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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________________ TO ________________
COMMISSION FILE NUMBER 1-12923
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WESTFIELD AMERICA, INC.
(Exact name of registrant as specified in its charter)
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MISSOURI 43-0758627
(State of incorporation) (IRS Employer Identification No.)
11601 WILSHIRE BOULEVARD, 12TH FLOOR, LOS ANGELES, 90025
CALIFORNIA (zip code)
(Address of principal executive offices)
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(310) 478-4456
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
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Common Stock, $0.01 par value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by checkmark 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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to this Form 10-K. / /
The aggregate market value of the shares of common stock held by
non-affiliates was approximately $294.9 million based on the closing price as
reported by the New York Stock Exchange for such shares on March 12, 1999.
The number of the Registrant's shares of common stock outstanding was
73,337,691 as of March 12, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the Annual Meeting of Shareholders to be
held on April 29, 1999 are incorporated by reference into Part III.
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WESTFIELD AMERICA, INC.
FORM 10-K
INDEX
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ITEM NO. PAGE
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PART I
1. Business....................................................................................... 1
2. Properties..................................................................................... 16
3. Legal Proceedings.............................................................................. 22
4. Submission of Matters to a Vote of Security Holders............................................ 22
PART II
5. Market for Registrant's Common Equity and Related Shareholder Matters.......................... 23
6. Selected Financial Data........................................................................ 25
7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 27
7A. Quantitative and Qualitative Disclosure about Market Risk...................................... 40
8. Financial Statements and Supplementary Data.................................................... 42
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........... 42
PART III
10. Directors and Executive Officers of the Registrant............................................. 43
11. Executive Compensation......................................................................... 43
12. Security Ownership of Certain Beneficial Owners and Management................................. 43
13. Certain Relationships and Related Transactions................................................. 43
PART IV
14. Exhibits, Consolidated Financial Statements, Financial Statement Schedule and Reports on Form
8-K.......................................................................................... 43
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PART I
ITEM 1: BUSINESS
GENERAL
Westfield America, Inc. (the "Company"), a Missouri corporation, is the
fourth largest publicly traded real estate investment trust ("REIT") in the
United States specializing in enclosed shopping centers. At December 31, 1998,
the Company had interests in 38 regional and super-regional shopping centers
branded as "Westfield Shoppingtowns". The Company's portfolio of Westfield
Shoppingtowns includes clusters of multi-center shopping centers in major
markets in the east coast, midwest and west coast. Westfield Shoppingtowns serve
10 percent of the U.S. population in eight states and comprise 35.9 million
square feet of retail space. Currently, the Company is the largest regional
shopping center owner in California with interests in 20 centers.
During 1998, the Company acquired interests in 16 shopping centers with
approximately 15.7 million square feet, increasing its portfolio from 24
shopping centers at the end of 1997 to its current portfolio of 38. As a result
of its clustering strategy, the Company is the largest owner of shopping centers
in the suburban markets of San Diego, Los Angeles, San Jose, St. Louis,
Connecticut and Washington D.C. Also in 1998, the Company launched its Westfield
Shoppingtown brand nationally with a multi-media campaign promoting the
Company's commitment to providing a quality shopping experience through customer
service and community commitment. The Company's branding strategy is designed to
build customer loyalty, solidify market penetration and promote store sales
growth at its shopping centers.
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 December 31, 1998, the Company's
portfolio of 38 shopping centers (the "Centers") consisted of 23 super-regional
shopping centers with approximately 25.8 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 600,000 square feet
of space, representing approximately 71.9%, 22.6%, 3.9% and 1.6%, respectively
of the Company's 35.9 million square feet of retail and office space, generally
referred to as gross leasable area ("Total GLA"). The Company also owns 12
separate department store properties (the "May Properties") that are net leased
to the May Department Stores Company (the "May Company") and are not located at
the Centers. The Company's Westfield Shoppingtowns were 93% leased as of
December 31, 1998. Excluding the 12 shopping centers acquired from TrizecHahn
Centers, Inc. ("Trizechahn") during the last half of 1998, the Centers were 95%
leased at year-end.
As of December 31, 1998, Westfield Shoppingtowns had 129 Anchors (department
stores generally occupying more than 80,000 square feet) occupying approximately
20.7 million square feet of gross leasable area ("Anchor GLA"), or 57.7% of
Total GLA. The Centers also had 4,744 Mall Stores (stores other than Anchors
including stores inside a Center and free-standing buildings outside a Center in
the parking areas) occupying approximately 14.6 million square feet of leasable
area (Mall GLA). Mall Stores consist of Mini-Majors (retail stores and theaters
generally occupying between 20,000 and 80,000 square feet of leasable space) and
Mall Shops (retail stores less than 20,000 square feet of leasable space). For
the year ended December 31, 1998, the Mall Shops reported sales of approximately
$3.1 billion (or $330 per square foot), Anchors' sales exceeded $4.0 billion and
Mini-Majors reported sales in excess of $494 million.
The Company is externally managed and advised by Westfield Holdings Limited
("WHL"), an Australian public company and leading developer and manager of one
of the largest portfolios of retail properties in the world. Currently, WHL's
management portfolio consists of 80 shopping centers containing approximately
60.3 million square feet of space and over 11,750 Mall Stores in Australia, New
Zealand, Malaysia and the United States. The Company has engaged a property
management company (the "Manager), asset management company (the "Advisor") and
development company (the "Developer") to
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provide property management, asset management and development services to the
Company under agreements that had initial terms of three years and are renewable
annually thereafter. Each of the Manager, Advisor and Developer is a
wholly-owned subsidiary of WHL, giving the Company access to WHL's worldwide
management expertise and resources.
In 1994, the Company reorganized itself as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"). In order to be treated as a REIT for
income tax purposes, the Company must meet the minimum distribution requirements
as well as certain asset, income and other tests specified by the Code. The
Company intends to conduct its business so as to continue to satisfy the REIT
provisions under the Code, including making distributions to its shareholders
sufficient to meet the minimum distribution requirements.
In 1997, the Company changed its name from Centermark Properties, Inc. to
Westfield America, Inc.
In 1998, the Company completed the exchange of its interests in most of the
Centers and other assets for Partnership interests ("Partnership Units") in
Westfield America Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"). Also in 1998, the Operating Partnership issued units
in the Operating Partnership to unrelated third parties ("Investor Unit Rights")
in exchange for certain interests. The Investor Unit Rights are held by various
unrelated third parties who may under certain circumstances exchange their
Investor Unit Rights for cash or, at the discretion of the Company, shares of
the Company's common stock.
THE COMPANY'S STRATEGY FOR OPERATIONS AND GROWTH
OVERALL STRATEGY
The Company's goal is to increase per share Funds from Operations (as
defined in Item 7 below) and thereby improve the long-term value of the Company
and return to shareholders through: (i) the redevelopment, expansion and market
repositioning of its portfolio of Centers; (ii) the improvement of the operating
performance of its Centers through an intensive management approach; and (iii)
the acquisition of additional super-regional and regional shopping centers.
Although no assurances can be given, the Company plans to achieve these
objectives through a variety of methods discussed below.
REDEVELOPMENT, EXPANSION AND MARKET REPOSITIONING
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 including those which have undergone
redevelopment in the past five years. Due to the financial and regulatory
burdens presented by the development of new regional shopping centers, an
ongoing program of redevelopment and repositioning provides a cost-efficient
means of ensuring that the Company's existing Centers compete effectively within
their existing markets and are able to attract new customers.
Redevelopment has been recently completed or substantially completed at the
following Centers:
- Westfield Shoppingtown Annapolis, in Annapolis, Maryland, is a five Anchor
super-regional shopping center with 167 Mall Stores. The fifth Anchor, a
120,000 square foot Lord & Taylor, and 12,000 square feet of Mall Stores
were opened in September 1998. The cost of this redevelopment was $4.7
million.
- Westfield Shoppingtown South Shore, in Bayshore, New York, is a four
Anchor super-regional shopping center with 124 Mall Stores. In addition to
the new Sears Anchor store and 40,000 square feet of Mall Stores added in
September 1997, a new 120,000 square foot Lord & Taylor opened in November
1998, giving the Center its fourth Anchor. The cost of this redevelopment
was $12.3 million.
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- Westfield Shoppingtown Mission Valley West, in San Diego, California, has
opened phase one of a 210,000 square foot power center with Borders Books,
Marshalls, Old Navy, Gateway Computer, Golfsmith and Just for Feet. The
second phase is under construction and is expected to open in Spring 1999.
The power center format complements the Company's nearby Westfield
Shoppingtown Mission Valley, a super-regional shopping center. The
aggregate cost of the redevelopment is approximately $29.5 million.
- Westfield Shoppingtown Enfield, in Enfield, Connecticut, is a three Anchor
regional shopping center with 77 Mall Stores. A new 58,000 square foot,
12-screen Hoyt's Theater and additional food retail outlets were added.
The theater opened in December 1998. The cost of this redevelopment was
$11.0 million.
- Westfield Shoppingtown Eastland, in West Covina, California, was converted
from an outdated enclosed mall into a power center through the addition of
a Target, Old Navy, Loehman's, Burlington Coat Factory, Babies R' Us and
Club Disney. Phase three of this redevelopment is underway with the
addition of 29,000 square feet of Mall Stores and is scheduled to be
completed in the first quarter of 1999. This redevelopment repositions the
Center within its trade area and complements the nearby Westfield
Shoppingtown West Covina. The cost of the redevelopment was approximately
$36.3 million.
OTHER APPROVED REDEVELOPMENTS
Future redevelopments approved by the Board of Directors have begun or are
scheduled to begin in 1999 at the following Centers:
- Westfield Shoppingtown Valley Fair, in San Jose, California, is a three
Anchor super-regional shopping center with 158 Mall Stores. A $150 million
redevelopment is planned featuring a new 225,000 square foot Nordstrom and
approximately 275,000 square feet of Mall Stores. The redevelopment is
expected to be done in stages with total project completion planned for
Fall 2001.
- Westfield Shoppingtown Meriden, in Meriden Connecticut, is a three Anchor
regional shopping center with 109 Mall Stores. The Center is being
expanded to include a 90,000 square foot Lord & Taylor store and an
additional 70,000 square feet of new Mall Stores. Construction began in
the third quarter of 1998 and is planned to be completed by Fall 1999. The
total projected cost of this redevelopment is $37.5 million.
- Westfield Shoppingtown Connecticut Post, in Milford Connecticut, is a
three Anchor regional shopping center with 132 Mall Stores. The $28
million redevelopment is scheduled to add a new two-level 194,000 square
foot Sears as well as approximately 44,000 square feet of Mall Stores
adjacent to Sears on both levels.
- Westfield Shoppingtown Annapolis plans to replace the existing theater
with a new 52,000 square foot multi-screen Crown Theater. Approximately
16,000 square feet of shops and restaurants are scheduled to be added in
an entertainment district. The existing cinema is scheduled to be
redeveloped into 13,000 square feet of Mall Stores. The $22 million
redevelopment is scheduled to begin in March 1999 with completion planned
for Spring 2000.
- Westfield Shoppingtown Mid Rivers, in St. Peters, Missouri, is a four
Anchor super-regional shopping center with 164 Mall Stores. Construction
on a new 15-screen, stadium-style theater is scheduled to begin in the
first quarter of 1999. The Center is scheduled to add approximately 62,500
square feet of Mall Stores, including a Chili's restaurant outside the
Center. The total projected cost of this redevelopment is $13.1 million.
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- Westfield Shoppingtown Crestwood, in St. Louis Missouri, is a three Anchor
super-regional shopping center with 143 Mall Stores. The $7.2 million
redevelopment is scheduled to add 27,000 square feet of Mall Stores.
In addition to the approved redevelopments described above, the Company has
identified the following Centers for redevelopment over the next five years:
- Westfield Shoppingtown West County, in Des Peres, Missouri, is a two
Anchor regional shopping center with 61 Mall Stores. Its $200 million
redevelopment was announced in 1997. The redeveloped Center will feature
the addition of two new Anchors, Nordstrom and Lord & Taylor. The existing
Famous-Barr store is planned to be replaced by a new flagship store and
the JCPenney Anchor store is scheduled to be remodeled. The Center is
projected to double in size to 1.2 million square feet with more than 150
Mall Stores.
- Westfield Shoppingtown South County, in St. Louis, Missouri, is a three
Anchor regional shopping center with 120 Mall Stores. Redevelopment and
renovation planning is proceeding to reposition the Center through
renovation and the addition of a fourth Anchor.
- Westfield Shoppingtown Wheaton, in Wheaton, Maryland, is a three Anchor
super-regional shopping center with 138 Mall Stores. An additional Anchor
department store and new Mall GLA is planned, along with a renovation of
the existing Center. When completed, Total GLA is expected to expand by
approximately 500,000 square feet.
- Westfield Shoppingtown Independence Mall, in Wilmington, North Carolina,
is a three Anchor regional shopping center with 81 Mall Stores. This
recent acquisition has provided the Company with an opportunity to expand
the Center by adding a new Anchor and 150,000 square feet of Mall Stores.
IMPROVEMENT OF OPERATING PERFORMANCE THROUGH INTENSIVE MANAGEMENT
The Manager's role is to increase operating income and capital appreciation
over time. The Company's Manager has in-house capabilities to manage every
aspect of the development and operation of a Center, including initial concept,
design, construction, leasing, day-to-day operations and promotion. With its
years of center management experience, the Manager has developed its intensive
management approach which is designed to increase occupancy levels and mall
store sales while at the same time reducing operating costs. In addition to its
ability to redevelop and reposition its Centers, the Manager works to build
long-term relationships with major retailers and adds value through branding
efforts designed to increase traffic and repeat business by building customer
loyalty through customer service and commitment to the community.
INCREASING OCCUPANCY AND CAPITALIZING ON EMERGING THEMES
Management is continually looking for opportunities to increase occupancy as
a means of enhancing revenues. The Manager works to find ways to expand rentable
area within the existing building envelope by converting non-productive space to
Mall GLA, to add temporary tenants who can improve the merchandise mix and range
of retailers and to capitalize on emerging themes such as the addition of
entertainment and dining complexes. An example is the introduction of
entertainment concepts such as the AMC multiplex 20-screen theater added to
Westfield Shoppingtown Mission Valley, and Club Disney at Westfield Shoppingtown
Eastland. Through its relationships, the Manager is able to assist national and
regional retailers in establishing a market presence in new markets and to
increase penetration in existing markets.
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INCREASING TRAFFIC AND SALES THROUGH BRAND POSITIONING, MARKETING AND
CUSTOMER SERVICE
In 1998, the Company launched its Westfield Shoppingtown brand through a
multi-media advertising campaign including network television in its major
markets. The purpose of establishing a brand profile for the Centers is to
increase customer traffic and thereby improve retail sales and, ultimately,
rents. The Westfield Shoppingtown brand represents a quality shopping experience
by providing exceptional customer service, a wide range of retail product
choices and a commitment to the communities served by the Centers. The Company
believes that advertising, promotion, community involvement and customer service
programs will build shopper loyalty, especially with a recognized brand in
multi-center markets. The Company's ability to brand its properties is a direct
result of its market penetration and acquisition strategies.
Advertising is critical to maximizing sales at the Centers. The Manager has
an in-house marketing staff and employs a leading U.S. advertising agency to
provide advertising, promotional and media services to the Centers. The Manager,
on behalf of the Company, executes a national marketing program to provide
shared advertising, media and community promotions to create a consistent look
and quality in the execution of its marketing program. This strategy is
particularly effective in the Company's multi-center markets of San Diego, Los
Angeles, San Jose, St. Louis, Connecticut and Washington D.C.
