where the Event of Default is in respect of a matter
stated in paragraphs (b), (c), (d), (e), (f) or (g) of
this clause, the Trustee has been directed to issue a
Default Notice by a Special Resolution of a meeting of
Noteholders; and
(iii) at the time of issue of the Default Notice, the Event of
Default is subsisting and has not been remedied.
Notwithstanding the above, the Trustee is not obliged to take any action
(including giving any notice or Default Notice) under this CLAUSE 10.1
unless it has Knowledge of an Event of Default (including Knowledge of
an event requiring the giving of such notice or Default Notice).
10.2 ENFORCEMENT
Subject to this Deed, at any time after issuing a Default Notice in
accordance with this clause, the Trustee may:
(a) revoke the Default Notice if the Event of Default is remedied; or
(b) institute proceedings to enforce payment of the Notes and recover
any other Moneys Owing under this Deed.
10.3 COMPLIANCE WITH LAWS
Where the Event of Default is in respect of a matter stated in paragraph
(a) of CLAUSE 10.1, the Trustee must not issue a Default Notice during
such period as the Borrower is able to satisfy the Trustee that its
failure or refusal to make any payment is in order to comply with:
(a) any fiscal or other law or regulation; or
(b) the order of any court of competent jurisdiction,
applicable to the payment.
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11. REMUNERATION AND EXPENSES OF TRUSTEE
11.1 REMUNERATION
The Borrower shall pay to the Trustee by way of remuneration for its
services as trustee a fee of $50,000 per annum, payable half yearly in
arrears. The Borrower will also pay the Trustee time in attendance at
the Trustee's normal rate from time to time for, in relation to or in
connection with:
(a) any enforcement action;
(b) convening and holding of meetings of Noteholders; or
(c) any changes to the Trust Deed, any other related documents or the
structure of the Trust,
to the extent that such costs, charges, expenses and duties are not
attributable to the Trustee's bad faith, negligence, fraud or breach of
trust.
11.2 EXPENSES
The Borrower will on demand by the Trustee pay all costs (including
legal fees on a full indemnity basis), charges and expenses and any
stamp or other duty payable by or on behalf of the Trustee in or in
connection with:
(a) the carrying out by the Trustee of any right, power or privilege
conferred on the Trustee or any Noteholder by this Deed or by
Law;
(b) any breach or default in the observance or performance by the
Borrower of the covenants, obligations and conditions of this
Deed;
(c) convening, holding and carrying out any directions or resolutions
of, any meeting of Noteholders,
to the extent that such costs, charges, expenses and duties are not
attributable to the Trustee's bad faith, negligence, fraud or breach of
trust and further PROVIDED THAT such costs, charges, expenses and duties
are properly and reasonably incurred. For the avoidance of doubt, the
Trustee will be entitled to pay full market rates for legal fees having
regard to the complexity, quality and urgency of any advice sought by
the Trustee in accordance with this Deed.
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11.3 PRIORITY TO NOTEHOLDERS
All amounts payable to the Trustee under this CLAUSE 11 must be paid in
priority to any claim by any Noteholder and will continue to be payable
until the trusts of this Deed are finally wound up and whether or not
the trusts of this Deed are in course of administration by or under the
order of any court. The Trustee may retain and pay to itself in
priority to any claim by any Noteholder all such amounts out of any
moneys for the time being in its hands upon the trusts of this Deed.
12. TRUSTEE'S POWERS
12.1 POWERS
Subject to this Deed, the Trustee has within and outside Australia all
the powers in relation to the trusts constituted by this Deed, that it
is legally possible for a natural person or corporation to have.
12.2 ACTION ON BREACH
Despite any other provisions of this Deed, the Trustee, in relation to
any breach (whether anticipatory or actual) of or default in any
covenant, obligation, condition or provision under this Deed:
(a) may in its absolute discretion waive or excuse any breach or
default on any terms or conditions;
(b) may in its absolute discretion not inform Noteholders of any
breach or default;
(c) must not, despite Knowledge of the Trustee of any breach or
default, take any action (including without limitation filing
proofs of claim under CLAUSE 7.4 and the determinations under
CLAUSE 13) or proceedings against the Borrower to enforce the
observance or performance of any such covenant, obligation,
condition or provision (including, without limitation,
enforcement of the payment of the Notes and recovery of any other
Moneys Owing under this Deed) unless in any such case the
Trustee:
(i) is directed so to do by a Special Resolution of
Noteholders;
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and
(ii) the Trustee is indemnified to its satisfaction against
all liabilities, proceedings, claims and demands to which
the Trustee may become liable as a result of such
direction and all costs, charges and expenses (including
its rights to remuneration under this Deed) which may be
incurred by the Trustee in connection with such
direction, action or proceedings; and
(d) must not take any action in relation to any breach or default by
the Borrower or an Event of Default including the issuing of any
notice under this Deed unless it has Knowledge of the Event of
Default or is advised by another Person of the Event of Default,
and until such a time the Trustee can assume that no such breach,
default by the Borrower or Event of Default (as the case may be)
has occurred.
12.3 DELEGATION
The Trustee, by power of attorney or otherwise, may authorise and
delegate to one or more Persons being:
(a) a Related Body Corporate; or
(b) subject to the prior consent of the Borrower (not to be
unreasonably withheld) to any other Person whether or not being
the Borrower or persons related to or associated with the
Borrower, provided that the Trustee does not need to obtain the
consent of the Borrower where an Event of Default has arisen and
the matter to which the attorney or delegate is to act relates to
that Event of Default,
to do anything that the Trustee may lawfully delegate, including, but
not limited to, holding any trust property and executing documents on
its behalf, and delegating any trusts, powers or discretions vested in
the Trustee under this Deed on such terms and conditions (including
power to subdelegate) as the Trustee may think fit.
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12.4 TRUSTEE NOT TO INTERFERE
Subject to this Deed, its general duties as trustee under statute
(including the Corporations Law) and at general law, the Trustee must
not interfere with the conduct of the ordinary business of the Borrower
unless and until the Moneys Owing have become immediately due and
payable as a result of the issue of a Default Notice by the Trustee in
accordance with this Deed and the Trustee has become bound, or been duly
directed by Noteholders, pursuant to the terms of this Deed to enforce
the same. For the avoidance of doubt, nothing in this clause restricts
or precludes the Trustee's rights to remuneration in CLAUSE 11 or the
Trustee's right of indemnity in CLAUSE 14.
12.5 INDEPENDENT RIGHTS
The Trustee and any Related Body Corporate or associate of the Trustee
(including without limitation, Perpetual Companies and Perpetual Trustee
Company Limited in its capacity as trustee of the Westfield America
Trust), subject to always acting in good faith to Noteholders may:
(a) hold Notes, or any other Marketable Securities in the Borrower;
(b) represent or act for, or contract with, individual Noteholders;
(c) deal in any capacity with the Borrower or with any related
company or associate of the Borrower;
(d) contract or enter into arrangements with itself acting in any
capacity other than as Trustee; or
(e) act in any capacity in relation to any other trusts,
without in any such case being liable to account to any trust, the
Borrower or to any Noteholder.
12.6 DIRECTIONS
The Trustee may apply to any court for directions in relation to any
question and assent to and approve or oppose any application to any
court made by or at the instance of any Noteholder.
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12.7 EXPERTS
The Trustee may act, in accordance with the terms of this Deed, on the
advice or opinion or any information obtained from any barrister,
solicitor, accountant, valuer, surveyor, broker, auctioneer or other
expert whether obtained by the Borrower or any issuing house concerned
with the issue of any of the Notes or by the Trustee and whether or not
addressed to the Trustee or expressed to be for the benefit of the
Trustee.
