<PAGE>
[WESTFIELD LOGO]
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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, 1999
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)
MISSOURI 43-0758627
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11601 WILSHIRE BOULEVARD
12TH FLOOR
LOS ANGELES, CALIFORNIA 90025
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
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 12, 1999, 73,345,137 shares of Common Stock, par value $.01
per share, were outstanding.
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<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1: Condensed Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 1999 (unaudited) and
December 31, 1998 ............................................................. 1
Consolidated Statements of Income (unaudited) for the three months ended
June 30, 1999 and 1998 and for the six months ended June 30, 1999 and 1998..... 2
Consolidated Statements of Cash Flows (unaudited) for the six months ended
June 30, 1999 and 1998 ........................................................ 3
Notes to Condensed Consolidated Financial Statements (unaudited) ................ 4
Item 2: Management's Discussion and Analysis of Financial Condition and Results of
Operations .................................................................... 13
Item 3: Quantitative and Qualitative Disclosures about Market Risk ...................... 25
PART II - OTHER INFORMATION
Item 1: Legal Proceedings ............................................................... 26
Item 2: Changes in Securities ........................................................... 26
Item 3: Defaults Upon Senior Securities ................................................. 27
Item 4: Submission of Matters to a Vote of Security Holders ............................. 27
Item 5: Other Information ............................................................... 29
Item 6: Exhibits and Reports on Form 8-K ................................................ 29
</TABLE>
i
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
---------------- ----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Land...................................................................... $ 451,938 $ 457,801
Buildings, improvements and equipment .................................... 2,846,942 3,185,969
Less accumulated depreciation ............................................ (391,695) (340,727)
---------------- ----------------
Net property and equipment ............................................. 2,907,185 3,303,043
Construction in progress ................................................. 52,908 20,254
Investments in unconsolidated real estate affiliates ..................... 160,984 138,747
Participating loan to an affiliate ....................................... 145,000 145,000
Direct financing leases receivable ....................................... 82,090 83,214
---------------- ----------------
Net investment in real estate .......................................... 3,348,167 3,690,258
Cash and cash equivalents ................................................ 12,987 25,272
Restricted cash .......................................................... 11,814 25,820
Accounts receivable, net of allowance of $8,869 and $8,400 in 1999
and 1998, respectively ................................................. 44,263 45,325
Deferred expenses and other assets, net .................................. 33,916 33,964
---------------- ----------------
Total assets ........................................................... $ 3,451,147 $ 3,820,639
---------------- ----------------
---------------- ----------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Notes payable and revolving credit facility .............................. $ 2,327,691 $ 2,641,015
Accounts payable and accrued expenses .................................... 77,263 82,658
Distribution payable ..................................................... 35,997 33,242
---------------- ----------------
Total liabilities ...................................................... 2,440,951 2,756,915
---------------- ----------------
Minority interests ....................................................... 34,694 42,605
Series C and D preferred stock ........................................... 275,000 275,000
Common stock ............................................................. 731 731
Series A and B preferred stock ........................................... 121,000 121,000
Additional paid-in capital ............................................... 578,771 624,388
---------------- ----------------
Total shareholders' equity ............................................. 700,502 746,119
---------------- ----------------
Total liabilities and shareholders' equity ............................. $ 3,451,147 $ 3,820,639
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
1
<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 30, JUNE 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Minimum rents ...................................... $ 85,824 $ 48,335 $ 170,477 $ 96,519
Tenant recoveries .................................. 38,034 18,620 75,629 37,779
Percentage rents ................................... 3,364 1,724 6,465 4,298
------------- ------------- -------------- -------------
Total revenues ................................... 127,222 68,679 252,571 138,596
------------- ------------- -------------- -------------
EXPENSES:
Operating .......................................... 37,345 19,837 76,151 39,763
Management fees .................................... 2,750 1,383 5,228 2,770
Advisory fee ....................................... 2,015 1,483 3,642 2,966
General and administrative ......................... 692 422 1,182 901
Depreciation and amortization ...................... 29,078 17,040 57,819 33,878
------------- ------------- -------------- -------------
Total expenses ................................... 71,880 40,165 144,022 80,278
------------- ------------- -------------- -------------
OPERATING INCOME ...................................... 55,342 28,514 108,549 58,318
INTEREST EXPENSE, net ................................. (50,041) (18,911) (99,185) (39,202)
OTHER INCOME:
Equity in income of unconsolidated real estate
Affiliates ....................................... 1,264 423 2,320 910
Gain on sale of investments......................... 1,971 65,710 1,971 65,710
Interest and other income .......................... 4,307 3,909 8,773 7,440
------------- ------------- -------------- -------------
INCOME BEFORE MINORITY INTEREST 12,843 79,645 22,428 93,176
Minority interests in earnings of consolidated
real estate affiliates ........................... (752) (998) (1,336) (1,978)
------------- ------------- -------------- -------------
NET INCOME ............................................ $ 12,091 $ 78,647 $ 21,092 $ 91,198
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
Net income allocable to preferred shares .............. $ 8,625 $ 2,723 $ 17,250 $ 5,447
Net income allocable to common shares ................. 3,466 75,924 3,842 85,751
------------- ------------- -------------- -------------
$ 12,091 $ 78,647 $ 21,092 $ 91,198
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
EARNINGS PER COMMON SHARE:
Basic .............................................. $ 0.05 $ 1.04 $ 0.05 $ 1.17
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
Diluted ............................................ $ 0.05 $ 0.97 $ 0.05 $ 1.12
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES:
Basic .............................................. 73,342 73,333 73,340 73,331
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
Diluted ............................................ 74,382 81,192 74,370 81,140
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
2
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ........................................................... $ 21,092 $ 91,198
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ...................................... 57,819 33,878
Amortization of deferred loan costs ................................ 3,289 521
Equity in income of unconsolidated real estate affiliates .......... (2,320) (910)
Minority interests in earnings of consolidated real estate
affiliates ....................................................... 1,336 1,978
Gain on sale of investments ........................................ (1,971) (65,710)
Issuance of common stock to independent directors .................. 120 120
Changes in assets and liabilities:
Accounts receivable, net ........................................... 1,230 (920)
Deferred expenses and other assets ................................. (3,401) (1,897)
Accounts payable and accrued expenses .............................. 406 (7,326)
---------------- ----------------
Net cash flows provided by operating activities ...................... 77,600 50,932
---------------- ----------------
INVESTING ACTIVITIES:
Capital expenditures and acquisitions ................................ (184,168) (156,149)
Proceeds from sale of investments .................................... 314,527 99,670
Cash distributions received from unconsolidated real estate
affiliates ......................................................... 3,033 3,976
Direct financing leases receivable payments .......................... 1,124 1,051
Decrease (increase) in restricted cash................................ 14,006 (2,577)
---------------- ----------------
Net cash flows provided by (used in) investing activities ............ 148,522 (54,029)
---------------- ----------------
FINANCING ACTIVITIES:
Proceeds from sale of option, net of stock issuance costs ............ $ 3,494 -
Redemption of preferred shares ....................................... - (67)
Cash distributions paid to preferred shareholders .................... (15,710) (5,408)
Cash distributions paid to common shareholders ....................... (52,556) (51,697)
Cash distributions paid to minority interests ........................ (2,869) (3,061)
Proceeds from notes payable and revolving credit facility ............ 466,289 494,847
Principal payments on notes payable and revolving credit facility .... (637,055) (434,453)
---------------- ----------------
Net cash flows (used in) provided by financing activities ............ (238,407) 161
---------------- ----------------
Net decrease in cash and cash equivalents ............................ (12,285) (2,936)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .......................... 25,272 11,003
---------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ................................ $ 12,987 $ 8,067
---------------- ----------------
---------------- ----------------
SUPPLEMENTAL CASH FLOW INFORMATION PROVIDED IN NOTE 9.
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
3
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
1. ORGANIZATION:
Westfield America, Inc., a Missouri corporation (together with its
subsidiaries or separately, the "Company"), is the fourth largest publicly
traded real estate investment trust ("REIT") in the United States
specializing in enclosed shopping centers. At June 30, 1999, the Company had
interests in 37 shopping centers branded nationwide as "Westfield
Shoppingtowns". The Company's portfolio of Westfield Shoppingtowns includes
multi-center clusters of shopping centers in the east coast, midwest and west
coast.
The Company, through its controlling interest in Westfield America Limited
Partnership (the "Operating Partnership") and its other subsidiaries and
affiliates, owns interests in a portfolio of 22 super-regional shopping centers,
12 regional shopping centers, three power centers (each individually a "Center"
and collectively the "Centers"), 12 separate department store properties which
are net leased under financing leases to The May Department Stores Company and
are not located at the Centers, and certain other real estate investments
(collectively, the "Properties").
The Company is externally managed and advised by Westfield Holdings Limited
("WHL"), an affiliate of the Company and an Australian public company. The
Company has engaged a property management company (the "Manager"), an asset
management company (the "Advisor") and a development company (the "Developer")
to provide property management, asset management and development services to the
Company. Each of the Manager, Advisor and Developer is a wholly-owned subsidiary
of WHL.
2. BASIS OF PRESENTATION:
The accompanying Condensed Consolidated Financial Statements of the Company
are unaudited; however, they have been prepared in accordance with generally
accepted accounting principles for interim financial information and 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, 1999 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, 1998 audited
Consolidated Financial Statements and Notes thereto included in the Company's
Annual Report on Form 10-K filed on March 23, 1999.
The Company conducts its business through its Operating Partnership,
wholly-owned subsidiaries and affiliates. The consolidated financial
statements include the accounts of the Company, the Operating Partnership and
its other subsidiaries and affiliates over which the Company is able to
exercise significant control. The Company does not consider itself to be in
control when other third party equity holders have important approval rights
over major actions. Investments in non-controlled affiliates are accounted
for using the equity method. All significant intercompany accounts and
transactions have been eliminated in consolidation. Certain amounts in the
1998 Condensed Consolidated Financial Statements have been reclassified to
conform to the 1999 presentation.
4
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
3. ACQUISITIONS:
In June 1999, the Company acquired the remaining 50% interest in Valley
Fair, a super-regional shopping center located in San Jose, California, it did
not previously own from The Rouse Company, for approximately $107,000 plus the
assumption of debt. Funds for the purchase of Valley Fair were obtained from the
proceeds from the sale of Cerritos discussed below and borrowings under the
Company's unsecured revolving credit facility.
4. DISPOSITIONS:
In June 1999, the Company sold Cerritos, a super-regional shopping center
located in Cerritos, California to The Macerich Company for approximately
$93,000, net of related debt.
On June 23, 1999, the Company completed a joint venture transaction (the
"Joint Venture") with J.P. Morgan Investment Management, Inc., acting for a
group of pension trusts ("J.P. Morgan"), which effectively transferred a 50%
interest in University Towne Centre ("UTC") and Valley Fair to J.P. Morgan
for approximately $246,000 including the assumption of debt totaling
approximately $120,000. Concurrently, the Company sold an option (the
"Liquidity Option") to J.P. Morgan for $4,000. The Liquidity Option gives J.
P. Morgan the right, under certain circumstances, to exchange its interest in
the Joint Venture, or its interest in either Center, for shares of the
Company's common stock. Upon exercise of the Liquidity Option, J.P. Morgan
will receive shares of the Company's common stock equal to J.P. Morgan's
share of FFO in the Joint Venture, or a Center (as applicable), for the
preceding four calendar quarters divided by the Company's FFO per share for
the same period. As a result of the Liquidity Option, the Company accounted
for the sale of interests in Valley Fair and UTC as a financing transaction.
5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE AFFILIATES:
As of June 30, 1999, the Company's economic interest in Centers held by
unconsolidated affiliates is as follows:
<TABLE>
<CAPTION>
ECONOMIC
WESTFIELD SHOPPINGTOWN LOCATION INTEREST
<S> <C> <C>
Independence Mall Wilmington, NC 85.0%
Plaza Camino Real Carlsbad, CA 40.0%
UTC La Jolla, CA 50.0%
Valley Fair San Jose, CA 50.0%
Vancouver Vancouver, WA 50.0%
West Valley Canoga Park, CA 42.5%
</TABLE>
5
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE AFFILIATES: (CONTINUED)
A summary of the condensed balance sheets and statements of income for all
unconsolidated real estate affiliates on a combined basis is as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------------ ------------------
<S> <C> <C>
CONDENSED BALANCE SHEETS:
Investment in real estate:
Land, building and improvements, at cost .......................... $ 637,776 $ 490,214
Less accumulated depreciation and amortization .................... (39,730) (46,908)
Construction in progress .......................................... 24,495 5,081
------------------ ------------------
Net investment in real estate ........................................ 622,541 448,387
Notes payable ........................................................ (343,355) (185,674)
Other assets and liabilities, net and outside interests .............. (118,202) (123,966)
------------------ ------------------
Investments in unconsolidated real estate affiliates ................. $ 160,984 $ 138,747
------------------ ------------------
------------------ ------------------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ -------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CONDENSED STATEMENTS OF INCOME:
Total revenues ................................ $ 13,668 $ 14,219 $ 29,452 $ 28,704
Costs and expenses:
Operating, general and
administrative expenses................... 4,172 4,363 9,488 8,546
Interest expense, net ...................... 3,348 4,817 6,669 9,595
Depreciation and amortization .............. 3,043 3,045 6,793 6,480
-------------- -------------- -------------- --------------
Net income .................................... 3,105 1,994 6,502 4,083
Other partners' share of net income ........... (1,841) (1,571) (4,182) (3,173)
-------------- -------------- -------------- --------------
Equity in income of unconsolidated real
estate affiliates .......................... $ 1,264 $ 423 $ 2,320 $ 910
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
Significant accounting policies used by unconsolidated real estate
affiliates are similar to those used by the Company.
6
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
6. NOTES PAYABLE AND REVOLVING CREDIT FACILITY:
As of June 30, 1999 and December 31, 1998, the Company had consolidated
indebtedness as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
---------------- ------------------
<S> <C> <C>
Collateralized non-recourse notes to an insurance company, interest only
payable monthly at 6.51%, due in 2001........................................ $ 167,000 $ 167,000
Collateralized loan with a maximum commitment of $101,500,
interest only at LIBOR + 1.50% (7.73% effective rate at June 30, 1999),
payable monthly, due in 2001................................................. 64,000 -
Senior collateralized non-recourse notes, interest at 6.39%, principal and
interest payable quarterly, due in 2004...................................... 15,413 16,782
Senior collateralized non-recourse notes bearing interest at 7.33%, interest
only payable 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 7.15%, principal and interest payable monthly, due in
2000......................................................................... 134,118 136,456
Unsecured revolving credit facility with a group of banks with a maximum
commitment of $600,000, interest only at LIBOR + 1.00%
(7.10% effective rate at June 30, 1999) payable monthly, due
in 2000 with options to extend............................................... 480,200 490,000
Unsecured bridge facility with a group of banks, interest only at LIBOR + 1.75%
payable monthly. This note was repaid and retired in June 1999............... - 100,000
Collateralized commercial mortgage notes due in 2004, interest only payable
monthly at 6.78%............................................................. 75,000 75,000
Secured bridge facility with a group of banks, interest only at LIBOR + 1.50%
payable monthly. This note was repaid and retired in January 1999............ - 44,000
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.77%, principal and interest
payable monthly, due in 2002................................................. 43,907 -
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and interest
payable monthly, due in 2002................................................. 60,553 61,603
Secured bridge facility with a group of banks, interest only at LIBOR + 1.75%
payable monthly. This note was repaid and retired in June 1999 .............. - 95,000
</TABLE>
7
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
6. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
---------------- -----------------
<S> <C> <C>
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and interest
payable monthly, due in 2018................................................. 18,795 19,026
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and interest
payable monthly, due in 2006................................................. 22,792 23,043
Collateralized non-recourse note payable to a bank, interest at
LIBOR + 2.00% interest only payable monthly. This note was
repaid and retired in May 1999............................................... - 92,476
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and interest
payable monthly, due in 2022................................................. 73,048 73,745
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.20%, principal and interest
payable monthly, due in 2006. This note was accounted for
under the equity method upon the sale of a 50%
interest in UTC to J.P. Morgan (See Note 4).................................. - 81,041
Collateralized non-recourse notes payable to an insurance company, effective
interest at 7.00%, principal and interest payable monthly, due in 2004....... 62,510 63,488
Collateralized note payable, interest only payable monthly at LIBOR + 0.53%
(6.38% effective rate at June 30, 1999) due in 2001.......................... 754,100 746,100
Unsecured subordinated notes to Australian investors, interest payable
semi-annually at LIBOR + 2.32% (8.38% effective rate at June 30, 1999), due
in equal installments in 2001, 2002 and 2003................................. 301,088 301,088
---------------- -----------------
$ 2,327,691 $ 2,641,015
---------------- -----------------
---------------- -----------------
</TABLE>
Interest costs capitalized for the three months ended June 30, 1999 and
1998 and the six months ended June 30, 1999 and 1998 totaled $601, $543, $844
and $661, respectively.
In conjunction with the issuance of the unsecured subordinated notes to
Australian investors in June 1998, the Company entered into a foreign
currency hedge agreement which effectively fixed the principal payments due
to the noteholders. The unrealized gain on the foreign currency hedge
agreement was approximately $5,580 at June 30, 1999 as compared to an
unrealized loss of $12,551 at December 31, 1998.
8
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
6. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
The annual maturities of notes payable and revolving credit facility as of
June 30, 1999, are as follows:
<TABLE>
<S> <C>
1999 ........................ $ 7,204
2000 ........................ 621,964
2001 ........................ 1,096,241
2002 ........................ 206,782
2003 ........................ 109,513
Thereafter .................. 285,987
----------------
$ 2,327,691
----------------
----------------
</TABLE>
7. INTEREST RATE SWAP CONTRACTS:
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 agreement, 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.
<TABLE>
<CAPTION>
RANGE OF
RANGE OF FIXED MATURITY
NOTIONAL AMOUNT RATES RATES
------------------- ------------------- --------------
<S> <C> <C> <C>
Current swaps where the Company receives
LIBOR.............................................. $1,887,000 5.93% to 6.34% 6/30/01 to
12/11/08
Deferred swaps where the Company receives
LIBOR ............................................. $730,000 6.07% to 6.35% 4/01/02 to
04/01/08
</TABLE>
At June 30, 1999, the Company had swap contracts, included above as
current swaps, with notional amounts totaling $177,416, hedging anticipated debt
for future redevelopments to occur over the next year. The swaps are contractual
agreements whereby the Company receives LIBOR and pays fixed rates ranging from
6.10% to 6.34%. These interest rate swap contracts are hedges and, accordingly,
changes in their fair values are not recognized in the financial statements.
The net unrealized gain on interest rate swap contracts was approximately
$64,613 at June 30, 1999 as compared to a net unrealized loss of approximately
$88,675 at December 31, 1998.
9
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
8. CAPITAL STOCK:
In May 1998, the Company entered into a stock subscription agreement with
Westfield America Trust ("WAT"), under which WAT has the obligation to purchase
and the Company has the right to sell, up to AUS $465,000 (approximately US
$307,737 at June 30, 1999) 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 common
stock at each installment date, the Company has the option to pay the 5%
discount in cash or common stock.
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 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 1999, the Company
issued a total of 7,446 shares of common stock to six directors.
A quarterly distribution was declared June 17, 1999 to stockholders of
record on June 30, 1999 of $0.3625 per common share, which is equal to $1.45 per
share on an annualized basis.
Under certain circumstances investors in the Company's Operating
Partnership may exchange their Investor Unit Rights for cash or, at the
discretion of the Company, shares of the Company's common stock. Holders of
Investor Unit Rights are entitled to receive, when declared, distributions from
the Operating Partnership in proportion to the dividends paid to holders of the
Company's common stock. On a weighted average basis, there were 2,164,235
Investor Unit Rights outstanding in the Operating Partnership for the three and
six months ended June 30, 1999, plus an additional 909,143 partnership units
outstanding in partnerships related to Independence Mall which may be converted
into an equivalent number of Investor Unit Rights in the Operating Partnership.
9. SUPPLEMENTAL CASH FLOW INFORMATION:
For the six months ended June 30, 1999 and 1998, the Company paid interest
totaling $104,112 and $40,649, respectively, net of capitalized interest.
NON CASH INVESTING AND FINANCING INFORMATION:
During the six months ended June 30, 1999, the Company recorded a decrease
in minority interest totaling $5,213 as a result of the acquisition of a 16%
interest in Wheaton Plaza for Investor Unit Rights in January 1999.
10
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
9. SUPPLEMENTAL CASH FLOW INFORMATION: (CONTINUED)
Prior to formation of the Joint Venture with J.P. Morgan in June 1999, UTC
was included in the Company's consolidated accounts. After the Company
transferred a 50% interest to J.P. Morgan in conjuction with the Joint Venture
transaction, the Company began accounting for UTC under the equity method. The
Company's 50% interest in the fixed assets and liabilities transferred to the
Joint Venture were as follows:
<TABLE>
<S> <C>
Land ....................................................... $ 9,540
Building and improvements .................................. 177,925
Less accumulated depreciation .............................. (4,180)
-------------
Net investment in real estate .......................... 183,285
Note payable ............................................... (80,269)
-------------
Net investment in UTC ...................................... 103,016
Cash proceeds from J.P. Morgan ............................. (50,865)
-------------
Non-cash addition to investments in unconsolidated
real estate affiliates ................................. $ 52,151
-------------
-------------
</TABLE>
10. RELATED PARTIES:
The Manager entered into an agreement with the Company to manage and lease
the properties in the Company's portfolio beginning January 1, 1995. In
consideration for providing these management services, the Company reimburses
the Manager for certain recoverable property operating costs including mall
related payroll and pays the Manager gross fees of 5% of minimum and
percentage rents received by the Centers. Property management fees totaling
$2,750 and $1,383, net of capitalized leasing fees of $1,851 and $1,053, were
expensed for the three months ended June 30, 1999 and 1998, respectively.
Property management fees totaling $5,228 and $2,770, net of capitalized leasing
fee of $3,556 and $2,062 were expensed by the Company for the six months ended
June 30, 1999 and 1998, respectively. Included in accounts payable and accrued
expenses at December 31, 1998, are management fees payable to the Manager
totaling $1,299.
In addition to the management fees, the Manager was reimbursed for
recoverable operating costs including mall related payroll costs totaling $4,788
and $3,933, for the three months ended June 30, 1999 and 1998, respectively and
$10,707 and $7,937 for the six months ended June 30, 1999 and 1998,
respectively.
11
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
10. RELATED PARTIES: (CONTINUED)
The Company entered into a Master Development Framework Agreement with the
Developer whereby the Company granted the Developer the exclusive right to carry
out expansion, redevelopment and related works on the Company's wholly-owned
shopping centers and to endeavor to have the Developer be appointed by the
relevant partner to carry out similar activities for jointly owned real estate
affiliates. During the three months ended June 30, 1999 and 1998, the Company
paid the Developer $20,387 and $14,746, respectively, and $35,187 and $20,104
for the six months ended June 30, 1999 and 1998, respectively for expansion,
redevelopment and related work.
In July 1996, the Company engaged the Advisor to provide 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 from
Operations ("FFO") in excess of the Advisory FFO Amount ($144,569 at June 30,
1999), but not to exceed 55 basis points of the Net Equity Value (as defined) of
the Company's assets. The Advisory FFO amount increases whenever the Company
issues additional common stock. The advisory fee was $2,015 and $1,483 for the
three months ended June 30, 1999 and 1998, respectively and $3,642 and $2,966
for the six months ended June 30, 1999 and 1998, respectively.
Included in interest and other income for the three and six months ended
June 30, 1999 and 1998 is interest income earned on a participating loan to
wholly-owned indirect subsidiaries of WHL totaling $3,747, $3,635, $7,663 and
$7,090, respectively.
11. COMMITMENTS AND CONTINGENCIES:
The Company is currently involved in several development projects and had
outstanding commitments to the Developer totaling approximately $132,000 at June
30, 1999.
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 material adverse impact on
the Company's consolidated financial position or results of operations.
12
<PAGE>
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Westfield America, Inc. (the "Company"), is the fourth largest publicly
traded real estate investment trust ("REIT") in the United States specializing
in enclosed shopping centers. The Company's portfolio, branded nationwide as
"Westfield Shoppingtowns", includes multi-center clusters of shopping centers in
the east coast, midwest and west coast.
The Company has been engaged for over 40 years in the business of owning,
acquiring, financing, operating, leasing, developing, and redeveloping regional
and super-regional shopping centers. As of June 30, 1999, the Company's
portfolio of 37 shopping centers (the "Centers") consisted of 22 super-regional
shopping centers with approximately 24.5 million square feet of space, 12
regional shopping centers with approximately 8.1 million square feet of space,
three power centers with approximately 1.4 million square feet of space and six
office buildings adjacent to its Centers with approximately 0.6 million square
feet of space, representing approximately 70.8%, 23.4%, 4.1%, and 1.7%,
respectively, of the Company's 34.6 million square feet of gross leasable area.
In May 1999, the Company entered into a five-year agreement with The
Coca-Cola Company to market its beverages at the Company's 37 Shoppingtowns.
This relationship includes development of jointly branded promotional activities
across the Company's portfolio which will enhance the Westfield Shoppingtown
brand in its markets.
The following discussion should be read in conjunction with the unaudited
Condensed Consolidated Financial Statements of the Company and the Notes thereto
for the six months ended June 30, 1999 and the Consolidated Financial Statements
of the Company for the year ended December 31, 1998 included in the Company's
Annual Report on Form 10-K.
GENERAL BACKGROUND
Fluctuations in the Company's results of operations from period to period
were primarily affected by acquisitions that occurred during the year ended
December 31, 1998. In 1998, the Company acquired interests in 16 shopping
centers, (the "1998 Acquisition Centers") including a portfolio of 12 shopping
centers (the "Hahn Centers") from TrizecHahn Centers, Inc. ("TrizecHahn"), for
approximately $1.8 billion.
The Centers acquired in 1998 were acquired with proceeds obtained from the
Company's unsecured revolving credit facility, issuance of new secured and
unsecured debt in the third and fourth quarter of 1998, assumption of debt, the
issuance of notes to Australian investors (the "Capital Notes") in June 1998,
the issuance of shares of the Company's Series C and D preferred stock in August
and December 1998, the exercise of warrants in WHL and subsequent sale of WHL
shares in April 1998 and issuance of partnership interests and Investor Unit
Rights.
13
<PAGE>
At June 30, 1999 and for the six months then ended, the Condensed
Consolidated Financial Statements and Notes thereto reflect the consolidated
financial results of 31 Centers, the equity in income of six unconsolidated
real estate affiliates including UTC which became a deconsolidated entity on
June 23, 1999, Cerritos until this center was sold on June 2, 1999 and an
additional 32% interest and 15% interest in Wheaton Plaza and Independence
Mall, respectively, which were acquired effectively on January 1, 1999, 12
separate department store properties that are net leased to The May Company
under financing leases, a $145 million participating loan made to two
wholly-owned affiliates of Westfield Holdings Limited ("WHL") in May of 1997
(the "Garden State Plaza Loan").
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 affiliates with interests in five Centers, Crestwood Plaza following
its acquisition in January 1998, The Promenade at Woodland Hills following its
acquisition in June 1998, 12 separate department store properties net leased to
the May Company under financing leases, the Garden State Plaza Loan, the Capital
Notes and the sale of investments in April 1998.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1999 TO THE THREE MONTHS ENDED
JUNE 30, 1998
TOTAL REVENUES increased $58.5 million or 85% to $127.2 million for the
three months ended June 30, 1999 as compared to $68.7 million for the same
period in 1998. The increase was primarily the result of the addition of the
1998 Acquisition Centers which contributed $49.4 million or 84% of the increase
in total revenues. Excluding the total revenues generated by the 1998
Acquisition Centers, total revenues increased $9.1 million due primarily to
increased minimum rents generated by completed redevelopments at Mission
Valley-West, South Shore and Annapolis, higher recovery revenues and percentage
rental revenues and higher minimum rents as a result of increased occupancy
throughout the portfolio.
TOTAL EXPENSES increased $31.7 million or 79% to $71.9 million for the
three months ended June 30, 1999 as compared to $40.2 million for the same
period in 1998. The increase was primarily the result of the addition of the
1998 Acquisition Centers, which contributed a combined $24.0 million or 76% of
the increase in total expenses, including $9.2 million in depreciation expense.
Excluding the total expenses incurred by the 1998 Acquisition Centers, total
expenses increased $7.7 million due primarily to increased operating costs and
depreciation as a result of redevelopments.
INTEREST EXPENSE, net of capitalized interest, increased $31.1 million or
165% to $50.0 million for the three months ended June 30, 1999 as compared to
$18.9 million for the same period in 1998, due primarily to increased borrowings
under the Company's secured and unsecured loan facilities, the Capital Notes and
secured debt assumed and issued in conjunction with the acquisition of the 1998
Acquisition Centers.
EQUITY IN INCOME OF UNCONSOLIDATED REAL ESTATE AFFILIATES increased
approximately $0.9 million to $1.3 million for the three months ended June 30,
1999 as compared to $0.4 million for the same period in 1998 primarily due to
the acquisition of joint venture interests in Valley Fair in July 1998 and
Independence Mall in August 1998, which were partially offset by the acquisition
of the remaining 55% interest in North County Fair in October 1998 and the
remaining 58% interest in Topanga acquired in November 1998.
14
<PAGE>
INTEREST AND OTHER INCOME increased $0.4 million to $4.3 million for the
three months ended June 30, 1999 as compared to the same period in 1998. The
increase was due to an increase in participation interest earned on the Garden
State Plaza Loan and interest earned on temporary investments.