The Manager maintains a staff development and review program to promote
efficient and friendly service to both the consumers who shop in the Centers and
the retailers who lease space. A focus on exceptional customer service is
essential to increasing traffic and promoting repeat business. These services
include specially-trained and uniformed customer service representatives, free
strollers and wheelchairs, valet parking and gift vouchers at each Center.
ACQUISITION OF NEW CENTERS AND JOINT VENTURE INTERESTS
The Company's strategy is to acquire regional and super-regional shopping
centers that meet the following investment criteria: (i) property of a quality
consistent with the Company's portfolio, (ii) property with potential for
increased income and value through redevelopment, repositioning, or both, and,
(iii) property that generates sufficient income pending redevelopment to support
the acquisition price. The Company's strategy also includes seeking to acquire
the interests of outside partners in the jointly owned Centers and acquiring and
redeveloping shopping centers that are geographically clustered in stable and
economically strong markets. Strategically clustering its assets allows the
Company to obtain greater efficiencies in leasing, operations, management,
marketing and building the Westfield Shoppingtown brand.
In 1998, the Company invested approximately $1.8 billion to acquire
interests in 16 properties. These include the following Centers which the
Company has branded Westfield Shoppingtowns:
- In January 1998, the Company acquired Crestwood, a one level
super-regional shopping center in St. Louis, Missouri, for $106.4 million.
Westfield Shoppingtown Crestwood has approximately one million square feet
of Total GLA with 143 Mall Stores and is anchored by Dillard's,
Famous-Barr and Sears.
- In June 1998, the Company acquired The Promenade, a two-level enclosed
regional shopping center in Woodland Hills, California, for $33.5 million.
Westfield Shoppingtown Promenade has 600,000 square feet of Total GLA with
79 Mall Stores and a 14-screen AMC theater and is anchored by two Macy's
stores.
- In August and October 1998, the Company acquired interests in Independence
Mall in Wilmington, North Carolina. The total acquisition consideration
was valued at $43.6 million, including the assumption of debt and the
issuance of partnership interests, giving the Company an effective 70%
interest in the Center. Westfield Shoppingtown Independence Mall has
690,000 square feet of Total GLA with 81 Mall Stores and is anchored by
JCPenney, Sears and Belk Beery.
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- In November 1998, the Company acquired the remaining 58% interest in
Topanga that the Company did not already own. The total acquisition cost
was approximately $92 million, including the assumption of debt at its
fair value, giving the Company a 100% interest in this Center. Westfield
Shoppingtown Topanga is a 1.1 million square foot super-regional shopping
center located in Canoga Park, California with 132 Mall Stores, anchored
by Nordstrom, Sears, Robinsons-May and Montgomery Ward.
In 1998, the Company also acquired a portfolio of interests in 12 shopping
centers (the "Hahn Centers") which have 12.3 million square feet of Total GLA
from TrizecHahn for approximately $1.4 billion and third party interests in the
Hahn Centers for approximately $150 million. Interests in the Centers acquired
from TrizecHahn and third parties are as follows:
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MALL STORE GLA
----------------- NUMBER OF OWNERSHIP
WESTFIELD SHOPPINGTOWNS MALL STORES INTEREST
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(000'S)
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Capital Mall, Olympia, WA............... 603 239 95 100%
Cerritos, Cerritos, CA.................. 1,306 504 168 100%
Downtown Plaza, Sacramento, CA.......... 1,193(1) 410 113 100%
Fox Hills, Culver City, CA.............. 891 320 148 100%
Horton Plaza, San Diego, CA............. 868 506 133 100%
North County Fair, Escondido, CA........ 1,258 377 172 100%(2)
Oakridge, San Jose, CA.................. 798 330 106 100%
Parkway Plaza, El Cajon, CA............. 1,110 506 182 100%
Santa Anita, Arcadia, CA................ 1,099 394 152 90%
Solano, Fairfield, CA................... 1,036 504 150 100%
UTC, San Diego, CA...................... 1,035 441 162 100%
Valley Fair, Santa Clara, CA............ 1,140 471 158 50%
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12,337 5,002 1,739
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(1) Includes 280,000 square feet of office building space.
(2) In October 1998, the Company acquired the remaining 55% interest in North
County Fair which the Company did not previously own. Prior to August 1,
1998, this Center was managed by TrizecHahn.
LARGE MULTI-CENTER MARKETS
The Company's overall strategy includes the acquisition and redevelopment of
regional shopping centers that are geographically clustered in stable and
economically strong markets. Strategically clustering its assets provides the
Company with an improved ability to develop its brand, aggressively redevelop
the Centers and work with key retailers to increase sales. Additionally,
clustering allows the Company to obtain greater efficiencies in leasing,
operations, management and marketing.
The Company's current portfolio serves approximately 28 million people, or
10% of the United States population. The majority of the Company's Centers are
clustered in major markets that serve nearly 24.6 million people. The Company's
major markets include San Diego, Los Angeles, San Jose, St. Louis, Connecticut
and Washington D.C., in each of which the Company is the largest owner of
regional shopping centers. A summary of these major markets is as follows:
- SAN DIEGO MARKET
The Company owns seven of the nine regional centers in San Diego. The
Westfield Shoppingtowns serve 100% of the market's total population of 2.7
million people. During 1998, the seven Westfield Shoppingtowns had retail
sales exceeding $1.6 billion, with Mall Shop sales of $330 per square foot,
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a 3.6% increase over the prior year. The San Diego Centers consist of 7.8
million square feet of Total GLA with 1,060 Mall Stores that were 92%
leased at year-end.
- LOS ANGELES MARKET
The Company owns eight of the 28 centers in Los Angeles County. The
Westfield Shoppingtowns serve over half of the county's 9.4 million people.
During 1998, the eight Westfield Shoppingtowns had retail sales exceeding
$1.5 billion, with Mall Shop sales of $295 per square foot, an increase of
5.2% over the prior year. The Los Angeles Centers consist of 7.4 million
square feet of Total GLA with 990 Mall Stores that were 93% leased at year
end.
- SAN JOSE MARKET
The Company owns two of the six regional centers in the San Jose market.
The Westfield Shoppingtowns serve over 80% of the metropolitan area's 1.6
million people. During 1998, the two Westfield Shoppingtowns had retail
sales of approximately $700 million with Mall Shop sales of $544 per square
foot, an increase of 4.9% over the prior year. The San Jose Centers consist
of 1.9 million square feet of Total GLA with 264 Mall Stores that were 98%
leased at year end.
- ST. LOUIS MARKET
The Company owns five of the 11 centers in St. Louis. The Westfield
Shoppingtowns serve approximately 85% of the market's 2.6 million people.
The five Westfield Shoppingtowns had retail sales exceeding $880 million,
with Mall Shop sales of $269 per square foot, a 1.7% increase over the
prior year. The Centers in this market consist of 5.0 million square feet
of Total GLA with 660 Mall Stores that were 92% leased at year end.
- CONNECTICUT MARKET
The Company owns four of the 10 centers in Connecticut. The Westfield
Shoppingtowns serve approximately 50% of the state's 3.3 million people.
During 1998, sales from the four Westfield Shoppingtowns were $720 million,
with Mall Shop sales of $306 per square foot, an increase of 1.1% over the
prior year. The Connecticut Centers consist of 3.4 million square feet of
Total GLA with 484 Mall Stores that were 95% leased at year end.
- WASHINGTON D.C. MARKET
The Company owns three of the 19 centers in the Washington D.C. market. The
Company's ownership is concentrated in the Maryland sub-market to the north
of Washington D.C. For the year ended December 31, 1998, the three
Westfield Shoppingtowns had retail sales of approximately $910 million,
with Mall Shop sales of $398 per square foot, an increase of 4.7% over the
prior year. The Washington D.C. Centers consist of 3.8 million square feet
of Total GLA with 479 Mall Stores that were 97% leased at year end.
THE SHOPPING CENTER BUSINESS
There are several types of retail shopping centers, varying primarily by
size and marketing strategy. Centers with greater than 800,000 square feet of
Total GLA built around three or more Anchors are referred to as super-regional
shopping centers. Centers with Total GLA ranging from 400,000 to 800,000 square
feet built around one to three Anchors are referred to as regional shopping
centers. Centers with Total GLA ranging from 200,000 to 600,000 square feet
built around retailers consisting of Category Killers (large discount retailers
in a specific product niche such as Toys R' Us) and Big Box Retailers (similar
to Category Killers but a wider product offering such as Loehman's) are referred
to as power centers. In enclosed super-regional and regional shopping centers,
Anchors are usually located at the ends of enclosed common area corridors. This
layout is intended to maximize pedestrian traffic for Mall Stores.
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Most regional and super-regional shopping centers compete for consumer
retail dollars by offering fashion merchandise, hard goods and services,
generally in an enclosed, climate-controlled environment with convenient
parking. Regional and super-regional shopping centers have differing strategies
for price levels depending upon the market demographics, competition and the
merchants and merchandise offered, from very high-end presentations, at one end,
to a strategy of leasing exclusively to promotional, single category outlet
stores, at the other. Super-regional shopping centers generally have more
variety and assortment than regional shopping centers. Westfield Shoppingtowns
seek to optimize Mall Store mix consistent with market demographics and customer
preferences.
The following table sets forth the number of Centers in each state and Total
GLA at December 31, 1998:
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TOTAL GLA
NO. OF -----------
SHOPPING PERCENT OF
SHOPPING CENTER LOCATIONS BY STATE CENTERS (000'S) TOTAL GLA
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California................................................. 20 19,364 53.9%
Colorado................................................... 1 471 1.3%
Connecticut................................................ 4 3,418 9.5%
Maryland................................................... 3 3,763 10.5%
Missouri................................................... 6 5,574 15.5%
New York................................................... 1 1,167 3.3%
North Carolina............................................. 1 690 1.9%
Washington................................................. 2 1,471 4.1%
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38 35,918 100%
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From 1994 to 1998, the Manager managed all the Centers in which the Company
had an interest except North County Fair which was managed by TrizecHahn. On
August 1, 1998, the Manager commenced management responsibilities for the Hahn
Centers acquired from TrizecHahn. The Centers managed by the Manager are
referred to as "Managed Centers".
ANCHORS
Anchors traditionally have been a major factor in the public's
identification with a shopping center. Anchors generally are department stores
whose merchandise appeals to a broad range of shoppers and continue to be a
major factor in the public's perception of a shopping center. Although the
Centers receive a smaller proportion of their operating income from Anchors than
from Mall Stores on a square foot basis, the Company believes that the Anchors
at a center generate customer traffic and therefore make a center desirable for
Mall Store retailers.
Anchors and the owner of a shopping center usually enter into agreements,
generally referred to as "reciprocal easement agreements" or "REAs," covering,
among other things, operational matters and initial construction and future
expansion. Anchors generally retain certain rights to approve or disapprove
future renovations or expansions of the shopping center, and the REAs usually
are recorded as encumbrances on all of the real property within the shopping
center. Many of the Anchors own their stores, the land under them and adjacent
parking areas. Others enter into long-term leases at rents that are lower than
the rents generally charged to Mall Store retailers.
As of December 31, 1998, Anchors at the Centers occupied approximately 20.7
million square feet of Anchor GLA, or 57.7% of Total GLA, and accounted for less
than 2.8% of the Company's total revenue in 1998. Anchors range in size from
approximately 57,000 square feet to 363,000 square feet, with an average of
approximately 160,500 square feet. The Centers have 129 Anchors operating under
20 trade names
8
<PAGE>
including Dayton-Hudson, Dillard's, Federated, JCPenney, May Company, Montgomery
Ward, Nordstrom and Sears.
Westfield Shoppingtowns Downtown Plaza, Northwest Plaza and Wheaton have
office buildings connected to them with a total of approximately 600,000 square
feet, or 1.6% of Total GLA.
The following table indicates the parent company of each Anchor at the
Centers, the number of stores owned or leased by each Anchor, Anchor GLA,
percentage of Anchor GLA to Total GLA and the base rent of each Anchor as of
December 31, 1998:
<TABLE>
<CAPTION>
1998
ANCHOR TOTAL
GLA ANNUALIZED
NUMBER OF --------------- PERCENTAGE OF BASE RENT
NAME ANCHOR STORES TOTAL GLA ---------------
- -------------------------------------------------- ----------------- (IN THOUSANDS) --------------- (IN THOUSANDS)
<S> <C> <C> <C> <C>
May Department Stores
Robinsons-May................................... 13 2,226 6.2% $ 205
Famous-Barr..................................... 6 1,098 3.1 733
Filene's........................................ 4 705 2.0 479
Hecht's......................................... 3 596 1.7 200
Lord & Taylor................................... 3 348 1.0 30
Meier & Frank................................... 1 118 0.3 --
--- ------ --- -------
Sub-Total......................................... 30 5,091 14.3 1,647
--- ------ --- -------
JCPenney........................................ 24 3,734 10.4 2,421
Macy's.......................................... 20 3,730 10.4 1,920
Sears........................................... 19 3,377 9.4 805
Nordstrom....................................... 10 1,400 3.9 777
Montgomery Ward................................. 7 1,154 3.2 756
Dayton Hudson
Mervyn's...................................... 8 685 1.9 155
Target........................................ 1 122 0.3 252
--- ------ --- -------
Sub-Total....................................... 9 807 2.2 407
--- ------ --- -------
Dillard's....................................... 4 708 2.0 1,168
Kmart........................................... 1 191 0.5 1,517
Belk Beery...................................... 1 176 0.5 --
Bon Marche...................................... 1 113 0.3 211
Caldor.......................................... 1 86 0.2 210
Shopko.......................................... 1 81 0.2 --
Lamonts......................................... 1 57 0.2 200
--- ------ --- -------
Total........................................... 129 20,705 57.7% $ 12,039
--- ------ --- -------
--- ------ --- -------
</TABLE>
MALL STORES
As of December 31, 1998, the Centers had approximately 4,744 Mall Stores and
national or regional chains leased approximately 90% of the Mall GLA. The five
Mall Store retailers accounting for the largest percentage of Mall Stores'
effective rent (i.e., base rent plus percentage rent) in 1998 were: The Limited
Stores (Abercrombie & Fitch, The Limited, Limited Express, Lane Bryant,
Lerner's, Structure, Victoria's Secret and others), The Venator Group, formerly
Woolworth, (Footlocker, Kinney Shoes and others), The Gap (The Gap, Gap Kids and
Banana Republic), Hallmark and Contempo Casuals.
9
<PAGE>
The following table sets forth certain information with respect to the ten
largest Mall Store retailers (through their various operating divisions) in
terms of Mall GLA, as of December 31, 1998.
<TABLE>
<CAPTION>
TOTAL 1998
EFFECTIVE
NUMBER OF PERCENTAGE RENT PERCENTAGE OF
MALL STORES OF ------------- TOTAL MALL STORE
TENANT LEASED MALL GLA TOTAL MALL GLA EFFECTIVE RENT
- --------------------------------------- --------------- ---------- ----------------- (THOUSANDS) -------------------
<S> <C> <C> <C> <C> <C>
The Limited Stores..................... 129 959,606 6.6% $ 20,900 7.0%
Venator Group.......................... 128 417,886 2.8 9,386 3.2
The Gap................................ 34 278,883 1.9 6,681 2.2
Toys R' Us............................. 5 150,197 1.0 1,426 0.5
Hallmark............................... 29 111,928 0.8 2,793 0.9
AMC Theater............................ 2 107,735 0.7 1,327 0.4
Eddie Bauer............................ 15 100,213 0.7 2,341 0.8
Edison Brothers........................ 48 99,623 0.7 2,431 0.8
Contempo Casuals....................... 23 96,318 0.7 2,702 0.9
Kay Bee Toys........................... 22 91,223 0.6 2,251 0.8
--- ---------- --- ------------- ---
435 2,413,612 16.5% $ 52,238 17.5%
--- ---------- --- ------------- ---
--- ---------- --- ------------- ---
</TABLE>
SALES
From 1996 to 1998, reported sales for Mall Shops increased from $1.5 billion
to $3.1 billion. Total sales for Mall Shops 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.