13. TRUSTEE'S DISCRETION
Except where otherwise expressly provided for in this Deed, the Trustee
may determine:
(a) whether to exercise and the manner, mode and time of exercise of
its powers, authorities and discretions in its absolute
discretion; and
(b) as between itself and the Noteholders all questions and matters
of doubt arising in relation to this Deed and every such
determination made in good faith whether upon a question actually
raised or implied in the acts or proceedings of the Trustee shall
be conclusive and shall bind all Noteholders.
14. TRUSTEE'S INDEMNITY
14.1 The Trustee (including every attorney, agent or other person appointed
by it under this Deed) is entitled to be indemnified by the Borrower in
respect of all fees (including legal fees on a full indemnity basis),
costs, losses, liabilities, Taxes and expenses reasonably and properly
incurred by it in the execution of the trusts of this Deed or any of the
powers, authorities or discretions vested in the Trustee under this Deed
and against all actions, costs, liabilities, Taxes, claims and demands
in respect of any matter or thing done or omitted by it in any way
relating to this Deed (in each case, other than such cost, loss,
liability or expense to the extent that it arises out of its bad faith,
negligence, fraud or breach of trust or any Taxes imposed on the
Trustee's remuneration for its services as trustee). Any indemnity to
which the Trustee is entitled:
(a) under this Deed is in addition to, and without prejudice to, any
indemnity allowed by law to trustees; and
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(b) for the avoidance of doubt does not extend to any Principal
Moneys or any interest payable on the Notes.
14.2 The Trustee may retain and pay out any moneys in its hands arising from
this Deed all sums necessary to give effect to the above indemnity.
14.3 Without limiting the generality of CLAUSE 14.1, the Borrower must
reimburse the Trustee (on a full indemnity basis) upon its request for
all expenses and disbursements reasonably and properly incurred by the
Trustee (including every attorney, agent or other person appointed by it
under this Deed) in good faith without fraud, negligence or breach of
trust in the execution of the trusts of this Deed.
15. LIABILITY OF TRUSTEE
15.1 LIABILITY
Except to the extent to which the Trustee has acted in bad faith,
negligently, fraudulently or in breach of trust, the Trustee will not be
liable to the Borrower or any Noteholder or any future Trustee or any
other Person:
(a) for loss caused by:
(i) the Trustee's acts or omissions in accordance with the
terms of this Deed in reliance on:
(A) the Register of Noteholders;
(B) information or documents supplied by the Borrower
or any of their respective agents;
(C) the authenticity of any document (including an
Officer's Certificate);
(D) opinion, advice or information of any barrister,
solicitor, accountant, valuer, surveyor, broker,
auctioneer or other expert instructed by the
Trustee or the Borrower or any issuing house
concerned with the issue of any Notes or
otherwise, including without limitation an Opinion
of Counsel;
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(E) acting on any instruction or direction properly
given to it by the Borrower or Noteholders under
this Deed;
provided the Trustee has no Knowledge to the contrary;
(ii) any act, omission, neglect or default of the Borrower or
any other person including any agent of the Trustee;
(iii) any act or omission required by law or by any court of
competent jurisdiction;
(iv) any act or omission in accordance with any resolution
properly passed at any duly convened meeting of the
Noteholders;
(v) any act or omission of an operator of any securities
title, transfer or holding system;
(vi) the Trustee validly exercising any right, power,
authorities or discretions under and in accordance with
the terms of this Deed; or
(vii) any payment having been made to any fiscal authority; or
(b) for loss caused by the Trustee waiving or excusing, subject to
any conditions the Trustee may think fit, any breach by the
Borrower of the Borrower's obligations under this Deed.
15.2 Certificate by Borrower
The Trustee is:
(a) entitled to accept and rely upon an Officer's Certificate as to
any fact or matter (including without limitation any fact or
matter referred to in clause 9 (ADDITIONAL AMOUNTS)) as
conclusive evidence of it and a like certificate to the effect
that any particular dealing or transaction or step or thing is in
the opinion of the Person so certifying commercially desirable
and not detrimental to the interests of the Noteholders as
conclusive evidence that it is so;
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(b) entitled to accept, rely upon and act upon any information,
statement, certificate, report, balance sheet or account supplied
by the Borrower or any duly authorised officer of the Borrower;
(c) entitled to accept, rely upon and act upon the statements and
opinions contained in any statement, certificate, report, balance
sheet or account given pursuant to the provisions of this Deed as
conclusive evidence of the contents of it.
The Trustee is not bound to call for further evidence other than such
certificate, statement, report, balance sheet or account or to enquire
as to the accuracy thereof and is not responsible for any loss or damage
that may be occasioned by its relying thereon.
15.3 NOT BOUND TO GIVE NOTICE
The Trustee is not bound to give notice to any Person or Persons of the
execution of this Deed and the Trustee is not bound to take any steps to
ascertain whether any event including, without limitation, an Event of
Default has happened (despite the Trustee's Knowledge of such event)
upon the happening of which the Notes become immediately payable.
15.4 NO MONITORING OBLIGATION
Notwithstanding any other provisions of the Deed, but subject to the
Trustee's statutory obligations under DIVISION 4 OF PART 7.12 of the
Corporations Law, the Borrower acknowledges that the Trustee has no
obligation to monitor compliance by the Borrower of its covenants and
obligations under this Deed or any other activities or status of the
Borrower whatsoever.
16. RETIREMENT AND REMOVAL OF TRUSTEE
16.1 Subject to compliance with the relevant statutory requirements for the
time being and to CLAUSE 16.3, the Trustee may retire (without giving
any reason for its retirement) at any time upon giving not less than 60
days' notice (or such other period as the Trustee and the Borrower may
agree) in writing to the Borrower of its intention to do so.
16.2 Subject to CLAUSE 16.3, the power to appoint a new Trustee (which new
Trustee must be a Trustee Company) is vested in the Borrower.
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16.3 If within 60 days (or such other period as the Trustee and the Borrower
may agree) after the Trustee has given notice in writing to the Borrower
of its desire to retire a new Trustee has not been appointed, the
retiring Trustee may appoint a Trustee Company as the new Trustee and
any such appointment will be effective without the approval of the
Borrower or the Noteholders being required but the Trustee may, in lieu
of exercising the power conferred by this clause, convene a meeting of
the Noteholders for the purpose of appointing by the passing of a
Resolution of the Noteholders a person nominated either by the Trustee
or by any Noteholder as the new Trustee.
16.4 Notwithstanding anything contained in this clause the Trustee covenants
that the retirement of the Trustee pursuant to this clause will not take
effect unless and until a new Trustee (being a Trustee Company) has been
appointed, and the Trustee hereby declares that this covenant is
intended for the benefit of the Noteholders.
16.5 Subject to compliance with the relevant statutory requirements for the
time being and to CLAUSE 16.3:
(a) where the Borrower reasonably forms the view that the Trustee has
not performed or has acted in bad faith, negligently,
fraudulently, or in breach of trust the Borrower may by 30 days
notice to the Trustee; or
(b) the Noteholders may by Resolution of the Noteholders,
remove the Trustee and appoint a new Trustee in accordance with the
provisions of this Deed.
16.6 By force of this clause, when the Trustee retires or is removed, the
Trustee is discharged and released from its obligations covenants and
liabilities under this Deed arising after the date it retires or is
removed. The Borrower must then, if required by the Trustee, execute a
confirmation of release in favour of the Trustee in a form and substance
acceptable to the Trustee (including, without limitation that the
provisions in this Deed in relation to the indemnity given by the
Borrower to the Trustee for any cost, charge, expense, loss and
liability will apply even after the date of release if the action,
omission or event giving rise to such cost, charge, expense, loss or
liability occurred prior to the date of release but only to the extent
that such cost, charge, expense, loss and liability is not attributable
to the Trustee's bad faith, fraud, negligence or breach of trust).