MINORITY INTERESTS decreased $0.2 million to $0.8 million for the three
months ended June 30, 1999 as compared to $1.0 million for the same period in
1998 due to the acquisition of a 16% interest in Wheaton Plaza in January 1999
which was partially offset by minority interests in Santa Anita and Capital
Mall.
NET INCOME decreased $66.5 million to $12.1 million for the three months
ended June 30, 1999 as compared to $78.6 million for the same period in 1998.
Excluding gains of $2.0 million from the sale of Cerritos in June 1999 and
$65.7 million for the same period in 1998 due primarily to the sale of WHL
Warrants in April 1998 net income decreased $2.8 million or 22% to $10.1
million for the months ended June 30, 1999 as compared to $12.9 million for
the same period in 1998 for the reasons discussed above.
RESULTS OF OPERATIONS
COMPARISONS OF THE SIX MONTHS ENDED JUNE 30, 1999 TO THE SIX MONTHS ENDED
JUNE 30, 1998
TOTAL REVENUES increased $114.0 million or 82% to $252.6 million for the
six months ended June 30, 1999 as compared to $138.6 million for the same period
in 1998. The increase was primarily the result of the addition of the 1998
Acquisition Centers which contributed $101.5 million or 89% of the increase in
total revenues. Excluding the total revenues generated by the 1998 Acquisition
Centers, total revenues increased $12.5 million due to increased minimum rents
generated by completed redevelopments at Mission Valley-West, South Shore, and
Annapolis, higher recovery revenues and percentage rental revenues and higher
minimum rents as a result of increased occupancy throughout the portfolio.
TOTAL EXPENSES increased $63.7 million or 79% to $144.0 million for the six
months ended June 30, 1999 as compared to $80.3 million for the same period in
1998. The increase was primarily the result of the addition of the 1998
Acquisition Centers, which contributed a combined $52.8 million or 83% of the
increase in total expenses, including $19.7 million in depreciation expense.
Excluding the total expenses incurred by the 1998 Acquisition Centers, total
expenses increased $10.9 million due primarily to increased operating costs and
depreciation as a result of redevelopments placed into service in 1998.
INTEREST EXPENSE, net of capitalized interest, increased $60.0 million or
153% to $99.2 million for the six months ended June 30, 1999 as compared to
$39.2 million for the same period in 1998, due primarily to increased borrowings
under the Company's secured and unsecured loan facilities, the Capital Notes and
secured debt assumed and issued in conjunction with the acquisition of the 1998
Acquisition Centers.
EQUITY IN NET INCOME OF UNCONSOLIDATED REAL ESTATE AFFILIATES increased
approximately $1.4 million to $2.3 million for the six months ended June 30,
1999 as compared to $0.9 million for the same period in 1998 due primarily to
the acquisition of joint venture interests in Valley Fair in July 1998 and
Independence Mall in August 1998, which were partially offset by the acquisition
of the remaining 55% interest in North County Fair in October, 1998 and the
remaining 58% interest in Topanga acquired in November, 1998.
INTEREST AND OTHER INCOME increased $1.3 million to $8.8 million for the
six months ended June 30, 1999 as compared to the same period in 1998. The
increase was due to an increase in participation interest earned on the Garden
State Plaza Loan and interest earned on temporary investments.
15
<PAGE>
MINORITY INTERESTS decreased $0.7 million to $1.3 million for the six
months ended June 30, 1999 as compared to $2.0 million for the same period in
1998 due to the acquisition of a 16% interest in Wheaton Plaza in January 1999
which was partially offset by minority interests in Santa Anita and Capital
Mall.
NET INCOME decreased $70.1 million to $21.1 million for the six months
ended June 30, 1999 as compared to $91.2 million for the same period in 1998.
Excluding gains of $2.0 million from the sale of Cerritos in June 1999 and
$65.7 million for the same period in 1998 due primarily to the sale of WHL
warrants in April 1998 net income decreased $6.4 million or 25% to $19.1
million for the six months ended June 30, 1999 as compared to $25.5 million
for the same period in 1998 for the reasons discussed above.
FFO FUNDS FROM OPERATIONS
The Company computes FFO in accordance with standards established by the
White Paper on FFO approved by the Board of Governors of NAREIT in March 1995
which defines FFO as net income (loss) (computed in accordance with generally
accepted accounting principles ("GAAP")), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related depreciation and
amortization and after adjustments for unconsolidated affiliates and joint
ventures. FFO 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. The Company believes that FFO is an effective measure of the
Company's operating performance because analysts and investors utilize FFO in
analyzing the operating results of real estate companies rather than using
earnings per share. FFO, as computed by the Company, may not be comparable to
similarly titled figures reported by other REITs.
The following is a summary of the Company's FFO and a reconciliation of net
income to FFO for the periods presented (amounts in thousands, except
percentages):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Funds from operations ......................... $ 42,037 $ 32,155 $ 83,207 $ 63,713
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
Increase in funds from operations from prior
period ...................................... 30.7% 30.6%
------------- -------------
------------- -------------
Reconciliation:
Net income .................................. $ 12,091 $ 78,647 $ 21,092 $ 91,198
Gains on sales of investments ............... (1,971) (65,710) (1,971) (65,710)
Income allocable to Investor Unit Rights..... 594 - 1,533 -
Depreciation and amortization:
Deferred financing leases ................ 567 530 1,124 1,051
Consolidated properties .................. 29,078 17,040 57,819 33,878
Unconsolidated real estate affiliates..... 1,941 1,938 4,143 3,876
Minority interest portion ................ (263) (290) (533) (580)
------------- ------------ ------------- ------------
Funds from operations ......................... $ 42,037 $ 32,155 $ 83,207 $ 63,713
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
</TABLE>
16
<PAGE>
EBITDA EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
The Company believes that there are several important factors that
contribute to the ability of the Company to increase rent and improve
profitability of its shopping centers, including aggregate retailer sales
volume, sales per square foot, occupancy levels and retailer costs. Each of
these factors has a significant effect on EBITDA. The Company believes that
EBITDA is an effective measure of operating performance because EBITDA is
unaffected by the debt and equity structure of the property owner. EBITDA: (i)
does not represent cash flow from operations as defined by GAAP; (ii) should not
be considered as an alternative to net income (determined in accordance with
GAAP) as a measure of the Company's overall 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 affiliates increased from $106.7 million
for the six months ended June 30, 1998 to $185.0 million for the same period in
1999. The growth in EBITDA reflects the addition of total gross leasable area,
increased rental rates, increase retailer sales, improved occupancy levels and
effective control of operating costs.
The following is a summary of the Company's EBITDA and a reconciliation of
EBITDA to FFO (which has been reconciled to the Company's net income above) for
the periods presented (amounts in thousands, except percentages):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- -------------------------------
1999 1998 1999 1998
------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
EBITDA ......................................... $ 93,457 $ 53,012 $ 185,017 $ 106,715
------------ ------------- ------------- --------------
------------ ------------- ------------- --------------
Increase in EBITDA from prior period ........... 76.3% 73.4%
------------ -------------
------------ -------------
Reconciliation:
Funds from Operations ........................ $ 42,037 $ 32,155 $ 83,207 $ 63,713
Interest expense:
Consolidated properties ................... 50,041 18,911 99,185 39,202
Unconsolidated real estate affiliates ..... 1,839 2,112 3,539 4,220
Minority interest portion of consolidated
properties .............................. (460) (166) (914) (420)
------------ ------------- ------------- --------------
EBITDA ......................................... $ 93,457 $ 53,012 $ 185,017 $ 106,715
------------ ------------- ------------- --------------
------------ ------------- ------------- --------------
</TABLE>
17
<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 these factors, earnings are generally highest in
the fourth quarter of each year.
The following table summarizes certain quarterly operating data for 1998 and
the first two quarters of 1999 for the Company's Centers (amounts in thousands,
except percentages):
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1999 QUARTERLY DATA
Mall Shop sales................................ $ 643,844 $ 712,957 N/A N/A
Revenues....................................... $ 145,599 $ 145,197 N/A N/A
Percentage leased(1)........................... 91% 92% N/A N/A
1998 QUARTERLY DATA
Mall Shop sales................................ $ 615,302 $ 685,548 $ 688,089 $ 1,071,951
Revenues....................................... $ 87,933 $ 86,807 $ 108,469 $ 145,072
Percentage leased ............................. 92% 93% 93% 93%
</TABLE>
(1) Includes the TrizecHahn Centers which were acquired in the last half of
1998.
REPORTED TENANT SALES VOLUME
Total sales for Mall Shops (retail stores with less than 20,000 square feet
of leasable area) 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 Shop sales for the
Company's Centers, for the six months ended June 30, 1999, increased 5.3% on a
per square foot basis over the same period in 1998. The Company believes these
sales levels enhance the Company's ability to obtain higher rents from
retailers.
The table below sets forth Mall Shop sales and per square foot percentage
increases over the same periods in 1998 for the Company's Centers, in the east
coast, the midwest and the west coast regions of the United States (amounts in
thousands, except percentages):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1999
-------------------------------- -------------------------------
MALL SHOP INCREASE PER MALL SHOP INCREASE PER
SALES SQ. FT. SALES SQ. FT.
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
East coast ................................... $ 208,347 4.9% $ 392,176 5.2%
Midwest ...................................... 85,181 1.4% 167,018 2.6%
West coast ................................... 419,429 6.6% 797,607 6.0%
--------------- --------------- --------------- --------------
Total Centers ................................ $ 712,957 5.4% $ 1,356,801 5.3%
--------------- --------------- --------------- --------------
--------------- --------------- --------------- --------------
</TABLE>
18
<PAGE>
LEASING
Mall Shop space was 92% leased at June 30, 1999, including the TrizecHahn
Centers which were acquired in the last half of 1998. The Company excludes
temporary leasing from the calculation of leased Mall Shop space because such
leases are on a short-term basis (less than one year) and are subject to
termination by the Company on thirty days' notice. The following table sets
forth leased status for the Company's Centers in the east coast, the midwest
and the west coast regions of the United States.
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
East coast............................................................. 95% 92%
Midwest................................................................ 93% 92%
West coast............................................................. 90% 95%
Total Centers.......................................................... 92% 93%
</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 retailers'
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.
Average base rent was $29.71 per square foot at June 30, 1999. The following
table contains certain information regarding base rent per square foot of Mall
Shop leases, excluding leases in excess of 20,000 square feet, that have been
executed and expired since January 1, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Average base rent of Mall Shop leases, at the end
of the period........................................ $ 29.71 $ 28.22 $ 29.71 $ 28.22
Leases expired during the period....................... 22.90 26.70 24.81 25.17
Leases executed during the period...................... 38.61 30.32 37.76 29.11
</TABLE>
As required by GAAP, contractual rent increases are recognized as rental
income using the straight-line method over the respective lease terms which may
result in the recognition of income not evidenced by cash receipts. The amount
of contractual rent increases not represented by cash receipts (in thousands)
was $1,265 and $1,011 for the three months ended June 30, 1999 and 1998,
respectively, and $2,510 and $2,012 for the six months ended June 30, 1999 and
1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, the Company had unused capacity under its unsecured
revolving credit facility totaling $120 million which will be utilized to
fund acquisition and redevelopment activities and as a revolving working
capital facility. Through its hedging activities, the Company has fixed the
interest rates applicable to the outstanding balance under this facility at
rates ranging from 6.90% to 7.20%.
At June 30, 1999, the Company's cash and cash equivalents totaled $13
million, excluding its proportionate share of cash held by unconsolidated real
estate affiliates.
19
<PAGE>
During the quarter ended June 30, 1999, the Company closed on a $102
million facility with PNC Bank, which included a $38 million construction
loan commitment for the Meriden redevelopment. The loan bears interest at
LIBOR + 1.50% and is due in November 2001. At the closing, PNC Bank funded
$64 million which was used to pay down the unsecured revolving credit
facility. Additionally, during the quarter, the Downtown Plaza first mortgage
totaling $93 million was refinanced through the unsecured revolving credit
facility.
On June 2, 1999, the Company sold Cerritos and utilized a portion of the
proceeds to retire encumbered debt. The remaining $93 million, plus an
additional $14 million obtained from the Company's unsecured revolving credit
facility, was used to acquire from The Rouse Company the remaining 50% interest
in Valley Fair that the Company did not previously own.
On June 23, 1999, the Company (a) refinanced the existing $100 million
Valley Fair loan with a new $275 million loan facility from Canadian Imperial
Bank of Commerce and Hypo Bank, which included a $110 million construction
loan commitment for the Valley Fair redevelopment, and (b) completed a joint
venture transaction (the "Joint Venture") with J.P. Morgan Investment
Management, Inc., acting for a group of pension trusts ("J.P. Morgan"), which
effectively transferred a 50% interest in UTC and Valley Fair to J.P. Morgan
for approximately $246 million, including the assumption of debt totaling
approximately $120 million. Concurrently with these transactions, the Company
sold an option to J.P. Morgan for $4 million giving J.P. Morgan the right,
under certain circumstances, to convert its interest in the Joint Venture
into shares of the Company's common stock. Proceeds from the refinancing, the
joint venture transaction and the sale of the put option were used to retire
the $100 million TrizecHahn acquisition bridge loan and pay down the
unsecured revolving credit facility.
The Company's consolidated indebtedness at June 30, 1999 was $2,328
million, of which 100% is fixed-rate debt after considering interest rate
protection agreements totaling approximately $1.7 billion. The interest rate on
the fixed rate debt ranges from 6.39% to 8.38%. The Company's pro-rata share of
debt-to-total market capitalization, based on the share price at June 30, 1999
was 54.6%, excluding the Capital Notes from the numerator. The maturity dates of
consolidated indebtedness range from 2000 to 2018. Scheduled principal
amortization and balloon payments in connection with maturing mortgage
indebtedness are included in Note 6 of the Condensed Consolidated Financial
Statements included in this quarterly report on Form 10-Q.
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: (a) FFO, (b) secured and unsecured financing, (c) capital contributions
and (d) tenant recoveries. The Company anticipates that development projects,
expansion projects and potential acquisitions will be funded by external
financing sources.
Capital expenditures and capital leasing costs totaled approximately $52
million and $25 million, for the six months ended June 30, 1999 and 1998,
respectively. The following table shows the components of capital expenditures
and capital leasing costs (amounts in millions):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------------
1999 1998
------------- -------------
<S> <C> <C>
Renovations and expansions.................. $ 40.6 $ 18.7
Tenant allowances............................ 5.9 4.0
Capital leasing costs........................ 3.6 2.1
Other capital expenditures................... 1.4 0.3
------------- -------------
Total........................................ $ 51.5 $ 25.1
------------- -------------
------------- -------------
</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 continually evaluates the
redevelopment potential of its Centers. Due to the financial and regulatory
burdens presented by the development of new regional shopping centers, the
Company believes that an on-going redevelopment program provides a cost
efficient means of ensuring that the Company's Centers compete effectively
within their existing markets and are able to attract new customers.
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 $132 million on a proportional basis as of June 30,
1999, which will be funded through existing mortgage debt and the unsecured
revolving credit facility.
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 expansions, as well as for scheduled principal
payments, including balloon payments on outstanding indebtedness, are expected
to be obtained from: (a) additional debt financing, (b) additional equity and
(c) 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 expand and develop its business in accordance with its strategy
for growth.
DISTRIBUTIONS
A quarterly distribution was declared June 17, 1999 to stockholders of
record on June 30, 1999 of $0.3625 per common share, which equates to $1.45 per
share on an annualized basis.
YEAR 2000 READINESS
The Year 2000 Problem is the result of computer hardware and software
systems (collectively referred to as "Systems" and individually as a "System")
having been designed to use a two-digit code rather than a four-digit code to
define the applicable year, as in "98" to represent "1998". Systems may
misinterpret a date using "00" as the year 1900 rather than the year 2000. This
could result in errors causing such Systems to become unreliable or to fail.
On behalf of the Company, the Company's Manager began a company-wide
assessment in 1997 (the "Project") to identify the Company's reliance on Systems
using a two digit date code as well as the Company's exposure to third party
customers and suppliers critical to the Company's operations. The Project
includes an assessment of the Company's dependence upon such Systems and third
parties as well as establishing priorities for addressing any Systems or third
party customers and suppliers which are assessed as potential year 2000
compliance risks.
21
<PAGE>
The Company's initial assessment identified four areas of concern: (i)
internal Systems which the Company uses for information processing, data storage
and communication, (ii) fire, life and safety systems installed at the Company's
Properties which are used for measurement and control of mechanical devices
essential to the Properties' use and operations, (iii) economic dependence upon
significant customers which are critical to the Company's operations, and (iv)
relationships with third party suppliers upon which the Company's business is
substantially dependent.
INTERNAL SYSTEMS
In 1997, the Manager completed a comprehensive assessment of all
communication, hardware and software Systems believed to be critical to the
Company's operations. As a result of that assessment, the Manager began a
program of replacing and upgrading all Systems which were identified as not
being Year 2000 compliant. Requirements for replacing all hardware and software
Systems included receipt of written confirmation that the new Systems were Year
2000 compliant. The conversion was substantially completed on October 31, 1998.
The Manager is now in the final stage of the conversion which consists of
testing the computer system for Year 2000 compliance. Based upon the assessments
and testing to date, no contingency plans are expected to be needed. Management
considers its efforts to ensure Year 2000 compliance of its internal Systems to
be adequate; however, assurances obtained from hardware and software vendors
have not been independently verified and there can be no assurance that testing
yet to be performed will be adequate, in all instances, to ensure that all
software and hardware systems are compatible and able to function reliably in
the year 2000 and thereafter. The cost of the computer conversion as well as the
costs to test the System's Year 2000 compliance will be incurred by the Manager
and are not reimbursable by the Company.
FIRE, LIFE AND SAFETY SYSTEMS
Management's initial assessment of the fire, life and safety Systems and the
heating, ventilating and air conditioning ("HVAC") Systems at its properties
indicates that manual overrides on most Systems are available as an alternative
to automated controls for monitoring and controlling existing Systems. The
Manager has completed an assessment of all electronic and mechanical control
systems at the Properties and is currently in the process of upgrading or
replacing any systems which are not Year 2000 compliant prior to September 30,
1999. Any cost incurred to replace or upgrade such Systems are a cost of
maintaining the Centers and are therefore considered to be recoverable from the
tenants under the terms of existing leases. Although there can be no assurance,
management considers that the financial impact and risk of significant loss
because of System changes or business interruptions caused by fire, life and
safety Systems and HVAC Systems which are not Year 2000 compliant will not be
material.
SIGNIFICANT CUSTOMERS
The Company is also reliant on its customers to make the necessary
preparations for the year 2000 so that their business operations will not be
interrupted, thus threatening their ability to honor their financial
commitments. As of December 31, 1998, all tenants had been notified of their
responsibilities under their leases notwithstanding interruptions to their
business resulting from Year 2000 problems. Although the Company's tenants
have indicated that they are in the process of upgrading and testing their
Systems, there can be no assurance that all tenants will adequately complete
the necessary upgrades or that the tests being or to be performed will be
adequate to ensure that all of their Systems will function reliably in the
year 2000 and thereafter.
22
<PAGE>
THIRD PARTY SUPPLIERS
Exposure to third party suppliers is considered to pose a significant risk.
Information requests have been distributed to key third party suppliers and
replies are being evaluated. Where the risk assessment indicates significant
exposure, follow-up questionnaires and direct contact in the form of
teleconferences and site visits will be performed to assess accuracy of
information received and to determine and minimize, to the extent possible,
potential loss exposure. This assessment is substantially complete. Although
management believes that its efforts with respect to such risks have been
appropriate, there can be no assurance that such efforts have been adequate for
purposes of determining whether key third party suppliers are Year 2000
compliant and thereby preventing a material adverse effect on the Company. As
part of its contingency planning for non-compliant third party suppliers the
Company has identified, to the extent possible, alternative suppliers who are
Year 2000 compliant as a replacement source for goods or services. The cost of
communicating with the Company's third party suppliers has been incurred by the
Manager and is not reimbursable by the Company. There can be no assurance that
all suppliers of critical goods and services will in fact be Year 2000 compliant
or that, if they are not, alternative suppliers who are compliant will exist or
will be able to furnish such goods and services without substantial
interruption.
WORST CASE SCENARIO
The worse case scenario could be as far reaching as an extended loss of
utility services resulting from interruptions at the point of power generation
or line transmission or local distribution to the Properties. Such an
interruption could result in an inability to provide tenants with access to
their spaces thereby affecting the Company's ability to collect rent and pay its
obligations which could result in a material adverse effect on the Company. The
effect could be as insignificant as a minor interruption in services provided to
tenants at the Centers resulting from unanticipated problems encountered by the
Company's Systems or any of the significant third parties with whom the Company
does business. The pervasiveness of the Year 2000 issue makes it likely that
previously unidentified issues will require remediation during the normal course
of business. In such a case, the Company anticipates that automated procedures
could be replaced by manual procedures while Systems are repaired and that such
interruptions would have a minor effect on the Company's operations.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report includes, and future public filings and oral and written
statements by the Company and its management may include, statements (other than
the consolidated 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," "Portfolio Data," "Liquidity and Capital Resources,"
"Distributions," and "Year 2000 Readiness," (b)"Quantitative and Qualitative
Disclosure about Market Risk," "Legal Proceedings" and (c) statements preceded
by, followed by or that include the words "believes," "expects," "may," "will,"
"anticipates," "intends," "plans," "estimates," "proposes," "scheduled," or
other similar expressions.
Forward-looking statements are made based on management's current
expectations and beliefs 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.
23
<PAGE>
The following important factors, and those important factors described
elsewhere in this report (including without limitation those discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Quantitative and Qualitative Disclosures about Market Risk" 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; (a) risks
generally inherent in real estate investment, such as changes in the national
economic climate, the regional economic climate (including the impact of
local employers or industry concentrations on the economic climate) or local
real estate conditions; perceptions by retailers or shoppers of the safety,
convenience and attractiveness of a shopping center, trends in the retail
industry; competition for retailers, changes in market rental rates and
vacancy rates, the ability to collect rent from retailers, the need to
periodically renovate, repair and relet space and the costs thereof; the
ability of an owner to provide adequate management and maintenance and
insurance, and increased operating costs, as well as changes in governmental
regulations, zoning or tax laws; and possible environmental liabilities; (b)
the ability of the Company to successfully redevelop properties (including
the ability to complete the redevelopment, to complete construction within
the estimated time frame and budget or to realize anticipated occupancy and
rental rates from completed projects), or to achieve anticipated operating
results from acquired properties; (c) competition from other shopping centers
and other forms of retailing; (d) the impact of the financial condition of
anchors and major tenants on the Centers' operations, including the
bankruptcy or insolvency of anchors or retailers or the decision of any
anchor or major tenant to not renew its lease when it expires; (e) the
Company's ability to make scheduled payments of principal or interest on, or
to refinance its obligations with respect to its indebtedness and to comply
with the covenants and restrictions contained in the instruments governing
such indebtedness, which will depend on its future operating performance and
cash flow, which are subject to prevailing economic conditions, prevailing
interest rate levels, and financial, competitive, business and other factors
beyond its control, including changes in consumer buying patterns, regulatory
developments and increased operating costs; (f) the Company's ability to
continue to qualify as a REIT for federal income tax purposes and the
taxation of the Company as a regular corporation if it were to lose that
status, the 100% tax on net income from transactions that constitute
prohibited transactions pursuant to the rules relating to REITs under the
Code; and possible taxation of the Company with respect to built-in gain on
disposition of certain property if such property were disposed of during a
ten-year period; and the possibility of a dramatic decrease in cash available
for distributions if such taxes become payable; and (g) possible conflicts of
interest due to the controlling ownership interest of affiliates.
While the Company periodically reassesses material trends and
uncertainties affecting the operations and financial condition in connection
with the preparation of 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 from liability with respect to forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995.
24
<PAGE>
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
In the normal course of business the Company enters into interest rate
swap contracts to reduce its exposure to fluctuations in interest rates. Net
interest differentials to be paid or received related to these contracts are
accrued as incurred or earned. The Company's policy is to maintain fixed rate
borrowing (including fixed rate mortgages and interest rate swaps) for
approximately 75% of forecast debt (existing debt and future expiring debt
anticipated to be refinanced) for a term of not more than ten years.
Additional hedging may be entered into for up to 100% of forecast debt if
interest rates are extremely favorable.
It is the Company's policy to enter into interest rate swap contracts to
hedge fluctuations in interest rates only to the extent necessary to meet its
objectives as stated above. The Company does not enter into interest rate swap
contracts for speculative purposes but rather for limiting the Company's
exposure to changes in interest rates.
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 between the contract rate and the market rate on the notional
amount. The Company does not anticipate non-performance by any of the
counterparties.
The following is a summary of fixed rate debt, average fixed interest rate
and average remaining term to maturity for the Company's pro rata share of fixed
rate notes payable and unsecured revolving credit facility (amounts in
thousands, except percentages and years):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------------- --------------
<S> <C> <C>
Principal amount of fixed rate debt.................................... $ 773,946 $ 777,911
Principal (notional) amount of other current fixed rate
payable instruments.................................................. 1,709,584 1,700,000
--------------- --------------
$ 2,483,530 $ 2,477,911
--------------- --------------
--------------- --------------
Fixed rate debt as a percentage of total notes payable and unsecured
revolving credit facility............................................ 100% 91.40%
--------------- --------------
--------------- --------------
Average effective fixed rate (inclusive of margins) of
total fixed rate debt and hedges..................................... 7.20% 7.09%
--------------- --------------
--------------- --------------
Average remaining term (in years) of total fixed rate debt
and hedges, including delayed start swaps............................ 8.1 9.1
--------------- --------------
--------------- --------------
</TABLE>
As of June 30, 1999, there have been no material changes in the market risks
reported in the Company's Annual Report on Form 10-K other than those disclosed
in Notes 6 and 7 of the Condensed Consolidated Financial Statements for the
quarter ended June 30, 1999 included in this quarterly report on Form 10-Q.
25
<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
SHARES ISSUED TO DIRECTORS
Each director who is not an officer of the Company or an employee of WHL is
entitled to annual compensation equal to $20,000 in cash and $20,000 in 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. On May 13, 1999,
the Company issued a total of 7,446 shares of common stock to six directors.
Such shares of common stock were issued in a private placement to the above
mentioned directors pursuant to the exemption from the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act"), provided by
Section 4(2) of the Securities Act.
LIQUIDITY OPTION
On June 23, 1999, concurrently with the completion of the Joint Venture,
the Company sold an option (the "Liquidity Option") to J.P. Morgan for $4
million. The Liquidity Option grants J.P. Morgan the right, under certain
circumstances, to exchange (a) J.P. Morgan's interest in the Joint Venture or
(b) J.P. Morgan's interest in either of the malls owned by the Joint Venture
for shares of the Company's common stock.
If J.P. Morgan exercises the Liquidity Option and exchanges its interest in
the Joint Venture, the Company is required to issue to J.P. Morgan an amount of
shares of the Company's common stock equal to J.P. Morgan's share of the Joint
Venture's FFO for the four calendar quarters preceding the option exercise
divided by the Company's FFO per share for the same period.
If J.P. Morgan exercises the Liquidity Option and exchanges its interest in
one of the malls owned by the Joint Venture, the Company is required to issue to
J.P. Morgan an amount of shares of the Company's common stock equal to J.P.
Morgan's share of the mall's FFO for the four calendar quarters preceding the
option exercise divided by the Company's FFO per share for the same period.
The Liquidity Option was issued in a private placement to J.P. Morgan
pursuant to the exemption from the registration requirements of the Securities
Act provided by Section 4(2) of the Securities Act.
26
<PAGE>
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Registrant's Annual Meeting of Shareholders was held on April 29,
1999 in New York, New York.
(b) Proxies for the Annual Meeting were solicited pursuant to Regulation 14
under the Securities Exchange Act of 1934, as amended. There was no
solicitation in opposition to the management's nominees as listed in
the proxy statement to elect three Directors. All of the nominees were
elected.
(c) The matters voted on at the meeting and the results were as follows:
(1) To elect three Directors to serve as such until the Annual
Meeting of Shareholders to be held in 2002 and until their
successors are elected and qualified.
<TABLE>
<CAPTION>
FOR AGAINST
---------- ---------
<S> <C> <C> <C>
Director #1 - David H. Lowy Common Stock 66,610,926 57,563
Director #2 - Herman Huizinga Common Stock 66,611,426 57,063
Director #3 - Bernard Marcus Common Stock 66,616,026 52,463
</TABLE>
(2) To approve the issuance of our Common Stock upon conversion of
our Series D Preferred Shares if then held by a substantial
security holder of us or other restricted holder under Rule 312
of the New York Stock Exchange Listed Company Manual.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NON-VOTES
---------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Common Stock 59,020,284 226,466 157,818 7,263,921
</TABLE>
(3) To approve and ratify the appointment of Ernst & Young LLP as
our independent auditors for the fiscal year ending December
31, 1999.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---------- ------- -------
<S> <C> <C> <C>
Common Stock 66,530,469 48,787 89,233
</TABLE>
27
<PAGE>
(4) To approve the amendment of our Series C Certificate of
Designation so that the holders of the Series C Preferred
Shares, the holders of the Series C-1 Preferred Shares and the
holders of the Series C-2 Preferred Shares will, in some cases,
vote together as a single class.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NON-VOTES
---------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Common Stock 59,009,816 209,597 185,155 7,263,921
Series C
Preferred Shares 4,166,670 0 0 0
</TABLE>
(5) To approve the issuance of our Common Stock upon conversion of
our Series D-1 Preferred Shares if then held by a substantial
security holder of us or other restricted holder under Rule 312
of the New York Stock Exchange Listed Company Manual.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NON-VOTES
---------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Common Stock 59,016,161 228,304 160,103 7,263,921
Series C
Preferred Shares 4,166,670 0 0 0
</TABLE>
(6) To approve the issuance of our Common Stock to Westfield America
Trust pursuant to a stock subscription agreement entered into on
May 29, 1998.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NON-VOTES
---------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Common Stock 59,009,816 209,597 185,155 7,263,921
Series C
Preferred Shares 4,166,670 0 0 0
Series C-1
Preferred Shares 1,388,890 0 0 0
Series C-2
Preferred Shares 1,388,890 0 0 0
</TABLE>
The holders of shares of Common Stock and the holders of Series C Preferred
Shares voted as separate classes on item (4) above. Accordingly, each Common
Share was entitled to one vote and each Series C Preferred Share was entitled to
one vote. The holders of shares of Common Stock and the holders of Series C
Preferred Shares voted together as a single class on item (5) above.