The table below sets forth Mall Shop sales for Managed Centers in the east
coast, the midwest and west coast regions of the United States.
<TABLE>
<CAPTION>
EAST COAST CENTERS MIDWEST CENTERS WEST COAST CENTERS TOTAL CENTERS
-------------------------- -------------------------- ------------------------ --------------------------
SALES(1) PERCENTAGE SALES(1) PERCENTAGE SALES(1) PERCENTAGE SALES(1) PERCENTAGE
YEAR (MILLIONS) INCREASE (MILLIONS) INCREASE (MILLIONS) INCREASE (MILLIONS) INCREASE
- ------------------- ----------- ------------- ----------- ------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998............... $ 867 2.7% $ 366 80.3% $ 1,828 137.7% $ 3,061 68.6%
1997............... 844 20.5 203 14.7 769 25.9 1,816 22.0
1996............... 700 -- 177 1.7 611 8.7 1,488 3.7
</TABLE>
- ------------------------
(1) Sales are based on Mall Shop retailers for Managed Centers reporting sales,
excluding Centers under redevelopment in 1996.
Reported sales per square foot for Mall Shops located at the Managed Centers
for the years ended December 31, 1998, 1997 and 1996, excluding Centers under
redevelopment in 1996, were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Reported sales per square foot........................................ $ 330 $ 310 $ 297
Increase from prior year.............................................. 6.5% 4.4% 6.5%
Increase from prior year on a comparable Mall Shop basis.............. 4.2% 4.4% 6.5%
</TABLE>
The Company believes these sales levels enhance its ability to obtain higher
rents from retailers.
LEASING
Leasing percentages are calculated on the basis of signed leases excluding
temporary leases, which consist of leases having a term of less than one year.
The following table sets forth leased status for the
10
<PAGE>
Managed Centers in the east coast, the midwest and the west coast regions of the
United States (excluding certain Centers under redevelopment in 1996).
<TABLE>
<CAPTION>
EAST COAST MIDWEST WEST COAST TOTAL
DECEMBER 31 CENTERS CENTERS CENTERS CENTERS
- ----------------------------------------------------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
1998................................................. 95% 93% 92% 93%(1)
1997................................................. 94% 91% 94% 93%
1996................................................. 92% 93% 92% 92%
</TABLE>
- ------------------------
(1) Excluding the Hahn Centers, Mall Stores were 95% leased. As of December 31,
1998, the Hahn Centers were 89% leased compared to 87% in July 1998 when the
Manager began managing the Hahn Centers.
COSTS OF OCCUPANCY
Management believes that in order to continue to increase per share Funds
from Operations (as defined in Item 7 below), Mall Store retailers must be able
to operate profitably. A factor contributing to retailer profitability is cost
of occupancy, which consists of base rents and expense recoveries; therefore, as
sales levels increase, the retailer can afford to pay a higher rent. From 1996
to 1998 recoverable expenses remained relatively constant while sales per square
foot continued to increase, thereby giving the Company an opportunity to
increase effective rents without raising a retailer's total occupancy cost
beyond its ability to pay.
The following table sets forth certain information relating to occupancy
costs as a percentage of sales for reporting Mall Store retailers at the Managed
Centers.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Occupancy Costs as a Percentage of Sales:
Base Rents.................................................. 7.8% 8.4% 8.5%
Expense Recoveries.......................................... 4.2 4.6 4.7
--- --- ---
Total....................................................... 12.0% 13.0% 13.2%
--- --- ---
--- --- ---
</TABLE>
LEASES
Generally, Mall Store leases are for ten-year terms and provide for
retailers to pay rent comprised of fixed and variable components. The fixed
component, referred to as "base" or "minimum" rent, is often subject to steps,
or contractual increases according to a negotiated schedule. The variable rent
component is based upon a percentage of a retailer's gross sales in excess of a
minimum annual amount. In some cases, retailers only pay base rent and, in a few
cases, retailers only pay percentage rent.
Virtually all of the leases for Mall Stores contain provisions that allow
the Centers to recover certain operating costs and expenses (including certain
capital expenditures) with respect to the common areas (including parking
facilities), all buildings, roofs and facilities within the Centers, as well as
insurance and property taxes. During 1998, the Centers recovered approximately
98% of these costs and expenditures in the form of expense recoveries from
retailers.
LEASE EXPIRATIONS
The expiration of leases present shopping center owners with the opportunity
to increase base and percentage rents, modify lease terms, improve retailer mix,
relocate existing retailers, reconfigure or expand retailer spaces and introduce
new retailers and retail concepts to the shopping center. The
11
<PAGE>
Company endeavors to increase base rent levels in the Centers in part through
negotiating terminations of leases of underperforming retailers and
renegotiating expired leases.
The following table shows scheduled lease expirations over the next ten
years based upon Mall Store leases in place at December 31, 1998.
<TABLE>
<CAPTION>
ANNUALIZED BASE
APPROXIMATE MALL PERCENTAGE OF AVERAGE RENT OF PERCENTAGE OF BASE
NUMBER OF GLA OF MALL GLA BASE RENT (PSF) EXPIRING LEASES RENT REPRESENTED
YEAR ENDING LEASES EXPIRING LEASES REPRESENTED BY OF EXPIRING --------------- BY EXPIRING
DECEMBER 31, EXPIRING (SQ. FT.) EXPIRING LEASES LEASES LEASES
- --------------- ------------- ---------------- ------------------- --------------- (THOUSANDS) ---------------------
<S> <C> <C> <C> <C> <C> <C>
1999........ 301 967,568 6.7% $ 13.93 $ 13,475 4.6%
2000........ 434 1,185,124 8.2 18.54 21,975 7.5
2001........ 418 985,140 6.8 23.45 23,102 7.9
2002........ 452 987,341 6.8 26.81 26,468 9.1
2003........ 489 1,298,905 8.9 23.53 30,561 10.5
2004........ 520 1,388,026 9.6 26.77 37,160 12.8
2005........ 379 1,211,629 8.3 32.52 39,401 13.5
2006........ 331 1,125,305 7.8 25.86 29,101 10.0
2007........ 341 1,152,899 7.9 26.70 30,784 10.6
2008........ 326 1,094,557 7.5 26.63 29,144 10.0
</TABLE>
MALL SHOP RENTAL RATES
The following table contains certain information regarding per square foot
average base and effective rent (base rent plus percentage rent) of the Mall
Shops at Managed Centers.
<TABLE>
<CAPTION>
EXISTING MALL SHOP
LEASES
------------------------
EFFECTIVE
AS OF DECEMBER 31, BASE RENT RENT
- -------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
1998................................................................ $ 28.72 $ 29.22
1997................................................................ 28.11 28.70
1996................................................................ 27.07 27.62
</TABLE>
As leases have expired, the Company has generally sought to rent the
available space, either to the existing retailer or a new retailer, at rental
rates that are higher than those of the expiring leases, since the average rent
for leases in place is generally less than the market rate for such space.
The following table illustrates increases in Mall Shop rental rates for the
Managed Centers.
<TABLE>
<CAPTION>
LEASES EXPIRING LEASE EXECUTED
DURING THE DURING THE
YEAR PERIOD(1) PERIOD(2) PERCENT INCREASE
- ---------------------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
1998.............................. $ 25.19 $ 32.81 30.3%
1997.............................. 27.20 29.22 7.4%
1996.............................. 21.48 28.16 31.1%
</TABLE>
- ------------------------
(1) Includes scheduled expirations, early terminations, abandonments and
negotiated buyouts. Represents average base rent for the final year of
occupancy.
(2) Represents average base rent for the initial year of occupancy including
renewals.
Minimum rents at Mall Stores are expected to grow as a result of contractual
rent increases in existing leases. Although there can be no assurances that such
contractual increases will be realized, or that such
12
<PAGE>
contractual increases are indicative of possible future increases, base rent at
the Centers is expected to increase by approximately $23.9 million over the next
five years through these contractual increases.
<TABLE>
<CAPTION>
CUMULATIVE
EXISTING EXISTING
CONTRACTUAL CONTRACTUAL
YEAR RENT INCREASES RENT INCREASES
- ----------------------------------------------------- ------------------- ------------------
<S> <C> <C>
1999................................................. $ 7,571,912 $ 7,571,912
2000................................................. 5,983,670 13,555,582
2001................................................. 3,791,738 17,347,320
2002................................................. 3,595,682 20,943,002
2003................................................. 2,930,408 23,873,410
</TABLE>
As required by generally accepted accounting principles ("GAAP"),
contractual rent increases are recognized as rental income using the
straight-line method over the respective lease term which may result in the
recognition of income not currently billable under the terms of the lease. The
amount of contractual rent recognized in excess of rent billed for the years
ending December 31, 1998, 1997 and 1996 was $4.2 million, $3.1 million and $2.3
million, respectively.
SEASONALITY
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when retailer occupancy and retail
sales are typically at their highest levels. In addition, shopping centers
achieve a substantial portion of their specialty (temporary retailer) rents
during the holiday season. As a result of the above, earnings are generally
highest in the fourth quarter of each year.
The following table summarizes certain 1998 and 1997 quarterly data for the
Managed Centers:
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
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%(1)
1997 QUARTERLY DATA:
Mall Shop sales............................ $ 298,716 $ 316,178 $ 325,834 $ 506,591
Revenues................................... $ 69,482 $ 69,087 $ 80,209 $ 83,031
Percentage Leased.......................... 91% 92% 92% 93%
</TABLE>
- ------------------------
(1) The portfolio was 95% leased, excluding the Hahn Centers which were 89%
leased.
COMPETITION
All of the Centers are located in developed retail and commercial areas,
many of which compete with other mall or neighborhood shopping centers within
their primary trade area. The amount of rentable space in the Centers' trade
area, the quality of facilities and the nature of stores at such competing
shopping centers could each have a material adverse effect on the Company's
ability to lease space and rents the Company can obtain. In addition, retailers
at the Centers face increasing competition from other forms of retailing, such
as discount shopping centers, outlet malls, catalogues, discount shopping clubs,
telemarketing and internet retailing. Other real estate investors, including
other REITs, compete for acquisition of new retail shopping centers.
Although the Company believes its Centers can compete effectively within
their trade areas, the Company must also compete with other owners, managers and
developers of retail shopping centers.
13
<PAGE>
Those competitors that are not REITs may be at an advantage to the extent they
can utilize operating cash flows to finance projects, while the Company (and its
REIT competitors) will be required by the Code to distribute significant amounts
of its operating cash flows to shareholders. If the Company should require
funds, it may have to borrow when the cost of capital is high. Moreover,
increased competition could adversely affect the Company's revenues and Funds
from Operations.
ENVIRONMENTAL MATTERS
Various Federal, state and local environmental laws subject property owners
and operators to liability for the costs of removal of certain hazardous
substances released, or remediation of hazardous conditions, on a property.
These laws often impose liability without regard to whether the owner or
operator knew of, or was responsible for, the release of the hazardous
substances. The presence of hazardous substances, or the failure to properly
remediate conditions caused by hazardous substances, may adversely affect the
owner's ability to sell a property or to borrow using the property as
collateral. The presence of hazardous substances, may also cause the owner to
incur substantial cleanup costs. Entities who arrange for the disposal or
treatment of hazardous substances may also be liable for the costs of removal or
remediation at the facility to which they sent the substances. Certain other
laws regulate the management of, and may impose liability for, personal injuries
associated with exposure to asbestos-containing material or other regulated
materials. If the Company renovates or demolishes any of the Centers, the
Company may incur substantial costs for the removal and disposal of
asbestos-containing materials.
In connection with the Company's ownership and operation of currently-owned
and formerly-owned properties, the Company and the joint ventures in which the
Company has an interest may be potentially liable for removal or remediation
costs, as well as other costs (including governmental fines and costs related to
injuries to persons and property) resulting from environmental conditions at
these properties.
An independent consultant has reviewed existing environmental reports to
identify environmental conditions at Company-owned Centers and certain
properties that the Company formerly owned. A majority of the reports were
prepared for entities other than the Company. In some cases, the Company
commissioned additional or follow-up investigations by various outside
consultants. However, there can be no assurance (i) that circumstances have not
changed since any investigations were completed, (ii) that the investigation and
the related report revealed all potential environmental liabilities, (iii) that
the reports are accurate, or (iv) that prior owners or operators of the
properties have not created a potential environmental liability unknown to the
Company.
Based on these investigations and the Company's knowledge of the operation
of its properties, the company believes that many of its Centers and properties
that the Company formerly owned contain, or have contained, petroleum storage
tanks and automobile service operations. These tanks and operations have, or may
have, resulted in soil or groundwater contamination. Further, the Company is
aware of asbestos-containing materials in each of the Centers and in at least
some of the properties that the Company formerly owned.
The Company has received environmental reports prepared by independent
consultants with respect to each of the properties in which the Company has
acquired an interest from TrizecHahn. All of these environmental reports were
prepared in 1998.
Although there can be no assurances, the Company does not believe that
environmental conditions at any of the Properties will have a material adverse
effect on the Company's business, financial condition or results of operations.
There can be no assurance that environmental laws will not become more stringent
in the future or that the environmental conditions on or near the Properties
will not have a material adverse effect on individual properties or on the
Company as a whole in the future.
14
<PAGE>
INSURANCE ARRANGEMENTS
The Company believes, based in part on the advice of its insurance advisors,
that its insurance covering fire, flood, earthquake and comprehensive liability
is adequate having regard to the insurable risks and insured limits customarily
carried for similar properties. Earthquake insurance is subject to a deductible
equal to 5% of the total insured value of each Center and a combined annual
aggregate loss limit of $150 million on the Centers.
EMPLOYEES
The Company has engaged the Manager to provide property management and
leasing services, the Advisor to provide advisory services and the Developer to
provide development and redevelopment planning and implementation services. The
Company has no employees.
EXECUTIVE OFFICES
The Company's executive offices and the headquarters of the Company's
Manager, Advisor and Developer are located at 11601 Wilshire Boulevard, Los
Angeles, California 90025 (telephone 310/478-4456).
15
<PAGE>
ITEM 2: PROPERTIES
The following table sets forth certain information about each of the
Company's Centers at December 31, 1998:
<TABLE>
<CAPTION>
PERCENTAGE OF MALL OCCUPANCY COST 1998 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1998 DECEMBER 31, 1998 (PER SQ. FT.)