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16.7 In this CLAUSE 16, 'TRUSTEE COMPANY' means a body corporate eligible
under SECTION 1052(1) of the Law to act as trustee for the holders of
unsecured notes.
17. NOTICES
17.1 A notice required or authorised to be given or served on a party under
this Deed must be in writing and may be given or served by facsimile
(except in the case of notices to which CLAUSE 17.7 refers), post or
hand to that party at its facsimile number or address appearing in this
clause or such other facsimile number or address as the party may have
notified the other party or parties in writing:
to the Borrower
Attention: The Secretary
Westfield America, Inc.
Address: 11601 Wilshire Boulevard, Los Angeles California
90025
Facsimile No: 310 478-8776
to the Trustee
Attention: National Manager, Corporate and Structured Finance
Address: Perpetual Trustee Company (Canberra) Limited
Level 4, 10 Rudd Street
Canberra City ACT 2601
Facsimile No: (02) 6247 6816
With a copy of all notices to the Trustee sent to:
Attention: National Manager, Corporate and Structured Finance
Address: Perpetual Trustee Company (Canberra) Limited
Level 13, 1 Castlereagh Street
Sydney NSW 2000
Facsimile No: (02) 9231 5606
17.2 A notice is deemed to have been given or served on the party to whom it
was sent:
(a) in the case of hand delivery, on delivery during Business Hours;
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(b) in the case of pre-paid post, two Business Days after the date of
despatch;
(c) in the case of facsimile transmission, at the time of despatch
if, following transmission, the sender receives a transmission
confirmation report or, if the sender's facsimile machine is not
equipped to issue a transmission confirmation report, the
recipient confirms in writing that the notice has been received.
17.3 A notice given or served under this Deed is sufficient if:
(a) in the case of a company, it is signed by a director, officer or
secretary of that company;
(b) in the case of a partnership, it is signed by a director, officer
or secretary of the general partner of the partnership; or
(c) in the case of an individual, it is signed by that party.
17.4 The provisions of this clause are in addition to any other mode of
service permitted by law.
17.5 In this clause 'NOTICE' includes a demand, request, consent, approval,
offer and any other instrument or communication made, required or
authorised to be given under this Deed.
17.6 In this clause 'BUSINESS HOURS' means from 9.00am to 5.00pm on a
Business Day.
17.7 The following notices issued by the Trustee must not be issued by
facsimile transmission:
(a) a notice issued under CLAUSE 10.1(d); and
(b) a Default Notice,
and any such notice which is issued by facsimile transmission is deemed
not to be given by the Trustee or served on the party to whom it was
sent.
17.8 A notice given to a Noteholder under this Deed must be in writing and
may be
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given to a Noteholder by being delivered to him or posted by prepaid
envelope at a post office or post office letter box and addressed to the
Noteholder's Registered Address in the Jurisdiction or if the Noteholder
has no such Registered Address in the Jurisdiction, to the Trustee at
its office in the Jurisdiction (or such other place in the Jurisdiction
as the Trustee may nominate) and upon actual receipt of the notice by
the Trustee, the Trustee cause the notice to be given to the Noteholder
at the Noteholder's Registered Address.
17.9 A post office receipt for the envelope containing a notice will be taken
as conclusive evidence of the date on which the notice was posted.
17.10 A notice given to any one of any joint Noteholders is sufficient notice
to all of those joint Noteholders.
18. REGISTERS
18.1 REGISTER
On issue of the Notes, the Borrower will establish and maintain, or
cause to be established and maintained, in the Jurisdiction a Register
of the issued and outstanding Notes. The Borrower, may delegate to
attorneys or agents such powers, authorities and discretions in relation
to any Register as it may properly so delegate.
18.2 REGISTERED OWNERS
The persons whose names are inscribed in the Register as the registered
owners of the Notes from time to time will be treated by the Borrower
and the Trustee as the absolute owners of such Notes for all purposes.
18.3 NO NOTICE OF ANY TRUST
Except as provided by statute or as required by an order of a court of
competent jurisdiction, no notice of any trust (whether express, implied
or constructive or other interest) may be entered in the Register of
Noteholders in respect of a Note and neither the Borrower nor the
Trustee is obliged to recognise any trust.
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18.4 INSCRIPTION CONCLUSIVE
Each inscription in the Register in respect of a Note constitutes:
(a) sufficient and conclusive evidence to all persons and for all
purposes that the person whose name is so inscribed, is the
registered owner of the Note;
(b) an unconditional and irrevocable undertaking and promise by the
Borrower to the person whose name is so inscribed that, for value
received, the Borrower will make all payments of principal and
interest in respect of the Note in accordance with the Deed.
18.5 PARTICULARS
In the Register there will be entered the names and addresses of
Noteholders, the amount of the Notes held by each Noteholder and such
other particulars as the Trustee requires or the Borrower thinks fit.
18.6 INSPECTION
The Register will be open at all reasonable times during business hours
for the inspection of the Trustee and the Noteholders, and of any
Persons authorised in writing by the Trustee or the Noteholders.
18.7 CLOSURE OF REGISTER
Subject to the Listing Rules, the Borrower, may from time to time close
any relevant Register for any period or periods not exceeding in total
in any one year the maximum period for the time being permitted by law
or 30 days, whichever is the lesser period.
18.8 CHANGE OF DETAILS
Any change of the name or address of a Noteholder must be notified
immediately by the Noteholder in writing to the Borrower accompanied, in
the case of a change of name, by any evidence the Borrower requires and
the Register will be altered accordingly.
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18.9 SITUS
The property in the Notes will for all purposes be regarded as situated
at the place where the Register on which such Notes are for the time
being entered is situated and not elsewhere.
18.10 COPY TO THE TRUSTEE
The Borrower will give, or cause to be given to, the Trustee a complete
copy of the Register within 3 Business Days after the Trustee so
requests.
18.11 MANIFEST ERROR
The making of, or giving effect to, a manifest error in an inscription
in the Register will not avoid the constitution, issue or transfer of a
Note. The Borrower must correct or cause to be corrected any manifest
error of which it becomes aware.
18.12 NO CERTIFICATE
No certificate or other evidence of title shall be issued by or on
behalf of the Borrower to evidence title to a Note unless the Borrower
determines that certificates should be made available or that it is
required to do so pursuant to any applicable law or regulation.
19. JOINT NOTEHOLDERS
19.1 Subject to CLAUSE 19.3, if more than one person is the holder of a Note,
the address of only one of them will be entered on the Register of
Noteholders. If more than one address is notified to the Borrower, the
address recorded in the Register of Noteholders will be the address of
the Noteholder whose name first appears in the Register of Noteholders.
19.2 If several Persons are entered in the Register as joint Noteholders in
respect of a Note the receipt by any one of such Persons for the payment
or satisfaction of any principal or interest from time to time payable
or repayable to the joint Noteholders will be as effective a discharge
to the Borrower as if the Person accepting the payment were a sole
Noteholder in respect of that Note.
19.3 The Borrower will not be bound to register more than three Persons as
the joint
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holders of any Notes.
19.4 Subject to CLAUSE 20, all of the joint Noteholders in respect of any
Note must join in any transfer of the relevant Note.
20. TRANSFER OF NOTES
20.1 Every Noteholder will be entitled, subject to this Deed, to transfer
Notes held by that Noteholder.
20.2 Subject to CLAUSE 20.3, Notes may be transferred by:
(a) a written transfer instrument in any usual or common form; or
(b) any other form approved by the Borrower, as evidenced by an
Officer's Certificate.