Accordingly, each shares of Common Stock was entitled to one vote and each
Series C Preferred Share was entitled to ten votes. The holders of shares of
Common Stock and the holders of Series C Preferred Shares voted together as a
single class on item (6) above, the holders of shares of Common Stock and the
holders of Series C-1 Preferred Shares voted together as a single class on item
(6) above, and the holders of shares of Common Stock and the holders of Series
C-2 Preferred Shares voted together as a single class on item (6) above. In each
instance with respect to item (6), each shares of Common Stock was entitled to
one vote and each Series C Preferred Share, Series C-1 Preferred Share or Series
C-2 Preferred Share, as applicable, was entitled to ten votes.
28
<PAGE>
ITEM 5: OTHER INFORMATION
None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
NO. DESCRIPTION
---- -----------
<S> <C>
3.1 Restated Articles of Incorporation of the Company.
3.2 Second Amended and Restated By-Laws of the Company
(Exhibit 3.2(1)).
3.3 Amendment No.1 to the Second Amended and Restated By-Laws
of the Company (Exhibit 3.3(1)).
3.4 Amendment No. 2 to the Second Amended and Restated By-Laws
of the Company (Exhibit 3.4(1)).
3.5 Amendment No. 3 to the Second Amended and Restated By-Laws
of the Company (Exhibit 3.5(1)).
10 Second Credit Agreement Amendment, dated as of August 12,
1998, among Westfield America, Inc., as Borrower, national
Australia Bank Limited, Commonwealth Bank of Australia,
Australia and New Zealand Banking Group Limited and UBS AG,
as Lenders, Commonwealth Bank of Australia and Australia and
New Zealand Banking Group Limited, as co-Agents, UBS AG, New
York Branch, as Documentary Agent, and National Australia
Bank Limited, New York Branch, as Administrative Agent.
11.1 Statement regarding Computation of Per Share Earnings for
the three months ended June 30, 1999.
11.2 Statement regarding Computation of Per Share Earnings for
the six months ended June 30, 1999.
12 Statement regarding Computation of Ratios.
27 Financial Data Schedule
99 Agreement regarding Disclosure of Long-Term Debt
Instruments.
</TABLE>
(b) Reports on Form 8-K:
None
- ------------------------
(1) Incorporated by reference to designated exhibit to the Company's
quarterly report on Form 10-Q filed on May 17, 1999.
29
<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.
WESTFIELD AMERICA, INC.
Date: August 13, 1999 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
<PAGE>
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
WESTFIELD AMERICA, INC.
Westfield America, Inc., a Missouri corporation organized on September
24, 1924, does hereby restate its Articles of Incorporation and certifies that
the Restated Articles of Incorporation correctly sets forth, without change, the
corresponding provisions of the Articles of Incorporation as heretofore amended
and that the Restated Articles of Incorporation supersede the original Articles
of Incorporation and all amendments thereto.
The Restated Articles of Incorporation were adopted May 12, 1997 by
unanimous consent of the share holders of the corporation and are attached
hereto as Exhibit A.
IN WITNESS WHEREOF, the undersigned, Co-President has executed this
instrument and its Assistant Secretary has attested to said instrument on the
16th day of May, 1997.
WESTFIELD AMERICA, INC.
ATTEST: By: /s/ Peter Lowy
---------------------------
Co-President
/s/ Barry Mills
- ------------------------
Assistant Secretary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
I, Gail Shulman, a notary public, do hereby certify that on this 16th
day of May, 1997, personally appeared before me Peter S. 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/ Gail Shulman
------------------------------
Notary Public
My Commission Expires: February 28, 1998
<PAGE>
EXHIBIT A
ARTICLE FIRST
The name of the corporation is: Westfield America, Inc.
ARTICLE SECOND
The Corporation's registered agent in the State of Missouri shall be
The Corporation Company, 7733 Forsyth Boulevard, Clayton, Missouri 631015-1817.
ARTICLE THIRD
The Corporation is formed for the following purposes:
(a) To take, purchase or otherwise acquire, and to hold, own, use,
manage, develop, control, improve, sell, exchange, convey, transfer, assign,
mortgage or otherwise encumber, and to let, lease as lessor or lessee, invest in
and otherwise deal in and with real property, or any estate or interest therein,
within and without the State of Missouri and in any part of the world; and
(b) To have and exercise all powers which are or may be conferred upon
corporations organized under and pursuant to The General and Business
Corporation Law of Missouri (the "GBCL").
ARTICLE FOURTH
SECTION 4.1 Classes and Number of Shares.
----------------------------
The total number of shares of all classes of stock that the
Corporation shall have authority to issue is four hundred ten million, and two
hundred (410,000,200) shares, consisting of (i) two hundred (200) shares of non-
-
voting senior preferred stock, par value $1.00 per share (the "Senior Preferred
Shares"), (ii) five million (5,000,000) shares of preferred stock, par value
--
$1.00 per share (the "Preferred Shares"), of which nine hundred forty thousand
(940,000) shares shall be designated Series A cumulative redeemable preferred
stock (the "Series A Preferred
2
<PAGE>
Shares"), (iii) two-hundred million (200,000,000) shares of common stock, par
---
value $.01 per share (the "Common Shares"), and (iv) two hundred five million
--
(205,000,000) shares of excess stock, par value $.01 per share (the "Excess
Shares"). Excess Shares, if any, that are exchanged pursuant to Sections 4.5(c)
and 4.7 hereof (i) for Common Shares, are sometimes referred to herein as
"Excess Common Shares", (ii) for Preferred Shares, are sometimes referred to
--
herein as "Excess Preferred Shares", and together with the Preferred Shares, as
"Preferred Equity Shares", and (iii) for Series A Preferred Shares, are
---
sometimes referred to herein as "Excess Series A Preferred Shares", and together
with the Series A Preferred Shares, as "Series A Equity Shares". The Preferred
Shares and Excess Preferred Shares may be issued, from time to time, in one or
more series as authorized by the Board of Directors of the Corporation (the
"Board of Directors"). Prior to issuance of a series, the Board of Directors by
resolution shall designate that series to distinguish it from other series and
classes of stock of the Corporation, shall specify the number of shares to be
included in the series, and shall fix the terms, rights, restrictions and
qualifications of the shares of the series, including any preferences, voting
powers, dividend rights and redemption, sinking fund and conversion rights.
Subject to the express terms of any other series of Preferred Equity Shares
outstanding at the time, the Board of Directors may increase or decrease the
number of shares or alter the designation or classify or reclassify any unissued
shares of a particular series of Preferred Equity Shares by fixing or altering
in any one or more respects from time to time before issuing the shares any
terms, rights, restrictions and qualifications of the shares. The Senior
Preferred Shares and the Preferred Shares are sometimes referred to herein
collectively as the "Senior Shares". The Common Shares and the Excess Common
Shares are sometimes referred to herein collectively as the "Common Equity
Shares".
SECTION 4.2 Senior Preferred Shares.
-----------------------
(a) General Terms. Each Senior Preferred Share shall be identical in
-------------
all respects with each other Senior Preferred Share. Senior Preferred Shares
that are redeemed or purchased by the Corporation may, at the election of the
Corporation either (i) be reissued by the Corporation or (ii) be canceled and if
- --
so canceled shall revert to authorized but unissued Senior Preferred Shares. No
other shares of the Corporation may be authorized that are senior to or pari
----
passu with the Senior Preferred Shares with
- -----
3
<PAGE>
respect to rights to receive dividends and rights upon liquidation of the
Corporation.
(b) Dividend Rights. (i) The holders of Senior Preferred Shares
---------------
shall be entitled to receive, when and as declared by the Board of Directors,
but only out of funds legally available therefor, cash dividends at the annual
rate of $35.00 per share, and no more, payable quarterly on the first day of
January, April, July and October, respectively, in each year with respect to the
quarterly dividend period (or portion thereof) ending on the day preceding such
respective dividend payment date, to shareholders of record on the respective
date, not exceeding fifty days preceding such dividend payment date, fixed for
the purpose by the Board of Directors in advance of payment of each particular
dividend.
(ii) So long as any Senior Preferred Shares remain outstanding, no
dividend whatever shall be paid or declared and no distribution made on any
Preferred Shares or Common Equity Shares other than a dividend payable in
Preferred Shares or Common Equity Shares, and no shares of Preferred Shares or
Common Equity Shares shall be purchased, redeemed or otherwise acquired for
consideration by the Corporation, directly or indirectly (other than as a result
of a reclassification of Preferred Shares or Common Equity Shares, or the
exchange or conversion of one Preferred Share or Common Equity Share for or into
another Preferred Share or Common Equity Share or other than through the use of
the proceeds of a substantially contemporaneous sale of other Preferred Shares
or Common Shares), unless the full dividend payable with respect to the Senior
Preferred Shares for the then current quarterly-yearly dividend period shall
have been paid or declared and set apart for payment. Subject to the foregoing,
and not otherwise, dividends may be declared by the Board of Directors and paid
on any Series A Equity Shares or Common Equity Shares from time to time out of
any funds legally available therefor, and the Senior Preferred Shares shall not
be entitled to participate in any such dividends, whether payable in cash, stock
or otherwise.
(c) Rights Upon Liquidation. In the event of any voluntary
-----------------------
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Senior Preferred Shares shall be entitled, before any distribution or
payment is made to the holders of any Preferred Shares or Common Equity Shares,
to be paid in full an amount equal to $550.00 per share (which amount is
hereinafter referred to as the "senior voluntary liquidation amount"), together
with the
4
<PAGE>
full dividend thereon for the then current quarterly-yearly dividend period. In
the event of any involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, then, before any distribution or payment shall be
made to the holders of any Preferred Shares or Common Equity Shares, the holders
of Senior Preferred Shares shall be entitled to be paid in full an amount equal
to $550.00 per share (which amount is hereinafter referred to as the "senior
involuntary liquidation amount"), together with the full dividend thereon for
the then current quarterly-yearly dividend period.
If payment shall have been made in full to all holders of Senior
Preferred Shares, the remaining assets of the Corporation shall be distributed
among the holders of Preferred Shares or Common Equity Shares, according to
their respective numbers of shares. For the purposes of this Section 4.2(c),
the consolidation or merger of the Corporation with any other corporation shall
not be deemed to constitute a liquidation, dissolution or winding up of the
Corporation.
(d) Redemption. The Corporation, at the option of the Board of
----------
Directors, may redeem in whole, but not in part, the Senior Preferred Shares at
the time outstanding at any time from and after February 20, 1999, upon notice
given as hereinafter specified, at a redemption price for each Senior Preferred
Share equal to $550.00, together with the full dividend thereon for the then
current quarterly-yearly dividend period.
Notice of redemption of the Senior Preferred Shares shall be mailed by
first class mail, postage prepaid, addressed to the holders of record of the
shares to be redeemed at their respective last addresses as they shall appear on
the books of the Corporation. Such mailing shall be at least 30 days and not
more than 60 days prior to the date fixed for redemption. Any notice which is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the shareholder receives such notice, and failure
duly to give such notice by mail, or any defect in such notice, to any holder of
Senior Preferred Shares designated for redemption shall not affect the validity
of the proceedings for the redemption of any other Senior Preferred Shares.
The Board of Directors shall have full power and authority, subject to
the provisions herein contained, to
5
<PAGE>
prescribe the terms and conditions upon which Senior Preferred Shares shall be
redeemed.
If notice of redemption shall have been duly given, and if, on or
before the redemption date specified therein, all funds necessary for such
redemption shall have been set aside by the Corporation, separate and apart from
its other funds, in trust for the pro rata benefit of the holders of the shares
called for redemption, so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for redemption shall
not have been surrendered for cancellation, all shares so called for redemption
shall no longer be deemed outstanding on and after such redemption date, and
all rights with respect to such shares shall forthwith on such redemption date
cease and terminate, except only the right of the holders thereof to receive the
amount payable on redemption thereof, without interest.
Any funds so set aside and unclaimed at the end of three years from
such redemption date shall, to the extent permitted by law, be released or
repaid to the Corporation, after which repayment the holders of the shares so
called for redemption shall look only to the Corporation for payment thereof.
(e) Voting Rights. Except as required by applicable law, the holders
-------------
of Senior Preferred Shares shall have no voting rights in the Corporation.
(f) No Other Rights. The Senior Preferred Shares shall not have any
---------------
relative, participating, optional or other special rights and powers other than
as set forth herein.
(g) Legend. Any certificate evidencing Senior Preferred Shares shall
------
be stamped or endorsed with a legend in substantially the following form:
THE SHARES OF SENIOR PREFERRED STOCK REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, AND ACCORDINGLY NEITHER THE
SHARES NOR ANY INTEREST THEREIN MAY BE SOLD,
TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND ANY
6
<PAGE>
SUCH LAWS APPLICABLE THERETO AND THE RULES AND
REGULATIONS THEREUNDER.
SECTION 4.2A Series A Preferred Shares.
-------------------------
(a) General Terms. Each Series A Preferred Share shall be identical
-------------
in all respects to each other Series A Preferred Share. Each Excess Series A
Preferred Share shall be identical in all respects to each other Excess Series A
Preferred Share, and except as otherwise provided herein, shall be identical in
all respects to each Series A Preferred Share. Series A Preferred Shares that
are redeemed or purchased by the Corporation may, at the election of the
Corporation either (i) be reissued by the Corporation or (ii) be canceled and if
- --
so canceled shall revert to authorized but unissued Preferred Shares.
(b) Dividend Rights. (i) The holders of Series A Equity Shares shall
---------------
be entitled to receive, when and as declared by the Board of Directors, but only
out of funds legally available therefor, cumulative cash dividends payable to
shareholders of record on the respective date, not exceeding 50 days preceding
such dividend payment date, fixed for the purpose by the Board of Directors in
advance of payment of each particular dividend in an amount equal to the greater
of (A) $8.50 per share per annum and (B) an amount per share equal to 6.2461
(subject to proportional adjustment in the case of any subdivision, stock split,
stock dividend, combination or reverse split of the Common Equity Shares or the
Preferred Equity Shares) (as so adjusted from time to time, the "Common
Equivalent Factor") times the dollar amount of dividends declared with respect
to each Common Equity Share (such product, the "Common Equivalent Amount") for
the same annual period; provided, however, that if, as a result of the quarterly
-------- -------
dividends paid in accordance with the following sentence, the holders of Series
A Equity Shares shall have received for any calendar year more dividends than
such Shares shall be entitled under clauses (A) and (B) above, the dividends
payable in respect of Series A Preferred Shares in subsequent calendar years
shall be reduced to the extent of such overpayment. Subject to the proviso of
the preceding sentence of this Section 4.2A(b)(i), the dividend paid in respect
of each quarterly period in each calendar year shall be determined as follows:
(1) for the first quarter, the greater of $2.125 per share and the Common
-
Equivalent Amount for same quarter; (2) for the second quarter, an amount such
-
that the aggregate amount to be received per Series A Equity Share in respect of
the first two quarters of such calendar
7
<PAGE>
year shall be the greater of $4.25 per share and the Common Equivalent Amount
for the same two quarters; (3) for the third quarter, an amount such that the
-
aggregate amount to be received per Series A Equity Share in respect of the
first three quarters of such calendar year shall be the greater of $6.375 per
share and the Common Equivalent Amount for the same three quarters; and (4) for
-
the fourth quarter, an amount such that the aggregate amount to be received per
Series A Equity Share in respect of such calendar year shall be the amount
provided in the preceding sentence of this Section 4.2A(b)(i). Dividends paid on
shares of Series A Equity Shares in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all Series A Equity Shares as are
outstanding at the time. Accumulated but unpaid dividends for any past quarterly
dividend periods may be declared and paid at any time, without reference to any
regularly scheduled quarterly dividend payment date, to holders of record on
such date, not exceeding 50 days preceding such dividend payment date, fixed for
the purpose by the Board of Directors in advance of payment of each particular
dividend.
(ii) So long as any Series A Equity Shares remain outstanding, no
dividend whatever shall be paid or declared and no distribution made on any
Common Equity Shares other than a dividend payable in Common Equity Shares, and
no shares of Common Equity Shares shall be purchased, redeemed or otherwise
acquired for consideration by the Corporation, directly or indirectly (other
than as a result of a reclassification of Common Equity Shares, or the exchange
or conversion of one Common Equity Share for or into another Common Equity
Share, or other than through the use of the proceeds of a substantially
contemporaneous sale of other Common Shares), unless the full dividend thereon
for the then current quarterly dividend period and all prior dividend periods
shall have been paid or declared and set apart for payment. Subject to the
foregoing, and not otherwise, such dividends may be declared by the Board of
Directors and paid on any Common Equity Shares from time to time out of any
funds legally available therefor, and the Series A Equity Shares shall not be
entitled to participate in any such dividends, whether payable in cash, stock or
otherwise.
(c) Rights Upon Liquidation. In the event of any voluntary
-----------------------
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Series A Equity Shares shall be entitled, before any distribution or
payment
8
<PAGE>
is made to the holders of any Common Equity Shares, to be paid in full an amount
per share equal to $100.00 (which amount is hereinafter referred to as the
"Series A Preferred voluntary liquidation amount"), together with (x) all
-
accrued and unpaid dividends through the end date of the calender quarter most
recently completed prior to the date of liquidation, dissolution or winding up
of the affairs of the Corporation (any such date, a "Series A Voluntary
Liquidation Date") plus (y) $2.125 times a fraction equal to the actual number
-
of days elapsed from the end date of the calendar quarter most recently
completed to the relevant Series A Voluntary Liquidation Date over ninety days.
In the event of any involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, then, before any distribution or payment shall be
made to the holders of any Common Equity Shares, the holders of Series A Equity
Shares shall be entitled to be paid in full an amount per share equal to $100.00
(which amount is hereinafter referred to as the "Series A Preferred involuntary
liquidation amount"), together with (x) all accrued and unpaid dividends through
-
the end date of the calender quarter most recently completed prior to the date
of involuntary liquidation, dissolution or winding up of the affairs of the
Corporation (any such date, a "Series A Involuntary Liquidation Date"); plus (y)
-
$2.125 times a fraction equal to the actual number of days elapsed from the end
date of the calendar quarter most recently completed to the relevant Series A
Involuntary Liquidation Date over ninety days.
Payment shall be made in full to all holders of Series A Equity Shares
and other Shares ranking pari passu on liquidation with the Series A Equity
---- -----
Shares, before any remaining assets of the Corporation shall be distributed
among the holders of Common Equity Shares, according to their respective numbers
of shares. For the purposes of this Section 4.2A(c), the consolidation or
merger of the Corporation with any other corporation shall not be deemed to
constitute a liquidation, dissolution or winding up of the Corporation, but
shall, to the extent appropriate, cause an adjustment to the Common Equivalent
Factor.
(d) Redemption. The Corporation, at the option of the Board of
----------
Directors, with approval of a majority of the Independent Directors (as defined
in Section 4.5 hereof), may redeem in whole, or in part, the Series A Equity
Shares at the time outstanding at any time and from time to time from and after
July 1, 2003, upon notice given as hereinafter specified, at a redemption price
for each Series A Equity Share equal to $100.00, together with (i)
-
9
<PAGE>
all accrued and unpaid dividends through the end date of the calender quarter
most recently completed prior to the date of redemption of the Series A Equity
Shares (each a "Series A Redemption Date"); plus (ii) $2.125 times a fraction
--
equal to the actual number of days elapsed from the end date of the calendar
quarter most recently completed to the relevant Series A Redemption Date over
ninety days (such fraction, the "Pro Rata Adjustment"); plus (iii) a right to
---
receive on the payment date for dividends declared on the Common Equity Shares
with respect to the calendar quarter during which the relevant Series A
Redemption Date occurs (the "Relevant Quarter"), the excess of (x) the Common
-
Equivalent Factor times (A) the dollar amount of the per share dividends
-
declared on the Common Equity Shares for the Relevant Quarter times the Pro Rata
Adjustment plus (B) the dollar amount of the per share dividends declared on the
-
Common Equity Shares from the beginning of the calendar year in which such
redemption occurs through the end date of the calendar quarter prior to the
Relevant Quarter over (y) the dollar amount calculated in the preceding clause
-
(ii) plus all other dividends paid on the Preferred Shares from the beginning of
--
the calendar year during which the relevant Series A Redemption Date occurs.
If the Corporation shall determine to redeem less than all the Series
A Equity Shares then outstanding, the shares to be redeemed shall be selected
pro rata (as nearly as may be) so that the number of shares redeemed from each
holder shall be the same proportion of all the shares to be redeemed that the
total number of Series A Equity Shares then held by such holder bears to the
total number of Series A Equity Shares then outstanding.
Notice of redemption of the Series A Equity Shares shall be mailed by
first class mail, postage prepaid, addressed to the holders of record of the
shares to be redeemed at their respective last addresses as they shall appear on
the books of the Corporation. Such mailing shall be at least 30 days and not
more than 60 days prior to the date fixed for redemption. Any notice which is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the shareholder receives such notice, and failure
duly to give such notice by mail, or any defect in such notice, to any holder of
Series A Equity Shares designated for redemption shall not affect the validity
of the proceedings for the redemption of any other Series A Equity Shares.
10
<PAGE>
The Board of Directors shall have full power and authority, subject to
the provisions herein contained, to prescribe the terms and conditions upon
which Preferred Shares shall be redeemed.
If notice of redemption shall have been duly given, and if, on or
before the redemption date specified therein, the Corporation shall deposit all
funds necessary for such redemption with a bank or trust company in an account
that is separate and apart from its other accounts and shall hold such funds in
trust for the pro rata benefit of the holders of the shares called for
redemption, so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for redemption shall
not have been surrendered for cancellation, all shares so called for redemption
shall no longer be deemed outstanding on and after such redemption date, and all
rights with respect to such shares shall forthwith on such redemption date cease
and terminate, except only the right of the holders thereof to receive the
amount payable on redemption thereof, without interest.
Any funds so deposited and unclaimed at the end of two years from such
redemption date shall, to the extent permitted by law, be released or repaid to
the Corporation, after which repayment the holders of the shares so called for
redemption shall look only to the Corporation for payment thereof.
(e) Voting Rights. The holders of Series A Equity Shares shall have
-------------
no voting rights in the Corporation except: (i) in the event that the Board of
-
Directors has not declared a dividend payable to holders of any series of
Preferred Shares that were authorized with the consent of the holders of a
majority of the Series A Equity Shares or were issued to the original holder of
the Series A Equity Shares (all such Preferred Shares, collectively the "Ranking
Preferred Shares") or the Series A Preferred Shares for four (4) quarterly
dividend periods, the number of directors constituting the Board of Directors
shall, without further action, be increased by one (1) and the holders of a
majority of the Series A Equity Shares shall have the exclusive right together
with holders of all other series of Ranking Preferred Shares, to elect one (1)
director to fill such newly created directorship until such time as all such
dividends in arrears are made current and paid in full, at which time the
director so elected shall cease to be a director, the number of directors
constituting the Board of Directors shall be reduced by one (1) and such
additional
11
<PAGE>
voting rights of the holders of the Series A Equity Shares shall terminate,
subject to revesting in the event of each and every subsequent event of the
character indicated above, (ii) the affirmative vote of the holders of a
--
majority of the Series A Equity Shares voting together as a class shall be
required to approve any amendment to these Articles of Incorporation that
materially and adversely affects the rights, preferences or powers of the Series
A Equity Shares, including, without limitation, the definition of Ownership
Limit with respect to the Series A Equity Shares, provided, that (x) except as
-------- -
required by clause (y) where the amendment to these Articles of Incorporation
-
for which the vote is required pursuant to this clause (ii) adversely affects
--
the rights, powers and preferences of other series of Ranking Preferred Shares,
then such amendment shall be approved by a vote of a majority of the Ranking
Preferred Shares affected thereby, voting together as a class and (y) the
-
unanimous approval of the holders of Series A Equity Shares shall be required
for any amendment to these Articles of Incorporation that would decrease the
rate or change the time of payment of any dividend or distribution on the Series
A Equity Shares, decrease the amount payable upon redemption of the Series A
Equity Shares or upon the voluntary or involuntary liquidation of the
Corporation, or advance the date on which the Series A Equity Shares may be
redeemed by the Corporation, amend the number of shares of Series A Equity
Shares required to effect amendments to these Articles of Incorporation or amend
this Section 4.2A(e), (iii) the affirmative vote of the holders of a majority of
---
the Ranking Preferred Shares of each affected series voting together as a class
shall be required to approve any merger or consolidation of the Corporation and
another entity in which the Corporation is not the surviving corporation and
each holder of such series of Ranking Preferred Shares does not receive shares
of the surviving corporation with substantially similar rights, preferences and
powers in the surviving corporation as the Ranking Preferred Shares have with
respect to the Corporation, (iv) the affirmative vote of the holders of a
--
majority of the Ranking Preferred Shares of each affected series voting together
as a class shall be required to approve any voluntary action by the Board of
Directors intended to cause the Corporation to cease to have the status as a
REIT (as defined in Section 4.5 hereof) and (v) as otherwise required by
-
applicable law.
(f) No Other Rights. The Series A Equity Shares shall not have any
---------------
relative, participating, optional or
12
<PAGE>
other special rights and powers other than as set forth herein.
SECTION 4.3 Common Equity Shares.
--------------------
(a) Common Equity Shares Subject to Terms of Shares. The Common
-----------------------------------------------
Equity Shares shall be subject to the express priorities and limitations of the
Senior Shares.
(b) Dividend Rights. (i) The holders of Common Equity Shares shall
---------------
be entitled to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor.
(ii) Each of the Common Shares, and the Excess Common Shares shall
rank in parity with one another with respect to the declaration and payment of
any dividend or the making of any distribution by, or out of the property and
assets of the Corporation, or the issuance of any rights or warrants to
subscribe for, or purchase securities convertible into, stock or other
securities of the Corporation. No dividend or distribution, whether payable in
cash, securities or other property or assets of the Corporation, shall be
declared or paid or made, and no such rights or warrants shall be issued, in
respect of any of the Common Shares unless an identical dividend or distribution
is concurrently declared and paid or made, or identical rights or warrants are
issued, in respect of each of the Excess Common Shares, nor shall any dividend
or distribution be declared or paid or made, nor any rights or warrants issued,
in respect of any of the Common Shares or any class thereof unless an identical
dividend or distribution is concurrently declared and paid or made, or identical
rights or warrants are issued, in respect of each of the Excess Common Shares,
nor any rights or warrants issued, in respect of any of the Excess Common Shares
unless an identical dividend or distribution is concurrently declared and paid
or made, or identical rights or warrants are issued, in respect of each of the
Common Shares; provided, however, that in the case of any dividend or
-------- -------
distribution payable in, or rights or warrants to subscribe for, or purchase
securities convertible into Common Shares, such dividend or distribution shall
only be payable in, and such rights or warrants shall only provide subscription
or purchase rights relating to securities convertible into, Common Shares to
holders of Common Shares and Excess Common Shares to holders of Excess Common
Shares.
13
<PAGE>
(c) Rights Upon Liquidation. In the event of any voluntary or
-----------------------
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of Common Equity Shares shall be
entitled to receive, ratably with each other holder of Common Equity Shares,
that portion of the assets of the Corporation available for distribution to the
holders of its Common Equity Shares, as the number of Common Equity Shares held
by such holder bears to the total number of Common Equity Shares then
outstanding.
(d) Voting Rights. Except as otherwise provided herein, the holders
-------------
of Common Shares shall vote together as a single class. At all meetings of the
shareholders of the Corporation each holder of Common Shares shall be entitled
to one vote for each Common Share entitled to vote at such meeting. The
affirmative vote of a majority of the holders of Common Shares voting together
as a class shall be required to approve: (1) an election to change the
-
Corporation's status as a REIT, and (2) other matters as required by applicable
-
law.
(e) Election of Directors. (i) The cumulative voting rights set
---------------------
forth in Section 351.245(3) of the GBCL are hereby eliminated.
SECTION 4.4 Preemptive Rights. No holder of Common Equity Shares or
-----------------
of Senior Shares shall be entitled as a matter of right to subscribe for or
purchase, or have any preemptive right with respect to, any part of any new or
additional issue of stock of any class whatsoever, or of securities convertible
into any stock of any class whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration or by way of dividend.
SECTION 4.5 Restrictions on Ownership and Transfer; Exchange For
----------------------------------------------------
Excess Shares.