- ---------------------------------- ------------- ------------ ------------ ------------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
SAN DIEGO MARKET
Horton Plaza, .................. 100 868,000 506,000 93% 14.2% $ 445
San Diego, California
Mission Valley, ................ 76 1,370,000 577,000 97 8.0 $ 278
San Diego, California
Mission Valley West, (1) . 76 210,000 210,000 n/a n/a n/a
San Diego, California
North County, (4) .............. 100 1,258,000 377,000 86 12.9 357
Escondido, California
Parkway Plaza, ................. 100 1,110,000 506,000 87 12.0 291
El Cajon, California
Plaza Bonita, .................. 100 825,000 316,000 96 16.0 308
National City, California
Plaza Camino Real, ............. 40 1,148,000 430,000 91 12.7 304
Carlsbad, California
University Towne Center, ....... 100 1,035,000 441,000 90 11.8 393
San Diego, California
------------ ------------ --- ------ -----
7,824,000 3,363,000 92% 12.3% $ 330
------------ ------------ --- ------ -----
<CAPTION>
HISTORY & STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
SAN DIEGO MARKET
Horton Plaza, .................. Opened 1985 Nordstrom, Macy's, Mervyn's
San Diego, California
Mission Valley, ................ Opened 1961 Robinsons-May, Macy's, Montgomery
San Diego, California Redeveloped 1975/1983/1997 Ward, AMC 20-Screen Theater,
Nordstrom Rack
Mission Valley West, (1) . Opened 1961 Borders Books, Marshalls, Old
San Diego, California Redeveloped 1997/1998 Navy, The Gordon Biersch Brewing
Company
North County, (4) .............. Opened 1986 Nordstrom, Robinsons-May (two
Escondido, California stores), Macy's, JCPenney, Sears
Parkway Plaza, ................. Opened 1972 Robinsons-May, Sears, JCPenney,
El Cajon, California Mervyn's
Plaza Bonita, .................. Opened 1981 Robinsons-May, JCPenney,
National City, California Montgomery Ward and Mervyn's
Plaza Camino Real, ............. Opened 1969 Macy's (two stores),
Carlsbad, California Redeveloped 1979/1989 Robinsons-May, Sears, JCPenney
University Towne Center, ....... Opened 1977 Nordstrom, Macy's, Robinsons-May,
San Diego, California Sears
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF MALL OCCUPANCY COST 1998 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1998 DECEMBER 31, 1998 (PER SQ. FT.)
- ---------------------------------- ------------- ------------ ------------ ------------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
LOS ANGELES MARKET
Cerritos, ...................... 100 1,306,000 504,000 93% 13.1% $ 338
Cerritos, California
Eagle Rock, .................... 100 471,000 161,000 93 16.5 166
Los Angeles, California
Eastland, (1) .................. 100 775,000 573,000 100 4.1 230
West Covina, California
Fox Hills, ..................... 100 891,000 320,000 83 16.5 285
Culver City, California
Promenade, ..................... 100 600,000 330,000 n/a 9.9 277
Woodland Hills, California
Santa Anita, ................... 90 1,099,000 394,000 89 14.5 318
Arcadia, California
Topanga, ....................... 100 1,054,000 375,000 100 13.1 352
Canoga Park, California
West Covina, ................... 100 1,177,000 529,000 92 15.6 261
West Covina, California
------------ ------------ ----- ------ -----
7,373,000 3,186,000 93% 12.5% $ 295
------------ ------------ ----- ------ -----
<CAPTION>
HISTORY & STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
LOS ANGELES MARKET
Cerritos, ...................... Opened 1971 Nordstrom, Macy's, Robinsons-May,
Cerritos, California Sears, Mervyn's
Eagle Rock, .................... Opened 1973 Robinsons-May, Montgomery Ward
Los Angeles, California
Eastland, (1) .................. Opened 1957 Mervyns, Target, Burlington Coat
West Covina, California Redeveloped 1979/1997 Factory, Old Navy Loehmans, Baby's
R' Us, Marshall's,
Fox Hills, ..................... Opened 1975 Robinsons-May, Macy's, JCPenney
Culver City, California
Promenade, ..................... Opened 1973 Macy's (two stores), AMC Theater
Woodland Hills, California
Santa Anita, ................... Opened 1974 Macy's, Nordstrom, Robinsons-May,
Arcadia, California JCPenney
Topanga, ....................... Opened 1964 Redevelopment Nordstrom, Robinsons-May, Sears,
Canoga Park, California 1984/1992/1994 Montgomery Ward
West Covina, ................... Opened 1975 Robinsons-May, Macy's, Sears,
West Covina, California Redeveloped 1990/1993 JCPenney
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF MALL OCCUPANCY COST 1998 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1998 DECEMBER 31, 1998 (PER SQ. FT.)
- ---------------------------------- ------------- ------------ ------------ ------------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
SAN JOSE MARKET
Oakridge, ...................... 100 798,000 330,000 97% 11.3% $ 350
San Jose, California
Valley Fair, ................... 50 1,140,000 471,000 98 9.9 648
San Jose, California
------------ ------------ ----- ------ -----
1,938,000 801,000 98% 10.2% $ 544
------------ ------------ ----- ------ -----
OTHER WEST COAST CENTERS
Capital Mall, .................. 100 603,000 239,000 81% 9.6% $ 277
Olympia, Washington
Downtown Plaza, (3) ............ 100 1,193,000 410,000 87 14.1 307
Sacramento, California
Solano, ........................ 100 1,036,000 504,000 76 12.6 300
Fairfield, California
Vancouver, ..................... 50 868,000 326,000 93 10.9 258
Vancouver, Washington
------------ ------------ ----- ------ -----
3,700,000 1,479,000 85% 12.1% $ 289
------------ ------------ ----- ------ -----
ST. LOUIS MARKET
Crestwood, ..................... 100 1,000,000 380,000 99% 12.4% $ 311
St. Louis, Missouri
Mid Rivers, .................... 100 927,000 353,000 84 12.3 291
St. Peters, Missouri
Northwest Plaza, (3) ........... 100 1,813,000 715,000 93 11.2 256
St. Ann, Missouri
South County, .................. 100 751,000 256,000 93 11.5 281
St. Louis, Missouri
West County, ................... 100 584,000 153,000 92 13.7 235
Des Peres, Missouri
------------ ------------ ----- ------ -----
5,075,000 1,857,000 92% 12.0% $ 269
------------ ------------ ----- ------ -----
<CAPTION>
HISTORY &STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
SAN JOSE MARKET
Oakridge, ...................... Opened 1973 Macy's, Sears, Montgomery Ward
San Jose, California
Valley Fair, ................... Opened 1986 Nordstrom, Macy's (two stores)
San Jose, California
OTHER WEST COAST CENTERS
Capital Mall, .................. Opened 1978 JCPenney, Bon Marche, Mervyn's, La
Olympia, Washington Monts
Downtown Plaza, (3) ............ Opened 1971 Macy's (two stores)
Sacramento, California
Solano, ........................ Opened 1981 Macy's, Sears, JCPenney, Mervyn's
Fairfield, California
Vancouver, ..................... Opened 1977 Nordstrom, Meier & Frank, Sears,
Vancouver, Washington Redeveloped 1979/1993 JCPenney, Mervyn's
ST. LOUIS MARKET
Crestwood, ..................... Opened 1957 Famous-Barr, Sears, Dillard's
St. Louis, Missouri Redeveloped 1984
Mid Rivers, .................... Opened 1987 Famous-Barr, Dillard's, Sears,
St. Peters, Missouri Redeveloped 1990/1996 JCPenney
Northwest Plaza, (3) ........... Opened 1965 Famous-Barr, JCPenney, Sears,
St. Ann, Missouri Redeveloped 1989 Dillards
South County, .................. Opened 1963 Famous-Barr, Dillard's, JCPenney
St. Louis, Missouri Redeveloped 1979
West County, ................... Opened 1969 Famous-Barr, JCPenney
Des Peres, Missouri Redeveloped 1985
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF MALL OCCUPANCY COST 1998 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1998 DECEMBER 31, 1998 (PER SQ. FT.)
- ---------------------------------- ------------- ------------ ------------ ------------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OTHER MID WEST CENTERS
Westland, ...................... 100 471,000 138,000 99% 4.6% $ 171
Lakewood, Colorado
West Park, ..................... 100 499,000 227,000 97 10.3 201
Cape Girardeau, Missouri
------------ ------------ ----- ------ -----
970,000 365,000 98% 6.9% $ 190
------------ ------------ ----- ------ -----
CONNECTICUT MARKET
Connecticut Post, .............. 100 779,000 386,000 87% 13.5% $ 300
Milford, Connecticut
Enfield, (1) ................... 100 716,000 295,000 99 13.0 218
Enfield, Connecticut
Meriden, ....................... 100 729,000 293,000 100 14.5 299
Meriden, Connecticut
Trumbull, ...................... 100 1,194,000 497,000 96 12.7 355
Trumbull, Connecticut
------------ ------------ ----- ------ -----
3,418,000 1,471,000 95% 13.3% $ 306
------------ ------------ ----- ------ -----
WASHINGTON MARKET
Annapolis, (1) ................. 100% 1,127,000 425,000 99% 13.0% $ 395
Annapolis, Maryland
Montgomery Mall, ............... 100 1,246,000 460,000 99 13.2 445
Bethesda, Maryland
Wheaton, ....................... 100 1,390,000 572,000 94 9.3 317
Wheaton, Maryland (2),(3)
------------ ------------ ----- ------ -----
3,763,000 1,457,000 97% 12.2% $ 398
------------ ------------ ----- ------ -----
<CAPTION>
HISTORY & STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
OTHER MID WEST CENTERS
Westland, ...................... Opened 1960 Sears, Super Kmart
Lakewood, Colorado Redeveloped 1978/1994
West Park, ..................... Opened 1981 Famous-Barr, JCPenney, Shopko
Cape Girardeau, Missouri Redeveloped 1984
CONNECTICUT MARKET
Connecticut Post, .............. Opened 1960 Filene's, JCPenney, Caldor
Milford, Connecticut Redeveloped 1991
Enfield, (1) ................... Opened 1971 Filene's, JCPenney, Sears
Enfield, Connecticut Redeveloped 1987/1997/1998
Meriden, ....................... Opened 1971 Filene's, JCPenney, Sears
Meriden, Connecticut Redeveloped 1988/1993
Trumbull, ...................... Opened 1962 Macy's, Filene's, Lord & Taylor,
Trumbull, Connecticut Redeveloped 1982/1987/1990 1992 JCPenney
WASHINGTON MARKET
Annapolis, (1) ................. Opened 1980 Nordstrom, Hecht's, JCPenney, Lord
Annapolis, Maryland Redeveloped 1983/1994/1998 & Taylor, Montgomery Ward
Montgomery Mall, ............... Opened 1968 Nordstrom, Hecht's, Sears,
Bethesda, Maryland Redeveloped 1976/1982/1984 1991 JCPenney
Wheaton, ....................... Opened 1960 Hecht's, JCPenney, Montgomery Ward
Wheaton, Maryland (2),(3) Redeveloped 1987
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF MALL OCCUPANCY COST 1998 MALL
PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT AS A % OF SALES SHOP SALES
SHOPPINGTOWN & LOCATION OWNERSHIP (SQ. FT.) (SQ. FT.) DECEMBER 31, 1998 DECEMBER 31, 1998 (PER SQ. FT.)
- ---------------------------------- ------------- ------------ ------------ ------------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OTHER EAST COAST CENTERS
Independence Mall, ............. 70 690,000 226,000 99% 7.9% $ 357
Wilmington, North Carolina
South Shore, (1) ............... 100 1,167,000 309,000 87 15.5 384
Bay Shore, New York
------------ ------------ ----- ------ -----
1,857,000 535,000 92% 11.7% $ 373
------------ ------------ ----- ------ -----
35,918,000 14,514,000 93% 12.0% $ 330
------------ ------------ ----- ------ -----
------------ ------------ ----- ------ -----
<CAPTION>
HISTORY & STATUS ANCHOR RETAILERS &
SHOPPINGTOWN & LOCATION OF DEVELOPMENT SPECIAL FEATURES
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
OTHER EAST COAST CENTERS
Independence Mall, ............. Opened 1979 JCPenney, Sears, Belk Beery
Wilmington, North Carolina
South Shore, (1) ............... Opened 1963 Macy's, JCPenney, Sears, Lord &
Bay Shore, New York Redeveloped 1997/1998 Taylor,
</TABLE>
- ------------------------
(1) Under redevelopment during 1998.
(2) In January 1999, the Company acquired the remaining 32% interest not
previously owned by the Company.
(3) Total GLA includes office square footage.
(4) The Center is subject to ground leases with the cities of Escondido and San
Diego which expire in 2038.
20
<PAGE>
MORTGAGE AND OTHER SECURED DEBT ON PORTFOLIO PROPERTIES
The following table sets forth certain information regarding debt secured by
the Company's interests in the Centers, including the Company's pro rata share
of debt encumbering Centers in which the Company has less than a 100% interest.
All mortgage debt is nonrecourse to the Company. The information set forth below
is as of December 31, 1998.
<TABLE>
<CAPTION>
EARLIEST
DATE
PRINCIPAL ANNUAL DEBT BALANCE DUE ON ON WHICH THE
INTEREST BALANCE SERVICE MATURITY MATURITY NOTE CAN BE
PROPERTY PLEDGED AS COLLATERAL RATE (000'S) (000'S) DATE (000'S) PREPAID
- ------------------------------- --------------- ------------ ------------ --------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Capital Mall................... 6.38% $ 27,802 $ 1,774 12/11/01 $ 27,802 12/2001(1)
Cerritos....................... LIBOR+1.75 95,000 7,107 11/17/99 95,000 12/1998
Crestwood...................... 6.38 74,699 4,766 12/11/01 74,699 12/2001(1)
Downtown Plaza................. LIBOR+1.50 92,476 6,684 6/2/99 92,476 12/1998
Enfield........................ 6.38 36,706 2,342 12/11/01 36,706 12/2001(1)
Fox Hills...................... 6.38 46,699 2,979 12/11/01 46,699 12/2001(1)
Horton Plaza................... 6.38 111,900 7,139 12/11/01 111,900 12/2001(1)
Mid Rivers..................... 6.38 53,229 3,396 12/11/01 53,229 12/2001(1)
Montgomery Mall................ 6.51 121,515 7,911 2/11/01 121,515 2/2001(3)
North County Fair (6).......... 7.00 73,745 6,399 5/30/22 -- 6/2022(7)
Northwest Plaza................ 6.38 79,052 5,044 12/11/01 79,052 12/2001(1)
Oakridge....................... 6.38 37,004 2,361 12/11/01 37,004 12/2001(1)
Parkway Plaza.................. 6.38 82,417 5,258 12/11/01 82,417 12/2001(1)
Plaza Bonita................... 6.38 76,678 4,892 12/11/01 76,678 12/2001(1)
Solano......................... 7.00 19,026 1,788 7/1/18 -- 4/2018(5)
Solano......................... 7.00 23,043 2,108 1/1/06 18,572 10/2005(5)
South County................... 6.51 28,735 1,871 2/11/01 28,735 2/2001(3)
Topanga........................ LIBOR+1.50 44,000 3,180 2/17/99 44,000 12/1998
Topanga........................ 7.00 61,603 6,279 2/01/02 54,856 2/2002(4)
Trumbull....................... 7.15 136,456 14,183 7/01/00 130,727 4/2000(2)
UTC............................ 7.20 81,041 7,340 1/1/06 67,396 9/2005(4)
West County.................... 6.51 16,750 1,090 2/11/01 16,750 2/2001(3)
West Covina.................... 6.38 89,837 5,732 12/11/01 89,837 12/2001(1)
West Park...................... 6.38 30,077 1,919 12/11/01 30,077 12/2001(1)
May Department Stores.......... 6.39 16,782 2,489 2/04/04 -- 2/2004
May Department Stores.......... 7.33 55,167 5,342 2/04/14 -- 2/2014
------------ ------------ --------------
Total wholly-owned........... 1,611,439 121,373 1,416,127
Mission Valley (9)............. 6.78 56,850 3,854 12/31/04 56,850 12/1999
Plaza Camino Real (9).......... 9.50 14,628 1,515 6/01/00 14,497 3/2000(4)
Vancouver (9).................. 9.78 15,634 1,701 5/13/02 15,035 2/2002(8)
Valley Fair (9)................ LIBOR+0.75 42,500 2,749 10/20/99 42,500 12/1998
Independence Mall (9).......... LIBOR+1.00 22,985 2,382 8/4/03 16,994 12/1998
Santa Anita (9)................ 7.00 42,306 4,690 2/1/04 38,641 11/2003(10)
Santa Anita (9)................ 7.00 14,630 1,638 2/1/04 13,322 11/2003(10)
------------ ------------ --------------
$ 1,820,972 11) $ 139,902 $ 1,613,966
------------ ------------ --------------
------------ ------------ --------------
</TABLE>
- ------------------------
(1) Beginning December 1999, the loans may be simultaneously prepaid in full at
any regular payment date without penalty or premium.