A written transfer instrument must be forwarded for registration to the
address of the Register on which the Noteholder's relevant Notes are
recorded accompanied by such other evidence as the Borrower may require
to prove:
(i) the title of the transferor, or the Noteholder's right to
transfer the Notes;
(ii) the due execution of the transfer; and
(iii) the due compliance with the provisions of any relevant
statute relating to stamp duties,
and if satisfied with such evidence and that the transferor has
otherwise complied with this CLAUSE 20, the Borrower, will register the
transfer and recognise the transferee as the Noteholder entitled to the
amount of Notes comprised in the transfer.
20.3 The Borrower may participate in any computerised or electronic system
for market settlement, securities transfer and registration conducted in
accordance with the Law, the Listing Rules and the SCH Business Rules.
If the Borrower participates in a system of this kind, then despite any
other provision of this Deed:
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(a) Notes may be transferred, and transfers may be registered, in any
manner required or permitted by the Listing Rules or SCH Business
Rules applying in relation to that system;
(b) the Borrower, must comply with and give effect to those rules;
(c) the Borrower, will not, in accordance with those rules, issue
certificates for holdings of Notes; and
(d) the only document required to be completed and delivered by the
Borrower, in relation to a transfer of the Notes being an
SCH-regulated transfer is such document (if any) as the SCH
Business Rules require to be so completed and delivered.
20.4 Except in the case of a proper SCH transfer, a transferor of Notes
remains the holder of the Notes transferred until the transfer is
registered and the name of the transferee entered in the Register in
respect of the Notes. A transfer of Notes does not pass the right to
any interest payable on the Notes until such registration.
20.5 Despite anything contained elsewhere in this CLAUSE 20, but subject to
the Listing Rules, the Borrower may in its absolute discretion refuse to
register any transfer of:
(a) less than a marketable parcel (being the number determined in
accordance with the Listing Rules) unless the transferee is
already a Noteholder; or
(b) a Note in favour of a Person who is known to the Borrower to be a
minor or of unsound mind, but the Borrower will not be bound to
enquire as to the age or soundness of mind of any transferee.
20.6 No transfer of a Note may be made to more than 3 transferees jointly
unless the transferees are the legal personal representatives or
trustees of a deceased Noteholder.
20.7 The Borrower must without charge:
(a) register all registrable transfer forms (if any), renunciations
(if any) and transfers (if any); and
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(b) mark or note transfer forms (if any).
20.8 All instruments of transfer which are registered will remain the
property of the Borrower and will be retained by it for a period of 3
years or such minimum period or in such alternative form as may be
permitted by law after receipt. However, any instrument of transfer
which the Borrower declines to register will (except in the case of
fraud or suspected fraud) be returned on demand to the Person depositing
the instrument.
20.9 Any power of attorney granted by a Noteholder may be lodged, produced or
exhibited to the Borrower or any of its officers and will, as between
the Borrower and the Noteholder who granted the power of attorney:
(a) be taken and deemed to continue and will remain in full force and
effect; and
(b) may be acted upon,
unless express notice in writing of its revocation or of the death of
the Noteholder who granted it is lodged with the Borrower.
21. SURVIVORSHIP
In the case of the death of any one of joint Noteholders, the survivors
will be the only Persons recognised by the Borrower as having any title
to or interest in the Notes registered in their names jointly.
22. DECEASED NOTEHOLDERS
The legal personal representatives of a deceased Noteholder (not being
one of joint Noteholders) will be the only Persons recognised by the
Borrower as having any title to that Noteholder's Notes. Any Person
becoming entitled to Notes in consequence of the death or liquidation of
any Noteholder may, on producing such evidence of that Person's title as
the Borrower, think sufficient, be registered himself as the holder of
the Notes or, subject to CLAUSE 20, may transfer those Notes. The
Borrower will be at liberty to retain the principal and interest and any
other moneys payable in respect of any Notes which any Person under this
clause is entitled to or to transfer until such Person is registered or
has duly transferred the Notes in accordance with this clause. Nothing
in this clause
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will prejudice the rights of any such Person to vote in respect of that
Note at any meeting or on a poll.
23. MEETINGS OF NOTEHOLDERS
The Trustee or the Borrower may summon a meeting of Noteholders in the
manner as provided in the SECOND SCHEDULE and the meetings shall be
conducted in accordance with the SECOND SCHEDULE.
24. ALTERATION OF DEED
At any time and from time to time the Borrower and the Trustee may
jointly modify, alter, cancel, amend or add to all or any of this Deed
(which, for the avoidance of doubt includes this clause, the Conditions
of Issue and any one or more of the Schedules to this Deed), if:
(a) the Borrower and the Trustee are each of the opinion such
modification, alteration, cancellation, amendment or addition is:
(i) of a formal or technical nature; or
(ii) made to cure any ambiguity or correct any manifest error;
or
(iii) expedient for the purpose of enabling the Notes to be
listed for quotation or to retain listing on any stock
exchange or to be offered for, or subscription for, sale
under the laws for the time being in force in any place
and is otherwise not considered by the Trustee to be
materially prejudicial to the interests of Noteholders as
a whole; or
(iv) necessary to comply with the provisions of any statute or
the requirements of any statutory authority; or
(v) to evidence the succession of another Person to the
Borrower and the assumption by any such successor of the
covenants and obligations of the Borrower in this Deed;
or
(b) except as provided in paragraphs (c) and (d), such modification,
alteration, cancellation, amendment or addition is authorised by
a Resolution of the Noteholders passed at a meeting (including a
meeting
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held by way of postal ballot) of Noteholders held pursuant to the
provisions of the SECOND SCHEDULE; or
(c) a clause provides for Noteholders to give a direction to the
Trustee by a Special Resolution, then that clause may only be
modified, altered, cancelled, amended or added to if a Special
Resolution is passed at a meeting of Noteholders held pursuant to
the provisions of the SECOND SCHEDULE in favour of such
modification, alteration, cancellation, amendment or addition; or
(d) the Second Schedule is to be modified, altered, cancelled,
amended or added to and neither paragraphs (a) or (e) apply, then
the Second Schedule may only be modified, altered, cancelled,
amended or added to if a Special Resolution is passed at a
meeting of Noteholders held pursuant to the provisions of the
SECOND SCHEDULE in favour of such modification, alteration,
cancellation, amendment or addition; or
(e) generally in any case where such modification, alteration,
cancellation, amendment or addition is considered by the Trustee
not to be materially prejudicial to the interests of Noteholders
as a whole.
25. INVALIDITY
Any provision of this Deed which is invalid or unenforceable in any
jurisdiction will as to that jurisdiction only be read down or severed
to the extent of that invalidity or unenforceability provided that the
remaining provisions of this Deed are properly and effectively
self-sustaining and capable of separate enforcement without regard to
the read down or severed provision in that jurisdiction. Such remaining
provisions continue to be valid and enforceable in accordance with their
terms.
26. DISCHARGE AND RELEASE
By force of this clause the Borrower will immediately be discharged and
released from its liabilities, obligations and covenants under this
Deed:
(a) on the principal of the Notes and interest on the Notes being
paid in full or otherwise redeemed or satisfied (as to which the
Trustee may accept as conclusive an Officer's Certificate);
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(b) on the Borrower furnishing to the Trustee a statement in writing
that it does not intend to, and will not, create any Notes in the
future; and
(c) on payment of all fees, costs, charges and expenses properly
incurred by the Trustee.
The Trustee must then, if required by the Borrower execute a
confirmation of release in favour of the Borrower and terminate the
Trust and the Trust will terminate on such a release being given.
On the Trust being terminated, the Trustee is entitled to be indemnified
by the Borrower in respect of all fees, costs, losses, liabilities and
expenses reasonably and properly incurred by it in respect of an event
which occurred prior to the date of termination (other than such cost,
loss, liability or expense to the extent that it arises out of the
Trustee's negligence, fraud or breach of trust).