- -------------
(a) Definitions. As used in these Articles of Incorporation, the
-----------
following terms shall have the following meanings:
"Affiliate" shall mean with respect to any person, any other person
that, directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such person and the term
"Affiliated" has a meaning correlative to the foregoing. As used herein the
term "control" shall mean either (i) having
-
14
<PAGE>
(directly or indirectly through one or more intermediaries) the exclusive power
to direct the management and policies of a person or (ii) having both (A) at
-- -
least fifty percent (50%) of the economic interest in a person and (B) at least
-
fifty percent (50%) of the voting rights with respect to such person with the
full right to exercise such vote, and the term "controlled" has a meaning
correlative to the foregoing. Notwithstanding the foregoing, (i) with respect to
-
Westfield American Investments Pty Limited ("Westfield") only, the term
"Affiliate" shall include any United States real estate investment trust or
foreign trust with shares publicly traded on an internationally recognized
national securities exchange, provided that Westfield and its Affiliates own in
the aggregate at least twenty-five percent (25%) of the economic and voting
interests in such real estate investment trust or foreign trust and Westfield or
one of its Affiliates is the manager of all or substantially all of the
properties in which such real estate investment trust or foreign trust has a
direct or indirect interest and for which such real estate investment trust or
foreign trust has the right to designate the manager thereof or is a manager of
such trust. As used herein the term "person" shall mean an individual,
corporation, partnership, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity that may be treated
as a person under applicable law.
"Beneficial Ownership" shall mean ownership of Shares either directly
or constructively through the application of Section 544 of the Code, as
modified by Section 856(h) of the Code. The terms "Beneficial Owner",
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Beneficiary" shall mean the beneficiary or beneficiaries of the
Special Trust which shall be the United Jewish Appeal and, if necessary to avoid
the Corporation being "closely held" within the meaning of Section 856(h) of the
Code or to assure that the Corporation satisfies the requirement of Section
856(a)(5) of the Code that it has at least 100 shareholders, one or more
additional persons exempt from tax under Section 501(c)(3) of the Code as shall
be designated by the Board of Directors or a duly authorized officer of the
Corporation.
"Closely Held" shall have the meaning prescribed in Section 856(h) of
the Code.
15
<PAGE>
"Closing Date" shall mean the date of the initial closing of the
offerings of Common Shares by the Corporation as described to the registration
statement on Form S-11 as filed with the Securities and Exchange Commission
(Registration No. 333-22731).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and references to sections thereof shall include any appropriate
successor provisions.
"Existing Holder" shall mean Mr. Frank P. Lowy and all of the members
of his family, as such term is defined for purposes of Section 544(a)(2) of the
Code.
"Existing Holder Limit" shall mean, (A) for the period prior to the
-
Closing Date 33% of the value of the total outstanding Shares of the
Corporation, and (B) for the period on and after the Closing Date, 26% of the
-
value of the total outstanding Shares of the Corporation.
"Independent Director" shall mean a director of the Company who (i) is
-
not, and has not for the last 12 months been, an officer, director or employee
of any of the Westfield Group or the WAT Trustee, (ii) is not an affiliate of
--
any of the Westfield Group or the WAT Trustee or an officer or employee of such
an affiliate, (iii) is not a member of the immediate family of any natural
---
person described in clauses (i) and (ii) above, and (iv) is free from any
--
relationship that would interfere with the exercise of independent judgment as a
Director. For purposes of this definition of Independent Director only, an
"Affiliate" shall mean any person directly or indirectly controlling, controlled
by, or under common control with, such other person; "Control" shall mean the
power to exercise a controlling influence over the management or policies of a
company, unless such power is solely the result of an official position with any
of the Westfield Group or the WAT Trustee; and "Member of the Immediate Family"
shall mean any parent, spouse of a parent, child, spouse of a child, spouse,
brother or sister and includes step and adoptive relationships.
"Individual" shall mean any Person that is treated as an individual
for purposes of Section 542(a)(2) of the Code as the application of such Section
may be modified by Section 856(h) of the Code.
16
<PAGE>
"Institutional Investor" shall mean any "qualified institutional
buyer" as defined in Section (a)(1)(i)(A), (a)(1)(i)(D), (a)(1)(i)(E),
(a)(1)(i)(F), (a)(1)(i)(H) (but limited to any organization exempt from tax
under Section 501(c)(3) of the Code), (a)(1)(iv) or (a)(1)(vi) of Rule 144A
under the Securities Act of 1933, as amended. The term Institutional Investor
shall be deemed to include any foreign entity that would otherwise qualify under
the foregoing definition, including, without limitation, a foreign insurance
company.
"Market Price" shall mean, with respect to Shares of the relevant
class or series on the relevant date, the closing sale price regular way on such
day, or, in case no such sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in each case on the New York
Stock Exchange, or, if such Shares are not listed or admitted to trading on such
exchange, on the principal national securities exchange or quotation system on
which such Shares are quoted or listed or admitted to trading, or, if not quoted
or listed on any national securities exchange or quotation system, the average
of the closing bid and asked prices of such Shares on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similarly generally accepted reporting service, or, if not so
available in such manner, the fair market value of such Shares as determined by
a nationally recognized investment banking firm selected by the Board of
Directors.
"Ownership Limit", shall mean, (A) with respect to Shares Beneficially
-
Owned by any Individual (other than an Existing Holder), (i) for the period
-
prior to the Closing Date, 4% of the total value of the outstanding Shares of
all classes and series, and (ii) for the period on and after the Closing Date,
--
5.5% of the total value of the outstanding Shares of all classes and series, and
(B) with respect to the Senior Preferred Shares during the period prior to the
-
Closing Date, one Senior Preferred Share, in each case subject to adjustment as
set forth in Sections 4.5(i) and 4.5(j).
"Ownership Limitation Termination Date" shall mean the first day, if
any, on which holders of Shares determine, in accordance with any class voting
procedures as provided in these Articles that it is no longer in the best
interests of the Corporation to attempt to, or continue to, qualify as a REIT.
17
<PAGE>
"Person" shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under section 401(a) or 501(c)(17) of the
Code), a portion of a trust permanently set aside for or to be used exclusively
for the purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity or any government or agency or political subdivision thereof and
also includes a group as that term is used for purposes of Section 13(d)(3) of
the Exchange Act.
"Purported Beneficial Holder" shall mean, with respect to any event
other than a purported Transfer which results in Shares being automatically
exchanged for Excess Shares, the person for whom the Purported Record Holder of
the Shares that were, pursuant to Section 4.5(c), automatically exchanged for
Excess Shares upon the occurrence of such event held such exchanged Shares.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer which results in Shares being automatically exchanged for
Excess Shares, the purported beneficial transferee for whom the Purported Record
Transferee would have acquired such exchanged Shares, if such Transfer had been
valid under Sections 4.5(b) and 4.5(c).
"Purported Record Holder" shall mean, with respect to any event other
than a purported Transfer which results in Shares being automatically exchanged
for Excess Shares, the record holder of the Shares that were, pursuant to
Section 4.5(c), automatically exchanged for Excess Shares upon the occurrence of
such event.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Shares being automatically exchanged for
Excess Shares, the record holder of such exchanged Shares if such Transfer had
been valid under Sections 4.5(b) and 4.5(c).
"REIT" shall mean a real estate investment trust under Section 856 of
the Code.
"Shares" shall mean Senior Shares or Common Shares (all as defined in
section 4.1).
"Special Trust" shall mean a trust created pursuant to Section 4.7(a).
18
<PAGE>
"Special Trust Transferee" shall mean the ultimate transferee or
transferees of New Shares that are to be transferred from a Special Trust upon
transfer of Excess Shares pursuant to Section 4.7(e) below.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of Shares (including the granting or transfer of any option or
entering into any agreement for the sale, transfer or other disposition of
Shares), whether voluntary or involuntary, whether of record or beneficially and
whether by operation of law or otherwise.
"Trustee" shall mean such person, as trustee of the Special Trust, as
shall be selected from time to time by the Board of Directors.
(b) Restrictions on Ownership and Transfer.
--------------------------------------
(1) Prior to the Ownership Limitation Termination Date, no Individual
(other than an Existing Holder) shall Beneficially Own Shares (and, with respect
to the Senior Preferred Shares, during the period prior to the Closing Date, no
Person shall beneficially own (without reference to any rules of attribution)
Senior Preferred Shares, in each case in excess of the applicable Ownership
Limit.) In addition, prior to the Ownership Limitation Termination Date, no
Existing Holder shall Beneficially Own Shares in excess of the Existing Holder
Limit.
(2) Prior to the Ownership Limitation Termination Date, to the extent
that any Transfer, if effective, would result in any Individual (other than an
Existing Holder) Beneficially Owning Shares in excess of the Ownership Limit,
the Transfer of such Shares which would be otherwise Beneficially Owned by such
Individual in excess of such Ownership Limit shall be void ab initio; and the
-- ------
intended transferee shall acquire no rights to such Shares.
(3) Prior to the Ownership Limitation Termination Date, any Transfer
that, if effective, would result in any Existing Holder Beneficially Owning
Shares in excess of the Existing Holder Limit shall be void ab initio as to the
-- ------
Transfer of such Shares which would be otherwise Beneficially Owned by such
Existing Holder in excess of such Existing Holder Limit; and such Existing
Holder shall acquire no rights to such Shares.
19
<PAGE>
(4) Prior to the earlier of the Closing Date and the Ownership
Limitation Termination Date, any Transfer of Senior Preferred Shares that, if
effective, would result in any Person (determined without reference to any rules
of attribution) beneficially owning Senior Preferred Shares in excess of the
Ownership Limit with respect to Senior Preferred Shares shall be void ab initio
-- ------
as to the Transfer of such Preferred Shares which would be otherwise
beneficially owned by such Person (determined without reference to any rules of
attribution) in excess of such amount; and the intended transferee shall acquire
no rights in such Senior Preferred Shares.
(5) Prior to the Ownership Limitation Termination Date, any Transfer
that, if effective, would result in the Shares being beneficially owned by less
than 100 Persons (determined without reference to any rules of attribution) or
which would otherwise cause the Corporation to fail to satisfy the requirements
for qualification as a REIT, shall be void ab initio as to the Transfer of such
-- ------
Shares which would be otherwise beneficially owned by the transferee (determined
without reference to any rules of attribution); and the intended transferee
shall acquire no rights in such Shares.
(6) Prior to the Ownership Limitation Termination Date, any Transfer
that, if effective, would result in the Corporation being "Closely Held" shall
be void ab initio as to the Transfer of the Shares which would cause the
-- ------
Corporation to be "Closely Held" and the intended transferee shall acquire no
rights in such Shares.
(c) Shares Exchanged for Excess Shares.
----------------------------------
(1) If at any time prior to the Ownership Limitation Termination Date,
there is a purported Transfer such that, notwithstanding the other provisions
contained in this Article Fourth, any Individual (other than an Existing Holder)
would Beneficially Own Shares in excess of the Ownership Limit, such number of
Shares in excess of such Ownership Limit (rounded up to the nearest whole Share)
shall be automatically exchanged for Excess Shares, and shall be subject to the
terms of Section 4.7 hereof.
(2) If at any time prior to the Ownership Limitation Termination Date,
there is a purported Transfer such that, notwithstanding the other provisions
contained in this Article Fourth, an Existing Holder would Beneficially Own
Shares in excess of the applicable Existing Holder
20
<PAGE>
Limit, then such number of Shares in excess of such Existing Holder Limit
(rounded up to the nearest whole Share) shall be automatically exchanged for
Excess Shares, and shall be subject to the terms of Section 4.7 hereof.
(3) If at any time prior to the Ownership Limitation Termination Date,
there is a purported Transfer of Shares which would, notwithstanding the other
provisions contained in this Article Fourth, cause the Corporation to become
Closely Held, then the Shares being Transferred which would cause the
Corporation to be Closely Held (rounded up to the nearest whole Share) shall be
automatically exchanged for Excess Shares, and shall be subject to the terms of
Section 4.7 hereof.
(4) If, at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer such that, notwithstanding the other
provisions contained in this Article Fourth, the total outstanding Shares would
be beneficially owned (without reference to any rules of attribution) by fewer
than 100 Persons, then such number of Shares as would otherwise cause the
Corporation to fail to satisfy the ownership requirements of Section 856(a)(5)
of the Code shall automatically be exchanged for Excess Shares and shall be
subject to the terms of Section 4.7 hereof.
(5) If, at any time prior to the Ownership Limitation Termination
Date, an event other than a purported Transfer (an "Event") occurs which would
(i) cause any Individual (other than an Existing Holder) to Beneficially Own
-
Shares in excess of the Ownership Limit, (ii) cause an Existing Holder to
--
Beneficially Own Shares in excess of the Existing Holder Limit, or (iii) cause
---
the Corporation to be Closely Held, or then outstanding Shares Beneficially
Owned by such Individual or Existing Holder, as the case may be, shall be
automatically exchanged for Excess Shares, and shall be subject to the terms of
Section 4.7 hereof to the extent necessary to eliminate such excess ownership.
In determining which outstanding Shares shall be exchanged for Excess Shares,
outstanding Shares, if any, directly held or Beneficially Owned by any
Individual who caused the Event to occur shall be exchanged for Excess Shares
before any outstanding Shares not so Beneficially Owned are exchanged for Excess
Shares, and to the extent not inconsistent therewith, in such manner as
minimizes the aggregate value of the Shares that are exchanged for Excess Shares
(except to the extent that the Board of Directors determines that the Shares to
be exchanged for Excess Shares are to be those held through a Person that caused
or contributed to the
21
<PAGE>
occurrence of such Event, rather than Shares held through a different chain of
ownership). Where several such Individuals or Persons exist, the outstanding
Shares shall be exchanged for Excess Shares in such manner as minimizes the
aggregate value of the Shares that are exchanged for Excess Shares (except to
the extent that the Board of Directors determines that the Shares to be
exchanged for Excess Shares are to be those held through Persons that caused or
contributed to the occurrence of such Event, rather than Shares held through a
different chain of ownership), and to the extent not inconsistent therewith, on
a pro rata basis. If no Persons or Individuals caused the Event to occur,
outstanding Shares shall be exchanged for Excess Shares in such manner as
minimizes the aggregate value of Shares that are exchanged for Excess Shares.
(6) Any exchange of Shares for Excess Shares pursuant to this Section
4.5(c) and Section 4.7 hereof shall be effective as of the close of business on
the business day prior to the date of the Transfer or other Event that resulted
in such exchange.
(7) A Special Trust that, in accordance with Section 4.7(a) and these
Articles is the holder of any Excess Shares shall, except as otherwise
specifically provided herein, have the same rights hereunder, including without
limitation, voting rights and distribution rights, to which a permitted holder
of the Shares exchanged therefor would be entitled in respect of such Shares had
such Shares not been exchanged for Excess Shares. Such Excess Shares shall be
treated as Shares of the same class or series as the Shares exchanged therefor.
(d) Remedies For Breach. If the Board of Directors or its designees
-------------------
shall at any time determine in good faith that a Transfer has taken place in
violation of Section 4.5(b) or 4.5(c) or that a Person intends to acquire or has
attempted to acquire beneficial ownership (determined without reference to any
rules of attribution) or an Individual intends to acquire or has attempted to
acquire Beneficial Ownership of any Shares in violation of Sections 4.5(b) or
4.5(c), the Board of Directors or its designees shall take such action as it
deems advisable to refuse to give effect to or to prevent such Transfer (or any
Transfer related to such intent), including, but not limited to, refusing to
give effect to such Transfer on the books of the Corporation or instituting
proceedings to prevent such Transfers, provided, however, that nothing contained
in this Section 4.5(d) shall prevent the automatic application and
22
<PAGE>
operation of Section 4.5(b) (regarding certain attempted Transfers of Shares
being void ab initio) and, failing the operation and application of Section
4.5(b) for any reason, the automatic application and operation of Section 4.5(c)
(regarding the exchange of Shares for Excess Shares), in each case without the
need for any further action by the Corporation or the Board of Directors.
(e) Notice of Ownership or Attempted Ownership in Violation of Section
------------------------------------------------------------------
4.5(b). Any Individual or Person who acquires or attempts to acquire Beneficial
- -----
Ownership of Shares in violation of Sections 4.5(b) or 4.5(c), shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such acquisition or attempted acquisition on
the Corporation's status as a REIT.
(f) Owners Required to Provide Information. Prior to the Ownership
--------------------------------------
Limitation Termination Date,
each Person who is a Beneficial Owner of Shares and each Person
(including the shareholder of record) who is holding Shares for a Beneficial
Owner shall provide to the Corporation such information as the Corporation may
request, in good faith, in order to determine the Corporation's status as a REIT
or to comply with regulations promulgated under the REIT provisions of the Code
including, without limitation, Treasury Regulations Section 1.857-8 or any
successor regulation.
(g) Remedies Not Limited. Nothing contained in this Article Fourth
--------------------
shall (i) preclude the settlement of Shares on the New York Stock Exchange or
-
(ii) limit the authority of the Board of Directors to take such other action as
--
it deems necessary or advisable to protect the Corporation and the interests of
its shareholders by preservation of the Corporation's status as a REIT.
(h) Ambiguity. In the case of an ambiguity in the application of any
---------
of the provisions of this Article Fourth, including any definition contained in
Section 4.5(a) and any ambiguity with respect to which Shares are to be
exchanged for Excess Shares in a given situation, the Board of Directors shall
have the power to determine in good faith the application of the provisions of
this Article Fourth with respect to any situation based on the facts known to
it.
23
<PAGE>
(i) Modifications of Ownership Limit. Subject to the limitations
--------------------------------
provided in Section 4.5(j), the Board of Directors may from time to time
increase or decrease the Ownership Limit with respect to any Individual or
Person, or any Shares or class or series thereof.
(j) Limitations on Modifications.
----------------------------
(1) The Ownership Limit may not be increased if, after giving effect
to such increase, five Individuals could Beneficially Own, in the aggregate,
more than 49.9% of the value of the outstanding Shares.
(2) Prior to the modification of any Ownership Limit pursuant to
Section 4.5(i), the Board of Directors may require such opinions of counsel,
affidavits, undertakings or agreements as it may deem necessary or advisable in
order to determine or ensure the Corporation's status as a REIT.
(3) The Ownership Limit may not be increased to a percentage which is
greater than 9.8% of the value of the outstanding Shares of the Corporation of
all classes and series.
SECTION 4.6 Legend. (a) Each certificate issued on or after the
------
Closing Date in respect of Common Shares shall bear the following legend:
"The Common Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended. No Individual may Beneficially
Own Shares in excess of the then applicable Ownership Limit, which may
decrease or increase from time to time, unless such Individual is an
Existing Holder. In general, any Individual who attempts to Beneficially
Own shares in excess of the Ownership Limit must immediately notify the
Corporation. All capitalized terms used in this legend have the meanings
set forth in the Articles of Incorporation, a copy of which, including the
restrictions 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."
24
<PAGE>
(b) Each certificate issued prior to the Closing Date in respect of
Senior Preferred Shares shall bear the following legend:
"The Preferred Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"). No Person may
beneficially own more than one share of the outstanding Preferred Shares.
Any Person who attempts to beneficially own Preferred Shares in excess of
the above limitations must immediately notify the Corporation and any
transfer which would result in ownership of Preferred Shares in excess of
the above limitation shall be void. All capitalized terms used in this
legend have the meanings set forth in the Articles of Incorporation, a copy
of which, including the restrictions on ownership and transfer, will be
sent without charge to each shareholder who so requests."
The stock certificates evidencing any Senior Preferred Shares issued on or after
the Closing Date shall bear a legend in the form as set forth in Section 4.6(c)
hereof, provided, however, that the term "Senior Preferred Shares" shall be
-------- -------
substituted in place of the term "Preferred Shares" in every place in which the
term "Preferred Shares" appears in such legend.
(c) Each certificate issued on or after the Closing Date in respect of
Preferred Shares shall bear the following legend:
"The Preferred Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended. No Individual may Beneficially
Own Shares in excess of the then applicable Ownership Limit, which may
decrease or increase from time to time, unless such Individual is an
Existing Holder. In general, any Individual who attempts to Beneficially
Own Shares in excess of the Ownership Limit must immediately notify the
Corporation. All capitalized terms used in this legend have the meanings
set forth in the Articles of Incorporation, a copy of which, including the
restrictions on ownership and transfer, will be sent
25
<PAGE>
without charge to each shareholder who so requests. If the restrictions on
ownership and transfer are violated, the Preferred Shares represented
hereby may be automatically exchanged for Excess Shares and deemed
transferred to a Special Trust as provided in the Articles of
Incorporation."
SECTION 4.7 Excess Shares.
-------------
(a) Ownership in Trust. Upon any purported Transfer or other Event
------------------
that results in the exchange of Shares for Excess Shares pursuant to Section
4.5(c), such Excess Shares shall be deemed to have been transferred to a
Trustee, as trustee of a Special Trust for the exclusive benefit of a
Beneficiary. Excess Shares of any class or series that are held in trust as
provided in this Section 4.7 shall constitute issued and outstanding Common
Shares or Senior Shares of the Corporation, as the case may be. The Purported
Record Transferee or Purported Record Holder shall have no rights in such Excess
Shares, but shall have the rights provided in Sections 4.7(c) and 4.7(e). Where
a Transfer or other Event results in an automatic exchange of Shares of more
than one class or series for Excess Shares of more than one class or series,
separate Special Trusts shall be deemed to have been established for the Excess
Shares of each such class or series. Each exchange of Shares for Excess Shares
pursuant to Section 4.5(c)(5) hereof (relating to the requirement of Section
856(a)(5) of the Code that the Corporation have at least 100 shareholders)
shall, with respect to each such Transfer that caused such exchange, be effected
through a transfer of Excess Shares to a separate and distinct Special Trust for
the benefit of a separate and distinct Beneficiary.
(b) Dividend Rights. Dividends or other distributions that have been
---------------
declared on any Shares that have been exchanged for Excess Shares pursuant to
Section 4.5(c) shall be paid when due to the appropriate Trustee, as trustee of
the particular Special Trust for the exclusive benefit of the Beneficiary of
such Special Trust until such time as the Trustee shall transfer New Shares in
respect of such Excess Shares pursuant to Section 4.7(e). Any dividend or
distribution paid prior to the discovery by the Corporation that the Shares with
respect to which the dividend or distribution was made had been exchanged for
Excess Shares shall be returned to the Corporation and promptly thereafter paid
over to the Trustee, as trustee of the Special Trust for the exclusive benefit
of the Beneficiary.
26
<PAGE>
(c) Rights Upon Liquidation. In the event of any voluntary or
-----------------------
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, the Trustee of each Special Trust that is the
holder of any Excess Shares shall be entitled to receive a portion of the assets
of the Corporation available for distribution to the holders of that class or
series of Shares for which such Excess Shares were exchanged originally pursuant
to Section 4.5(c) and this Section 4.7. The Trustee shall distribute to the
Purported Record Transferee or Purported Record Holder of the Excess Shares held
in the Special Trust an amount (the "Original Value Amount") not to exceed (A)
-
in the case of a Purported Record Holder or in the case of a Purported Record
Transferee that did not give value for the Shares for which such Excess Shares
were exchanged (through a gift, devise or other transaction), the Market Price
of the Shares for which such Excess Shares were exchanged as of the date of such
exchange or (B) in the case of a Purported Record Transferee that did give value
-
for the Shares for which such Excess Shares were exchanged, the price such
Purported Record Transferee paid for such Shares, out of the assets received by
the Trustee in respect of the Excess Shares held in such Special Trust in
connection with any liquidation, dissolution or winding up of, or any
distribution of the assets of, the Corporation, and the Trustee shall distribute
to the Beneficiary of the particular Special Trust any amounts in excess of the
Original Common Amount.
(d) Voting Rights. Each Trustee, as holder of any Excess Shares and
-------------
as trustee of a Special Trust for the exclusive benefit of a Beneficiary, shall
have the same right to vote any such Excess Shares as the Shares exchanged
therefore would have had if they had not been so exchanged in connection with
any matter on which the holders of Shares are entitled to vote until such time
as the Trustee shall transfer New Shares in respect of such Excess Shares
pursuant to Section 4.7(e).
(e) Transfer of Excess Shares.
-------------------------
(1) Any Excess Shares which were issued in exchange for Shares
pursuant to Section 4.5(c) and are held by a Trustee in a Special Trust for the
benefit of a Beneficiary pursuant to Section 4.7(a) shall be Transferred by the
Trustee only as provided in this Section 4.7(e). Such Trustee shall, within one
hundred eighty (180) days after the date of the purported Transfer or other
Event that resulted in such Excess Shares being issued in exchange for
27
<PAGE>
Shares, or, if later, one hundred eighty (180) days after the date on which the
Corporation first became aware of the issuance of Excess Shares (the "Excess
Shares Exchange Date"), Transfer the Excess Shares held in a Special Trust to a
Special Trust Transferee, provided that (i) simultaneously with such Transfer
-
such Excess Shares shall be automatically exchanged for an equal number of
Shares of the same class or series that had originally been exchanged for such
Excess Shares (the "New Shares"), (ii) such New Shares would not as a result of
--
such Transfer to such Special Trust Transferee be automatically exchanged for
Excess Shares pursuant to Section 4.5(c) and (iii) such Special Trust Transferee
---
is an Institutional Investor or, if designated by the Corporation as provided
below, an Affiliate of a shareholder. The Corporation shall have the right to
designate a Special Trust Transferee within the first ninety (90) days after the
Excess Shares Exchange Date provided that (i) such Special Trust Transferee is
-
either (A) an Affiliate of a shareholder or (B) an Institutional Investor and
- -
(ii) the New Shares would not as a result of a Transfer to such Special Trust
--
Transferee be automatically exchanged for Excess Shares pursuant to Section
4.5(c). Notwithstanding anything to the contrary in this Section 4.7(e), each
Trustee shall Transfer New Shares in respect of the Excess Shares held in each
Special Trust to a Special Trust Transferee designated by the Corporation
pursuant to the immediately preceding sentence and, during the first ninety (90)
days after the relevant Excess Shares Exchange Date, the Trustee shall not
Transfer New Shares in respect of the Excess Shares to a Special Trust
Transferee that has not been designated by the Corporation pursuant to the
immediately preceding sentence.
Each Trustee shall distribute to the particular Purported Record
Transferee or Purported Record Holder of the Excess Shares held in the Special
Trust out of the purchase price received by the Trustee from a Special Trust
Transferee for New Shares in respect of such Excess Shares an amount (the
"Original Transfer Amount") not to exceed (A) in the case of a Purported Record
-
Holder or in the case of a Purported Record Transferee that did not give value
for the Shares for which such Excess Shares were exchanged (through a gift,
devise or other transaction), the lesser of (w) the Market Price of such Shares
-
as of the date such Shares were exchanged for Excess Shares and (x) the purchase
-
price received by the Trustee from the Special Trust Transferee for the New
Shares or (B) in the case of a Purported Record Transferee that did give value
-
for the Shares for which such Excess Shares were exchanged, the lesser of (y)
-
the purchase
28
<PAGE>
price received by the Trustee from the Special Trust Transferee for the New
Shares and (z) the price such Purported Record Transferee paid for such Shares.
-
The Trustee shall distribute to the particular Beneficiary of the Special Trust
any amounts in excess of the Original Transfer Amount.
(2) Notwithstanding the foregoing, if a Purported Record Transferee or
Purported Record Holder receives any amounts in respect of any Excess Shares
held in a Special Trust that exceeds the amounts allowable under Section
4.7(e)(1), such Purported Record Transferee or Purported Record Holder shall pay
such excess to the Trustee for the benefit of the Beneficiary of such Special
Trust.
SECTION 4.8 Severability. If any provision of this Article Fourth or
------------
any application of any such provision is determined to be invalid by any federal
or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
ARTICLE FIFTH
The Corporation shall have perpetual existence.
ARTICLE SIXTH
(a) The Board of Directors shall have the power without the assent or
vote of the stockholders to adopt, amend, alter or repeal the By-Laws of the
Corporation, except to the extent that the By-Laws or these Articles of
Incorporation otherwise provide.
(b) The Corporation may in its By-Laws confer powers upon the Board of
Directors in addition to the powers and authorities expressly conferred upon the
Board of Directors by applicable law.
ARTICLE SEVENTH
(a) The number of directors of the Corporation shall be fixed by the
By-Laws of the Corporation but in no event shall be less than three (3) or more
than fourteen
29
<PAGE>
(14) and may be increased or decreased within such limitations from time to time
in such a manner as may be prescribed by the By-Laws and in accordance with the
terms hereof. In the event that the Board is increased by such a resolution, the
vacancy or vacancies so resulting shall be filled by a vote of the majority of
the directors then in office. No decrease in number in the Board shall shorten
the term of any incumbent directors. Any change shall be reported to the
Secretary of State within thirty (30) calendar days of such change. The Board of
Directors shall be divided into three (3) classes, as nearly equal in number as
possible, with the mode of such classification to be provided for in the By-
Laws. Except as otherwise provided in the By-Laws with respect to the
implementation of this Article 7, directors shall be elected to hold office for
a term of three (3) years, with the term of office of one class expiring each
year. Any director or the entire Board of Directors may be removed, for cause
only, by the holders of 66 2/3 of all shares then entitled to vote at an
election of directors. The provisions of this Section 7(a) shall not be amended,
altered, changed or repealed unless approved by the affirmative vote of the
holders of not less than seventy-five percent of the total voting power of all
outstanding shares of voting stock.
(b) Unless and except to the extent that the By-Laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
(c) Notwithstanding anything contained in these Articles of
Incorporation to the contrary (other than Section 4.3(d) above), the affirmative
vote of the holders of a majority in interest of the then outstanding Common
Shares shall be required to terminate the Corporation's status as a real estate
investment trust.
(d) Any action required or permitted to be taken by the holders of any
class or series of stock of the Corporation, including but not limited to the
election of directors, may be taken by written consent or consents but only if
such consent or consents are signed by all holders of the class or series of
stock entitled to vote on such action.