21
<PAGE>
(2) Prepayment in entirety with 60 days notice subject to the greater of a
yield maintenance premium (as defined) or 1% of balance, until April 2000.
(3) May be prepaid with a premium equal to the greater of a yield maintenance
premium or a declining 1% premium (as defined).
(4) May be prepaid for the greater of 1% of the outstanding principal balance
or yield maintenance premium amount (as defined).
(5) Beginning July 2000, the loan may be prepaid for a 5% premium declining
0.5% annually to a minimum of 1%. Both obligations to the lender must be
prepaid simultaneously.
(6) Contingent interest is owed at 30% of receipts in excess of $8.3 million.
(7) Beginning June 2004, the loan may be prepaid for a 6% premium; this
declines 0.5% annually to a minimum of 1% plus ten times contingent
interest during the 12-month period preceeding prepayment.
(8) May be prepaid for the greater of 2% of the outstanding principal balance
or yield maintenance premium amount (as defined).
(9) Reflects the Company's pro rata share of debt.
(10) Beginning March 1999, both notes may be simultaneously prepaid in full for
the greater of a yield maintenance premium or a declining 2% premium (as
defined).
(11) A reconciliation of the Company's pro rata share of debt secured by the
Company's interest in the Centers to the consolidated indebtedness as of
December 31, 1998, is as follows:
<TABLE>
<CAPTION>
(000'S)
------------
<S> <C>
Pro rata share of debt secured by the Company's interests in the Centers.................. $ 1,820,972
Less: Pro rata share of debt secured by unconsolidated partnership Centers................ (95,747)
Plus: Minority interest in debt secured by consolidated Centers........................... 24,702
Unsecured consolidated indebtedness....................................................... 891,088
------------
Consolidated indebtedness................................................................. $ 2,641,015
------------
------------
</TABLE>
ITEM 3: 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 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
22
<PAGE>
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common stock trades on the New York Stock Exchange ("NYSE"),
under the symbol "WEA." The following table sets forth the per share high and
low for the quarter based on intra-day trading as reported by the NYSE and
distributions declared for the Company's common stock on a quarterly basis since
May 16, 1997, the date of the Company's initial public offering (the
"Offering").
<TABLE>
<CAPTION>
DECLARED
HIGH LOW CLOSE DISTRIBUTION
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
1999
First Quarter (to March 12, 1999)................ $ 18.25 $ 15.81 $ 17.13 N/A
1998
Fourth Quarter................................... $ 18.13 $ 15.88 $ 17.25 $ 0.355
Third Quarter.................................... 17.88 15.69 17.13 0.355
Second Quarter................................... 18.44 16.75 18.38 0.355
First Quarter.................................... 18.75 16.81 17.63 0.355
1997
Fourth Quarter................................... $ 17.81 $ 14.25 $ 17.00 $ 0.35
Third Quarter.................................... 17.25 16.00 16.63 0.35
Second Quarter (from May 16, 1997)............... 17.63 15.25 16.88 0.16
</TABLE>
The number of shareholders of record of the Company's common stock was 115
as of March 12, 1999.
The Company intends to continue to pay regular quarterly distributions to
the holders of its common stock. The 1998 distributions include a dividend
declared on December 18, 1998 to shareholders of record on December 31, 1998 of
$33.0 million or $0.355 per common share for the quarter ended December 31,
1998. For the years ended December 31, 1998 and 1997, the Company declared
distributions per common share of $1.42 and $1.59, respectively.
On August 12, 1998, December 24, 1998 and December 29, 1998, the Company
issued 416,667, 138,889 and 138,889 shares, respectively, of Series C, Series
C-1 and Series C-2 cumulative convertible redeemable preferred stock
(collectively, the "Series C Preferred Stock"). The Series C Preferred Stock was
issued to Security Capital Preferred Growth Incorporated ("SCPG") in exchange
for gross proceeds of $125,000,000, and has a par value of $1.00 per share and a
liquidation value $180 per share. Each share of Series C Preferred Stock is
currently convertible into 10 shares of common stock of the Company, subject to
adjustment. All of the Series C Preferred Stock was offered and sold to SCPG, an
accredited investor, pursuant to the exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), provided by
Section 4(2) of the Act. In connection with such sales, the Company paid an
aggregate of $1,250,000, in private placement commissions.
On August 12, 1998 and December 22, 1998, the Company issued 416,667 and
138,889 shares, respectively, of Series D and Series D-1 cumulative convertible
redeemable preferred stock (collectively, the "Series D Preferred Stock"). The
Series D Preferred Stock was issued to Westfield America Trust ("WAT"), the
Company's largest shareholder, in exchange for gross proceeds of $100,000,000,
and has a par value of $1.00 per share and a liquidation value $180 per share.
Also on August 12, 1998, the Company issued 277,778 shares of the Series D
Preferred Stock to Westfield America Investments Pty Limited ("WAI"), a
subsidiary of WHL, in exchange for gross proceeds of $50,000,000. The Series D
Preferred Stock is not convertible into the Company's common stock, unless (i)
the conversion is approved by the shareholders of the Company, which consent the
Company will seek to obtain at its next annual meeting or (ii) the Series D
Preferred Stock is sold to an individual or entity to whom the Company may issue
its common stock without shareholder approval. Subject to the foregoing, each
share of Series D Preferred Stock is currently convertible into 10 shares of
common stock of the Company, subject to adjustment. All
23
<PAGE>
of the Series D Preferred Stock was offered and sold to either WAT or WAI
pursuant to the exemption from the registration requirements of the Act,
provided by Section 4(2) of the Act.
In May 1998, the Company entered into a stock subscription agreement with
WAT. Subject to shareholder approval, the Company has the right to sell, and WAT
has the obligation to purchase, up to AUS $465 million (approximately US $285
million at December 31, 1998 foreign currency exchange rates) 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.
24
<PAGE>
ITEM 6: SELECTED FINANCIAL DATA
The following table sets forth historical and consolidated financial data
for the Company and should be read in conjunction with the Company's
Consolidated Financial Statements and the Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Annual Report on Form 10-K. The Company's
Consolidated Financial Statements are not necessarily indicative of the future
financial position and results of operations of the Company. The Company
believes that the book value of its real estate assets, which reflects the
historical cost of such real estate assets less accumulated depreciation, is
less than the current market value of its properties.
<TABLE>
<CAPTION>
PERIOD FROM PREDECESSOR
FEBRUARY 12, PERIOD FROM
1994 JANUARY 1, 1994
YEARS ENDED DECEMBER 31, THROUGH THROUGH
------------------------------------------------- DECEMBER 31, FEBRUARY 11,
1998 1997 1996 1995 1994 1994
----------- ----------- ----------- ---------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Revenues:
Minimum rents..................... $ 226,089 $ 147,971 $ 105,295 $ 74,727 $ 58,750 $ 7,309
Tenant recoveries................. 91,909 64,662 44,423 32,335 32,023 4,036
Percentage rents.................. 10,467 4,175 3,991 1,690 2,470 467
Service fee and other income...... -- -- -- -- 6,213 957
----------- ----------- ----------- ---------- -------- -------
Total revenue................... 328,465 216,808 153,709 108,752 99,456 12,769
Expenses:
Operating......................... 97,359 64,156 47,339 33,532 29,477 4,326
Management fees................... 6,264 4,074 3,191 1,828 -- --
Advisory fees(1).................. 6,140 -- 2,600 -- -- --
General and administrative........ 1,519 949 808 776 7,129 2,543
Depreciation and amortization..... 76,926 53,913 38,596 29,150 24,897 3,605
----------- ----------- ----------- ---------- -------- -------
Operating income................ 140,257 93,716 61,175 43,466 37,953 2,295
Interest expense, net............. (106,852) (57,472) (40,233) (27,916) (24,156) (481)
----------- ----------- ----------- ---------- -------- -------
Income before other income and net
gain............................ 33,405 36,244 20,942 15,550 13,797 1,814
Equity in net income (loss) of
unconsolidated real estate
partnerships.................... 5,949 3,887 3,707 4,412 (386) (2,151)
Interest and other income......... 17,196 9,212 1,110 1,884 1,830 340
Gain on sale of investments,
net............................. 53,895 -- -- -- -- --
Minority interest in earnings of
consolidated real estate
partnerships.................... (4,257) (2,478) (1,063) -- -- --
----------- ----------- ----------- ---------- -------- -------
Net income........................ $ 106,188 $ 46,865 $ 24,696 $ 21,846 $ 15,241 $ 3
----------- ----------- ----------- ---------- -------- -------
----------- ----------- ----------- ---------- -------- -------
Net income allocable to dilutive
common shares..................... $ 88,569 $ 35,437 $ 20,432 $ 21,843 $ 15,241 $ 3
----------- ----------- ----------- ---------- -------- -------
----------- ----------- ----------- ---------- -------- -------
Earnings per dilutive common
share(2).......................... $ 1.20 $ 0.54 $ 0.42 $ 0.48 $ 0.34
----------- ----------- ----------- ---------- --------
----------- ----------- ----------- ---------- --------
Dividends declared per dilutive
common share(2)................... $ 1.42 $ 1.59 $ 1.51 $ 1.68 $ 0.81
----------- ----------- ----------- ---------- --------
----------- ----------- ----------- ---------- --------
</TABLE>
25
<PAGE>
SELECTED FINANCIAL DATA, CONTINUED:
<TABLE>
<CAPTION>
PREDECESSOR
PERIOD FROM PERIOD FROM
FEBRUARY 12, JANUARY 1,
1994 1994
YEARS ENDED DECEMBER 31, THROUGH THROUGH
---------------------------------------------------- DECEMBER 31, FEBRUARY 11,
1998 1997 1996 1995 1994 1994
------------- ----------- ----------- ----------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OTHER DATA:
EBITDA(3)........................ $ 256,931 $ 177,858 $ 124,352 $ 102,199 $ 83,529 $ 8,691
Funds from Operations(4)......... $ 140,839 $ 111,271 $ 75,842 $ 65,792 $ 53,315 $ 4,942
Cash flows provided by operating
activities..................... $ 97,859 $ 91,180 $ 55,244 $ 41,937 $ 20,665 $ 5,294
Cash flows (used in) provided by
investing activities........... $ (1,346,534) $ (560,965) $ (90,969) $ 6,529 $ 23,556 $ (23,501)
Cash flows provided by (used in)
financing activities........... $ 1,262,944 $ 474,059 $ 42,454 $ (62,722) $ (67,988) $ 26,013
Funds from operations allocable
to common shares (2), (4)...... $ 120,557 $ 100,555 $ 71,578 $ 65,789 $ 53,315
Weighted average number of
dilutive common shares (2)..... 73,901 65,505 49,063 44,978 44,902
Ratio of earnings to fixed
charges(2),(5)................. 1.54x 1.92x 1.77x 2.25x 2.89x
Ratio of earnings to combined
fixed charges and preferred
stock dividends(2),(5)......... 1.33x 1.61x 1.60x 2.25x 2.89x
Ratio of FFO to fixed
charges(2),(4),(5)............. 2.28x 2.87x 2.78x 3.35x 3.21x
Ratio of FFO to combined fixed
charges and preferred stock
dividends(2),(4),(5)........... 1.97x 2.40x 2.52x 3.35x 3.21x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
------------ ------------ ------------ ---------- ----------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Investments in real estate, net................ $ 3,690,258 $ 1,848,501 $ 1,310,434 $ 829,484 $ 848,892
Total assets................................... $ 3,820,639 $ 1,969,630 $ 1,341,854 $ 841,990 $ 879,951
Notes payable and revolving credit facility.... $ 2,641,015 $ 1,107,425 $ 770,625 $ 426,781 $ 420,397
Minority interest.............................. $ 42,605 $ 25,123 $ 54 $ -- $ --
Shareholders' equity........................... $ 746,119 $ 770,380 $ 518,530 $ 380,419 $ 430,782
</TABLE>
- ------------------------
(1) The advisory fee first became payable for the year ended December 31, 1998.
(2) Information for the period January 1, 1994 through February 11, 1994 is not
presented because it is not comparable.
26
<PAGE>
(3) EBITDA represents the Company's share of net income before interest, taxes,
gain on sale of investments, depreciation and amortization. While EBITDA
should not be construed as an alternative to operating income (as determined
in accordance with GAAP) as an indicator of the Company's operating
performance or to cash flows from operating activities (as determined in
accordance with GAAP), nor as a measure of liquidity and other consolidated
income or cash flow statement data determined in accordance with GAAP. The
Company believes that EBITDA is an effective measure of shopping center
operating performance because EBITDA is unaffected by the debt and equity
structure of the property owner.
(4) The Company computes FFO in accordance with standards established by the
White Paper on FFO approved by the Board of Governors of the National
Association of Real Estate Investment Trusts ("NAREIT") in March 1995 which
defines FFO as net income (loss) (computed in accordance with GAAP)
excluding gains (or losses) from debt restructuring and sales of property,
plus real estate related depreciation and amortization and after adjustments
for unconsolidated partnerships and joint ventures. 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. In
addition, FFO as computed by the Company may not be comparable to similarly
titled figures reported by other REITs. The Company believes that FFO is an
effective measure of the Company's operating performance because analysts
and investors usually use FFO in analyzing the operating results of real
estate companies rather than using earnings per share.
(5) Fixed charges consist of interest, including capitalized interest and
amortization of debt expense.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the "Selected
Financial Data" and the Company's Consolidated Financial Statements and Notes
thereto. Historical results set forth in "Selected Financial Data" and the
Company's Consolidated Financial Statements are not necessarily indicative of
the future financial position and results of operations of the Company.
27
<PAGE>
GENERAL BACKGROUND
The Company's results of operations from year to year are due primarily to
acquisitions in 1998, 1997 and 1996 which are summarized as follows:
1998 ACQUISITIONS:
In 1998, the Company invested approximately $1.8 billion to acquire
interests in 16 Centers, including a portfolio of 12 shopping centers from
TrizecHahn for approximately $1.4 billion. The Properties acquired in 1998 were
as follows:
<TABLE>
<S> <C>
HAHN CENTERS:
UTC -- 100% interest acquired in July 1998.
Valley Fair -- 50% managing, non-controlling interest acquired in July
1998.
Solano -- 100% interest acquired in September 1998.
Parkway Plaza -- 100% interest acquired in September 1998.
Fox Hills -- 100% interest acquired in October 1998.
Oakridge -- 100% interest acquired in October 1998.
Downtown Plaza -- 100% interest acquired in October 1998.
Horton Plaza -- 100% interest acquired in October 1998.