27. NO RECOURSE AGAINST OTHERS
No recourse for the payment of the principal of or interest on any of
the Notes or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or
agreement of the Borrower in this Deed or in any of the Notes, or
because of the creation of any indebtedness represented thereby, shall
be had against any shareholder, partner, officer, director, employee or
controlling person of the Borrower or of any successor persons thereof.
Each holder of Notes by accepting a Note waives and releases all such
liability, and such waiver and release is part of the consideration for
the issuance of the Notes.
28. SERVICE OF PROCESS
28.1 Without preventing any other mode of service, the Borrower appoints each
partner of the Canberra office of the law firm Minter Ellison, of 8-10
Hobart Place, Canberra ACT, as its agent to accept on its behalf any
document in an action (including without limitation) service of
initiating process in any proceedings relating to or arising out of the
Deed ('PROCESS AGENT').
28.2 The Borrower may from time to time appoint a replacement of the Process
Agent or any replacement Process Agent by giving prior notice to the
Trustee.
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29. CURRENCY INDEMNITY
29.1 The Borrower indemnifies the Trustee and the Noteholders (each an
'INDEMNIFIED') and keeps them indemnified against:
(a) any loss or damage incurred by any of the Indemnified arising
from the non-payment by the Borrower of any A$ amount due to the
Indemnified under this Deed or the Notes by reason of any
variation in the rates of exchange between those used for the
purposes of calculating the amount due under a judgment or order
in respect of that payment, which amount is expressed in a
currency other than A$ and under which the Indemnified does not
have an option to have that judgment or order expressed in A$,
and those prevailing at the date of actual payment by the
Borrower; and
(b) any deficiency arising or resulting from any variation in rates
of exchange between:
(i) the date (if any) as of which the non-A$ currency
equivalent of the A$ amounts due or contingently due
under this Deed (other than this clause) or in respect of
the relevant Notes is calculated for the purposes of any
bankruptcy, insolvency or liquidation of the Borrower;
and
(ii) the final date for ascertaining the amounts of claims in
that bankruptcy, insolvency or liquidation provided that
in that bankruptcy, insolvency or liquidation claims are
required to be made in a currency other than A$.
The amount of that deficiency shall not be reduced or increased
by any variation in rates of exchange occurring between the final
date and the date of any distribution of assets in connection
with that bankruptcy, insolvency or liquidation.
29.2 The indemnities in this clause are obligations of the Borrower separate
and independent from its obligations under this Deed and the Notes and
apply irrespective of any time or indulgence granted by the Indemnified
from time to time and shall continue in full force and effect despite
the judgment or filing of any proof or proofs in any bankruptcy,
insolvency or liquidation of the Borrower for a liquidated sum or sums
in respect of amounts due under this
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Deed (other than this clause) or the Notes. Any deficiency will
constitute a loss suffered by the Noteholders and no proof or evidence
of any actual loss shall be required by the Borrower or its liquidator.
30. UNTRACEABLE NOTEHOLDERS
Subject to applicable law and the Listing Rules, where the Borrower has
made reasonable efforts to locate a Noteholder but is unable to do so,
and monies payable to the Noteholder have not been claimed by the
Noteholder or any legal personal representative of the Noteholder for a
period of 12 months after first becoming payable, those monies shall be
paid by the Trustee to the Borrower, if the Trustee has actual
possession and control of such moneys, and shall become the property of
the Borrower. The Trustee is not liable to any Noteholder for any
moneys paid to the Borrower in accordance with this clause.
31. ASSUMPTION BY ARRANGEMENT
31.1 Subject to any applicable law and maintenance of quotation of the Notes,
the Borrower may enter into an arrangement ('ARRANGEMENT') with an
Associate ('NEW BORROWER') under which:
(a) all obligations of the Borrower under this Deed and the Notes
will be assumed by the New Borrower; and
(b) the Borrower unconditionally and irrevocably guarantees the
obligations of the New Borrower,
and Noteholders will be deemed to have consented to the Arrangement.
31.2 The Borrower must:
(a) give the Trustee 10 Business Days notice of any proposal to
implement an Arrangement; and
(b) within 10 Business Days after implementation of an Arrangement,
notify Noteholders of implementation of an Arrangement.
31.3 An arrangement shall be binding on all Noteholders, the Trustee, the
Borrower and the New Borrower.
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31.4 In this clause, 'ASSOCIATE' has the same meaning as Division 2 of Part
1.2 of the Law.
32. APPLICABLE LAW
This Deed is governed by and is to be construed in accordance with the
laws of the Australian Capital Territory. Each party irrevocably and
unconditionally submits to the non-exclusive jurisdiction of the courts
of the Australian Capital Territory and Courts entitled to hear appeals
from these Courts.
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FIRST SCHEDULE
TABLE OF CONTENTS
FIRST SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
2. GENERAL TERMS OF ISSUE. . . . . . . . . . . . . . . . . . . . . . . . 1-2
3. INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
4. NON-PARTICIPATION IN ISSUES AND LIMITED VOTING RIGHTS . . . . . . . . 1-3
5. NON-RESIDENT NOTE HOLDERS . . . . . . . . . . . . . . . . . . . . . . 1-3
6. REPAYMENT AND MATURITY. . . . . . . . . . . . . . . . . . . . . . . . 1-4
7. INTEREST ON OVERDUE AMOUNTS . . . . . . . . . . . . . . . . . . . . . 1-4
8. DEED BINDING ON PARTIES AND SUCCESSORS. . . . . . . . . . . . . . . . 1-5
9. INDEMNITY TO THE BORROWER . . . . . . . . . . . . . . . . . . . . . . 1-5
10. PAYMENT TO NOTEHOLDERS OR AS OTHERWISE DIRECTED . . . . . . . . . . . 1-5
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FIRST SCHEDULE
CONDITIONS OF ISSUE OF THE CAPITAL NOTES
1. DEFINITIONS
1.1 Words and expressions defined in the Trust Deed have the same meaning in
these Conditions of Issue, unless the context otherwise requires.
1.2 In addition, in these Conditions of Issue, unless the context otherwise
requires:
'AUSTRALIAN DOLLAR SWAP RATE' means the quote for an Australian dollar
swap rate with a term of 4 years obtained (at or around 11 am Sydney
time on the Offer Closing Date) from the Australian Financial Markets
Association Swap Revaluation Rate page (Telerate page 45402) where the
bank is quoted as a receiver of fixed rate;
'INSTALMENT AMOUNT' means in respect of a Note, the sum of $1.00 payable
on an Instalment Payment Date;
'INSTALMENT PAYMENT DATE' means in respect of the first Instalment
Amount, 29 June 2001 and in respect of the second Instalment Amount,
means 28 June 2002 and in respect of the final Instalment Amount means
30 June 2003;
'INSTALMENT RECORD DATE' means such date as determined by the Borrower
from time to time in accordance with the Listing Rules;
'INTEREST PAYMENT' is the amount determined by the following formula:
P X R
-------
2
where:
P = the Outstanding Principal Amount on a Note (but excluding any
Instalment Amount which is an Overdue Amount);
R = the Interest Rate
1-1
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'INTEREST PAYMENT DATE' in respect of a Note means, subject to
CONDITIONS 1.3 and 1.4, 31 December and 30 June of each calendar year
provided that:
(a) the first Interest Payment Date is 31 December 1998;
(b) the final Interest Payment Date is 30 June 2003;
'INTEREST RATE' means if the Australian Dollar Swap Rate on the Offer
Closing Date is:
(a) less than 5.5% the Interest Rate will be 2.5% above the
Australian Dollar Swap Rate;
(b) greater than or equal to 5.5% but less than 5.75%, the Interest
Rate will be 8%; or
(c) greater than or equal to 5.75% the Interest Rate will be 2.25%
above the Australian Dollar Swap Rate;
'INTEREST RECORD DATE' means such date as determined by the Borrower
from time to time in accordance with the Listing Rules;
'MATURITY DATE' means 30 June 2003;
'NOTEHOLDER' means a person whose name is for the time being inscribed
in the Register as a holder of Notes;
'NOTE' or 'CAPITAL NOTE' means each Note issued pursuant to the Trust
Deed subject to these Conditions of Issue;
'OFFER CLOSING DATE' means 18 June 1998, unless brought forward or
extended by the Borrower;
'OUTSTANDING PRINCIPAL AMOUNT' means the principal amount outstanding on
a Note from time to time;
'OVERDUE AMOUNT' means any amount which, in accordance with these
Conditions of Issue, is due to be paid by the Borrower to the Trustee on
behalf
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of a Person on the date specified in these Conditions of Issue, but is
not paid, whether because of the operation of CLAUSE 7 (SUBORDINATION)
of the Trust Deed or any other reason;
'REGISTERED ADDRESS' means the address of the Noteholder entered in the
Register;
'TRUST DEED' means the WEA Capital Note Trust Deed made between the
Borrower and the Trustee.