ARTICLE EIGHTH
(a) The Corporation shall, to the fullest extent permitted by the
GBCL, including the provisions of Section
30
<PAGE>
351.355.7 RSMo, indemnify and advance expenses to any person who was or is a
party or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a Director or Officer of
the Corporation or is or was serving at the request of the Corporation as a
director or officer of any other corporation or enterprise. Such right of
indemnification shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person. The
indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any By-Law, agreement, vote of
shareholders or disinterested directors or otherwise.
(b) The Corporation may, to such extent as it deems appropriate and as
may be permitted by the GBCL, indemnify any other person acting in any of the
other capacities referred to in Section 351.355 of the GBCL against any such
claim by reason of the fact that he is or was serving the Corporation or at the
request of the Corporation in any of such capacities or arising out of his
status in any such capacity.
(c) The Corporation may, but shall not be required to, supplement the
right of indemnification under paragraph (a) above by (1) the purchase of
insurance on behalf of any one or more of such persons, whether or not the
Corporation would be obligated to indemnify such person under paragraph (a)
above, (2) individual or group indemnification agreements with any one or more
of such persons and (3) advances for related expenses of such a person.
ARTICLE NINTH
(a) In addition to any affirmative vote required by law, the Articles
of Incorporation, any agreement with any national securities exchange or
otherwise, any Business Combination (as hereinafter defined) involving the
Corporation shall be subject to approval in the manner set forth in this Article
9.
(b) No Business Combination shall be consummated or effected with an
Interested Shareholder (as hereinafter
31
<PAGE>
defined) during the five-year period after which a person or an entity becomes
an Interested Shareholder unless such Business Combination or the transaction in
which the person or entity becomes an Interested Shareholder is approved by the
Board of Directors on or before the date of the Acquisition Transaction (as
hereinafter defined).
(c) After the five-year period following the Acquisition Transaction,
Business Combinations may occur only if (i) prior to the Acquisition
-
Transaction, the board of directors approved the Acquisition Transaction or
approved the Business Combination in question; (ii) the holders of a majority of
--
the outstanding stock, other than stock owned by the Interested Shareholder,
approve the Business Combination or (iii) the Business Combination meets all of
---
the following conditions:
(A) The aggregate amount of the cash and the market value as of the
consummation date of consideration other than cash to be received per share by
holders of outstanding shares of Common Equity Shares is at least equal to the
higher of the following:
1. The highest per share price paid by such Interested Shareholder
at a time when he was the beneficial owner, directly or indirectly, of five
percent or more of the outstanding voting stock of the Corporation, for any
shares of common stock of the same class or series acquired by it within the
five-year period immediately prior to the announcement date with respect to such
Business Combination, or within the five-year period immediately prior to, or
in, the transaction in which such Interested Shareholder became an Interested
Shareholder, whichever is higher; plus, in either case, interest compounded
annually from the earliest date on which such highest per share acquisition
price was paid through the consummation date at an amount equal to the greater
of (i) the rate for one-year United States treasury obligations from time to
-
time in effect and (ii) 8 1/2%; less the aggregate amount of any cash dividends
--
paid, and the market value of any dividends paid other than in cash, per share
of common stock since such earliest date, up to the amount of such interest; and
2. The market value per share of common stock on the announcement
date with respect to such Business Combination or on such Interested
Shareholder's stock acquisition date, whichever is higher; plus interest
compounded annually from such date through the consummation date at an amount
equal to the greater of (i) the rate for
-
32
<PAGE>
one-year United States treasury obligations from time to time in effect and (ii)
--
8 1/2%; less the aggregate amount of any cash dividend paid, and the market
value of any dividends paid other than in cash, per share of common stock since
such date, up to the amount of such interest;
(B) The aggregate amount of the cash and the market value as of the
consummation date of consideration other than cash to be received per share by
holders of outstanding shares of any class or series of stock other than the
Common Equity Shares is at least equal to the highest of the following, whether
or not such Interested Shareholder has previously acquired any shares of such
class or series of stock:
1. The highest per share price paid by such Interested Shareholder
at a time when he was the beneficial owner, directly or indirectly, of five
percent or more of the outstanding voting stock of the Corporation, for any
shares of such class or series of stock acquired by him within the five-year
period immediately prior to the announcement date with respect to such Business
Combination, or within the five-year period immediately prior to, or in, the
transaction in which such Interested Shareholder became an Interested
Shareholder, whichever is higher; plus, in either case, interest compounded
annually from the earliest date on which such highest per share acquisition
price was paid through the consummation date at an amount equal to the greater
of (i) the rate for one-year United States treasury obligations from time to
-
time in effect and (ii) 8 1/2%; less the aggregate amount of any cash dividends
--
paid, and the market value of any dividends paid other than in cash, per share
of such class or series of stock since such earliest date, up to the amount of
such interest;
2. The highest preferential amount per share to which the holders of
shares of such class or series of stock are entitled in the event of any
voluntary liquidation, dissolution or winding up of the Corporation, plus the
aggregate amount of any dividends declared or due as to which such holders are
entitled prior to payment of dividends on some other class or series of stock,
unless the aggregate amount of such dividends is included in such preferential
amount; and
3. The market value per share of such class or series of stock on
the announcement date with respect to such business combination or on such
Interested Shareholder's stock acquisition date, whichever is higher;
33
<PAGE>
plus interest compounded annually from such date through the consummation date
at an amount equal to the greater of (i) the rate for one-year United States
-
treasury obligations from time to time in effect and (ii) 8 1/2%; less the
--
aggregate amount of any cash dividends paid, and the market value of any
dividends paid other than in cash, per share of such class or series of stock
since such date, up to the amount of such interest;
(C) The consideration to be received by holders of a particular class
or series of outstanding stock, including the Common Equity Shares, of the
Corporation in such Business Combination is in cash or in the same form as the
Interested Shareholder has used to acquire the largest numbers of shares of such
class of series of stock previously acquired by it, and such consideration shall
be distributed promptly;
(D) The holders of all outstanding shares of stock of the Corporation
not beneficially owned by such Interested Shareholder immediately prior to the
consummation of such Business Combination are entitled to receive in such
Business Combination cash or other consideration for such shares in compliance
with paragraphs (A), (B) and (C) of this clause (iii) of this paragraph (c) of
---
this Article Ninth;
(E) After such Interested Shareholder's stock acquisition date and
prior to the consummation date with respect to such Business Combination, such
Interested Shareholder has not become the beneficial owner of any additional
shares of voting stock of the Corporation except:
1. As part of the transaction which resulted in such Interested
Shareholder becoming an Interested Shareholder;
2. Through a Business Combination meeting all of the conditions of
clause (ii) of this paragraph (c) of this Article Ninth and this clause (iii) of
this paragraph (c) of this Article Ninth;
3. Through purchase by such Interested Shareholder at any price
which, if such price had been paid in an otherwise permissible Business
Combination the announcement date and consummation date of which were the date
of such purchase, would have satisfied the requirements of paragraphs (A), (B)
and (C) of this clause (iii) of this paragraph (c) of this Article Ninth.
34
<PAGE>
(e) Definitions. As used in this Article Nine, the following terms
-----------
shall have the following meanings:
"Acquisition Transaction" shall mean any transaction in which any
Person becomes an Interested Shareholder.
"Business Combination" shall mean (i) any merger, consolidation or
-
exchange of shares of capital stock of the Corporation of any of its
subsidiaries with or into an interested Shareholder, in each case irrespective
of which corporation or company is to be the surviving entity; (ii) any sale,
--
lease, exchange, mortgage, pledge, transfer or other disposition to or with an
Interested Shareholder (in a single transaction or a series of related
transactions), other than in the ordinary course of business, of all or a
substantial part of the assets of the Corporation (including without limitation
any securities or assets of a subsidiary of the Corporation) or all or a
substantial part of the assets of any of its subsidiaries; (iii) any sale,
---
lease, exchange, mortgage, pledge, transfer or other disposition to or with the
Corporation or to or with any of its subsidiaries (in a single transaction or a
series of related transactions) other than in the ordinary course of business,
of all or a substantial part of the assets of an Interested Shareholder; (iv)
--
the issuance or transfer by the Corporation or any of its subsidiaries of any
securities of the Corporation or any of its subsidiaries to an Interested
Shareholder (other than an issuance or transfer of securities which is effected
on a pro rata basis to all shareholders of the Corporation); (v) the acquisition
-
by the Corporation or any of its subsidiaries from an Interested Shareholder of
any securities issued by an Interested Shareholder (other than an issuance or
transfer of securities which is effected on a pro rata basis to all shareholders
of the Interested Shareholder); (vi) any recapitalization or reclassification of
--
shares of any class of capital stock of the Corporation or any merger or
consolidation of the Corporation with any of its subsidiaries which would have
the effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of capital stock of the Corporation (or any
securities convertible into any class of such capital stock) owned by any
Interested Shareholder; (vii) any merger or consolidation of the Corporation
---
with any of its subsidiaries after which the provisions of this Article 9 of the
Articles of Incorporation shall not appear in the Articles of Incorporation of
the surviving entity; (viii) a plan of partial or complete liquidation or
----
35
<PAGE>
dissolution of the Corporation or spin-off or sale of a substantial part of the
assets of the Corporation or any of its subsidiaries proposed by or on behalf of
an Interested Shareholder; and (ix) any agreement, contract, plan, proposal or
--
other arrangement providing for any of the foregoing.
"Interested Shareholder" shall mean a Person which beneficially owns
or controls 20% or more of the outstanding voting shares of the Corporation
provided that any Person who would be an Interested Shareholder as of April 15,
- --------
1997 shall be excluded from the definition of Interested Shareholder.
"Person" shall mean any individual, corporation, partnership or other
person or entity.
(f) The provisions of this Article 9 shall not be amended, altered,
changed or repealed nor may any provision inconsistent with any of such
provisions be added to the Articles of Incorporation unless approved by the
affirmative vote of the holders of not less than the greater of (i) seventy-five
-
percent of the total voting power of all outstanding shares of voting stock of
the Corporation, voting as a single class and (ii) a majority of shareholders
--
other than any Interested Shareholder.
ARTICLE TENTH
The Corporation reserves the right at any time and from time to time
to amend, alter, change or repeal any provision contained in these Articles of
Incorporation, and any other provisions authorized by the laws of the State of
Missouri at the time in force may be added or inserted in the manner now or
hereafter prescribed herein or by applicable law, and all rights, preferences
and privileges of whatsoever nature conferred upon shareholders, directors or
any other persons whomsoever by and pursuant to these Articles of Incorporation
in their present form or as hereafter amended are granted subject to the rights
reserved in this Article Ninth; provided, however, that any amendment or repeal
-------- -------
of Article Eighth of these Articles of Incorporation shall not adversely affect
any right or protection existing hereunder immediately prior to such amendment
or repeal.
36
<PAGE>
ARTICLE ELEVENTH
The names of the original incorporators were Morton D. May, David May
and S.B. Butler, all of St. Louis, Missouri.
* * *
37
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES B PREFERRED SHARES
AND FIXING PREFERENCES AND RIGHTS THEREOF"
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
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, a 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"), (iii) 200,000,000 shall be shares of common stock, par value $.01 per
---
share (the "Common Shares"), (iv) 200,000,000 shall be shares of excess common
--
stock, par value $.01 per share (the "Excess Common Shares", and together with
the Common Shares, the "Common Equity Shares") and (v) 5,000,000 shares shall be
-
excess preferred stock, par value $1.00 per share (the "Excess Preferred
Shares", and together with the Preferred Shares, the "Preferred Equity Shares"),
and under said Article of Incorporation (as amended, the "Article of In
corporation"), 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.
<PAGE>
2
SECOND: That the Pricing Committee of the Board of Directors of the
Corporation pursuant to the authority so vested in it by the Board of Directors
and 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 May 15, 1997 the following resolution
creating a series of Preferred Stock designated as "Series B 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 B 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
B Preferred Shares) as follows:
SECTION 1. DESIGNATION; NUMBER OF SHARES. The number and designation of
-----------------------------
the series of Preferred Stock authorized hereby shall be 400,000 shares of
"Series B Preferred Shares", par value $1.00 per share, and is hereinafter in
this Resolution called the "Series B Preferred Shares."
SECTION 2. RANK. The Series B Preferred Shares shall with respect to
----
dividend rights and rights on liquidation, dissolution and winding up of the
affairs of the Corporation, rank pari passu to the Series A Preferred Shares.
---- -----
Each Series B Preferred Share shall be identical in all respects to each
other Series B Preferred Share. Each Excess Series B Preferred Share shall be
identical in
<PAGE>
3
all respects to each other Excess Series B Preferred Share, and except as
otherwise provided herein, shall be identical in all respects to each Series B
Preferred Share (the Series B Preferred Shares together with the Excess Series B
Preferred Shares being hereinafter referred to as the "Series B Equity Shares").
Series B Preferred Shares that are redeemed or purchased by the Corporation may,
at the election of the Corporation either (i) be reissued by the Corporation or
-
(ii) be canceled and if so canceled shall revert to authorized but unissued
--
Preferred Shares.
SECTION 3. DIVIDEND RIGHTS. (a) The holders of shares of Series B
---------------
Preferred Shares shall be entitled to receive, when and as declared by the Board
of Directors of the Corporation, but only out of funds legally available
therefor, cumulative cash dividends payable to shareholders of record on the
respective date, not exceeding 50 days preceding such dividend payment date,
fixed for the purpose by the Board of Directors in advance of payment of each
particular dividend in an amount equal to the greater of (A) $8.50 per share per
-
annum and (B) an amount per share equal to 6.6667 (subject to proportional
-
adjustment in the case of any subdivision, stock split, stock dividend,
combination or reverse split of the Common Equity Shares or the Preferred Equity
Shares) (as so adjusted from time to time, the "Common Equivalent Factor") times
the dollar amount of dividends declared with respect to each Common Equity Share
(such product, the "Common Equivalent Amount") for the same annual period;
provided, however, that if, as a result of the quarterly dividends paid in
- -------- -------
accordance with the following sentence, the holders of Series B Equity Shares
shall have received for any calendar year more dividends than such Shares shall
be entitled under clauses (A) and (B) above, the dividends payable in respect of
Series B 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: (1) for the first quarter, the
greater of $2.125 per share and the Common Equivalent Amount for same quarter;
(2) for the second quarter, an amount such that the aggregate amount to be
received per Series B Equity Share in respect of the first two quarters of such
calendar year shall be the greater of $4.250 per share and the Common Equivalent
Amount for the same two quarters; (3) for the third quarter, an amount such that
the
<PAGE>
4
aggregate amount to be received per Series B Equity Share in respect of the
first three quarters of such calendar year shall be the greater of $6.375 per
share and the Common Equivalent Amount for the same three quarters; and (4) for
the fourth quarter, an amount such that the aggregate amount to be received per
Series B Equity Share in respect of such calendar year shall be the amount
provided in the preceding sentence of this Section 3(a). Dividends paid on
shares of Series B Equity Shares in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all Series B Equity Shares as are
outstanding at the time. Accumulated but unpaid dividends for any past quarterly
dividend periods may be declared and paid at any time, without reference to any
regularly scheduled quarterly dividend payment date, to holders of record on
such date, not exceeding 50 days preceding such dividend payment date, fixed for
the purpose by the Board of Directors in advance of payment of each particular
dividend.
(b) So long as any shares of the Series B Equity Shares are outstanding,
no dividend whatever shall be paid or declared and no distribution made on any
Common Equity Shares other than a dividend payable in Common Equity Shares, and
no shares of Common Equity shall be purchased, redeemed, or otherwise acquired
for consideration by the Corporation, directly or indirectly (other than as a
result of a reclassification of Common Equity Shares, or the exchange or
conversion of one Common Equity Share for or into another Common Equity Share,
or other than through the use of proceeds of a substantially contemporaneous
sale of other Common Shares), unless the full dividend thereon for the then
------
current quarterly dividend period and all prior dividend periods shall have been
paid or declared and set apart for payment. Subject to the foregoing, and not
otherwise, such dividends may be declared by the Board of Directors and paid on
any Common Equity Shares from time to time out of any funds legally available
therefor, and the Series B Equity Shares shall not be entitled to participate in
any such dividends, whether payable in cash, stock or otherwise.
SECTION 4. RIGHTS UPON LIQUIDATION. (a) In the event of any voluntary
-----------------------
liquidation, dissolution or winding up of affairs of the Corporation, the
holders of the Series B Equity Shares shall be entitled, before any distribution
<PAGE>
5
or payment is made to the holders of any Common Equity Shares, to be paid in
full an amount per share equal to $100.00 (which amount is hereinafter referred
to as the "Series B Preferred Voluntary Liquidation Amount"), together with (x)
-
all accrued but unpaid dividends through the end date of the calendar quarter
most recently completed prior to the date of liquidation, dissolution or winding
up of the affairs of the Corporation (any such date, a "Series B Voluntary
Liquidation Date") plus (y) 2.125 times a fraction equal to the actual number of
-
days elapsed from the end date of the calendar quarter most recently completed
to the relevant Series B Voluntary Liquidation Date over ninety days. In the
event of any involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, then, before any distribution or payment is made to the
holders of any Common Equity Shares, the holders of the Series B Equity Shares
shall be entitled to be paid in full an amount per share equal to $100.00 (which
amount is hereinafter referred to as the "Series B Preferred Involuntary
Liquidation Amount"), together with (x) all accrued and unpaid dividends through
-
the end date of the calendar quarter most recently completed prior to the
involuntary liquidation (any such date, a "Series B Involuntary Liquidation
Date") plus (y) $2.125 times a fraction equal to the actual number of days
-
elapsed from the date of the calendar quarter most recently completed to the
relevant Series B Involuntary Liquidation Date over ninety days.
(b) Payment shall be made in full to all holders of the Series B Equity
Shares and other shares ranking pari passu on liquidation with the Series B
---- -----
Equity Shares, before any remaining assets of the Corporation shall be
distributed among the holders of Common Equity Shares, according to their
respective numbers of shares. For the purposes of this Section 4, the
consolidation or merger of the Corporation with any other corporation shall not
be deemed to constitute a liquidation, dissolution or winding up of the
Corporation but shall, to the extent appropriate, cause an adjustment to the
Common Equivalent Factor.
SECTION 5. (A) REDEMPTION. The Corporation, at the option of the Board
----------
of Directors, with approval of a majority of the Independent Directors (as
defined in the Articles of Incorporation), may redeem in whole, or in part, the
Series B Equity Shares at the time outstanding at any
<PAGE>
6
time and from time to time from and after May 21, 2004, upon notice given as
hereinafter specified, at a redemption price for each Series B Equity Share
equal to $100.00 together with (i) all accrued and unpaid dividends through the
-
end date of the calendar quarter most recently completed prior to the date of
redemption of the Series B Equity Shares (each a "Series B Redemption Date");
plus (ii) $2.125 times a fraction equal to the actual number of days elapsed
--
from the end date of the calendar quarter most recently completed to the
relevant Series B Equity Date over ninety days (such fraction, the "Pro Rata
Adjustment"); plus (iii) a right to receive on the payment date for dividends
---
declared on the Common Equity Shares with respect to the calendar quarter during
which the relevant Series B Redemption Date occurs (the "Relevant Quarter"), the
excess of (x) the Common Equivalent Factor times (A) the dollar amount of the
- -
per share dividends declared on the Common Equity Shares for the Relevant
Quarter times the Pro Rata Adjustment plus (B) the dollar amount of the per
-
share dividends declared on the Common Equity Shares from the beginning of the
calendar year in which such redemption occurs through the end date of the
calendar quarter prior to the Relevant Quarter over (y) the dollar amount
-
calculated in the preceding clause (ii) plus all other dividends paid on the
Preferred Shares from the beginning of the calendar year during which the
relevant Series B Redemption Date occurs.
(b) If the Corporation shall determine to redeem less than all the Series
B Equity Shares then outstanding, the shares to be redeemed shall be selected
pro rata (as nearly as may be) so that the number of shares redeemed from each
holder shall be the same proportion of all the shares to be redeemed that the
total number of Series B Equity Shares then held by such holder bears to the
total number of Series B Equity Shares then outstanding.
SECTION 6. MANNER AND EFFECT OF REDEMPTIONS. Notice of any proposed
--------------------------------
redemption of shares of Series B Equity Shares shall be mailed by first class
mail, postage prepaid, addressed to the holders of record of the shares to be
redeemed, at their respective last addresses as they shall appear on the books
of the Corporation. Such mailing shall be at least 30 days and not more than 60
days prior to the date fixed for such redemption. Any notice which is mailed in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the
<PAGE>
7
shareholder receives such notice, and failure duly to give such notice by mail,
or any defect in such notice, to any holder of Series B Equity Shares designated
for redemption shall not affect the validity of the proceedings for the
redemption of any other Series B Equity Shares.
The Board of Directors shall have full power and authority, subject to the
provisions herein contained, to prescribe the terms and conditions upon which
Series B Equity Shares shall be redeemed.
If notice of redemption shall have been duly given, and if, on or before
the redemption date specified therein, the Corporation shall deposit all funds
necessary for such redemption with a bank or trust company in an account that is
separate and apart from its other accounts and shall hold such funds in trust
for the pro rata benefit of the holders of the shares called for redemption, so
as to be and continue to be available therefor, then, not withstanding that any
certificate for shares so called for redemption shall not have been surrendered
for cancellation, all shares so called for redemption shall no longer be deemed
outstanding on and after such redemption date, and all rights with respect to
such shares shall forthwith on such redemption date cease and terminate, except
only the right of the holders thereof to receive the amount payable on
redemption thereof, without interest.
Any funds so deposited and unclaimed at the end of two years from such
redemption date shall, to the extent permitted by law, be released or repaid to
the Corporation, after which repayment the holders of the shares so called for
redemption shall look only to the Corporation for payment thereof.
SECTION 7. VOTING RIGHTS. The holders of Series B Equity Shares shall not
-------------
be entitled to any voting rights except (i) in the event that the Board of
-
Directors has not declared a dividend payable to holders of any Series of
Preferred Shares ranking pari passu with the Series B Equity Shares that were
---- -----
authorized prior to the issuance of the Series B Preferred Shares or with the
consent of the holders of a majority of the Series B Equity Shares or were
issued to the original holder of the Series B Equity Shares (all such Preferred
Shares, collectively, the "Ranking Preferred Shares") for four (4) quarterly
dividend periods, the number
<PAGE>
8
of directors constituting the Board of Directors shall, without further action,
be increased by one (1) and the holders of a majority of the Series B Equity
Shares shall have the exclusive right, together with holders of all other series
of Ranking Preferred Shares, to elect one (1) director to fill such newly
created directorship until such time as all such dividends in arrears are made
current and paid in full, at which time the director so elected shall cease to
be a director, the number of directors constituting the Board of Directors shall
be reduced by one (1) and such additional voting rights of the holders of the
Series B Equity Shares shall terminate, subject to revesting in the event of
each and every subsequent event of the character indicated above, (ii) the
--
affirmative vote of the holders of a majority of the Series B Equity Shares
voting together as a class shall be required to approve any amendment to the
Articles of Incorporation that materially and adversely affects the rights,
preferences or powers of the Series B Equity Shares, including, without
limitation, the definition of Ownership Limit with respect to the Series B
Equity Shares, provided, that (x) except as required by clause (y) where the
-------- -
amendment to these Articles of Incorporation for which the vote is required
pursuant to this clause (ii) adversely affects the rights, powers and
preferences of other series of Ranking Preferred Shares, then such amendment
shall be approved by a vote of a majority of the Ranking Preferred Shares
affected thereby, voting together as a class and (y) the unanimous approval of
-
the holders of Series B Equity Shares shall be required for any amendment to
these Articles of Incorporation that would decease the rate or change the time
of payment of any dividend or distribution on the Series B Equity Shares,
decrease the amount payable upon redemption of the Series B Equity Shares or
upon the voluntary or involuntary liquidation of the Corporation, or advance the
date on which the Series B Equity Shares may be redeemed by the Corporation,
amend the number of shares of Series B Equity Shares required to effect
amendments to the Articles of Incorporation, (iii) the affirmative vote of the
---
holders of a majority of the Ranking Preferred Shares of each affected series
voting together as a class shall be required to approve any merger or
consolidation of the Corporation and another entity in which the Corporation is
not the surviving corporation and each holder of such series of Ranking
Preferred Shares does not receive shares of the surviving corporation with
substantially similar rights, preferences and powers in the
<PAGE>
9
surviving corporation as the Ranking Preferred Shares have with respect to the
Corporation, (iv) the affirmative vote of the holders of a majority of the
Preferred Shares voting together as a class shall be required to approve any
voluntary action by the Board of Directors intended to cause the Corporation to
cease to have the status as a REIT (as defined in Section 4.5 of the Articles of
Incorporation) and (v) as otherwise required by applicable law.
-
SECTION 8. 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 B 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".
<PAGE>
10
IN WITNESS WHEREOF, the undersigned, Co-President has executed this
instrument and its Assistant Secretary has attested to said instrument on the
16th day of May, 1997.
WESTFIELD AMERICA, INC.
ATTEST: By: /s/ Peter Lowy
---------------------------
Co-President
------------
/s/ Barry Mills
- ------------------------
Assistant Secretary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
I, Gail Shulman, a notary public, do hereby certify that on this 16th
day of May, 1997, personally appeared before me Peter S. 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/ Gail Shulman
------------------------------
Notary Public
My Commission Expires: February 28, 1998
<PAGE>
EXHIBIT B
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>
2
"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.
"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.
<PAGE>
3
"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).
"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,
<PAGE>
4
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 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.
<PAGE>
5
"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 minority interests (as
reflected in the financial statements of the Corporation) plus deprecia-
tion/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.
<PAGE>
6
"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
(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
<PAGE>
7
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 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
<PAGE>
8
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 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
<PAGE>
9
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 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 indebted ness, 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.
----------------------
<PAGE>
10
(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 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.
<PAGE>
11
Section 5. Redemption at the Option of the Corporation.
-------------------------------------------
(a) The Series C Equity Shares shall not be redeemable by the Corporation
prior to _____ __, 2008./1/ On and after _________, 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 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
_________________
/1/. This date is the tenth anniversary of the Closing.
<PAGE>
12
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 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.
<PAGE>
13
(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).
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
<PAGE>
14
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 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
<PAGE>
15
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 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 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
<PAGE>
16
(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 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
<PAGE>
17
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 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
<PAGE>
18
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 Corpora tion 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 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
<PAGE>
19
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.
(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
<PAGE>
20
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 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.
<PAGE>
21
(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 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.
<PAGE>
22
(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.
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
<PAGE>
23
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 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.
Section 8. Redemption at the Option of the Holder.
--------------------------------------
<PAGE>
24
(a) At any time after _________, 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 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;
_______________________
/2/. This date is the tenth anniversary of the Closing hereunder.
<PAGE>
25
(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 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
<PAGE>
26
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 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.
<PAGE>
27
(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
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".
<PAGE>
28
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.
<PAGE>
29
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
<PAGE>
30
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
I, Annie M. Gary, a notary public, do hereby certify that on this 6th
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:
March 31, 2000
<PAGE>
AMENDMENT TO
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION AMENDING DESIGNATION
OF SERIES C PREFERRED SHARES"
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
AND APPROVED BY THE HOLDERS OF
SERIES C PREFERRED STOCK
AND COMMON STOCK 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 provision 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, (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, 400,000 of which have been designated as
Series B Preferred Shares, with a liquidation value of $100 per share,
416,667 of which have been designated as Series C Preferred Shares, with a
liquidation value of $180 per share (the "SERIES C PREFERRED SHARES"),
138,889 of which have been designated as Series C-1 Preferred Shares, with a
liquidation value of $180 per share, 138,889 of which have been designated
as Series C-2 Preferred Shares, with a liquidation value of $180 per share,
694,445 of which have been designated as Series D Preferred Shares, with a
liquidation value of $180 per share and 138,889 of which have been designated
as Series D-1 Preferred Shares, with a liquidation value of $180 per share,
(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 per share ("EXCESS SHARES"). Any Excess Shares which are issue
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 the State of Missouri, as
amended, adopted on January 21, 1999, the resolution, following the third
recital, amending the Certificate of Designation setting forth "Resolution of
the Board of Directors of Westfield America, Inc. Designating Series C
Preferred Shares and Fixing Preferences and Rights Thereof" (the "Series C
Certificate of Designation"), which resolution has not been amended,
modified, rescinded or revoked and is in full force and effect on the date
hereof.
<PAGE>
THIRD: That a majority of the holders of issued and outstanding Series C
Preferred Shares and Common Shares approved at the Corporation's Annual Meeting
of Shareholders held on April 29, 1999, the amendment of the Series C
Certificate of Designation in the form approved by the Board of Directors of the
Corporation.