Capital Mall -- 49% managing, non-controlling interest acquired in
October 1998 and the remaining 51% acquired in December
1998.
North County Fair -- the remaining 55% interest not previously owned by the
Company acquired in October 1998.
Cerritos -- 50% managing, non-controlling interest acquired in July
1998 and the remaining 50% acquired in November 1998.
Santa Anita -- 39.7% managing, non-controlling interest acquired in
September 1998 and an additional 50% interest acquired in
December 1998, which provided the Company with a
controlling interest in the property.
OTHER ACQUISITIONS:
Crestwood -- 100% interest acquired in January 1998.
Promenade -- 100% interest acquired in June 1998.
Independence Mall -- 60% interest acquired in August 1998 and an additional
10% interest acquired in October 1998.
Topanga -- the remaining 58% interest not previously owned by the
Company acquired in November 1998.
</TABLE>
The Centers acquired in 1998 (referred to as the "1998 Acquisition Centers")
were acquired with proceeds obtained from the Company's unsecured revolving
credit facility, the issuance of shares of the Company's Series C Preferred
Stock and Series D Preferred Stock totaling $275 million, the issuance of new
secured and unsecured debt, the issuance of notes to Australian investors (the
"Capital Notes") totaling $301.1 million, the assumption of debt, the exercise
of warrants in WHL (the "WHL Warrants") and subsequent sale of WHL shares for
$99.7 million and the issuance of partnership interests and Investor Unit Rights
valued at $32.3 million.
28
<PAGE>
At December 31, 1998 and for the year then ended, the Consolidated Financial
Statements and Notes thereto reflect the consolidated financial results of 29
Centers, the equity in income of five unconsolidated real estate partnerships,
the equity in income of North County Fair, Topanga, Cerritos, Santa Anita and
Capital Mall until these Centers became consolidated, 12 separate department
store properties net leased to the May Company under financing leases, certain
other real estate investments, the Garden State Plaza Loan (discussed below) and
the exercise of the WHL Warrants.
1997 ACQUISITIONS:
<TABLE>
<S> <C>
Garden State Plaza Loan -- In May 1997, the Company made a participating loan
totaling $145 million to two wholly-owned affiliates of WHL.
The loan is secured by the affiliates' 50% partnership
interest in Garden State Plaza, a super-regional shopping
center located in Paramus, New Jersey
WHL Warrants -- In May 1997, the Company acquired 49 million
non-transferable WHL Warrants which entitled the Company to
acquire WHL ordinary shares at a price equal to AUS $4.67
per share.
Wheaton -- 68% managing, controlling interest acquired in June 1997
Annapolis -- adjacent land and the remaining 70% interest not
previously owned by the Company acquired in June 1997
Meriden -- the remaining 50% interest not previously owned by the
Company acquired in September 1997
Northwest Plaza -- 100% interest acquired in December 1997
</TABLE>
The Centers acquired in 1997 (referred to as the "1997 Acquisition Centers")
were funded from proceeds obtained from the Company's Offering in May 1997, the
Company's unsecured corporate credit facility and the Company's interest in a
department store property net leased to the May Company.
At December 31, 1997 and for the year then ended, the Consolidated Financial
Statements and Notes thereto reflect the consolidated financial results of 17
Centers, the equity in income of five unconsolidated real estate partnerships,
the equity in income of Annapolis, and Meriden until these Centers became
consolidated, 12 separate department store properties net leased to the May
Company under financing leases, certain other real estate investments, and the
Garden State Plaza Loan.
For the year ended December 31, 1996, the Company's statements of income and
cash flows reflect the consolidated financial results of 12 Centers, the equity
in income of seven unconsolidated real estate partnerships, 13 separate
department store properties net leased to the May Company under financing
leases, certain other real estate investments and the Company's acquisition of
Connecticut Post, South Shore and Trumbull (the "1996 Acquisition Centers") in
July 1996.
29
<PAGE>
RESULTS OF OPERATIONS
COMPARISONS OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
TOTAL REVENUES increased $111.7 million or 52% to $328.5 million for the
year ended December 31, 1998 as compared to $216.8 million for the same period
in 1997. The increase is the result of the addition of the 1997 and 1998
Acquisition Centers which contributed $104.6 million or 94% of the increase in
total revenues. Excluding the total revenues generated by the 1997 and 1998
Acquisition Centers, total revenues increased $7.1 million due to completed
redevelopments, increased occupancy, higher base rents and higher percentage
rents due to higher sales throughout the portfolio.
TOTAL EXPENSES increased $65.1 million or 53% to $188.2 million for the year
ended December 31, 1998 as compared to $123.1 million for the same period in
1997. The increase was due primarily to the addition of the 1997 and 1998
Acquisition Centers, which contributed a combined $53.1 million or 82% of the
increase in total expenses. Excluding the total expenses incurred as a result of
the 1997 and 1998 Acquisition Centers, total expenses increased $12.0 million
due primarily to the advisory fee totaling $6.1 million, which first became
payable by the Company to the Advisor in 1998, and an increase in depreciation
primarily due to redevelopments placed into service in 1998 and 1997.
INTEREST EXPENSE, net of capitalized interest, increased $49.4 million or
86% to $106.9 million for the year ended December 31, 1998 as compared to $57.5
million for the same period in 1997, due primarily to increased borrowings under
the Company's secured and unsecured loan facilities, the Capital Notes and debt
assumed and issued in conjunction with the acquisition of the 1998 and 1997
Acquisition Centers.
EQUITY IN NET INCOME OF UNCONSOLIDATED REAL ESTATE PARTNERSHIPS increased
approximately $2.0 million to $5.9 million for the year ended December 31, 1998
as compared to $3.9 million for the same period in 1997 due primarily to the
acquisition of joint venture interests in Valley Fair, Independence Mall,
Capital Mall, Cerritos and Santa Anita, which were partially offset by the
acquisition of the remaining 55% interest in North County Fair in October 1998
and 58% interest in Topanga in November 1998.
INTEREST AND OTHER INCOME increased $8.0 million to $17.2 million for the
year ended December 31, 1998 as compared to $9.2 million for the same period in
1997. The increase was due to a full year of interest earned on the Garden State
Plaza Loan and interest earned on temporary investments.
NET INCOME increased $59.3 million to $106.2 million for the year ended
December 31, 1998 primarily due to a net gain of $53.9 million that resulted
from the sale of investments in April 1998, net of a loss from the reversal of
certain interest rate swap agreements in August 1998. Excluding this net gain,
net income increased $5.4 million or 12% to $52.3 million for the year ended
December 31, 1998 as compared to $46.9 million for the same period in 1997 for
the reasons discussed above.
COMPARISONS OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
TOTAL REVENUES increased $63.1 million or 41% to $216.8 million for the year
ended December 31, 1997 as compared to $153.7 million for the same period in
1996. The increase was primarily the result of a full year of operations of the
1996 Acquisition Centers, the acquisitions of the 1997 Acquisition Centers,
which contributed a combined $51.7 million or 82% of the increase in total
revenues. Excluding the total revenues generated by the 1996 and 1997
Acquisition Centers, total revenues increased $11.4 million due to higher
minimum rent resulting from Eastland, Mid Rivers and Mission Valley
redevelopments, higher occupancy and higher specialty leasing throughout the
portfolio.
TOTAL EXPENSES increased $30.6 million or 33% to $123.1 million for the year
ended December 31, 1997 as compared to $92.5 million for the same period in
1996. The increase was primarily the result of a full year of operations of the
1996 Acquisition Centers, the acquisition of the 1997 Acquisition Centers, which
contributed a combined $30.1 million or 98% of the increase in total expenses.
Excluding the total expenses incurred by the acquisitions and an advisory fee,
not payable in 1996 of $2.6 million, total
30
<PAGE>
expenses increased $3.1 million due primarily to an increase in depreciation
from the Mid Rivers, Eastland and Mission Valley redevelopments placed into
service in 1997.
INTEREST EXPENSE, net of capitalized interest, increased $17.3 million or
43% to $57.5 million for the year ended December 31, 1997 as compared to $40.2
million for the same period in 1996. The increase was due to the acquisition of
the 1996 Acquisition Centers which contributed $8.8 million of the increase in
interest expense. Excluding the 1996 Acquisition Centers, interest expense
increased $8.5 million due to additional borrowings on the Company's revolving
credit facility as a result of the acquisition of the 1997 Acquisition Centers,
and lower interest capitalized due to the completion of redevelopments.
EQUITY IN INCOME OF UNCONSOLIDATED REAL ESTATE PARTNERSHIPS increased by
$0.2 million to $3.9 million for the year ended December 31, 1997 as compared to
$3.7 million for the same period in 1996 due to improved operating results
totaling $1.7 million as a result of increased occupancy, rental rates and
specialty leasing income at all the partnerships and recovery of earthquake
repair costs of $0.4 million at Topanga, partially offset by the consolidation
of Annapolis and Meriden.
INTEREST AND OTHER INCOME increased $8.1 million to $9.2 million for the
year ended December 31, 1997 as compared to $1.1 million for the same period in
1996. The increase was primarily due to interest earned of $8.3 million on the
Garden State Plaza Loan.
MINORITY INTERESTS IN EARNINGS OF CONSOLIDATED REAL ESTATE PARTNERSHIPS
increased $1.4 million to $2.5 million for the year ended December 31, 1997 as
compared to $1.1 million for the same period in 1996 due to the acquisition of a
68% managing interest in Wheaton.
NET INCOME increased $22.2 million or 90% to $46.9 million from $24.7
million for the same period in 1996 for the reasons discussed above.
CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
Cash and cash equivalents increased $14.3 million for the year ended
December 31, 1998 due to excess cash generated by operating activities and
financing activities over cash used in investing activities. Net cash provided
by operating activities totaled $97.9 million which represents the cash flow
generated by the 1998 Acquisition Centers, a full year of operations of the 1997
Acquisition Centers, a full year of interest income earned on the Garden State
Plaza Loan and the operations of the Company's existing portfolio. The net cash
used in investing activities during the year ended December 31, 1998 totaled
$1,346.5 million due primarily to the acquisition of the 1998 Acquisition
Centers and cash used to fund renovations, expansions, tenant allowances and
other capital expenditures totaling $1,475.3 million which was partially offset
by investment proceeds obtained from the sale of WHL Stock totaling $99.7
million, $9.8 million in cash distributions received from unconsolidated
partnerships, notes receivable and deferred financing leases receivable
repayments totaling $4.9 million, restricted cash used in the redevelopment of
Mission Valley--West totaling $4.4 million and an increase in the cash balance
of consolidated real estate partnerships that were previously accounted for as
unconsolidated real estate partnerships totaling $10.0 million. The net cash
flow provided by financing activities totaled $1,262.9 million primarily as a
result of net borrowings totaling $1,117.6 million obtained to fund the purchase
of the 1998 Acquisition Centers and the $275.0 million in proceeds generated
from the issuance of convertible preferred stock which was partially offset by
cash distributions paid to preferred and common shareholders totaling $117.0
million, stock issuance costs totaling $8.8 million and cash distributions
totaling $3.9 million paid to minority interests in consolidated real estate
partnerships.
YEAR ENDED DECEMBER 31, 1997
Cash and cash equivalents increased $4.3 million for the year ended December
31, 1997 due to excess cash generated by operating activities and financing
activities over cash used for investing activities. Net
31
<PAGE>
cash provided by operating activities totaled $91.2 million which represent the
cash flow generated by the 1997 Acquisition Centers, a full year of operations
for the 1996 Acquisition Centers, interest income earned on the Garden State
Plaza Loan and the operations of the Company's existing portfolio. The net cash
used in investing activities totaled $561.0 million due primarily to the
acquisition of the 1997 Acquisition Centers and cash used to fund renovations,
expansions, tenant allowances and other capital expenditures totaling $386.2
million, funding the Garden State Plaza Loan totaling $145.0 million, the
purchase of WHL Warrants totaling $15.2 million and increase in restricted cash
totaling $28.3 million due to the funding of the Mission Valley--West
construction loan. The cash used in investing activities was partially offset by
investment proceeds obtained from cash distributions received from
unconsolidated partnerships totaling $10.0 million, notes receivable and
deferred financing lease receivable repayments totaling $2.6 million, and an
increase in the cash balances of consolidated real estate partnerships that were
previously accounted for as unconsolidated real estate partnerships totaling
$1.1 million. The net cash flow provided by financing activities totaled $474.1
million primarily as a result of net borrowings totaling $286.8 million obtained
to fund the purchase of the 1997 Acquisition Centers and the $300.4 million in
net proceeds generated from the issuance of common and preferred stock in
conjunction with the Company's Offering which was partially offset by cash
distributions paid to preferred and common shareholders totaling $111.7 million
and cash distributions totaling $1.4 million paid to minority interests in
consolidated real estate partnerships.
YEAR ENDED DECEMBER 31, 1996
Cash and cash equivalents increased $6.7 million for the year ended December
31, 1996 due to excess cash generated by operating activities and financing
activities over cash used for investing activities. Net cash provided by
operating activities totaled $55.2 million which represents the cash flow
generated by the 1996 Acquisition Centers and the operations of the Company's
existing portfolio. The net cash used in investing activities totaled $91.0
million primarily due to the purchase of the 1996 Acquisition Centers and cash
used to fund renovations, expansions, tenant allowances and other capital
expenditures totaling $106.9 million which was partially offset by investment
proceeds obtained from cash distributions received from unconsolidated
partnerships totaling $11.4 million, notes receivable and deferred financing
lease receivable repayments totaling $2.0 million and an increase in cash
balances of consolidated real estate partnerships that were previously accounted
for as unconsolidated real estate partnerships totaling $2.4 million. The net
cash flow provided by financing activities totaled $42.5 million primarily due
to net proceeds generated from the issuance of common and preferred stock net of
issuance costs totaling $405.4 million, used to redeem common stock of $218.0
million, partially offset by net distributions paid to preferred and common
shareholders totaling $68.2 million, net repayments of debt totaling $76.4
million and cash distributions totaling $0.3 million paid to minority interests
in consolidated real estate partnerships.
FFO--FUNDS FROM OPERATIONS
The Company computes FFO in accordance with standards established by the
White Paper on FFO approved by the Board of Governors of NAREIT in March 1995
which defines FFO as net income (loss) (computed in accordance with GAAP),
excluding gains (or losses) from debt restructuring and sales of property, plus
real estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. FFO should not be considered as
an alternative to net income (determined in accordance with GAAP) as a measure
of the Company's financial performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the Company's liquidity,
nor is it indicative of funds available to fund the Company's cash needs,
including its ability to make distributions. In addition, FFO as computed by the
Company may not be comparable to similarly titled figures reported by other
REITs. The Company believes that FFO is an effective measure of the Company's
operating performance because analysts and investors usually use FFO in
analyzing the operating results of real estate companies rather than using
earnings per share.
32
<PAGE>
The following is a summary of the Company's FFO and a reconciliation of net
income to FFO for the periods presented:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
---------- ---------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C>
Funds from Operations...................................... $ 140,839 $ 111,271 $ 75,842
---------- ---------- ---------
---------- ---------- ---------
Increase in Funds from Operations from prior period........ 26.6% 46.7% 15.3%
Reconciliation:
Net income............................................... $ 106,188 $ 46,865 $ 24,696
Gain on sale of investments.............................. (53,895) -- --
Depreciation and amortization:
Deferred financing leases.............................. 2,138 2,044 1,883
Consolidated properties................................ 76,926 53,913 38,596
Unconsolidated real estate partnerships................ 10,753 9,456 11,100
Minority interest portion.............................. (1,271) (1,007) (433)
---------- ---------- ---------
Funds from Operations...................................... $ 140,839 $ 111,271 $ 75,842
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
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 partnerships increased from $124.4 million
in 1996 to $256.9 million in 1998. The growth in EBITDA reflects the addition of
Total GLA, increased rental rates, increased retailer sales, improved occupancy
levels and effective control of operating costs.