1.3 If any day on which a payment to be made is not a Business Day then the
payment due on that day must be paid to the Noteholder on the Business
Day immediately preceding that day.
2. GENERAL TERMS OF ISSUE
2.1 Each Note will:
(a) have a face value of, and be issued at, $3.00;
(b) be transferable;
(c) be issued subject to the Listing Rules; and
(d) be known as a Capital Note.
2.2 Each Note must be paid for in full on application to the Borrower.
2.3 Applications for Notes must be in such form as the Borrower determines.
2.4 Subject to CONDITION 10, all payments by the Borrower on the Notes are
to be made to the Trustee and the Trustee must pay these amounts to the
Noteholders in accordance with the rights attaching to the Notes.
Payment by the Borrower of such amounts to the Trustee satisfies (for
all purposes) the Borrower's obligation to pay those amounts under the
Notes and the Trust Deed.
2.5 Notwithstanding any other provision of the Trust Deed or these
Conditions of Issue, the Trustee is not under any obligation to, and is
not liable for its failure
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to, make a payment to Noteholders under the Trust Deed or these
Conditions of Issue until it has actually received an amount in cleared
funds and in the relevant currency equal to the payment.
2.6 The Trustee is entitled to rely conclusively upon any information shown
on the Register of Noteholders in identifying those Noteholders who are
entitled to receive a payment in accordance with these Conditions of
Issue.
3. INTEREST
3.1 Subject to CONDITION 3.3, on or before 12.00pm (Canberra time) on an
Interest Payment Date, the Borrower must pay in cleared funds and in the
relevant currency an Interest Payment to the Trustee in respect of each
Note and the Trustee on receipt of such an amount will pay to each
Noteholder of a Note registered on the Register of Noteholders as at the
end of an Interest Record Date immediately prior to an Interest Payment
Date, an Interest Payment in respect of that Note on the Interest
Payment Date.
3.2 Where the amount of the interest payable to a Noteholder in respect of
that Noteholder's total holding of Notes would, except for this clause,
result in a fraction of $0.01, then the amount will be rounded downwards
where the fraction is one-half or less and rounded upwards in any other
case.
3.3 Interest on a Note will commence to accrue on (and include) 1 July 1998
and will, subject to CONDITION 7, cease to accrue on the Maturity Date.
4. NON-PARTICIPATION IN ISSUES AND LIMITED VOTING RIGHTS
4.1 Notes carry no right to participate in any offering by the Borrower of
Marketable Securities in the Borrower or of any other legal or equitable
interest in the Borrower. The Borrower reserves the right at all times
to issue Marketable Securities or any other legal or equitable interests
to shareholders or to any other Persons, whether for cash, as a bonus
distribution or any other way.
4.2 Noteholders will not have any right to vote at meetings of the Borrower.
1-4
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5. NON-RESIDENT NOTE HOLDERS
Where Notes are held by or on behalf of a Person resident outside
Australia, then, despite anything to the contrary contained in or
implied by these Conditions of Issue, it is a condition precedent to any
right of the Noteholder:
(a) to receive payment of the principal sum represented by those
Notes; or
(b) to receive payment of any interest on those Notes,
that all necessary Authorisations (if any) and any other statutory or
regulatory requirements which may then be in existence in relation to
that Person are obtained at the cost of (unless the Borrower, determines
otherwise) the Noteholder and are satisfied.
6. REPAYMENT AND MATURITY
6.1 On or before 12.00pm (Canberra time) on an Instalment Payment Date, the
Borrower must pay in cleared funds and in the relevant currency an
Instalment Amount to the Trustee in respect of each Note, and the
Trustee on receipt of such an amount will pay to each Noteholder of a
Note registered on the Register of Noteholders as at the end of an
Instalment Record Date immediately prior to an Instalment Payment Date,
an Instalment Amount in respect of that Note on the Instalment Payment
Date. Each Note will be redeemed on its Maturity Date by payment of the
final Instalment Amount in accordance with this condition and of all
interest and other moneys payable on the Note which have not been
otherwise paid.
6.2 The payment of an Instalment Amount in respect of a Note by the Borrower
to the Trustee will reduce the Outstanding Principal Amount of the Note
by such Instalment Amount.
6.3 If as a result of:
(a) any amendment to, or change in, the laws (or any regulations or
rulings thereunder or the official interpretation thereof) of the
United States of America or any political subdivision or taxing
authority thereof or therein affecting taxation; or
1-5
<PAGE>
(b) any amendment to or change in an official interpretation or
application of such laws or regulations or ruling,
which amendment or change is effective on or after the date of issue of
the Notes, Additional Amounts will be required to be paid pursuant to
CLAUSE 9 of the Trust Deed, and such obligation cannot be avoided by the
use of reasonable measures available to the Borrower not including
assignment of the Notes, then the Borrower may redeem without premium or
penalty any Note on any Interest Payment Date on giving not more than
60 nor less than 30 days' notice to the Noteholders concerned. If the
Borrower exercises a right to redeem under this CONDITION 6.3, the
Borrower must repay the Outstanding Principal Amount of the Note and all
interest accrued but unpaid on the Note to the date of payment. The
Borrower may, in its discretion, exercise its rights under this
CONDITION 6.3 in respect of all, or from time to time some, of the Notes
outstanding at that time.
7. INTEREST ON OVERDUE AMOUNTS
7.1 The Borrower will be obliged to pay to the Trustee on behalf of a person
entitled to an Overdue Amount:
(a) interest at the Interest Rate on the Overdue Amount accruing from
and including the due date for payment under these Conditions of
Issue to but excluding the date of payment of such Overdue Amount
('DEFAULT INTEREST'); and
(b) in cleared funds any Default Interest within 30 Business Days of
the obligation to pay Default Interest arising, provided that if
clause 7 (SUBORDINATION) of the Trust Deed applies, then the
payment of any Default Interest is to be made at the same time as
any other interest is to be paid in accordance with that clause.
1-6
<PAGE>
8. DEED BINDING ON PARTIES AND SUCCESSORS
The Trust Deed, including these Conditions of Issue and all other
Schedules to the Trust Deed, are binding on the Borrower, the Trustee
and the Noteholders and all Persons claiming through or under them
respectively.