"RESOLUTION OF THE BOARD OF DIRECTORS
OF WESTFIELD AMERICA, INC AMENDING
DESIGNATION OF SERIES C PREFERRED SHARES"
NOW, THEREFORE, IT IS:
RESOLVED, that Section 11(a) of the Series C Preferred Certificate of
Designation be amended in its entirety to read as follows:
"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, the Series C-1 Equity Shares (as defined in the
Corporation's Certificate of Designation authorizing the Series C-1
Equity Shares) or the Series C-2 Equity Shares (as defined in the
Corporation's Certificate of Designation authorizing the Series C-2
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, the
Series C-1 Equity Shares and the Series C-2 Equity Shares, voting
together 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, the Series
C-1 Equity Shares and the Series C-2 Equity Shares, voting together 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, the Series
C-1 Equity Shares and the Series C-2 Equity Shares called as hereinafter
provided; PROVIDED, HOWEVER, that except as set forth below, the holders
of the Series C Equity Shares, the Series C-1 Equity Shares and the
Series C-2 Equity Shares shall not have the right to elect more
<PAGE>
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 the Series C Equity Shares, the Series C-1
Equity Shares and the Series C-2 Equity Shares, voting together as a
single class, 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 Equity Shares, the Series C-1
Equity Shares and the Series C-2 Equity 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, the Series C-1 Equity Shares and the
Series C-2 Equity Shares were able to elect the full number of directors
then permitted to be elected by them under this Section 11(a) and the
directors otherwise elected numbered only ten. Whenever, as the case may
be, (i) all arrears dividends on the Series C Equity Shares, the Series
C-1 Equity Shares and the Series C-2 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,
the Series C-1 Equity Shares and the Series C-2 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, the Series C-1 Equity Shares and the Series C-2 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 Series C-1 Equity Shares and the Series C-2 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, the Series
C-1 Equity Shares and the Series C-2 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, the Series
C-1 Equity Shares and the Series C-2 Equity Shares for the election of
the Directors to be elected by them as herein provided, such call to be
made
<PAGE>
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, Series C-1 Equity
Shares or the Series C-2 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, the Series C-1 Equity Shares and the Series C-2 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, the Series C-1 Equity Shares and the Series C-2
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, the Series C-1 Equity Shares and the Series C-2 Equity
Shares, such Director shall be elected by the holders of the Series C
Equity Shares, the Series C-1 Equity Shares and the Series C-2 Equity
Shares as described 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.";
RESOLVED that such amendment be submitted for a vote of the holders
of the Corporation's Common Stock, par value $0.01 (the "COMMON SHARES")
and the holders of the Series C Preferred Shares for their approval at
the annual meeting of shareholders of the Corporation to be held on
April 29, 1999;
RESOLVED that the proper officers of the Corporation are authorized
and directed to solicit such shareholder approval, and to take such
further action as they deem necessary or advisable in connection
therewith; and
RESOLVED that subject to the requisite approval of such amendment by
the holders of the Corporation's Common Shares and Series C Preferred
Shares, the proper officers are authorized and directed to prepare and
file with the Missouri Secretary of State a certificate of amendment of
the Series C Preferred Certificate of Designation, and to take all other
steps deemed necessary or advisable to give effect to the forgoing
amendment.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Amendment to
Certificate of Designation to be duly executed by its Co-President this 8th
day of July, 1999.
WESTFIELD AMERICA, INC.
By: /s/ Richard E. Green
-----------------------------------
Name: Richard E. Green
Title: Co-President
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
I, Leesa A. Ashley, a notary public, do hereby certify that on this 8th
day of July, 1999, personally appeared before me Richard E. Green, and being
first duly sworn by me, declared that he is the Co-President of Westfield
America, Inc., that he signed the foreign document as Co-President of the
corporation, and that the statements therein contained are true.
[SEAL] /s/ Leesa A. Ashley
------------------------------
Notary Public
My Commission Expires: April 30, 2001
<PAGE>
EXHIBIT C
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" 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.
<PAGE>
2
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 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:
<PAGE>
3
"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 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
<PAGE>
4
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).
"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
<PAGE>
5
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 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
<PAGE>
6
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 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.
<PAGE>
7
"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).
-------------
"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
<PAGE>
8
(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 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.
<PAGE>
9
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 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
<PAGE>
10
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 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
<PAGE>
11
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 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.
<PAGE>
12
(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
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.
<PAGE>
13
(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 ________ __,
2008./1/ On and after ________ __, 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).
(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
_________________________
/1/ This date is the tenth anniversary of the Closing.
<PAGE>
14
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 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
<PAGE>
15
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-assessable Common Shares or Excess Common Shares,
respectively, obtained by dividing the aggregate Liquidation
<PAGE>
16
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
<PAGE>
17
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 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.
<PAGE>
18
(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 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
<PAGE>
19
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
<PAGE>
20
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 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
<PAGE>
21
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 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.
<PAGE>
22
(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 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
<PAGE>
23
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, 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
<PAGE>
24
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 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
<PAGE>
25
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 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.
<PAGE>
26
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 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.
<PAGE>
27
(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) 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 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
<PAGE>
28
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 holder has the right to require the Corporation to repurchase any
or all of the Series D Equity Shares then held by such bolder, (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
<PAGE>
29
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 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
<PAGE>
30
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
--------------------------------------
__________, 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 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
- ----------------------------
/2/. This date is the tenth anniversary of the Closing hereunder.
<PAGE>
31
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 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;
<PAGE>
32
(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 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
<PAGE>
33
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.
<PAGE>
34
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
<PAGE>
35
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
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: March 31, 2000
<PAGE>
EXHIBIT D
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES C-1 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"), 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"),
-------------------------
416,667 of which have been designated as Series C Preferred Shares, with a
Liquidation value of $180 per share (the "Series C Preferred Shares") and
-------------------------
694,445 of which have been designated as Series D Preferred Shares, with a
liquidation value of $180 per share (the "Series D Preferred Shares"), (iii)
-------------------------
200,000,000 shall be shares of common stock, par value $.01 per share (the
"Common Shares"), (iv) 205,000,000 shall be shares of excess stock, par value
- --------------
$.01 per share (the "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 the 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
<PAGE>
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
December 14, 1998 the following resolution creating a series of Preferred Stock
designated as "Series C-1 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 BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING 'SERIES C-1 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-1 Preferred
Shares) as follows:
Section 1. Number of Shares, Designation and Ranking. This class of
-----------------------------------------
preferred stock shall be designated as Series C-1 Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute such
series shall not be more than 138,889 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-
--------
1 Preferred Shares". Each Series C-1 Preferred Share shall be identical in all
- ------------------
respects to each other Series C-1 Preferred Share. Each Excess Series C-1
Preferred Share shall be identical in all respects to each other Excess Series
C-1 Preferred Share, and except as otherwise provided herein, shall be identical
in all respects to each Series C-1 Preferred Share (the Series C-1 Preferred
Shares together with the Excess Series C-1 Preferred Shares being hereinafter
referred to as the "Series C-1 Equity Shares").
------------------------
2
<PAGE>
Section 2. Definitions. For purposes of the Series C-1 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-1 Equity Share
---------
equal to 8.5% of the Liquidation Preference per Series C-1 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 C-1 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.
----
"Common Shares" shall mean the Corporation's common stock, par value
-------------
$0.01 per share.
"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,
3
<PAGE>
b. all income taxes paid or accrued according to GAAP for such
quarter (other than income taxes attributable to extraordinary,
usual 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).
"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,
4
<PAGE>
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).
---------------
"Conversation Price" shall mean the conversion price per Common Share
------------------
for which the Series C-1 Preferred Shares 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 average of the bid and asked prices on such day
as furnished by any NYSE member after 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
5
<PAGE>
any Series C-1 Equity Shares (other than the initial Dividend Period, which
shall commence on the Issue Date for such Series C-1 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-1
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-1 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-1 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 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.
6
<PAGE>
"Investor" shall mean Security Capital Preferred Growth Incorporated
--------
and controlled Affiliates thereof.
"Issue Date" shall mean the date on which the Series C-1 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-1 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 Shares" 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
7
<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-1 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-1 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-1
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-1 Preferred Shares.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Articles.
8
<PAGE>
Section 3. Dividends.
---------
(a) Subject to the preferential rights of the holders of any Senior
Preferred Stock or Preferred Shares that rank senior in the payment of dividends
to the Series C-1 Equity Shares and subject to paragraph (b) of this Section 3,
the holders of Series C-1 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 annuum and (B) an amount
per share equal to the Liquidation Preference of a Series C-1 Equity Share
(exclusive of accrued but unpaid dividends) divided by the Conversion Price (the
"Series C-1 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-1 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-1 Equity
Shares shall have received for any calendar year more dividends than such Series
C-1 Equity 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-1 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-1 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-1 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-1 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-1 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-1
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-1
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
9
<PAGE>
(as defined below) has occurred, the dividend payable per Series C-1 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 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-1 Equity Shares shall first be
credited against the earliest accrued but unpaid dividend due with respect to
Series C-1 Equity Shares which remains payable. Beginning with the quarter in
which a REIT Termination Event occurs, all dividends payable per Series C-1
Equity Share pursuant to this Section shall be multiplied by 2.5.
(b) The initial Dividend Period for the Series C-1 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-1 Equity Shares shall be
computed by dividing the number of days in such period by 90 and multiplying the
result by the Series C-1 Preferred dividend determined in accordance with
Section 3(a). Holders of Series C-1 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-1 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-1 Equity Shares which may be in arrears.
(c) So long as any Series C-1 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-1 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
10
<PAGE>
apart, as aforesaid, all dividends declared upon Series C-1 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-1 Equity Shares and accumulated and
unpaid on such Parity Shares.
(d) So long as any Series C-1 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 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 C-1 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-1 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-1 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-1 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
11
<PAGE>
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-1
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-1 Equity Shares shall be entitled to
receive One Hundred Eighty Dollars ($180.00) (the "Liquidation Preference") per
----------------------
share of Series C-1 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-1 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-1 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 contemplated to
the relevant Series C-1 Liquidation Date over 90 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
C-1 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-1 Equity Shares and any such other Parity Shares
ratably in accordance with the respective amounts that would be payable on such
Series C-1 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 (including the Parity Shares) or
prior to the Series C-1 Equity Shares upon Liquidation, dissolution or winding
up, upon any liquidation, dissolution or winding up of the Corporation, after
payment shall have
12
<PAGE>
been made in full to the holders of the Series C-1 Equity Shares, as provided in
this Section 4, the holders of Series C-1 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-1 Equity
Shares shall not be entitled to share therein.
Section 5. Redemption at the Option of the Corporation.
-------------------------------------------
(a) The Series C-1 Equity Shares shall not be redeemable by the
Corporation prior to August 12, 2008. On and after August 12, 2008, the
Corporation, at its option, may redeem the Series C-1 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-1 Equity Shares (plus all accumulated, accrued and
unpaid dividends as provided in paragraph (b) below).
(b) Upon any redemption of Series C-1 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-1 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 C-1 Equity Shares called for
redemption.
(c) If full cumulative dividends on the Series C-1 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-1 Equity Shares may
not be redeemed under this Section 5 in part and may not be redeemed unless the
Series C Equity Shares and Series C-2 Equity Shares (as defined below), if any,
are also redeemed in whole and the Corporation may not purchase or acquire
Series C Equity Shares, Series C-1 Equity Shares or Series C-2 Equity Shares, if
any, otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of Series C Equity Shares, Series C-1 Equity Shares and
Series C-2 Equity Shares, if any.
13
<PAGE>
(d) Notice of the redemption of any Series C-1 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-1 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-1 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-1 Equity Shares so called for redemption shall cease to accrue,
(ii) such shares shall no longer he deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of Series C-1 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 he
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-1 Equity Shares so called for
redemption. No interest shall accrue for the benefit of the holders of Series
C-1 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 C-1 Equity Shares
14
<PAGE>
are to be redeemed, shares to be redeemed shall be selected by the Corporation
from outstanding Series C-1 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-1 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-1 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-1 Preferred Shares or Excess 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 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-1 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-
1 Equity Shares. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such Series C-1 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 C-1 Equity Shares at the close of business on a dividend
payment record date shall be entitled to receive the dividend payable on such
shares
15
<PAGE>
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-1 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-1 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-1 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-1 Equity Shares on such date, and
the converting holder need not include payment of the amount of such dividend
upon surrender of Series C-1 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-1 Equity Shares as aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, 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 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-1
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
16
<PAGE>
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 C-1 Equity Shares. Instead
of any fractional interest in a Common Share that would otherwise be deliverable
upon the conversion of a Series C-1 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 Equity Shares of 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-1 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-1 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-1 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 subdivisions
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
17
<PAGE>
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 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
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<PAGE>
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-1 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 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 "Securities"), 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
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 Share
delivered to a Person converting a share of Series C-1 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-1 Equity Shares would no longer be
entitled to receive such Security with a Common 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
19
<PAGE>
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 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 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 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
20
<PAGE>
Corporation or such subsidiary or controlled Affiliate of consideration per
Common 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 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
21
<PAGE>
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
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-1 Equity Shares that will contain
provisions enabling the holders of the Series C-1 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.
(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-1
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
22
<PAGE>
(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-1 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 C-1 Equity Shares at such holder's last address as shown on
the records of the Corporation.
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<PAGE>
(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-1 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-1 Equity Shares, the Conversion Price for
the Series C-1 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-1 Equity Shares, the full number of Common Equity Shares
deliverable upon the conversion of all outstanding Series C-1 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
C-1 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-1 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-1
24
<PAGE>
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-1 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-1 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-1 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-1 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 C-1 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-1 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
----------------------
25
<PAGE>
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 each holder of Series C-1
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-1 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-1 Equity Shares repurchased.
(c) On the Change of Control repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series C-1 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-1 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 1 3d-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 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
26
<PAGE>
(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 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.
Section 8. Redemption at the Option of the Holder.
--------------------------------------
(a) At any time after August 12, 2008, the holders of Series C-1 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-1 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
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<PAGE>
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-1 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-1 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-1 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-1
Equity Shares or portions thereof so tendered.
Section 9. Shares To Be Retired. All Series C-1 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-1 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 C-1 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-1 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-1 Preferred Shares, if the holders of such class or series and
the Series C-1 Preferred Shares shall be entitled to the receipt of dividends
and of amounts distributable upon liquidation,
28
<PAGE>
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 Preferred Shares, Series B Preferred Shares, Series C
Preferred Shares, Series C-2 Preferred Shares (as defined below), if any, Series
D Preferred Shares and Series D-1 Cumulative Convertible Redeemable Preferred
Shares;
(c) junior to the Series C-1 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-1 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-1 Equity Shares shall have no voting rights. If the
Corporation has obtained shareholder approval and made the amendments as
described in Section 11(b) below, and if and whenever (i) for two consecutive
quarterly Dividend Periods the Corporation fails to pay dividends on the Series
C Equity Shares, the Series C-1 Equity Shares or, if any Series C-2 Cumulative
Convertible Redeemable Preferred Shares, par value $1.00 per share (the "Series
C-2 Preferred Shares"), shall have been authorized and initially issued by the
Corporation to Security Capital Preferred Growth Incorporated, the Series C-2
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, the Series C-1 Equity Shares and the Series
C-2 Equity Shares, if any, voting together 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, the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, voting together 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,
the Series
29
<PAGE>
C-1 Equity Shares and the Series C-2 Equity Shares, if any, called as
hereinafter provided; provided, however, that except as set forth below, the
-------- -------
holders of the Series C Equity Shares, the Series C-1 Equity Shares and the
Series C-2 Equity Shares, if any, shall not have the right to elect more than
two directors. For purposes hereof, "Series C-2 Equity Shares" shall mean
------------------------
Series C-2 Preferred Shares together with the Excess Series C-2 Preferred
Shares. If, other than through the operation of this Section 11 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, the
Board of Directors shall be increased by such number of additional directors,
and the holders of the Series C Equity Shares, the Series C-1 Equity Shares and
the Series C-2 Equity Shares, if any, voting together as a single class, 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 Equity Shares, the Series C-1 Equity Shares and the Series C-2 Equity
Shares, if any, 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, the Series C-1 Equity
Shares and the Series C-2 Equity Shares, if any, 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, the Series C-1
Equity Shares and the Series C-2 Equity Shares, if any, 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, the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, 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, the Series C-1 Equity Shares and the Series C-2 Equity Shares, if
any, 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 Series C-1 Equity Shares
and the Series C-2 Equity Shares, if any, the Secretary of the Corporation may,
and upon the written request of any holders of 5% of the outstanding Series C
Equity Shares, the Series C-1 Equity Shares and the Series C-2 Equity Shares, if
any (addressed to the Secretary at the principal office of the Corporation),
shall, call a special
30
<PAGE>
meeting of the holders of the Series C Equity Shares, the Series C-1 Equity
Shares and the Series C-2 Equity Shares, if any, 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, Series C-1 Equity Shares or the Series C-2 Equity Shares, if any,
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
share holders 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, the C-1
Equity Shares and the Series C-2 Equity Shares, if any, 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, the Series C-1
Equity Shares and the Series C-2 Equity Shares, if any, 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, the Series C-1 Equity Shares and the
Series C-2 Equity Shares, if any, such Director shall be elected by the holders
of the Series C Equity Shares, the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, as described 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) Notwithstanding anything to the contrary contained in this Section 11,
if the Corporation shall fail to obtain the required shareholder approval and
amend its Certificate of Designation for the Series C Preferred Shares so that
the holders of Series C Equity Shares vote together as a single class with the
holders of Series C-1 Equity Shares and the Series C-2 Equity Shares, if any,
with respect to the election of directors for which such holders are entitled to
vote, as provided above, then the voting rights of the holders of Series C-1
Preferred Shares shall automatically be altered to be as follows:
if and whenever (i) for two consecutive quarterly Dividend Periods the
Corporation fails to pay dividends on the Series C-1 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-1 Equity Shares and the Series C-2 Equity Shares, if
any, voting together as a single class, shall be entitled to elect the two
additional directors to serve on the Board of
31
<PAGE>
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-1 Equity
Shares and the Series C-2 Equity Shares, if any, voting together 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-1 Equity Shares and the Series C-2
Equity Shares, if any, called as hereinafter provided; provided, however,
-------- -------
that except as set forth below, the holders of Series C-1 Equity Shares and
the Series C-2 Equity Shares, if any, shall not have the right to elect
more than two directors. If, other than through the operation of this
Section 11 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, the Board of Directors shall be
increased by such number of additional directors, and the holders of Series
C-1 Equity Shares and the Series C-2 Equity Shares, if any, voting together
as a single class, 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-1 Shares and the Series C-2 Equity Shares,
if any, 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-1 Equity Shares and the Series C-2
Equity Shares, if any, 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-1 Equity Shares and the Series C-2
Equity Shares, if any, 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-1 Equity Shares and the Series C-2 Equity Shares, if any, 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
32
<PAGE>
persons elected as Directors by the holders of the Series C-1 Equity Shares
and the Series C-2 Equity Shares, if any, 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-1 Equity Shares and the Series C-2 Equity Shares, if any, the Secretary
of the Corporation may, and upon the written request of any holders of 5%
of the outstanding Series C-1 Equity Shares and the Series C-2 Equity
Shares, if any (addressed to the Secretary at the principal office of the
Corporation), shall, call a special meeting of the holders of the Series C-
1 Equity Shares and the Series C-2 Equity Shares, if any, 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-1 Equity Shares or the Series C-2 Equity
Shares, if any, 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-1 Equity Shares and the Series C-2 Equity Shares,
if any, 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-1 Equity Shares and the Series C-2 Equity Shares, if any, or the
successor of such remaining Director (or, if there are then no such
Directors or Director elected by the holders of the Series C-1 Equity
Shares and the Series C-2 Equity Shares, if any, such Director shall be
elected by the holders of the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, as described 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.
(c) The holders of the Series C-1 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 or the
Series D-1 Preferred Shares into Common Shares). In any matter for which a
holder of Series C-1 Equity Shares is permitted to vote under this Section
11(c), such holder shall have the number
33
<PAGE>
of votes equal to the number of Common Shares into which the Series C-1 Equity
Shares of such holder is convertible on the record date for such vote.
(d) So long as any Series C-1 Equity Shares are outstanding, in addition to
any other vote or consent of shareholders requested by law or by the Articles,
the affirmative vote of the holders of a majority of the Series C-1 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-1 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-1 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-1 Equity Shares have with respect
to the Corporation (except for changes that do not materially and adversely
affect the holders of the Series C-1 Preferred Stock).
provided, however, that no such vote of the holders of Series C-1 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-1 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(d),
each share of Series C-1 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-1 Equity Shares as a single class on any matter,
then the Series C-1 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 C-1 Equity
Shares shall not have any relative, participating, optional or other
special voting rights and powers other than as
34
<PAGE>
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-1 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-1 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.
35
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President and attested by its
Secretary this 15th day of December, 1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter Lowy
--------------------
Its: Co-President
Attest:
/s/ Irv Hepner
- --------------------
Its Secretary
36
<PAGE>
CORPORATION ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
On the 15th day of December, 1998, before me personally appeared Peter
Lowy, known to me or proved to me on the basis of satisfactory evidence to be
the Co-President of Westfield America, Inc., the corporation that executed the
foregoing instrument, who, being duly sworn, acknowledged that he resides at Los
Angeles; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by the order of
the Board of Directors of said corporation; and that he signed his name thereto
by like order.
/s/ Leesa A. Ashley
--------------------
Notary Public
My commission expires: April 30, 2001
37
<PAGE>
EXHIBIT E
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES C-2 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 nonvoting 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"), 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"),
-------------------------
416,667 of which have been designated as Series C Preferred Shares, with a
liquidation value of $180 per share (the "Series C Preferred Shares"), 138,889
-------------------------
of which have been designated as Series C-1 Preferred Shares, with a liquidation
value of $180 per share (the "Series C-1 Preferred Shares"), 694,445 of which
---------------------------
have been designated as Series D Preferred Shares, with a liquidation value of
$180 per share (the "Series D Preferred Shares") and 138,889 of which have been
-------------------------
designated as Series D-1 Preferred Shares, with a liquidation value of $180 per
share (the "Series D-1 Preferred Shares"), (iii) 200,000,000 shall be shares of
---------------------------
common stock, par value $.01 per share (the "Common Stock"), (iv) 205,000,000
------------
shall be shares of excess stock, par value $.01 per share (the "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 the Preferred Shares
shall be "Excess Preferred
----------------
<PAGE>
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
December __, 1998 the following resolution creating a series of Preferred Stock
designated as "Series C-2 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 C-2 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, 1imitations or restrictions thereof set forth in
the Articles of Incorporation which are applicable to the Series C-2 Preferred
Shares) as follows:
Section 1. Number of Shares, Designation. This class of preferred
-----------------------------
stock shall be designated as Series C-2 Cumulative Convertible Redeemable
Preferred Stock and the number of shares which shall constitute such series
shall not be more than 138,889 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-2 Preferred
--------------------
Shares". Each Series C-2 Preferred Share shall be identical in all respects to
- ------
each other Series C-2 Preferred Share. Each Excess Series C-2 Preferred Share
shall be identical in all respects to each other Excess Series C-2 Preferred
Share, and except as otherwise provided herein, shall be
2
<PAGE>
identical in all respects to each Series C-2 Preferred Share (the Series C-2
Preferred Shares together with the Excess Series C-2 Preferred Shares being
hereinafter referred to as the "Series C-2 Equity Shares").
------------------------
Section 2. Definitions. For purposes of the Series C-2 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-2 Equity Share
---------
equal to 8.5% of the Liquidation Preference per Series C-2 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 C-2 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.
----
"Common Shares" shall mean the Corporation's common stock, par value
-------------
$0.01 per share.
"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):
3
<PAGE>
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 nonrecurring 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 noncash 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 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
4
<PAGE>
(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 Share
----------------
for which the Series C-2 Preferred Shares 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 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
5
<PAGE>
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-2 Equity Shares (other than the initial Dividend
Period, which shall commence on the Issue Date for such Series C-2 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-2 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-2 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-2 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 minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the
6
<PAGE>
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-2 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-2 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;
7
<PAGE>
(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 C-2 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-2 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-2
Preferred Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Days" 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
8
<PAGE>
designee as the transfer agent, registrar and dividend disbursing agent for the
Series C-2 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 Senior
Preferred Stock or Preferred Shares that rank senior in the payment of dividends
to the Series C-2 Equity Shares and subject to paragraph (b) of this Section 3,
the holders of Series C-2 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-2 Equity
Share (exclusive of accrued but unpaid dividends) divided by the Conversion
Price (the "Series C-2 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-2 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-2 Equity Shares shall have received for any calendar year more
dividends than such Series C-2 Equity 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-2 Equity Shares in
subsequent calendar years shall be reduced to the extent of such overpayment.
Subject to the provisio 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, including 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-2 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-2 Equity Share in respect of the first two
quarters of such calendar year
9
<PAGE>
shall be the greater of 50% of the Base Rate per share and the Series C-2 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-2 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-2 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-2 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-2 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 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-2 Equity Shares shall first be credited against the earliest accrued
but unpaid dividend due with respect to Series C-2 Equity Shares which remains
payable. Beginning with the quarter in which a REIT Termination Event occurs,
all dividends payable per Series C-2 Equity Share pursuant to this Section shall
be multiplied by 2.5.
(b) The initial Dividend Period for the Series C-2 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-2 Equity Shares shall be
computed by dividing the number of days in such period by 90 and multiplying the
result by the Series C-2 Preferred dividend determined in accordance with
Section 3(a). Holders of Series C-2 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-2 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-2 Equity Shares which may be in arrears.
(c) So long as any Series C-2 Equity Shares remain outstanding, no
dividends, except as described in the immediately following sentence, shall be
10
<PAGE>
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-2 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 fu1l or a
sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon Series C-2 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-2 Equity
Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series C-2 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 C-2 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-2 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-2 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-2 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.
11
<PAGE>
(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-2
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-2 Equity Shares shall be entitled to
receive One Hundred Eighty Dollars ($180.00) (the "Liquidation Preference") per
----------------------
share of Series C-2 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-2 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-2 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-2 Liquidation Date over 90 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 C-2 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-2 Equity Shares and any such other Parity Shares ratably
in accordance with the respective amount that would be payable on such Series C-
2 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.
12
<PAGE>
(b) Subject to the rights of the holders of shares of any series or
class or classes of stock ranking on a parity with (including the Parity Shares)
or prior to the Series C-2 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-2
Equity Shares, as provided in this Section 4, the holders of Series C-2 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, he entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series C-2 Equity Shares shall not be entitled to share therein.
Section 5. Redemption at the Option of the Corporation.
-------------------------------------------
(a) The Series C-2 Equity Shares shall not be redeemable by the
Corporation prior to August 12, 2008. On and after August 12, 2008, the
Corporation, at its option, may redeem the Series C-2 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-2 Equity Shares (plus all accumulated, accrued and
unpaid dividends as provided in paragraph (b) below).
(b) Upon any redemption of Series C-2 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-2 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 C-2 Equity Shares called for
redemption.
(c) If full cumulative dividends on the Series C-2 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-2 Equity
Shares may not be redeemed under this Section 5 in part and may not be redeemed
unless the Series C Equity Shares and Series C-1 Equity Shares are also redeemed
in whole and the Corporation may not purchase or acquire Series C Equity Shares,
Series C-1 Equity Shares or Series C-2 Equity Shares otherwise than pursuant to
a purchase or
13
<PAGE>
exchange offer made on the same terms to all holders of Series C Equity Shares,
Series C-1 Equity Shares and Series C-2 Equity Shares.
(d) Notice of the redemption of any Series C-2 Equity Shares under
this Section 5 shall he mailed by first class mail or recognized overnight
courier to each holder of record of Series C-2 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-2 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 fail to make available an amount of cash necessary to
effect such redemption), (i) except as otherwise provided herein, dividends on
the Series C-2 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-2 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-2 Equity Shares so called for
redemption. No interest shall accrue for the benefit of the holders of Series
C-2 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 finds 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
14
<PAGE>
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-2
Equity Shares are to be redeemed, shares to be redeemed shall be selected by the
Corporation from outstanding Series C-2 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-2 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-2 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-2 Preferred Shares or Excess 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 nonassessable Common Shares or Excess Common Shares 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 C-2 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-
2 Equity Shares. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such Series C-2 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).
15
<PAGE>
Holders of Series C-2 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 correspondence Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to such
Dividend Payment Date. However, Series C-2 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-2 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-2 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-2
Equity Shares on such date, and the converting holder need not include payment
of the amount of such dividend upon surrender of Series C-2 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-2 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 Share arising upon such
conversion shall be settled as provided in paragraph (c) of this Section 6.
Each conversion should be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for Series C-2
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
16
<PAGE>
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 C-2 Equity Shares.
Instead of any fractional interest in a Common Share that would otherwise be
deliverable upon the conversion of a Series C-2 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 Equity 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-2 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-2 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-2 Equity Shares had been converted immediately prior to the record date
in the cases 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
17
<PAGE>
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
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
18
<PAGE>
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-2 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 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
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 owners of the Common Equity Shares on the date fixed for
the determination of shareholders
19
<PAGE>
entitled to such distribution of such Security, but also is distributed
with each Common Share delivered to a Person converting a share of Series
C-2 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-2 Equity Shares would no longer be entitled to receive
such Security with a Common 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 worded 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 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
20
<PAGE>
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 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 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
21
<PAGE>
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 if 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 interest 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 C-2 Preferred Share at his or her last address
appearing on the share register a notice of reduction prior to the date the
22
<PAGE>
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-2 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-2 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-2 Equity Shares that will contain
provisions enabling the holders of the Series C-2 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
23
<PAGE>
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 C-2 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 war
rants; 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-2 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
24
<PAGE>
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 C-2 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-2 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.
25
<PAGE>
(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-2 Equity Shares, the Conversion
Price for the Series C-2 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-2 Equity Shares, the full number of Common Equity
Shares deliverable upon the conversion of all outstanding Series C-2 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 C-2 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-2 Equity
Shares shall be validly issued, fully paid and nonassessable. 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-2 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.
The Corporation shall use its best efforts to list the Common Shares
required to be delivered upon conversion of the Series C-2 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-2 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.
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<PAGE>
(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-2
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-2 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 reason able 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 C-2 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-2 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 each holder of
Series C-2 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-2 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-2 Equity Shares repurchased.
(c) On the Change of Control Repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series C-2 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
27
<PAGE>
directed by such holder, send an amount equal to the Change of Control
Repurchase Payment in respect of all Series C-2 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 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 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
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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.