33
<PAGE>
The following is a summary of the Company's EBITDA and a reconciliation of
EBITDA to FFO (which has been reconciled to the Company's net income above) for
the periods presented:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C>
EBITDA................................................... $ 256,931 $ 177,858 $ 124,352
---------- ---------- ----------
---------- ---------- ----------
Increase in EBITDA from prior period..................... 44.5% 43.0% 21.7%
Reconciliation:
Funds from Operations.................................. $ 140,839 111,271 75,842
Interest expense:
Consolidated properties.............................. 106,852 57,472 40,233
Unconsolidated real estate partnership............... 10,193 9,858 8,748
Minority interest portion of consolidated
properties......................................... (953) (743) (471)
---------- ---------- ----------
EBITDA................................................... $ 256,931 $ 177,858 $ 124,352
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998, the Company had unused capacity under its unsecured
revolving credit facility totaling $108.8 million which will be utilized to fund
acquisition and redevelopment activities and as a 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
7.08% to 7.26%.
As of December 31, 1998, the Company's balance of cash and cash equivalents
was $25.3 million, not including its proportionate share of cash held by
unconsolidated real estate partnerships.
During 1998, the Company acquired the 1998 Acquisition Centers for
approximately $1.8 billion including the assumption of debt. The funds for these
acquisitions were obtained from the utilization of its existing credit facility,
new secured and unsecured loan facilities, sale of assets and issuance of debt
and equity securities as further described below.
In December 1998, the Company issued $75 million of Series C-1, C-2 and D-1
preferred stock. SCPG purchased $50 million of the Series C-1, and C-2 preferred
stock and WAT purchased $25 million of the Series D-1 preferred stock. Each
share of preferred stock is convertible to ten shares of the Company's common
stock at the price of $18.00 per share and has a dividend rate equal to the
greater of 8.5% or the dividend declared on the Company's common stock. The
Series D-1 preferred stock acquired by WAT is not convertible into the Company's
common stock until approval is obtained from the Company's shareholders which
the Company will seek to obtain at its next annual meeting.
In December 1998, the Company issued a collateralized non-recourse note
payable totaling $746.1 million. The proceeds were used to finance a portion of
the property portfolio purchased from TrizecHahn and to refinance an existing
collateralized non-recourse note and a portion of the unsecured revolving credit
facility. The note is due in December 2001 and interest is provided at LIBOR
plus 0.53%. The Company has fixed the rate on this note at 6.38% through
interest rate swap contracts.
During the year ended December 31, 1998, the Company obtained secured and
unsecured loan facilities totaling $239,000 in connection with the purchase of
the 1998 Acquisition Centers. These secured and unsecured loan facilities are
due at various dates in 1999 and bear interest at either LIBOR + 1.5% or LIBOR +
1.75%.
34
<PAGE>
During the year ended December 31, 1998, the Company assumed mortgage debt
totaling approximately $478.2 million on a pro rata basis in connection with its
acquisition of interests in Cerritos, UTC, Valley Fair, Independence Mall,
Solano, Topanga, Downtown Plaza, North County Fair and Santa Anita.
In December 1998, the Company acquired a 1% interest in Capital Mall for
cash and issued 978,378 Investor Unit Rights in exchange for the remaining 50%
interest in Capital Mall not already owned by the Company.
In August 1998, the Company issued $200 million of Series C and D preferred
stock. Each share of Series C and Series D preferred stock is convertible into
ten shares of the Company's common stock at the price of $18.00 per share and
has a dividend rate equal to the greater of 8.5% or the dividend declared on the
Company's common stock.
Additionally, in August 1998, the Company issued 786,286 units in Westfield
Independence Mall Limited Partnership in conjunction with the acquisition of an
interest in Independence Mall. Under certain circumstances, each unit of
Westfield Independence Mall Limited Partnership is exchangeable for cash or, at
the option of the Company, into shares of the Company's common stock.
In June 1998, the Company issued $301.1 million of unsecured subordinated
notes ("Capital Notes") to Australian investors, repayable in three equal
installments due in June 2001, 2002 and 2003 and bearing interest at 8.38% per
annum.
In May 1998, the Company entered into a stock subscription agreement with
WAT. Subject to shareholder approval, the Company has the right to sell, and WAT
has the obligation to purchase, up to AUS $465 million (approximately US $285
million at December 31, 1998 foreign currency exchange rates) 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. Based
upon the foreign currency exchange rate on March 12, 1999, the Company would
receive approximately US $296 million.
In April 1998, the Company exercised the WHL Warrants. As a result of the
exercise, WHL elected to pay the profit element of the WHL Warrants by issuing
20,339,066 WHL ordinary shares. These shares were then sold by the Company for
$99.7 million.
The Company's consolidated indebtedness at December 31, 1998 was $2,641.0
million, of which $2,472.3 million is fixed-rate debt and $168.7 million is
variable rate debt after considering interest rate protection agreements
totaling $1.7 billion. The interest rate on the fixed rate debt ranges from
6.38% to 8.38%. The Company's pro-rata share of debt-to-total market
capitalization, based on the share price at December 31, 1998 was 54.6%,
excluding the Capital Notes from the numerator. The maturity dates of
consolidated indebtedness range from 1999 to 2018. Scheduled principal
amortization and balloon payments in connection with maturing consolidated
indebtedness over the next five years and thereafter are set forth in the table
below:
<TABLE>
<CAPTION>
YEAR AMOUNT
- -------------------------------------------------------------- -----------
(IN
THOUSANDS)
<S> <C>
1999.......................................................... $ 346,433
2000.......................................................... 632,572
2001.......................................................... 1,025,110
2002.......................................................... 165,368
2003.......................................................... 111,016
Thereafter.................................................... 360,516
</TABLE>
35
<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 Properties including Properties which have
undergone redevelopment in the past five years. 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 existing Centers compete
effectively within their existing markets and are able to attract new customers.
Capital expenditures and capitalized leasing costs totaled $60.9 million,
$70.0 million, and $45.8 million for the years ended December 31, 1998, 1997 and
1996, respectively. The following table shows the components of capital
expenditures and capitalized leasing costs.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
($ IN MILLIONS)
<S> <C> <C> <C>
Renovations and expansions............................. $ 46.5 $ 61.2 $ 39.0
Tenant allowances...................................... 8.9 5.5 5.0
Capitalized leasing costs.............................. 4.6 2.9 1.7
Other capital expenditures............................. 0.9 0.4 0.1
--------- --------- ---------
Total................................................ $ 60.9 $ 70.0 $ 45.8
--------- --------- ---------
--------- --------- ---------
</TABLE>
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 $54.3 million as of December 31, 1998, which will be funded
through existing mortgage debt, new mortgage debt and the unsecured revolving
credit facility.
The historical sources of capital used to fund the Company's operating
expenses, interest expense, recurring capital expenditures and non-recurring
capital expenditures (such as major building renovations and expansions) have
been: (i) Funds from Operations, (ii) the issuance of secured and unsecured debt
and (iii) the issuance of equity. The Company anticipates that development
projects, expansion projects and potential acquisitions will be funded by
external financing sources.
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: (i) additional debt financing, (ii) additional equity and
(iii) working capital reserves.
Although no assurance can be given, the Company believes that it will have
access to capital resources sufficient to satisfy the Company's cash
requirements and expand and develop its business in accordance with its strategy
for growth.
DISTRIBUTIONS
A distribution was declared on December 18, 1998 to shareholders of record
on December 31, 1998 of $33.0 million or $0.355 per common share for the quarter
ended December 31, 1998, which is equal to $1.42 per common share on an
annualized basis. The Company intends to pay regular quarterly distributions to
holders of its common stock.
36
<PAGE>
INFLATION
Inflation has remained relatively low during the past three years and has
had a minimal impact on the operating performance of the Properties.
Nonetheless, substantially all of the retailers' leases contain provisions
designed to lessen the impact of inflation on the Company. Such provisions
include clauses enabling the Company to receive percentage rentals based on
retailer's gross sales, which generally increase as prices rise, contractual
rent steps, which increase rental rates during the term of the lease, or both.
In addition, the remaining terms of the existing leases are for an average
period of less than ten years, which may enable the Company to replace existing
leases with new leases at higher effective rentals if rents on the existing
leases are below the then existing market rate. Substantially all of the leases,
other than those for Anchors, require the retailers to pay a proportionate share
of operating expenses, including common area maintenance, real estate taxes and
insurance, thereby reducing the Company's exposure to increases in cost and
operating expenses resulting from inflation.
Inflation may however, have a negative effect on some of the Company's other
operating items. Interest and general and administrative expense may be
adversely affected by inflation as these costs could increase at a rate higher
than rents. The Company enters into interest rate swap contracts as a means of
reducing its exposure to fluctuations in interest rates; however, there can be
no assurance that the Company will not be adversely affected by increases in
interest rates. Also, for leases with stated rent increases, inflation may have
a negative effect because the rent increases specified in these leases could be
lower than the increase in inflation at any given time.
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". Any of the Company's
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.
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
37
<PAGE>
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 existing automated controls for monitoring and controlling existing Systems.
The Manager has completed an assessment of all electronic and mechanical control
systems at its 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 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 to be small.
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 retailers and Anchors had been
notified of their responsibilities under their leases and REAs notwithstanding
interruptions to their business resulting from Year 2000 problems. The Manager
is communicating with each of the retailers about their plans and progress in
addressing their respective Year 2000 problems. An initial risk assessment is
expected to be substantially completed by March 31, 1999. Although the Manager's
inquiries indicate that most of these companies are working on becoming Year
2000 compliant, there can be no assurance that failure to make necessary
modifications would not have a material adverse affect on the Company. The cost
of communicating with the Company's tenants will be incurred by the Manager and
is not reimbursable by the Company.
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 anticipated to be completed by the
end of the second quarter of 1999. Although management believes that its efforts
with respect to such risks are appropriate, there can be no assurance that such
efforts will be adequate to determine the readiness of any of its key
third-party suppliers in sufficient time to prevent a material adverse effect on
the Company. The Company's contingency planning for non-compliant third-party
suppliers is to identify by the third quarter of 1999, 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 will be incurred by the Manager and is not reimbursable by the
Company.
WORST CASE SCENARIO
The worse case scenario could be an extended loss of utility service
resulting from interruptions at the point of power generation or line
transmission or local distribution to the Company's properties. Such an
interruption could result in an inability to provide tenants with access to
their spaces thereby affecting the
38
<PAGE>
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) Item
3. "Legal Proceedings" (b) Item 1. "Business-The Shopping Center Business,"
"Costs of Occupancy," "Mall Store Rental Rates," "The Company's Strategy for
Operations and Growth," "Insurance" and "Environmental Matters," (c) Item 5.
"Market for Registrant's Common Equity and Related Shareholder Matters," (d)
Item 7. "Management's Discussion and Analysis of Financial Condition and Results
of Operations-Results of Operations Comparisons of Year Ended December 31, 1998
to Year Ended December 31, 1997 and Year Ended December 31, 1997 to Year Ended
December 31, 1996," "Liquidity and Capital Resources," "Distributions,"
"Inflation," and "Year 2000 Readiness," and (e) 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 belief concerning future developments and their potential
effects on the Company. There can be no assurance that future developments will
be in accordance with management's expectations or that the effect of future
developments on the Company will be those anticipated by management. Many of the
factors that will determine these results are beyond the Company's ability to
control or predict.
The following important factors, and those important factors described
elsewhere in this report (including without limitation those discussed in
"Business," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Legal Proceedings"), or in other Securities and
Exchange Commission filings, could affect (and in some cases have affected) the
Company's actual results and could cause such results to differ materially from
estimates or expectations reflected in such forward-looking statements; (i)
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; (ii) 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; (iii) competition from other shopping centers
and other forms of retailing; (iv) 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;
39
<PAGE>
(v) 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; and (vi) 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 disposed of during a ten-year period; and the
possibility of a dramatic decrease in cash available for distributions if any
such taxes become payable.
While the Company periodically reassesses material trends and uncertainties
affecting the operations and financial condition in connection with its
preparation of Management's Discussion and Analysis of Results of Operations and
Financial Condition contained in its quarterly and annual reports, the Company
does not intend to review or revise any particular forward-looking statement
referenced in this report in light of future events, even if new information,
future events or other circumstances have made them incorrect or misleading.
The information referred to above should be considered by investors when
reviewing any forward-looking statements contained in this report, in any
documents incorporated herein by reference, in any of the Company's public
filings or press releases or in any oral statements made by the Company or any
of its officers or any other persons acting on its behalf. For those statements,
the Company intends to avail itself of the protection of the safe harbor from
liability with respect to forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
ITEM 7A: 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. Any gain or loss from terminating current swap contracts is
recognized in the period the swap contract is terminated or reversed. The
Company's policy is to maintain fixed rate borrowing (including fixed rate
mortgages and interest rate swaps) for 75% of forecast debt 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 considered by management to be 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.
Interest rate exchange agreements 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). The agreements consist of swaps and involve the future receipt, of a
floating rate based on LIBOR and the payment of a fixed rate. Since December 31,
1997, the Company has lengthened the average remaining term of its pro rata
share of fixed rate borrowings and hedges, including delayed start swaps from
7.8 years to 9.1 years. 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.
40
<PAGE>
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 debt and variable rate debt which has been fixed through the use of
interest rate swap contracts:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
Principal amount of fixed rate debt................... $ 777,911 $ 703,175
Principal (notional) amount of other current fixed
rate payable instruments............................ 1,700,000 225,000
--------- ---------
$2,477,911 $ 928,175
--------- ---------
--------- ---------
Fixed rate debt as a percentage of total notes payable
and revolving credit facility....................... 91.4% 79.6%
--------- ---------
--------- ---------
Average effective fixed rate (inclusive of margins) of
total fixed rate debt and hedges, including delayed
start swaps......................................... 7.09% 7.10%
--------- ---------
--------- ---------
Average remaining term (in years) of total fixed rate
borrowings and hedges, including delayed start
swaps............................................... 9.1 7.8
--------- ---------
--------- ---------
</TABLE>
The Company has entered into one foreign currency exchange agreement related
to the Capital Notes in order to eliminate its exposure to fluctuations in
exchange rates.
The estimated fair value of the Company's financial instruments have been
determined by the Company, using available market information and appropriate
valuation methodologies. However, considerable judgment is necessarily required
in interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market transaction. The use of
different market assumptions or estimation methodologies may have a material
effect on the estimated fair value amounts.
For purposes of the Securities and Exchange Commission's market risk
disclosure requirements, the Company has estimated the fair value of its
financial instruments at December 31, 1998. The fair value estimates presented
herein are based on pertinent information available to management as of December
31, 1998. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts as of December 31, 1998,
future estimates of fair value and the amounts which may be paid or realized in
the future may differ significantly from the amounts presented below.