9. INDEMNITY TO THE BORROWER
9.1 Whenever in consequence of:
(a) the death of a Noteholder;
(b) the non-payment of any income Tax or other Tax payable by a
Noteholder;
(c) the non-payment of any stamp or other duty by a Noteholder or the
legal personal representatives of a Noteholder or his estate; or
(d) any other act or thing in relation to a Note or a Noteholder;
any law for the time being of the Jurisdiction or any other country or
place, in respect of that Note, imposes or purports to impose any
liability of any nature whatever on the Borrower to make any payments to
any Public Authority, the Borrower will in respect of that liability be
indemnified by that Noteholder and his legal personal representatives
and any moneys paid by the Borrower in respect of that liability may be
recovered by action from that Noteholder and/or the Noteholder's legal
personal representatives as a debt due to the Borrower and the Borrower
will have a lien in respect of those moneys upon the Notes held by that
Noteholder or his legal personal representatives and upon the principal
and interest payable in respect thereof.
9.2 Nothing in CONDITION 9 will prejudice or affect any right or remedy
which any such law may confer or purport to confer on the Borrower.
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<PAGE>
10. PAYMENT TO NOTEHOLDERS OR AS OTHERWISE DIRECTED
10.1 Any interest, principal or other moneys payable on or in respect of any
Notes may be paid:
(a) by payment by cheque marked 'not negotiable' and sent through the
post to the address of the Noteholder on the Register or other
Person entitled thereto, or in the case of joint holders to the
address of the joint holder who is first named in the Register in
respect of those Notes;
(b) by deposit to such account with any bank (as that expression is
defined in the BANKING ACT 1959 (COMMONWEALTH)) in Australia as
the Noteholder (or, where the Notes are held by joint
Noteholders, the first joint holder named on the Register of
Noteholders), by written notice to the Borrower and the Trustee,
may direct; or
(c) in accordance with a direction given by a Noteholder under
CONDITION 10.2.
Every cheque referred to in paragraph (a) will be sent at the risk of
the Person entitled to the moneys represented by the cheque. Payment
will be deemed to have been made when the cheque is posted or the
deposit is made in accordance with this clause.
10.2 A Noteholder may (with the approval of the Borrower) direct the
Borrower, or the Trustee as the case may be, to pay amounts payable in
respect of a Note, to which the Noteholder is entitled, to another
Person. The obligations of the Borrower and the Trustee will be fully
discharged in respect of any money payable to the Noteholder if the
Borrower or the Trustee, as the case may be, act in accordance with such
a direction. A direction given by a Noteholder may not be revoked or
altered more than once in each 12 month period commencing 1 July of each
year, except with the consent of the Borrower. The Borrower and the
Trustee are entitled to rely on such direction and have no liability
whatsoever for any loss to any person for such reliance.
10.3 Unless the Borrower otherwise determines, subject to CLAUSES 9 and 14.1
of the Trust Deed, each Noteholder is liable for all Taxes and costs
(including, without limitation, bank charges) incurred by the Borrower
or the Trustee in relation to
1-8
<PAGE>
that Noteholder's entitlement to, or payment of, income or capital, or
as a result of any act requested by, that Noteholder. The Borrower and
the Trustee may withhold payment of any money payable to a Noteholder
until the liability is discharged, or may meet the liability and recover
the amount from any money or property held for, or interest payable to,
or by redeeming Notes of, the Noteholder.
1-9
<PAGE>
SECOND SCHEDULE
TABLE OF CONTENTS
SECOND SCHEDULE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
1. NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
1.1 Calling of meetings . . . . . . . . . . . . . . . . . . . . . 2-1
1.2 Period of notice. . . . . . . . . . . . . . . . . . . . . . . 2-1
1.3 Contents of notice. . . . . . . . . . . . . . . . . . . . . . 2-1
1.4 Omission to give notice . . . . . . . . . . . . . . . . . . . 2-1
1.5 Postal ballot . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2. PROCEEDINGS AT MEETING. . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.1 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.2 No quorum . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.3 Chairperson . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.4 Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.5 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
3. VOTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
3.1 Show of hands . . . . . . . . . . . . . . . . . . . . . . . . 2-2
3.2 Poll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
3.3 Conduct of Poll . . . . . . . . . . . . . . . . . . . . . . . 2-2
3.4 Number of votes . . . . . . . . . . . . . . . . . . . . . . . 2-3
3.5 Joint holders . . . . . . . . . . . . . . . . . . . . . . . . 2-3
3.6 Casting Vote. . . . . . . . . . . . . . . . . . . . . . . . . 2-3
4. PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3
4.1 Instrument appointing proxy . . . . . . . . . . . . . . . . . 2-3
4.2 Proxy need not be Noteholder. . . . . . . . . . . . . . . . . 2-3
4.3 Deposit of Proxy. . . . . . . . . . . . . . . . . . . . . . . 2-3
4.4 Form of Proxy . . . . . . . . . . . . . . . . . . . . . . . . 2-4
4.5 Validity of vote. . . . . . . . . . . . . . . . . . . . . . . 2-4
5. NOTEHOLDERS BOUND . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4
6. INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4
<PAGE>
SECOND SCHEDULE
RULES RELATING TO MEETINGS OF NOTEHOLDERS
1. NOTICE
1.1 CALLING OF MEETINGS
Each of the Trustee or the Borrower may at any time summon a meeting of
Noteholders. The Borrower must at the request in writing of the holders
of Notes representing not less than 10% of the Outstanding Principal
Amount of the Notes, summon a meeting of Noteholders. The meeting is to
be held in the Jurisdiction or at any other place as the Trustee shall
determine or approve.
1.2 PERIOD OF NOTICE
At least 10 Business Days notice (15 Business Days notice for a Special
Resolution) exclusive of the day on which the notice is served or deemed
to be served and of the day for which it is given, of every meeting is
to be given to the Noteholders.
1.3 CONTENTS OF NOTICE
The notice must specify the place day and hour of meeting and the
general nature of the business to be transacted but it is not necessary
to specify in the notice the precise terms of the resolutions to be
proposed. A copy of the notice shall be sent by post to the Trustee
unless the meeting is convened by the Trustee and to the Borrower unless
convened by the Borrower.
1.4 OMISSION TO GIVE NOTICE
Accidental omission to give notice to, or the non-receipt of notice by,
a Noteholder does not invalidate the meeting nor any resolution passed
at a meeting.
1.5 POSTAL BALLOT
Any meeting of Noteholders may be conducted by postal ballot in
accordance with such arrangements as the Borrower, may determine and the
Trustee
2-1
<PAGE>
approve reflecting (unless the Trustee and the Borrower, agree
otherwise), as closely as may be practicable, the provisions of this
Second Schedule.
1.6 All meetings of Noteholders must be held in the Jurisdiction unless the
Borrower and the Trustee agree otherwise.
2. PROCEEDINGS AT MEETING
2.1 QUORUM
The quorum for any meeting is two Noteholders present in person or by
attorney or by proxy or being a corporation by proxy or by attorney or
by duly authorised representative holding (in aggregate) Notes
representing 10% of the Outstanding Principal Amount of the Notes when
the meeting begins. No business shall be transacted at any meeting
unless the requisite quorum is present at the commencement of business.
2.2 NO QUORUM
If a quorum is not present within half an hour from the time appointed
for the meeting then the meeting if convened upon the request of
Noteholders shall be dissolved. In any other case it shall stand
adjourned to such day and time not being less than 14 days thereafter
and to such place as may be appointed by the Chairperson. At such an
adjourned meeting the Noteholders present and entitled to vote whatever
the value of the Notes held by them shall be a quorum for the
transaction of business.
2.3 CHAIRPERSON
The Trustee may nominate the Chairperson, who need not be a Noteholder,
of any Meeting but who may be the chairperson of the Borrower or any
other executive officer of the Borrower.