Section 8. Redemption at the Option of the Holder.
--------------------------------------
(a) At any time after August 12, 2008, the holders of Series C-2
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-2 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-2 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-2 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-2 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-2 Equity Shares or portions thereof so tendered.
Section 9. Shares To Be Retired. All Series C-2 Equity Shares which
--------------------
shall have been issued and reacquired in any manner by the Corporation shall be
29
<PAGE>
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-2 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 C-2 Preferred Shares, which shall expressly include the Corporation's
nonvoting senior preferred stock, par value $1.00 per share;
(b) on a parity with the Series C-2 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-2 Preferred Shares, if the holders of such class or
series and the Series C-2 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 Preferred Shares, Series B Preferred Shares, Series C Pre ferred Shares,
Series C-l Preferred Shares, Series D Preferred Shares and Series D-l Preferred
Shares;
(c) junior to the Series C-2 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 Junior Shares; and
(d) junior to the Series C-2 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-2 Equity Shares shall have no voting rights. If the
Corporation
30
<PAGE>
has obtained shareholder approval and made the amendments as described in
Section 11(b) below, and if and whenever (i) for two consecutive quarterly
Dividend Periods the Corporation fails to pay dividends on the Series C Equity
Shares, the Series C-1 Equity Shares or the Series C-2 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, the Series C-1 Equity Shares and the Series C-2 Equity Shares, voting
together 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 tent 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, the Series C-1 Equity Shares and the Series C-2 Equity Shares, voting
together 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, the Series C-1
Equity Shares and the Series C-2 Equity Shares called as hereinafter provided;
provided, however, that except as set forth below, the holders of the Series C
- -------- -------
Equity Shares, the Series C-1 Equity Shares and the Series C-2 Equity Shares
shall not have the right to elect more than two directors. If, other than
through the operation of this Section 11 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, the Board of Directors shall be
increased by such number of additional directors, and the holders of the Series
C Equity Shares, the Series C-i Equity Shares and the Series C-2 Equity Shares,
voting together as a single class, 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 Equity Shares, the Series C-1 Equity
Shares and the Series C-2 Equity 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, the
Series C-1 Equity Shares and the Series C-2 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, the Series
C-1 Equity Shares and the Series C-2 Equity Shares then outstanding shall have
been paid and the Corporation has paid dividends
31
<PAGE>
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, the Series C-1 Equity Shares and the
Series C-2 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 once of all persons elected as Directors by the holders of the Series C
Equity Shares, the Series C-i Equity Shares and the Series C-2 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 Series C-1 Equity Shares
and the Series C-2 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, the Series C-1 Equity Shares and the Series C-2 Equity Shares (ad
dressed to the Secretary at the principal office of the Corporation) shall, call
a special meeting of the holders of the Series C Equity Shares, the Series C-i
Equity Shares and the Series C-2 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,
Series C-1 Equity Shares or the Series C-2 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, the C-1 Equity Shares and the Series
C-2 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, the Series C-1 Equity Shares and the Series C-2 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, the
Series C-1 Equity Shares and the Series C-2 Equity Shares, such Director shall
be elected by the holders of the Series C Equity Shares, the Series C-1 Equity
Shares and the Series C-2 Equity Shares as described 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.
32
<PAGE>
(b) Notwithstanding anything to the contrary contained in this Section
11, if the Corporation shall fail to obtain the required shareholder approval
and amend its Certificate of Designation for the Series C Preferred Shares so
that the holders of Series C Equity Shares vote together as a single class with
the holders of Series C-1 Equity Shares and the Series C-2 Equity Shares with
respect to the election of directors for which such holders are entitled to
vote, as provided above, then the voting rights of the holders of Series C-2
Preferred Shares shall automatically be altered to be as follows:
if and whenever (i) for two consecutive quarterly Dividend Periods the
Corporation fails to pay dividends on the Series C-2 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-1 Equity Shares and the
Series C-2 Equity Shares, voting together 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-1 Equity Shares and the Series C-2 Equity Shares,
voting together 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-
1 Equity Shares and the Series C-2 Equity Shares called as hereinafter
provided; provided, however, that except as set forth below, the
holders of
-------- -------
Series C-1 Equity Shares and the Series C-2 Equity Shares shall not
have the right to elect more than two directors. If, other than
through the operation of this Section 11 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, the Board of Directors shall be
increased by such number of additional directors, and the holders of
Series C-1 Equity Shares and the Series C-2 Equity
33
<PAGE>
Shares, voting together as a single class, 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-1 Shares
and the Series C-2 Equity 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-1 Equity Shares and the Series C-2 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-1 Equity Shares and the Series C-2 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-1 Equity Shares and the Series C-2 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-1 Equity Shares and the Series C-2 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-1 Equity Shares and the
Series C-2 Equity Shares, the Secretary of the Corporation may, and
upon the written request of any holders of 5% of the outstanding
Series C-1 Equity Shares and the Series C-2 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-1 Equity Shares
and the Series C-2 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-1 Equity Shares or Series C-2
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
34
<PAGE>
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-1 Equity Shares and the Series C-2 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-1 Equity
Shares and the Series C-2 Equity Shares or the successor of such
remaining Director (or, if there are then no such Directors or
Director elected by the holders of the Series C-1 Equity Shares and
the Series C-2 Equity Shares, such Director shall be elected by the
holders of the Series C-1 Equity Shares and the Series C-2 Equity
Shares as described 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.
(c) The holders of the Series C-2 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
or the Series D-1 Preferred Shares into Common Shares). In any matter for which
a holder of Series C-2 Equity Shares is permitted to vote under this Section
11(c), such holder shall have the number of votes equal to the number of Common
Shares into which the Series C-2 Equity Shares of such holder is convertible on
the record date for such vote.
(d) So long as any Series C-2 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-2
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-2 Equity shares; or
35
<PAGE>
(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-2 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-2 Equity Shares have with
respect to the Corporation (except for changes that do not materially and
adversely affect the holders of the Series C-2 Preferred Stock).
provided, however, that no such vote of the holders of Series C-2 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 securities to be made, as the case may be, provision is made for the
redemption of all Series C-2 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(d), each share of Series C-2 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-2 Equity Shares as a single class on any
matter, then the Series C-2 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 C-2 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-2 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-2 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
36
<PAGE>
with the requirements of Section 351.046 of the General and Business
Corporation Law of the State of Missouri, as amended.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President and attested by its
Secretary this 18th day of December, 1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter Lowy
--------------------------
Its: Co-President
Attest:
/s/ Irv Hepner
- --------------------------
Its: Secretary
37
<PAGE>
CORPORATION ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
On the 18th day of December 1998, before me personally appeared
Peter Lowy known to me or proved to me on the basis of satisfactory evidence to
be the Co-President of Westfield America, Inc. , the corporation that executed
the foregoing instrument, who, being duly sworn, acknowledged that he resides at
Los Angeles; that he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by the order
of the Board of Directors of said corporation; and that he signed his name
thereto by like order.
/s/ Leesa A. Ashley
-----------------------------------------------------
Notary Public
My commission expires: April 30, 2001
38
<PAGE>
EXHIBIT F
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES D-1 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"),
-------------------------
416,667 of which have been designated as Series C Preferred Shares, with a
liquidation value of $180 per share (the "Series C Preferred Shares") and
-------------------------
694,445 of which have been designated as Series D Preferred Shares, with a
liquidation value of $180 per share (the "Series D 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 the State of Missouri, as amended,
adopted on December 14, 1998 the following resolution creating a series of
Preferred Stock designated as "Series D-1 Preferred Shares," which resolution
has not been amended, modified, rescinded or revoked and is in full force and
effect on the date hereof.
2
<PAGE>
"RESOLUTION OF THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING
'SERIES D-1 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-1 Preferred
Shares) as follows:
Section 1. Number of Shares, Designation and Ranking. This class of
-----------------------------------------
preferred stock shall be designated as Series D-1 Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute such
series shall not be more than 138,889 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-
--------
1 Preferred Shares." Each Series D-1 Preferred Share shall be identical in all
- ------------------
respects to each other Series D Preferred Share. Each Excess Series D-1
Preferred Share shall be identical in all respects to each other Excess Series
D-1 Preferred Share, and except as otherwise provided herein, shall be identical
in all respects to each Series D-1 Preferred Share (the Series D-1 Preferred
Shares together with the Excess Series D-1 Preferred Shares being hereinafter
referred to as the "Series D-1 Equity Shares").
------------------------
Section 2. Definitions. For purposes of the Series D-1 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 D-1 Equity Share
---------
equal to 8.5% of the Liquidation Preference per Series D-1 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-1 Preferred Shares.
3
<PAGE>
"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).
4
<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 (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-1 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 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.
5
<PAGE>
"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-1 Equity Shares (other than the initial Dividend
Period, which shall commence on the Issue Date for such Series D-1 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-1 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-1 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 D-1 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.
6
<PAGE>
"Investor" shall mean Security Capital Preferred Growth Incorporated
--------
and controlled affiliates thereof.
"Issue Date" shall mean the date on which Series D-1 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-1 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 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
(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.
--------------
7
<PAGE>
"Series D-1 Preferred Shares" shall have the meaning given such term
---------------------------
in Section 1of 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-1 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-1
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 Series D-1 Preferred Shares and notified to the holders of the Series D-1
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 Senior Preferred Stock or Preferred Shares that rank senior in
the payment of dividends to the Series D-1 Equity Shares and subject to
paragraph (b) of this Section 3, the holders of Series D-1 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-1 Equity Share (exclusive of accrued but unpaid dividends) divided
by the Conversion Price (the "Series D-1 Common Equivalent Factor") times the
-----------------------------------
dollar amount of cash dividends declared with respect to each Common Equity
Share
8
<PAGE>
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-1 Equity Shares shall have received for any
calendar year more dividends than such Series D-1 Equity 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-1 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 D-1 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-1 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-1 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-1 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-1 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-1 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-1 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-1 Equity Shares shall first be credited against the earliest accrued
but unpaid dividend due with respect to Series D-1 Equity Shares which remains
payable. Beginning with the quarter in which a REIT Termination Event occurs,
all dividends payable per Series D-1 Equity Share pursuant to this Section shall
be multiplied by 2.5.
(b) The initial Dividend Period for the Series D-1 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
9
<PAGE>
period, or any other period shorter than a full quarterly Dividend Period, on
the Series D-1 Equity Shares shall be computed by dividing the number of days in
such period by 90 and multiplying the result by the Series D-1 Equity dividend
determined in accordance with Section 3(a). Holders of Series D-1 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-1
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-1 Equity
Shares which may be in arrears.
(c) So long as any Series D-1 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-1 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-1 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-1 Equity
Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series D-1 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-1 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-1 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-1 Equity Shares shall not be
entitled to participate in any such dividends, whether payable in cash, stock or
otherwise.
(e) No distributions on Series D-1 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
10
<PAGE>
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-1 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-1 Equity Shares shall be entitled to receive One Hundred Eighty Dollars
($180.00) (the "Liquidation Preference") per Series D-1 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-1 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-1
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-1 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-1 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-1 Equity Shares and any such other
Parity Shares ratably in accordance with the respective amounts that would be
payable on such Series D-1 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 (including the Parity Shares)
or prior to the Series D-1 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
11
<PAGE>
Series D-1 Equity Shares, as provided in this Section 4, the holders of
Series D-1 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-1 Equity Shares shall not be entitled to share
therein.
Section 5. Redemption at the Option of the Corporation. (a) The
-------------------------------------------
Series D-1 Equity Shares shall not be redeemable by the Corporation prior to
August 12, 2008. On and after August 12, 2008, the Corporation, at its option,
may redeem the Series D-1 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-1 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-1 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-1 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-1 Equity Share
(plus all accumulated, accrued and unpaid dividends as provided in paragraph (c)
below).
(c) Upon any redemption of Series D-1 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-1 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-1 Equity Shares called for redemption.
(d) If full cumulative dividends on the Series D-1 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-1 Equity
Shares may not be redeemed under this Section 5 in part and may not be redeemed
unless the Series D Equity Shares are also redeemed in whole and the Corporation
may not purchase or acquire Series D Equity Shares or Series D-1 Equity Shares,
otherwise than pursuant to a purchase or exchange offer made on the same terms
to all holders of Series D Equity Shares and Series D-1 Equity Shares.
12
<PAGE>
(e) Notice of the redemption of any Series D-1 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-1 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-1 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-1 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-1 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 D-1 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-1 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-1 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-1 Equity Shares are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding Series D-1 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-1
13
<PAGE>
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-1 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-1 Equity Shares into Common
Equity Shares or (ii) the transfer of the Series D-1 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-1 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-1 Preferred Shares or Excess Series D-1
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 D-1 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-1 Equity Shares. Unless the shares issuable on conversion
are to be issued in the same name as the name in which such Series D-1 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-1 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-1 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
14
<PAGE>
to a Call Date during such period, such Series D-1 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-1 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-1 Equity Shares on such date, and
the converting holder need not include payment of the amount of such dividend
upon surrender of Series D-1 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 D-1 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-1 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-1 Equity Shares.
Instead of any fractional interest in a Common Equity Share that would otherwise
be deliverable upon the conversion of a Series D-1 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-1 Equity Shares so surrendered.
15
<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-1 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-1 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 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,
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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-1 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 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
17
<PAGE>
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-1 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-1 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 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
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<PAGE>
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 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.
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<PAGE>
(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
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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
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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, the
Corporation shall mail to the holder of each Series D-1 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-1 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
20
<PAGE>
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-1 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 D-1 Equity Shares that will contain
provisions enabling the holders of the Series D-1 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-1 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
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<PAGE>
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;f
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series D-1 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-1 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 D-1 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.
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<PAGE>
(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-1 Equity Shares, the Conversion
Price for the Series D-1 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-1 Equity Shares, the full number of Common Equity
Shares deliverable upon the conversion of all outstanding Series D-1 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-1 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-1
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-1 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.
The Corporation shall use its best efforts to list the Common Shares
required to be delivered upon conversion of the Series D-1 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-1 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.
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<PAGE>
(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-1
Equity Shares pursuant hereto; provided, however, that the Corporation shall not
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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-1 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-1 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-1 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-1 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 D-1 Equity Shares then held by such bolder,
(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-1 Equity Shares repurchased.
(c) On the Change of Control Repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series D-1 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-1 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.
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(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 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)
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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, the holders of Series D-1 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-1 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
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<PAGE>
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-1 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-1
Equity Stock shall be redeemable at the option of the holder, to the 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-1 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-1 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-1 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-1 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-1
Equity Shares or portions thereof so tendered.
Section 9. Shares To Be Retired. All Series D-1 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-1 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
26
<PAGE>
holders of Series D-1 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-1 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 D-1 Preferred Shares, if the holders of
such class or series and the Series D-1 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, Series C Cumulative
Convertible Preferred Stock, Series C-1 Cumulative Convertible Preferred
Stock, Series C-2 Cumulative Convertible Preferred Stock, if any shall have
been authorized and issued, and Series D Cumulative Convertible Preferred
Stock;
(c) junior to the Series D-1 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-1 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. Series D Preferred Shares. The Company shall be entitled
-------------------------
to treat the Series D Preferred Shares and the Series D-1 Preferred Shares as
one class for accounting purposes.
Section 12. Voting. So long as any Series D-1 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 and the Series D-1 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 the Series D-1 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
27
<PAGE>
Shares and Series D-1 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 and
Series D-1 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 Shares or Series D-1 Equity Shares).
provided, however, that no such vote of the holders of the Series D Equity
-------- -------
Shares and Series D-1 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 D Equity Shares and Series D-1 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-1 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-1 Equity Shares as a single class on any
matter, then the Series D-1 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-1 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 13. Record Holders. The Corporation and the Transfer Agent
--------------
may deem and treat the record holder of any Series D-1 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 14. 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-1 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.
28
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President this 15th day of December,
1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
----------------------------------
Name: Peter S. Lowy
Title: Co-President
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
)SS:
COUNTY OF LOS ANGELES)
I, Leesa A. Ashley, a notary public, do hereby certify that on this 15/th/
day of December, 1998, personally appeared before me Peter S. 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/ Lessa A. Ashley
---------------------------------
Notary Public
My Commission Expires:
April 30, 2001
<PAGE>
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES E 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"), 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"), 416,667 of which have been designated as Series C
Preferred Shares, with a liquidation value of $180 per share (the "SERIES C
PREFERRED SHARES"), 138,889 of which have been designated as Series C-1
Preferred Shares, with a liquidation value of $180 per share (the "SERIES C-1
PREFERRED SHARES"), 138,889 of which have been designated as Series C-2
Preferred Shares, with a liquidation value of $180 per share (the "SERIES C-2
PREFERRED SHARES"), 694,445 of which have been designated as Series D
Preferred Shares, with a liquidation value of $180 per share (the "SERIES D
PREFERRED SHARES") and 138,889 of which have been designated as Series D-1
Preferred Shares, with a liquidation value of $180 per share (the "Series D-1
Preferred Shares"), (iii) 200,000,000 shall be shares of common stock, par
value $.01 per share (the "Common Shares"), and (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 the State of Missouri, as amended, adopted on July
16, 1999 the following resolution creating a series of Preferred Stock
designated as "Series E 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 E 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 E Preferred Shares) as follows:
Section 1. NUMBER OF SHARES, DESIGNATION AND RANKING. This class of
preferred stock shall be designated as Series E Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute
such series shall not be more than 477,778 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 E PREFERRED SHARES." Each Series E Preferred Share shall be
identical in all respects to each other Series E Preferred Share. Each
Excess Series E Preferred Share shall be identical in all respects to each
other Excess Series E Preferred Share, and except as otherwise provided
herein, shall be identical in all respects to each Series E Preferred Share
(the Series E Preferred Shares together with the Excess Series E Preferred
Shares being hereinafter referred to as the "SERIES E EQUITY SHARES").
Section 2. DEFINITIONS. For purposes of the Series E 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 E Equity Share
equal to 8.5% of the Liquidation Preference per Series E 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 E Preferred Shares.
<PAGE>
"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.
"CHANGE OF CONTROL" shall have the meaning set forth in Section 7(e).
"CHANGE OF CONTROL REPURCHASE DATE" shall have the meaning set forth
in Section 7(a).
"CHANGE OF CONTROL REPURCHASE EVENT" shall have the meaning set forth
in Section 7(a).
"CHANGE OF CONTROL REPURCHASE OFFER" shall have the meaning set forth
in Section 7(a).
"CHANGE OF CONTROL REPURCHASE PAYMENT" shall have the meaning set
forth in Section 7(a).
"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,
<PAGE>
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).
"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 E 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
<PAGE>
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 E Equity Shares (other than the initial
Dividend Period, which shall commence on the Issue Date for such Series E
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 E 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 E 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 E 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.
<PAGE>
"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 E Preferred Shares
are originally 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 E 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 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
<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 E PREFERRED SHARES" shall have the meaning given such term in
Section 1 of 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 E 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
E 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 Series E Preferred Shares and notified to the holders of the Series E
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 Senior Preferred Stock or Preferred Shares that rank senior in
the payment of dividends to the Series E Equity Shares and subject to
paragraph (b) of this Section 3, the holders of Series E Equity Shares shall
be entitled to receive, when, as and if declared by the
<PAGE>
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 E Equity
Share (exclusive of accrued but unpaid dividends) divided by the Conversion
Price (the "SERIES E 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 E 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 E Equity Shares shall have received for any calendar year
more dividends than such Series E Equity 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 E
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 E
Common Equivalent Amount for the same quarter; (2) for the second quarter, an
amount such that the aggregate amount to be received per Series E 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 E 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 E 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 E 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 E 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 E 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
<PAGE>
advance of payment of each particular dividend. Any dividend payment made on
Series E Equity Shares shall first be credited against the earliest accrued
but unpaid dividend due with respect to Series E Equity Shares which remains
payable. Beginning with the quarter in which a REIT Termination Event
occurs, all dividends payable per Series E Equity Share pursuant to this
Section shall be multiplied by 2.5.
(b) The initial Dividend Period for the Series E 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 E Equity Shares
shall be computed by dividing the number of days in such period by 90 and
multiplying the result by the Series E Equity dividend determined in
accordance with Section 3(a). Holders of Series E 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 E 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 E Equity Shares
which may be in arrears.
(c) So long as any Series E 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 E 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 E 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 E Equity Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series E 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 E 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
<PAGE>
respect to the Series E 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 E Equity Shares shall not be entitled to participate
in any such dividends, whether payable in cash, stock or otherwise.
(e) No distributions on Series E 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 E 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 E Equity Shares shall be entitled to receive One
Hundred Eighty Dollars ($180.00) (the "LIQUIDATION PREFERENCE") per Series E
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 E
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 E 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 E 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 E 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 E Equity Shares and any such other Parity Shares
ratably in accordance with the respective amounts that would be payable on
such Series E Equity Shares and any such other Parity Shares if all amounts
payable thereon were paid in full. For the
<PAGE>
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 (including the Parity
Shares) or prior to the Series E 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 E Equity Shares, as provided in this Section 4, the holders of Series
E 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 E Equity Shares shall not be entitled to share
therein.
Section 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) The
Series E Equity Shares shall not be redeemable by the Corporation prior to
the tenth anniversary of the Issue Date. On and after the tenth anniversary
of the Issue Date, the Corporation, at its option, may redeem the Series E
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 E 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 E Equity Shares into Common Equity
Shares at the Corporation's 2000 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 E 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
E Equity Share (plus all accumulated, accrued and unpaid dividends as
provided in paragraph (c) below).
(c) Upon any redemption of Series E 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 E 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
<PAGE>
unpaid dividends, whether or not in arrears, on Series E Equity Shares called
for redemption.
(d) If full cumulative dividends on the Series E 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 E Equity
Shares may not be redeemed under this Section 5 in part and the Corporation
may not purchase or acquire Series E Equity Shares, otherwise than pursuant
to a purchase or exchange offer made on the same terms to all holders of
Series E Equity Shares.
(e) Notice of the redemption of any Series E Equity Shares under this
Section 5 shall be mailed by first-class mail or recognized overnight courier
to each holder of record of Series E 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 E 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 E 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 E 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 E Equity Shares so called for redemption.
Notwithstanding the foregoing the Corporation shall, in the first instance,
send the money to any holder of Series E 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 E 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.
<PAGE>
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 E Equity Shares are to be redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding Series E
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 E 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 E 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 E Equity Shares into
Common Equity Shares or (ii) the transfer of the Series E 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 E 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 E Preferred Shares or Excess Series E 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 E 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 E Equity Shares. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such Series
E Equity Shares are registered, each share surrendered for conversion shall
be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly
<PAGE>
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 E 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 E 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 E 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 E 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 E Equity Shares on such date, and the
converting holder need not include payment of the amount of such dividend
upon surrender of Series E 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 E 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 E 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
<PAGE>
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 E Equity Shares.
Instead of any fractional interest in a Common Equity Share that would
otherwise be deliverable upon the conversion of a Series E 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 E 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 E 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 E 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
<PAGE>
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 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 E Equity Shares or any other
<PAGE>
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 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 E 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 E 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 circumstances), which rights or
warrants, until the occurrence of a specified event or events
<PAGE>
("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 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
<PAGE>
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 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
<PAGE>
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 E 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 E 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 E 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 E Equity Shares that will contain
provisions enabling the holders of the Series E Equity Shares that remain
outstanding after such Transaction to convert into the consideration received
by holders of Common Equity
<PAGE>
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 E 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 E 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
<PAGE>
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 E
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 E 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 E Equity Shares, the
Conversion Price for the Series E 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 E Equity Shares, the full number of Common Equity
Shares deliverable upon the conversion of all outstanding Series E 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 E Preferred Shares shall be computed as if at the
time of computation all such outstanding shares were held by a single holder.
<PAGE>
Any Common Equity Shares issued upon conversion of the Series E 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 E 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.
The Corporation shall use its best efforts to list the Common Shares
required to be delivered upon conversion of the Series E 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 E 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 E
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 E 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 E 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 E 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
REPURCHASE DATE"), pursuant to the offer described in SUBSECTION (b) below
(the "CHANGE OF CONTROL REPURCHASE OFFER").
<PAGE>
(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 each holder
of Series E 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 E 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 E Equity Shares
repurchased.
(c) On the Change of Control Repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series E 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 E 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 (or any similar provision then in force)) of beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act (or any similar
provision then in force), 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
<PAGE>
entity, or (B) any entity consolidating with or merging into the Corporation,
which in either event (A) or (B) is pursuant to a 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 the
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 the tenth anniversary of the Issue Date, the holders of Series E 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 E 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 E
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 E
Equity Shares shall be redeemable at the option of the holder, to the 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 E
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.
<PAGE>
(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 E 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 E
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 E 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 E Equity Shares or portions thereof
so tendered.
Section 9. SHARES TO BE RETIRED. All Series E 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 E 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 E 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 E 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 E Preferred Shares, if the
holders of such class or series and the Series E 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, Series C Cumulative Convertible Redeemable
Preferred Stock, Series C-1 Cumulative Convertible Redeemable Preferred
Stock, Series C-2 Cumulative Convertible Redeemable Preferred Stock,
Series D Cumulative Convertible Redeemable Preferred Stock and Series
D-1 Cumulative Convertible Redeemable Preferred Stock;
<PAGE>
(c) junior to the Series E 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 E 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 E 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 E 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 E 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 E Equity Shares does not receive
shares of the surviving corporation with substantially similar rights,
preferences and powers in the surviving corporation as the Series E
Equity Shares have with respect to the Corporation (except for changes
that do not materially and adversely affect the holders of the Series
E Equity Shares).
PROVIDED, HOWEVER, that no such vote of the holders of the Series E
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 E 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, each share of Series E 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 E Equity Shares as a
single class on any matter, then the Series E 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 E Equity Shares shall not have any relative,
participating, optional or other
<PAGE>
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 E 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 E 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.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President this 22nd day of July,
1999.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
--------------------------------
Name: Peter S. Lowy
Title: Co-President
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
I, LEESA A. ASHLEY, a notary public, do hereby certify that on this
22nd day of July, 1999, personally appeared before me PETER S. 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/ Leesa A. Ashley
-----------------------------------
Notary Public
My Commission Expires:
April 30, 2001
<PAGE>
EXHIBIT 10.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECOND CREDIT AGREEMENT AMENDMENT
dated as of
August 12, 1998
among
WESTFIELD AMERICA INC.,
as Borrower
and
COMMONWEALTH BANK OF AUSTRALIA
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED,
as Co-Agents
and
UBS AG,
NEW YORK BRANCH,
as Documentary Agent
and
NATIONAL AUSTRALIA BANK LIMITED,
NEW YORK BRANCH,
as Administrative Agent
<PAGE>
SECOND CREDIT AGREEMENT AMENDMENT, dated as of August 12, 1998, among
WESTFIELD AMERICA INC., a Missouri corporation (the "Borrower"), NATIONAL
AUSTRALIA BANK LIMITED, COMMONWEALTH BANK OF AUSTRALIA, AUSTRALIA AND NEW
ZEALAND BANKING GROUP LIMITED and UBS AG (formerly known as Union Bank of
Switzerland) (collectively, the "Lenders"), COMMONWEALTH BANK OF AUSTRALIA
and AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED, as Co-Agents
(the "Co-Agents"), UBS AG, as Documentary Agent (the "Documentary Agent") and
NATIONAL AUSTRALIA BANK LIMITED, NEW YORK BRANCH, as Administrative Agent
for the Lenders (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Co-Agents, the Documentary Agent
and the Administrative Agent are parties to a Credit Agreement dated as of
May 30, 1997, as amended by a Credit Agreement Amendment dated as of
January 15, 1998 (the "Credit Agreement") pursuant to which the Lenders have
severally committed to make Loans to the Borrower on a revolving basis and to
participate in Letters of Credit issued for the account of the Borrower, up
to an aggregate limit of $800,000,000 (the "Total Commitment"); and
WHEREAS, the Borrower has requested the Lenders to amend the Credit
Agreement as hereinafter provided in order to enable the Borrower to acquire
certain properties ("the TrizecHahn Properties") pursuant to an Asset
Purchase Agreement dated as of April 6, 1998 between TrizecHahn Centers Inc.,
The Rouse Company and the Borrower (the "TrizecHahn Agreement") and to incur
Indebtedness in connection therewith; and
WHEREAS, the Lenders are willing so to amend the Credit Agreement, on
the terms and conditions provided herein; and
WHEREAS, capitalized terms used herein which are defined in the Credit
Agreement have the meanings herein ascribed to them in the Credit Agreement.
NOW, THEREFORE, the parties agree as follows:
1. The term "Commitment" as defined in Section 1.01 (c) of the Credit
Agreement is hereby amended to mean with respect to each Lender (i) until the
Reduction Date, the amount set forth opposite such Lender's name under the
heading "Current Commitment" on Schedule 1 to this Second Credit Agreement
Amendment and (ii) on and after the Reduction Date, the amount sent forth
opposite such Lender's name under the heading "Reduced Commitment" on
Schedule 1 to this Second Credit Agreement Amendment, or at any time, as set
forth in the relevant Assignment and Acceptance, as such amount may be
reduced from time to time pursuant to Section 2.03 of the Credit Agreement.
If the aggregate outstanding principal amount of Loans and the aggregate L/C
Obligations of the Lenders on the Reduction Date exceeds the Total
Commitment, as so reduced, the Borrower will prepay Loans in the amount of
such excess on the Reduction Date, together with accrued interest on the
principal being prepaid to the date of
<PAGE>
prepayment and, in the case of Eurodollar Loans, any amounts required by
Section 4.03 of the Credit Agreement. The Reduction Date is the earlier of
June 30, 1999 and the date on which the Release Properties cease being
Syndicate Properties.
2. Section 3.03(a) of the Credit Agreement is hereby amended to read as
follows:
"(a) Each Eurodollar Loan shall bear interest from (and including) the
first day of each Interest Period to but excluding the last day of such
Interest Period (or, if sooner, the date such Loan is repaid or converted
to an ABR Loan), payable in arrears on the last day of such Interest
Period, and with respect to Interest Periods longer than three months on
the day which is three months after the commencement of such Interest
Period and on the last day of such Interest Period (or on the date such
Loan is repaid or converted, as the case may be), at a rate per annum
equal to the sum of (i) the Margin (changing as and when the Margin
changes) and (ii) LIBOR for such Interest Period."
3. Section 3.07 of the Credit Agreement is hereby amended, as follows:
(a) The Commitment Fee under Section 3.07(b) of the Credit Agreement
shall continue to accrue at the rate of 35/100 of 1% per annum until
December 31, 1998, and from and including January 1, 1999 to but excluding
the last day of the Waiver Period shall accrue at the rate of 50/100 of 1%
per annum. On and after the last day of the Waiver Period the Commitment
Fee will accrue at the rate of 35/100 of 1% per annum.
(b) The letter of credit fee payable under Section 3.07(c)(ii) of the
Credit Agreement shall continue to accrue at the rate of 13/16 of 1% per
annum until the Acquisition Date and during the Waiver Period shall be
increased to 1.25% per annum for the period from and including the
Acquisition Date to but excluding November 1, 1998, 1.50% per annum for
the period from and including the November 1, 1998 to but excluding
March 1, 1999 and 1.75% per annum for the period from and including
March 1, 1999 to but excluding the last day of the Waiver Period. On and
after the last day of the Waiver Period, the letter of credit fee will
accrue at the rate of 13/16 of 1% per annum.
4. Article VII of the Credit Agreement is hereby amended, as follows:
(a) Section 7.02(b) is hereby amended to read as follows:
"(b) LIENS. Create, incur, assume or suffer to exist any Lien,
upon or in any Portfolio Property, whether now owned
or hereafter acquired, except (i) Permitted Liens,
(ii) mortgages (but not renewals or extensions
thereof) on Non-Syndicate Properties in effect on the
date hereof, (iii) mortgages or other Liens on
Non-Syndicate Properties which are not 100% owned by
the Borrower and/or one or more Wholly Owned
Subsidiaries of the Borrower, (iv) Non-Recourse
Mortgages on Non-Syndicate Properties that are 100%
owned by the Borrower and/or one or more Wholly Owned
Subsidiaries of the
<PAGE>
Borrower securing Indebtedness which, together with
any mortgages on such properties permitted under
clause (ii) above, do not at any time exceed in the
aggregate 38% of the sum of (x) the then Current Value
of all Portfolio Properties and (y) the outstanding
principal amount of the Garden State Note, (v) Liens
on Non-Syndicate Properties acquired after the
Effective Date which were in effect at the time they
became Portfolio Properties and (vi) mortgages on Mid
Rivers Mall and Mission Valley Center securing
Indebtedness not exceeding $15,000,000 and
$48,000,000, respectively, as of the date hereof;
provided that (x) any such mortgage referred to in
clause (ii), (iii) or (v) of this Section 7.02(b) and
the Indebtedness secured thereby does not extend to
any other property and is without recourse to any of
the Borrower and its Subsidiaries other than the
direct owner of the property subject to such mortgage
(and other than pursuant to customary recourse
exceptions) and (y) from and after September 30, 1997
any such Indebtedness referred to in clause (vi) of
this Section 7.02(b) that is recourse to any of the
Borrower and its Subsidiaries other than the direct
owner of the property subject to the related mortgage
(other than pursuant to customary recourse exceptions)
shall not exceed $25,000,000 in the aggregate."
(b) Section 7.02(d) is hereby amended to read as
follows:
"(d) SYNDICATE SUBSIDIARY INDEBTEDNESS. Permit
any Syndicate Subsidiary to create, incur, assume or
suffer to exist any Indebtedness, other than (i)
Indebtedness owed by such Syndicate Subsidiary to the
Borrower or any Cross-Guarantor, (ii) a
Cross-Guarantee delivered by such Syndicate Subsidiary
hereunder and (iii) a guarantee by such Syndicate
Subsidiary of the Indebtedness guaranteed by the
Borrower in respect of the TrizecHahn Bridge."
(c) Section 7.03(a) is hereby amended to read as
follows:
"(a) SHAREHOLDERS' FUNDS. Permit Shareholders'
Funds to be less than $1,250,000,000 as of the last
day of any fiscal quarter, commencing with the third
quarter of 1998."
(d) Section 7.03(c) is hereby amended to read as
follows:
"(c) SYNDICATE PROPERTY COVERAGE." Permit the
ratio of (i) Net Operating Income of the Syndicate
Properties to (ii) Interest Expense of the Borrower
and its Subsidiaries in respect of unsecured
Indebtedness for the twelve month period ending on the
last day of each calendar quarter, (x) to be less than
1.75:1 if the last day of such calendar quarter occurs
other than during the Waiver Period and (y) to be less
than 1.50:1 if the last day of such calendar quarter
occurs during the Waiver Period."
<PAGE>
(e) Section 7.03(d) is hereby amended to read as
follows:
"(d) TOTAL DEBT. Permit Total Debt (x) at any
time other than during the Waiver Period to exceed 60%
of the lesser of (i) Total Tangible Assets and (ii)
Capitalized Value or (y) at any time during the Waiver
Period to exceed 65% of the lesser of (i) Total
Tangible Assets and (ii) Capitalized Value."
(f) Section 7.03(e) is hereby amended to read as
follows:
"(e) LOAN TO VALUE RATIO. Permit the sum of the
principal amount of unsecured Indebtedness of the
Borrower (including the Loans and L/C Obligations)
outstanding (x) at any time other than during the
Waiver Period, to exceed 60% of the Current Value of
the Syndicate Properties which are 100% owned directly
or indirectly by the Borrower or the UPREIT Entity (if
it is then a Cross-Guarantor) and the greater of the
proportionate share interest of the Borrower and the
proportionate share interest of the UPREIT Entity (if
it is then a Cross-Guarantor) in the Current Value of
all other Syndicate Properties or (y) at any time
during the Waiver Period, to exceed 80% of such
Current Value."
5. Section 8.01(f) of the Credit Agreement is hereby amended to read
as follows:
"(f) The Borrower or any Syndicate Subsidiary or
Cross-Guarantor shall fail to pay any Indebtedness
thereof (other than obligations hereunder) in an
amount of $20,000,000 or more beyond the lapse of any
applicable grace period provided for in the instrument
or instruments evidencing such Indebtedness; or any
such Indebtedness having an aggregate principal amount
outstanding of $20,000,000 or more shall become or be
declared to be due (other than at the option of the
obligor thereon) prior to the expressed maturity
thereof; or, in the case of the TrizecHahn Bridge,
there shall have occurred an event which, with the
giving of notice, or the lapse of time, or both, would
cause the TrizecHahn Bridge to become, or permit the
same to be declared to be, due prior to the expressed
maturity thereof; or"
6. (a) The definitions of "Interest Expense", "Shareholders' Funds" and
"Total Debt" in Section 1.01(c) of the Credit Agreement is hereby amended to
read as follows:
" 'INTEREST EXPENSE' means, for any period, the combined
interest expense (including that attributable to capital leases),
accrued and paid or payable in cash for such period, of the
Borrower and the Related Entities with respect to all outstanding
Indebtedness (excluding Indebtedness relating to the May Company
Finance Leases) of the Borrower and its proportionate interest in
outstanding Indebtedness of the Related Entities, including
capitalized interest
<PAGE>
and including dividends on preferred stock included in
"Indebtedness" and net costs (less net benefits, provided they are
not subject to any Lien) under Interest Rate Protection Agreements."
" 'SHAREHOLDERS' FUNDS' means, at any date of determination,
shareholders' equity (as shown on the financial statements for the
latest period ending on or before such date delivered to the
Lenders pursuant to Section 7.01(a)), PLUS the Capital Notes (as
reflected on such financial statements), PLUS the Borrower's
proportionate interest in the Current Value of Portfolio
Properties, MINUS (i) the value at which the Portfolio Properties
are reflected in such financial statements and (ii) Direct
Financing Lease Receivables (net of Indebtedness associated
therewith) as shown on such financial statements.
" 'TOTAL DEBT' means, at any date of determination, the
aggregate Indebtedness of the Borrower and its proportionate
interest in Indebtedness of the Related Entities, excluding any
Indebtedness relating to the May Company Finance Leases."
(b) Clause (ii) of the definition of "Indebtedness" in
Section 1.01(c) of the Credit Agreement is hereby amended to read as follows:
"(ii) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments (excluding the
Capital Notes),"
(c) Clause (vii) of the definition of "Indebtedness" in
Section 1.01(c) of the Credit Agreement is hereby amended to read as follows:
"(vii) all preferred stock issued by such Person (excluding
the Series A preferred stock, par value $1.00 per share, the Series
B preferred stock, par value $1.00 per share, and so long as no
REIT Event or Control Event has occurred and is continuing, the
Series C preferred stock, par value $1.00 per share and the Series
D preferred stock, par value $1.00 per share, of the Borrower)
which is redeemable prior to the scheduled repayment in full of the
Loans, other than at the option of such Person, valued at the
greater of its voluntary or involuntary liquidation preference plus
accrued and unpaid dividends,"
(d) Section 1.01(c) of the Credit Agreement is hereby amended by
adding thereto the following definitions:
"ACQUISITION DATE" means the date on which the Borrower
acquires one or more of the TrizecHahn Properties, whether or not
the conditions described in Section 9 of the Second Credit
Agreement Amendment shall than have been satisfied.
<PAGE>
"CAPITAL NOTES" means any outstanding capital notes of the
Borrower issued pursuant to the WEA Capital Note Trust Deed, dated
as of May 29, 1998, between the Borrower and Perpetual Trustee
Company (Canberra) Limited, as trustee.
"CONTROL EVENT" means a "Change in Control" as defined in the
Certificates of Designation establishing the Series C and Series D
preferred stock of the Borrower.
"GARDEN STATE NOTE" means the promissory note dated May 21,
1997, initially in the principal amount of $145,000,000, by
Westfield Partners, Inc. and Westland Management, Inc., jointly and
severally, in favor of the Borrower, and secured by a pledge of
their limited partnership interests in Westland Garden State Plaza
Limited Partnership.
"MARGIN" means (i) 1% until the Acquisition Date, (ii) 1.25%
during the period from and including the Acquisition Date to but
excluding November 1, 1998, (iii) 1.50% during the period from and
including November 1, 1998 to but excluding March 1, 1999, (iv)
1.75% during the period from and including March 1, 1999 to but
excluding the last day of the Waiver Period and (v) 1.00% on and
after the last day of the Waiver Period.
"NON-RECOURSE MORTGAGE" means a mortgage on a Non-Syndicate
Property securing Indebtedness (i) of a separately organized
Subsidiary that does not have, and is not permitted to have, any
other Indebtedness, (ii) as to which recourse is limited to
Non-Syndicate Properties included in the same financing, except for
recourse liabilities of the separately organized Subsidiary owners
of such Non-Syndicate Properties, (iii) as to which neither the
Borrower, any Cross Guarantor nor any Syndicate Subsidiary may be
liable, contingently or otherwise and (iv) in connection with which
the Borrower shall have furnished to the Lenders a certificate of
the chief financial officer or internal counsel of the Borrower in
form reasonably satisfactory to the Administrative Agent as to
(i), (ii) and (iii) above.
"REIT EVENT" means a "REIT Termination Event" as defined in
the Certificates of Designation establishing the Series C and
Series D preferred stock of the Borrower.
"RELEASE PROPERTIES" means Enfield Square, Northwest Plaza and
Crestwood Plaza.
"TRIZECHAHN BRIDGE" means a bridge debt financing for the
acquisition of the TrizecHahn Properties.
<PAGE>
"WAIVER PERIOD" means the period from and including the date
on which the conditions specified in Paragraph 9 of this Second
Credit Agreement Amendment are satisfied to the earlier of June 30,
1999 and the date on which the Borrower gives the Administrative
Agent irrevocable written notice that the Waiver Period is to
expire.
7. The Borrower may, by written notice to the Administrative Agent,
elect not to have the Release Properties qualify as Syndicate Properties in
order to subject the same to Non-Recourse Mortgages, provided that the
Borrower shall have raised an additional $200,000,000 of additional equity
capital through the issuance of convertible preferred stock which is fully
subordinated to the prior payment in full of the Loans, as set forth in the
opinion delivered pursuant to Section 9(f) hereof, and the satisfaction of
all other obligations of the Borrower under the Credit Documents and is not
subject to payment or redemption at the option of anyone other than the
Borrower (whether or not as a result of the occurrence of a default or any
other event) prior to the Termination Date other than upon the occurrence of
a Control Event or a REIT Event. Upon a Release Property no longer
qualifying as a Syndicate Property, each Subsidiary which was a Syndicate
Subsidiary by reason of its having been the owner, in whole or in part, of
such Release Property (unless it shall also be the owner, in whole or in
part, of any other Syndicate Property) shall be deemed to be released from
its Cross-Guarantee.
8. The Borrower represents and warrants to the Lenders (a) that the
representations and warranties of the Borrower set forth in Article V of the
Credit Agreement (except to the extent that any representation or warranty
speaks as of a date certain) are true and correct in all material respects on
the date of this Second Credit Agreement Amendment with the same effect as
though such representations and warranties were made on such date, (b) that
no Default or Event of Default has occurred and is continuing as of the date
of this Second Credit Agreement Amendment and (c) that there are no offsets
or defenses to the obligations of the Borrower or any Guarantor under any of
the Credit Documents.
9. The amendments provided for herein shall be effective upon the
satisfaction of the following conditions:
(a) The Administrative Agent shall have received counterparts of this
Second Credit Agreement Amendment duly executed and delivered by each of
the Lenders and the Borrower.
(b) The Administrative Agent shall have received letters from each of
the Guarantors substantially in the form of Exhibit A hereto (the
"Guarantee Confirmations") duly executed by each of the Guarantors.
(c) The Borrower shall have paid to the Administrative Agent for the
account of the Lenders a service fee in respect of this Second Credit
Agreement Amendment in the amount of $600,000.
<PAGE>
(d) The Administrative Agent shall have received from counsel to the
Borrower and each of the Guarantors opinions in form satisfactory to the
Administrative Agent as to the authorization, execution and delivery of
this Second Credit Agreement Amendment and the Guarantee Confirmations
and the enforceability of the Credit Agreement and the Guarantees, as
amended hereby and by the Guarantee Confirmations.
(e) The Administrative Agent shall have received copies of resolutions
of the Borrower and each of the Guarantors authorizing the execution,
delivery and performance of this Second Credit Agreement Amendment and
the Guarantee Confirmations.
(f) The Administrative Agent shall have received from Missouri counsel
to the Borrower an opinion in form satisfactory to the Administrative
Agent as to the subordination of the Series C and Series D Preferred
Shares of the Borrower to the obligations of the Borrower under the
Credit Documents.
(g) The Administrative Agent shall have notified the Borrower and each
of the Lenders that the conditions described in clauses (a) through (f)
above have been satisfied.
10. Except as amended hereby, the Credit Agreement shall remain in full
force and effect and is hereby ratified and confirmed.
11. THIS SECOND CREDIT AGREEMENT AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
12. This Second Credit Agreement Amendment may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Credit
Agreement Amendment to be duly executed as of the date first above written.
WESTFIELD AMERICA INC.
By: /s/ Mark A. Stefanek
---------------------------------
Name: Mark A. Stefanek
Title: Chief Financial Officer
NATIONAL AUSTRALIA BANK LIMITED,
NEW YORK BRANCH (ACN 0014 044 937),
as Administrative Agent and Lender
By: /s/ Jeff D. White
---------------------------------
Name: Jeff D. White
Title: Vice President
COMMONWEALTH BANK OF AUSTRALIA,
as Co-Agent and a Lender
By: /s/ Patrick C. Hildreth
---------------------------------
Name: Patrick C. Hildreth
Title: Vice President
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED,
as Co-Agent and a Lender
By: /s/ Peter N. Gray
---------------------------------
Name: Peter N. Gray
Title: Vice President
UBS AG, NEW YORK BRANCH, as
Documentary Agent and a Lender
By: /s/ Joseph M. Bassil
---------------------------------
Name: Joseph M. Bassil
Title: Executive Director
By: /s/ Albert Rabil III
---------------------------------
Name: Albert Rabil III
Title: Managing Director
<PAGE>
SCHEDULE I
LENDERS AND COMMITMENTS
<TABLE>
<CAPTION>
Current Reduced
Lender Commitment Commitment Address for Notices
------ ------------ ------------ ---------------------
<S> <C> <C> <C>
National Australia $333,333,333 $250,000,000 200 Park Avenue
Bank Limited New York, NY 10166
Telecopy: (212) 983-1969
Attn: Jeff White
Commonwealth Bank $200,000,000 $150,000,000 599 Lexington Avenue
of Australia New York, NY 10022-6072
Telecopy: (212) 336-7772
Attn: Ian Phillips
Australia and New $200,000,000 $150,000,000 1177 Avenue of the Americas
Zealand Banking New York, NY 10036-2798
Group Limited Telecopy: (212) 801-9131
Attn: Peter Gray
UBS AG $ 66,666,667 $ 50,000,000 299 Park Avenue
New York, NY 10171
Telecopy: (212) 821-4138
Attn: Department Head,
Commercial Real Estate
Finance
</TABLE>
<PAGE>
Exhibit A
[Date]
To: National Australia Bank Limited,
Commonwealth Bank of Australia,
Australia and New Zealand Banking Group Limited
UBS AG
c/o National Australia Bank Limited, as Agent
200 Park Avenue
New York, New York 10166
Re: CREDIT AGREEMENT, dated as of May 30, 1997, as amended by a
(the Credit Agreement Amendment dated as of January 15, 1998
"Credit Agreement"), among WESTFIELD AMERICA INC., a Missouri
corporation (the "Borrower"), NATIONAL AUSTRALIA BANK
LIMITED, COMMONWEALTH BANK OF AUSTRALIA, AUSTRALIA AND NEW
ZEALAND BANKING GROUP LIMITED and UBS AG (collectively,
the "Lenders"), COMMONWEALTH BANK OF AUSTRALIA AND AUSTRALIA
AND NEW ZEALAND BANKING GROUP LIMITED, as Co-Agents, UBS AG,
as Documentary Agent, and NATIONAL AUSTRALIA BANK LIMITED,
NEW YORK BRANCH, as Administrative Agent for the Lenders (the
"Agent").
-------------------------------------------------------------
Gentlemen:
The undersigned (the "Guarantor"), as a Guarantor under and as defined
in the Credit Agreement referred to above, has delivered to the Agent its
Guarantee dated as of _______, 1997 (the "Guarantee" and referred to in the
Credit Agreement as a "Cross Guarantee") in favor of the Agent and the
Lenders as to the obligations of the Borrower in respect of the Loans, the
L/C obligations and the other obligations of the Borrower under the Credit
Agreement. The Guarantor understands and acknowledges that the Credit
Agreement has been amended by to a Second Credit Agreement Amendment dated as
of August 12, 1998 (the "Amendment"). The Guarantor hereby confirms to the
Agent and the Lenders that the Guarantee remains in effect in accordance with
its terms and that term "Guaranteed Obligations" in the Guarantee refers to
the obligations of the Borrower in respect of the Loans, the L/C Obligations
and other obligations of the Borrower under the Credit Agreement, as modified
by the Amendment.
The Guarantor represents and warrants to the Agent and the Lenders (a)
that the representations and warranties of the Guarantor set forth in
Section 5 of the Guarantee are true
<PAGE>
and correct in all material respects on the date hereof with the same effect
as though such representations and warranties were made on this date and (b)
that there are no offsets or defenses to the obligations of the Guarantor
under the Guarantee.
Very truly yours,
[name of Guarantor]
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT 11
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
(AMOUNTS IN THOUSANDS EXCEPT SHARES/UNITS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARE
OUTSTANDING OUTSTANDING
----------- -----------
<S> <C> <C> <C> <C>
Average share price for three months ended
June 30,1999(1) $ 15.79
BASIC
COMMON SHARES OUTSTANDING
As of April 1, 1999 73,337,691 91 73,337,691
Issued on May 13, 1999 7,446 48 3,928
----------
Weighted average common shares outstanding 73,341,619
----------
----------
Net income $ 12,091
Less dividends on preferred shares: (8,625)
----------
Net income allocable to common shares $ 3,466
----------
----------
Per share amount $ 0.05
----------
----------
DILUTED
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 73,341,619
1996 Warrants:
As of January 1, 1998 6,246,096
Series A Preferred Shares (5,871,330)
----------
Excess 1996 Warrants (a) 374,766
----------
----------
Per Share Price
Average Market Price (b) $ 15.79
Exercise Price (c) $ 16.01
Common equivalent shares ((b-c)*a)/b 91 -
1997 WARRANTS:
As of January 1, 1998 2,089,552
Series B Preferred Shares (1,800,000)
----------
Excess 1997 Warrants (d) 289,552
----------
----------
Per Share Price
Average Market Price (b) $ 15.79
Exercise Price (e) $ 15.00
Common equivalent shares ((b-e)*d)/b 91 14,487
</TABLE>
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS (CONTINUED)
FOR THE THREE MONTHS ENDED JUNE 30, 1999
(AMOUNTS IN THOUSANDS EXCEPT SHARES/UNITS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARE
OUTSTANDING OUTSTANDING
----------- -----------
<S> <C> <C> <C> <C>
1998 SUBSCRIPTION AGREEMENT:
Subscription amount (g) AU$ 465,000
Exchange rate at 6/30/99 (h) $ 0.6618
Converted subscription amount (i)=(g)*(h) $ 307,737
Per Share Price
Average market price (b) $ 15.79
Common equivalent shares (i*.05)/(b*.95) 1,025,756 91 1,025,756
----------
Weighted average common and common
equivalent shares 74,381,862
----------
----------
Net income $ 12,091
Less net income allocable to preferred shares (8,625)
----------
Net income allocable to common shares $ 3,466
----------
----------
Per share amount $ 0.05
----------
----------
</TABLE>
Note 1 - The Company's preferred shares were not included in the earnings per
share calculation as their effect is antidilutive.
Note 2 - The Company's Investor Unit Rights, which may be converted under
certain circumstances into shares of the Company's common stock, were
not included in the EPS Calculation as their effect is antidilutive.
(1) The share price used for the EPS calculation is based on the average
daily closing market price of the Company's common stock as reported by
the New York Stock Exchange.
<PAGE>
EXHIBIT 11.1
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(AMOUNTS IN THOUSANDS EXCEPT SHARES/UNITS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARE
OUTSTANDING OUTSTANDING
----------- -----------
<S> <C> <C> <C> <C>
Average share price for six months ended
June 30,1999(1) $ 16.00
BASIC
COMMON SHARES OUTSTANDING
As of January 1, 1999 73,337,691 181 73,337,691
Issued on May 13, 1999 7,446 48 1,975
----------
Weighted average common shares outstanding 73,339,666
----------
----------
Net income $ 21,092
Less dividends on preferred shares: (17,250)
----------
Net income allocable to common shares $ 3,842
----------
----------
Per share amount $ 0.05
----------
----------
DILUTED
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 73,339,666
1996 Warrants:
As of January 1, 1998 6,246,096
Series A Preferred Shares (5,871,330)
----------
Excess 1996 Warrants (a) 374,766
----------
----------
Per Share Price
Average Market Price (b) $ 16.00
Exercise Price (c) $ 16.01
Common equivalent shares ((b-c)*a)/b 181 -
1997 WARRANTS:
As of January 1, 1998 2,089,552
Series B Preferred Shares (1,800,000)
----------
Excess 1997 Warrants (d) 289,552
----------
----------
Per Share Price
Average Market Price (b) $ 16.00
Exercise Price (e) $ 15.00
Common equivalent shares ((b-e)*d)/b 181 18,097
</TABLE>
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(AMOUNTS IN THOUSANDS EXCEPT SHARES/UNITS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARE
OUTSTANDING OUTSTANDING
----------- -----------
<S> <C> <C> <C> <C>
1998 SUBSCRIPTION AGREEMENT:
Subscription amount (g) AU$ 465,000
Exchange rate at 6/30/99 (h) $ 0.6618
Converted subscription amount (i)=(g)*(h) $ 307,737
Per Share Price
Average market price (b) $ 16.00
Common equivalent shares (i*.05)/(b*.95) 1,012,293 181 1,012,293
-----------
Weighted average common and common
equivalent shares 74,370,056
-----------
-----------
Net income $ 21,092
Less net income allocable to preferred shares (17,250)
-----------
Net income allocable to common shares $ 3,842
-----------
-----------
Per share amount $ 0.05
-----------
-----------
</TABLE>
Note 1 - The Company's preferred shares were not included in the earnings per
share calculation as their effect is antidilutive.
Note 2 - The Company's Investor Unit Rights, which may be converted under
certain circumstances into shares of the Company's common stock, were
not included in the EPS Calculation as their effect is antidilutive.
(1) The share price used for the EPS calculation is based on the average
daily closing market price of the Company's common stock as reported by
the New York Stock Exchange.
<PAGE>
EXHIBIT 12
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -----------------
1999 1998 1999 1998
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Income before income taxes $12,091 $78,647 $ 21,092 $ 91,198
Add: Minority interest in consolidated
real estate partnerships 752 998 1,336 1,978
Equity in income of unconsolidated
real estate partnerships (1,264) (423) (2,320) (910)
Distributions from unconsolidated
real estate partnerships 890 2,024 3,033 3,976
Interest expense 50,041 18,911 99,185 39,202
Less: Gains on sales of investments (1,971) (65,710) (1,971) (65,710)
------- ------- -------- --------
Total earnings available to cover fixed charges $60,539 $34,447 $120,355 $ 69,734
------- ------- -------- --------
------- ------- -------- --------
Total fixed charges-interest expensed and
capitalized 50,642 19,454 100,029 39,320
Total Preferred Stock Dividends 8,625 2,723 17,250 2,723
------- ------- -------- --------
Total combined fixed charges and preferred
stock dividends $59,627 $22,177 $117,279 $ 42,043
------- ------- -------- --------
------- ------- -------- --------
Ratio of earnings to fixed charges 1.20x 1.77x 1.20x 1.77x
------- ------- -------- --------
------- ------- -------- --------
Ratio of earnings to fixed charges and preferred
stock dividends 1.02x 1.55x 1.03x 1.66x
------- ------- -------- --------
------- ------- -------- --------
Supplemental Disclosure of Ratio of Funds from
Operations (FFO) to Fixed Charges:
FFO $42,037 $32,155 $ 83,207 $ 66,713
Interest expense 50,041 18,911 99,185 39,202
------- ------- -------- --------
Adjusted FFO available to cover fixed charges $92,078 $51,066 $182,392 $102,915
------- ------- -------- --------
------- ------- -------- --------
Total fixed charges -- interest expense and
capitalized $50,642 $19,454 $100,029 $ 39,320
Total preferred stock dividends 8,625 2,723 17,250 5,447
------- ------- -------- --------
Total combined fixed charges and preferred
stock dividends $59,267 $22,177 $117,279 $ 44,767
------- ------- -------- --------
------- ------- -------- --------
Ratio of FFO to fixed charges 1.82x 2.62x 1.82x 2.62x
------- ------- -------- --------
------- ------- -------- --------
Ratio of FFO to fixed charges and preferred
stock dividends 1.55x 2.30x 1.56x 2.30x
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q,
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> APR-01-1999 JAN-01-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
<CASH> 12,987 12,987
<SECURITIES> 0 0
<RECEIVABLES> 53,132 53,132
<ALLOWANCES> (8,869) (8,869)
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 3,739,862 3,739,862
<DEPRECIATION> (391,695) (391,695)
<TOTAL-ASSETS> 3,451,147 3,451,147
<CURRENT-LIABILITIES> 113,260 113,260
<BONDS> 2,327,691 2,327,691
0 0
396,000 396,000
<COMMON> 731 731
<OTHER-SE> 578,771 578,771
<TOTAL-LIABILITY-AND-EQUITY> 3,451,147 3,451,147
<SALES> 0 0
<TOTAL-REVENUES> 127,222 252,571
<CGS> 0 0
<TOTAL-COSTS> (71,880) (144,022)
<OTHER-EXPENSES> 4,819 9,757
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (50,041) (99,185)
<INCOME-PRETAX> 10,120 19,121
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 10,120 19,121
<DISCONTINUED> 0 0
<EXTRAORDINARY> 1,971 1,971
<CHANGES> 0 0
<NET-INCOME> 12,091 21,092
<EPS-BASIC> 0.05 0.05
<EPS-DILUTED> 0.05 0.05
</TABLE>
<PAGE>
EXHIBIT 99
AGREEMENT REGARDING DISCLOSURE OF LONG-TERM DEBT INSTRUMENTS
In reliance upon Item 601(b)(4)(iii)(A), of Regulation S-K, Westfield
America, Inc., a Missouri corporation (the "Company"), has not filed as an
exhibit to its Quarterly Report on Form 10-Q for the quarter ended June 30,
1999, any instrument with respect to long-term debt not being registered
where the total amount of securities authorized thereunder does not exceed 10
percent of the total assets of the Company and its subsidiaries on a
consolidated basis. Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the
Company hereby agrees to furnish a copy of any such agreement to the
Securities and Exchange Commission upon request.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
-------------------------------------
Peter S. Lowy
CO-PRESIDENT