2.4 ADJOURNMENT
The Chairperson may with the consent of a Resolution of Noteholders of
any meeting at which a quorum is present (such consent being obtained if
the Chairperson so requires on a poll) and shall (if directed by a
Resolution of
2-2
<PAGE>
Noteholders on a poll) adjourn the meeting from time to time and from
place to place but no business shall be transacted at any adjourned
meeting except business which might lawfully have been transacted at the
meeting from which the adjournment took place.
2.5 MINUTES
Minutes of a meeting signed by the Chairperson constitute conclusive
evidence of the proceedings of the meeting.
3. VOTING
3.1 SHOW OF HANDS
At any meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is (before or on the
declaration of the result of the show of hands) demanded by the
Chairperson or in writing by one or more Noteholders present in person
or by proxy and holding or representing 5% of the Outstanding Principal
Amount. Unless a poll is so demanded a declaration by the Chairperson
that a resolution has been carried or carried unanimously or by a
particular majority or lost shall be conclusive evidence of the fact
without proof of the number or proportion of the votes recorded in
favour of or against such resolution.
3.2 POLL
If a poll is duly demanded it shall be taken in such manner as the
Chairperson may direct and the result of such a poll shall be deemed to
be the resolution of the meeting at which the poll was demanded.
3.3 CONDUCT OF POLL
A poll demanded on the election of a Chairperson or on a question of
adjournment shall be taken at the meeting without adjournment. A poll
demanded on any other question shall be taken either immediately or at
such time (not being more than thirty days from the date of the meeting)
and place as the Chairperson may direct. No notice need be given of a
poll not taken immediately. The demand for a poll shall not prevent the
continuance of a
2-3
<PAGE>
meeting for the transaction of any business other than the question on
which the poll has been demanded.
3.4 NUMBER OF VOTES
On a show of hands every Noteholder who being an individual is present
in person or by proxy or attorney or being a corporation is present by
proxy or attorney or by its authorised representative shall have one
vote and on a poll every Noteholder who is present in person or by
attorney or by proxy shall have one vote for every Note with respect to
which it is the registered holder. A Noteholder entitled to more than
one vote need not use all its votes or cast all the votes it uses in the
same way.
3.5 JOINT HOLDERS
In the case of joint registered holders of Notes, the joint Noteholder
first named in the Register of Noteholders (or if that person does not
vote, the next named joint Noteholder, or if that person does not vote,
the next named and so forth) may exercise the voting rights of jointly
held Notes.
3.6 CASTING VOTE
If votes are equal, whether on a show of hands or on a poll, the
Chairperson has a casting vote in addition to the vote or votes (if any)
to which the Chairperson is otherwise entitled.
4. PROXIES
4.1 INSTRUMENT APPOINTING PROXY
An instrument appointing a proxy shall be in writing under the hand of
the appointor or of its attorney duly authorised in writing or if the
appointor is a corporation either under its common seal or under the
hand of an officer or attorney so authorised.
2-4
<PAGE>
4.2 PROXY NEED NOT BE NOTEHOLDER
A person appointed to act as a proxy need not be a Noteholder.
4.3 DEPOSIT OF PROXY
The instrument appointing a proxy and the power of attorney or other
authority (if any) under which it is signed or a duly certified copy of
such power or authority shall be deposited at such places in the
Jurisdiction as the Trustee or the Borrower, with the approval of the
Trustee may in the notice convening the meeting direct or if no such
place is appointed then at the office of the Trustee in the Jurisdiction
not less than 48 hours before the time appointed for holding the meeting
or adjourned meeting (or in the case of a poll before the time appointed
for taking of the poll) at which the person named in the instrument
proposes to vote and in default the instrument of proxy shall not be
treated as valid. No instrument appointing a proxy shall be valid after
the expiration of twelve months from the date named in it as the date of
its execution.
4.4 FORM OF PROXY
An instrument of proxy may be in the usual common form or in such other
form as the Borrower and the Trustee shall approve. The proxy shall be
deemed to include the right to demand or join in demanding a poll. A
proxy shall unless the contrary is stated thereon be valid as well for
any adjournment of the meeting as for the meeting to which it relates
and need not be witnessed.
4.5 VALIDITY OF VOTE
A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the
principal or revocation of the proxy or of the authority under which the
proxy was executed or the transfer of the Notes in respect of which the
proxy is given provided that no intimation in writing of such death
insanity revocation or transfer shall have been received by the
Borrower, at its registered office before the commencement of the
meeting or adjourned meeting at which the proxy is used.
2-5
<PAGE>
5. NOTEHOLDERS BOUND
A Resolution of the Noteholders or a Special Resolution passed at a
meeting of the Noteholders duly convened and held (or by way of postal
ballot) in accordance with this Schedule shall be binding upon all the
Noteholders whether or not present at the meeting and each of the
Noteholders shall be bound to give effect thereto accordingly.
6. INTERPRETATION
Words and expressions defined in the Deed have the same meaning in this
Second Schedule, unless the context otherwise requires.
2-6
<PAGE>
THIRD SCHEDULE
DEFAULT NOTICE
TO THE BORROWER
Attention: The Secretary
Westfield America, Inc.
Address: 11601 Wilshire Boulevard, Los Angeles California 90025
Facsimile No: 310 478-8776
Dear Sirs
WEA CAPITAL NOTE TRUST DEED DEFAULT NOTICE
This Default Notice is issued pursuant to CLAUSE 10.1.
The following Event of Default has occurred:
[SPECIFY EVENT OF DEFAULT]
By this Default Notice, the Trustee declares that the Moneys Owing are
immediately due and payable.
Terms used in this Default Notice have the same meaning as in the WEA Capital
Note Trust Deed dated [ ] 1998 made between Westfield America,
Inc. and Perpetual Trustee Company (Canberra) Limited.
Yours faithfully
- --------------------------------------------
Director
Perpetual Trustee Company (Canberra) Limited
3-1
<PAGE>
EXECUTED as a deed.
EXECUTED by WESTFIELD AMERICA, )
INC. by being signed, sealed and delivered )
by its attorney )
Mark FitzPatrick )
)
under power of attorney dated 26/5/93 )
1998 who declares that he has no notice )
of revocation of the power of attorney, in ) (signed) /s/ Mark FitzPatrick
the presence of: ) ----------------------
) Signature
)
(signed) /s/ D. Clark
--------------------------------
Signature of witness
Donna Clark
- ----------------------------------------
Name of witness (print)
3-2
<PAGE>
EXECUTED by PERPETUAL TRUSTEE )
COMPANY (CANBERRA) LIMITED )
by being signed, sealed and delivered )
by its attorney )
Mark Gerard Weber )
)
under power of attorney dated 28 May )
1998 who declares that he has no notice )
of revocation of the power of attorney, in ) (signed) /s/ Mark Gerard Weber
the presence of: ) ------------------------
) Signature
(signed) /s/ Bartlett
----------------------------------
Signature of witness
Adam Thomas Bartlett
- ------------------------------------------
Name of witness (print)
3-3
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<PAGE>
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<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<CASH> 8,067 8,067
<SECURITIES> 0 0
<RECEIVABLES> 28,432 28,432
<ALLOWANCES> 38,957 38,957
<INVENTORY> (10,525) (10,525)
<CURRENT-ASSETS> 0 0
<PP&E> 1,934,015 1,934,015
<DEPRECIATION> (268,263) (268,263)
<TOTAL-ASSETS> 2,064,014 2,064,014
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<BONDS> 1,176,059 1,176,059
121,000 121,000
0 0
<COMMON> 731 731
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<TOTAL-REVENUES> 68,679 138,596
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<OTHER-EXPENSES> 0 0
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<INCOME-PRETAX> 79,645 93,176
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<INCOME-CONTINUING> 79,645 93,176
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