41
<PAGE>
INTEREST RATE SENSITIVITY
PRINCIPAL (NOTIONAL) AMOUNT BY CONTRACT MATURITY DATE
<TABLE>
<CAPTION>
ESTIMATED
FAIR
VALUE
1999 2000 2001 2002 2003 THEREAFTER TOTAL 12/31/98
--------- --------- --------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(AMOUNTS IN THOUSANDS EXCEPT INTEREST RATES)
ASSETS:
Participating loan to
an affiliate........ -- -- -- -- -- $ 145,000 $ 145,000 $ 145,000
Average rate.......... -- -- -- -- -- 8.5%
Direct financing
leases receivable... $ 2,290 $ 2,447 $ 2,617 $ 2,799 $ 2,944 $ 70,117 $ 83,214 $ 85,571
LIABILITIES:
Notes Payable--fixed
rate................ $ 14,958 $ 142,572 $ 178,648 $ 65,005 $ 10,653 $ 360,516 $ 772,352 $ 781,713
Average rate.......... 7.1% 7.1% 6.6% 8.1% 6.8% 7.0%
Notes
Payable--variable
rate................ $ 331,475 $ 490,000 $ 846,462 100,363 100,363 -- $1,868,663 $1,868,663
Average rate.......... L+1.7 (1) L+1.5 (1) L+.70 (1) L+2.32 (1) L+2.32 (1) --
INTEREST RATE SWAP
CONTRACTS:
Current swaps where
the Company receives
L(1)................ $ 100,000 -- $ 100,000 $ 100,000 $ 100,000 $1,300,000 $1,700,000 $ (60,002)
Average rate.......... 5.99% -- 5.95% 5.95% 5.95% 5.85%
Deferred swaps where
the Company receives
L(1)................ -- -- -- $ 317,000 100,000 600,000 $1,017,000 $ (28,673)
Average rate.......... 6.21% 6.15% 6.11%
</TABLE>
- ------------------------------
(1) L refers to the London Interbank Offered Rate (or "LIBOR").
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Consolidated Financial Statements and Financial Statement
Schedules contained in Item 14.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
42
<PAGE>
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item will be contained in the Company's
definitive proxy statement for its 1999 annual meeting of shareholders which
will be filed on or before April 30, 1999 and is incorporated herein by
reference.
ITEM 11: EXECUTIVE COMPENSATION
The information required by this item will be contained in the Company's
definitive proxy statement for its 1999 annual meeting of shareholders which
will be filed on or before April 30, 1999 and is incorporated herein by
reference.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item will be contained in the Company's
definitive proxy statement for its 1999 annual meeting of shareholders which
will be filed on or before April 30, 1999 and is incorporated herein by
reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item will be contained in the Company's
definitive proxy statement for its 1999 annual meeting of shareholders which
will be filed on or before April 30, 1999 and is incorporated herein by
reference.
ITEM 14: EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULE AND REPORTS ON FORM 8-K
(a) 1. See page F-1 for a listing of consolidated financial statements
submitted as part of this report.
2. All other schedules have been omitted since the required information
is either included in the Consolidated Financial Statements, not
present, or not present in amounts sufficient to require submission
of the schedules
3. Exhibits submitted with this report as filed with the Securities and
Exchange Commission and those incorporated by reference to other
filings are listed on the exhibit index.
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K during the quarter
ended December 31, 1998.
<TABLE>
<CAPTION>
FINANCIAL
DATE OF FILING ITEMS REPORTED STATEMENT
- --------------------------------------------------------- -------------- ------------------
<S> <C> <C>
October 13, 1998......................................... 2, 7 No
October 16, 1998......................................... 7 Yes
October 19, 1998......................................... 7 Yes
November 13, 1998........................................ 2, 7 Yes
December 2, 1998......................................... 2, 7 No
December 11, 1998........................................ 5 No
</TABLE>
(c) Exhibits submitted with this report as filed with the Securities and
Exchange Commission and those incorporated by reference to other filings
are listed on the exhibit index.
43
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Auditors............................................................................. F-2
Consolidated Balance Sheets as of December 31, 1998 and 1997............................................... F-3
Consolidated Statements of Income for Years ended December 31, 1998, 1997 and 1996......................... F-4
Consolidated Statements of Changes in Shareholders' Equity for the Years ended December 31, 1998, 1997 and
1996..................................................................................................... F-5
Consolidated Statements of Cash Flows for the Years ended December 31, 1998, 1997 and 1996................. F-6
Notes to Consolidated Financial Statements................................................................. F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of
Westfield America Inc.:
We have audited the accompanying consolidated balance sheets of Westfield
America, Inc. and Subsidiaries (the "Company") as of December 31, 1998 and 1997
and the related consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three year period ended December 31, 1998.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Westfield America, Inc. and Subsidiaries as of December 31, 1998 and 1997 and
the consolidated results of operations and cash flows for each of the years in
the three year period ended December 31, 1998 in conformity with generally
accepted accounting principles.
[LOGO]
Los Angeles, California
January 25, 1999
F-2
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
<S> <C> <C>
1998 1997
------------ ------------
ASSETS
Land.................................................................................. $ 457,801 $ 302,260
Buildings, improvements and equipment................................................. 3,185,969 1,491,067
Less accumulated depreciation......................................................... (340,727) (236,220)
------------ ------------
Net property and equipment.......................................................... 3,303,043 1,557,107
Construction in progress.............................................................. 20,254 11,651
Investments in unconsolidated real estate partnerships................................ 138,747 49,391
Participating loan to affiliates...................................................... 145,000 145,000
Direct financing leases receivable.................................................... 83,214 85,352
------------ ------------
Net investment in real estate....................................................... 3,690,258 1,848,501
Cash and cash equivalents............................................................. 25,272 11,003
Restricted cash....................................................................... 25,820 28,305
Accounts receivable, net of allowance of $8,400 and $8,912 in 1998
and 1997, respectively.............................................................. 45,325 27,499
Deferred expenses and other assets, net............................................... 33,964 54,322
------------ ------------
Total assets........................................................................ $ 3,820,639 $ 1,969,630
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable and revolving credit facility........................................... $ 2,641,015 $ 1,107,425
Accounts payable and accrued expenses................................................. 82,658 38,352
Distribution payable.................................................................. 33,242 28,350
------------ ------------
Total liabilities................................................................... 2,756,915 1,174,127
------------ ------------
Minority interests.................................................................... 42,605 25,123
Series C and D preferred stock........................................................ 275,000 --
Common stock.......................................................................... 731 731
Series A and B preferred stock........................................................ 121,000 121,000
Additional paid-in capital............................................................ 624,388 648,649
------------ ------------
Total shareholders' equity.......................................................... 746,119 770,380
------------ ------------
Total liabilities and shareholders' equity.......................................... $ 3,820,639 $ 1,969,630
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
<S> <C> <C> <C>
1998 1997 1996
----------- ---------- ----------
REVENUES:
Minimum rents............................................................. $ 226,089 $ 147,971 $ 105,295
Tenant recoveries......................................................... 91,909 64,662 44,423
Percentage rents.......................................................... 10,467 4,175 3,991
----------- ---------- ----------
Total revenues.......................................................... 328,465 216,808 153,709
----------- ---------- ----------
EXPENSES:
Operating................................................................. 97,359 64,156 47,339
Management fees........................................................... 6,264 4,074 3,191
Advisory fee.............................................................. 6,140 -- 2,600
General and administrative................................................ 1,519 949 808
Depreciation and amortization............................................. 76,926 53,913 38,596
----------- ---------- ----------
Total expenses.......................................................... 188,208 123,092 92,534
----------- ---------- ----------
OPERATING INCOME............................................................ 140,257 93,716 61,175
INTEREST EXPENSE, net....................................................... (106,852) (57,472) (40,233)
OTHER INCOME:
Equity in income of unconsolidated real estate partnerships............... 5,949 3,887 3,707
Gain on sale of investments, net.......................................... 53,895 -- --
Interest and other income................................................. 17,196 9,212 1,110
----------- ---------- ----------
INCOME BEFORE MINORITY INTEREST............................................. 110,445 49,343 25,759
Minority interest in earnings of consolidated real
estate partnerships....................................................... (4,257) (2,478) (1,063)
----------- ---------- ----------
NET INCOME.................................................................. $ 106,188 $ 46,865 $ 24,696
----------- ---------- ----------
----------- ---------- ----------
Net income allocable to preferred shares.................................... $ 17,619 $ 11,428 $ 4,264
Net income allocable to common shares....................................... 88,569 35,437 20,432
----------- ---------- ----------
$ 106,188 $ 46,865 $ 24,696
----------- ---------- ----------
----------- ---------- ----------
EARNINGS PER COMMON SHARE:
Basic..................................................................... $ 1.21 $ 0.54 $ 0.42
----------- ---------- ----------
----------- ---------- ----------
Diluted................................................................... $ 1.20 $ 0.54 $ 0.42
----------- ---------- ----------
----------- ---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Basic..................................................................... 73,334 65,505 49,063
----------- ---------- ----------
----------- ---------- ----------
Diluted................................................................... 73,901 65,548 49,063
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PREFERRED PAID-IN RETAINED SHAREHOLDERS'
STOCK STOCK CAPITAL EARNINGS EQUITY
----------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1996.......................... $ 451 $ -- $ 379,968 $ -- $ 380,419
Net income for the year ended
December 31, 1996................................ -- -- -- 24,696 24,696
Issuance of common stock........................... 212 -- 342,109 -- 342,321
Issuance of preferred stock........................ -- 94,000 -- -- 94,000
Cost of stock issuances............................ -- -- (29,000) -- (29,000)
Redemption of common stock......................... (136) -- (217,864) -- (218,000)
Advisory fee (not payable)......................... -- -- 2,600 -- 2,600
Distributions on preferred stock................... -- -- -- (4,264) (4,264)
Distributions on common stock...................... -- -- (53,810) (20,432) (74,242)
----- ---------- ----------- ---------- -------------
BALANCES, DECEMBER 31, 1996........................ 527 94,000 424,003 -- 518,530
Net income for the year ended
December 31, 1997................................ -- -- -- 46,865 46,865
Issuance of common stock........................... 204 -- 305,796 -- 306,000
Issuance of preferred stock........................ -- 27,000 -- -- 27,000
Cost of stock issuances............................ -- -- (32,616) -- (32,616)
Redemption of senior preferred stock............... -- -- (57) -- (57)
Distributions on preferred stock................... -- -- -- (11,428) (11,428)
Distributions on common stock...................... -- -- (71,163) (35,437) (106,600)
----- ---------- ----------- ---------- -------------
BALANCES, DECEMBER 31, 1997, as previously
reported......................................... 731 121,000 625,963 -- 747,694
Adjustment to investment cost basis
(Note 4)......................................... -- -- 22,686 -- 22,686
----- ---------- ----------- ---------- -------------
BALANCES, DECEMBER 31, 1997, as restated........... 731 121,000 648,649 -- 770,380
Net income for the year ended
December 31, 1998................................ -- -- -- 106,188 106,188
Issuance of common stock........................... -- -- 140 -- 140
Cost of stock issuances............................ -- -- (8,834) -- (8,834)
Distributions on preferred stock................... -- -- -- (17,619) (17,619)
Distributions on common stock...................... -- -- (15,567) (88,569) (104,136)
----- ---------- ----------- ---------- -------------
BALANCES, DECEMBER 31, 1998........................ $ 731 $ 121,000 $ 624,388 $ -- $ 746,119
----- ---------- ----------- ---------- -------------
----- ---------- ----------- ---------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1998 1997 1996
------------- ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................. $ 106,188 $ 46,865 $ 24,696
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization......................................... 79,394 54,332 38,596
Equity in income of unconsolidated real estate partnerships........... (5,949) (3,887) (3,707)
Minority interests in earnings of consolidated real estate
partnerships........................................................ 4,257 2,478 1,063
Advisory fee (not payable in 1996).................................... -- -- 2,600
Gain on sale of investments, net...................................... (53,895) -- --
Issuance of common stock to independent directors..................... 140 -- --
Changes in assets and liabilities:
Accounts receivable, net.............................................. (11,545) (10,824) (5,510)
Deferred expenses and other assets.................................... (14,093) (6,760) (580)
Accounts payable and accrued expenses................................. (6,638) 8,976 (1,914)
------------- ----------- ----------
Net cash flows provided by operating activities......................... 97,859 91,180 55,244
------------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and acquisitions................................... (1,475,338) (386,238) (106,878)
Participating loan to affiliates........................................ -- (145,000) --
Purchase of WHL Warrants................................................ -- (15,184) --
Proceeds from sale of WHL Stock......................................... 99,670 -- --
Cash distributions received from unconsolidated real estate
partnerships.......................................................... 9,812 10,013 11,430
Cash and cash equivalents of consolidated real estate partnerships...... 10,042 1,083 2,389
Direct financing leases receivable repayments........................... 2,138 2,044 1,883
Notes receivable repayments............................................. 2,720 622 107
Decrease (increase) in restricted cash.................................. 4,422 (28,305) 100
------------- ----------- ----------
Net cash flows used in investing activities............................. $ (1,346,534) $ (560,965) $ (90,969)
------------- ----------- ----------
</TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUES ON THE FOLLOWING PAGE.
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
------------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock................................. $ -- $ 436,500 $ 340,405
Proceeds from issuance of preferred stock.............................. 275,000 27,000 94,000
Redemption of common stock............................................. -- (130,500) (218,000)
Redemption of preferred stock.......................................... -- (57) --
Cost of stock issuances................................................ (8,834) (32,616) (29,000)
Cash distributions paid to preferred shareholders...................... (13,184) (10,938) (2,070)
Cash distributions paid to common shareholders......................... (103,766) (100,721) (69,568)
Shareholders' recontribution of distributions.......................... -- -- 3,426
Cash distributions paid to minority interests, net..................... (3,914) (1,409) (316)
Proceeds from notes payable and revolving credit facility.............. 1,313,188 653,456 114,172
Principal payments on notes payable and revolving
credit facility...................................................... (195,546) (366,656) (190,595)
------------- ----------- -----------
Net cash flows provided by financing activities........................ 1,262,944 474,059 42,454
------------- ----------- -----------
Net increase in cash and cash equivalents.............................. 14,269 4,274 6,729
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD........................... 11,003 6,729 --
------------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................. $ 25,272 $ 11,003 $ 6,729
------------- ----------- -----------
------------- ----------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Interest (net of amounts capitalized).................................. $ 105,307 $ 58,514 $ 42,378
------------- ----------- -----------
------------- ----------- -----------
Income taxes........................................................... $ 218 $ 51 $ 60
------------- ----------- -----------
------------- ----------- -----------
</TABLE>
NONCASH INVESTING AND FINANCING INFORMATION PROVIDED IN NOTES 8 AND 11.
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
1. ORGANIZATION:
Westfield America, Inc. (the "Company"), a Missouri corporation, is
primarily in the business of owning, operating, leasing, developing,
redeveloping and acquiring super-regional and regional retail shopping centers
in major metropolitan areas in the United States. The Company is a publicly
traded real estate investment trust ("REIT"), with interests in 38 major
shopping centers branded nationwide as "Westfield Shoppingtowns". The Company's
portfolio, of Westfield Shoppingtowns includes clusters of multi-center regional
and super-regional shopping centers in eight states 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, owns
interests in a portfolio, of 23 super-regional shopping centers, 12 regional
shopping centers, three power centers (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
including the Centers, the "Properties"). The Centers are located in eight
states in the east coast, midwest and west coast regions of the United States.
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), asset
management company (the "Advisor") and development company (the "Developer") to
provide property management, asset management and development services to the
Company under agreements that had initial terms of three years and are renewable
annually thereafter. Each of the Manager, Advisor and Developer is a
wholly-owned subsidiary of WHL, giving the Company access to WHL's worldwide
management expertise and resources. In 1997, the Company changed its name from
CenterMark Properties, Inc. to Westfield America, Inc., in conjunction with its
initial public offering (the "Offering").
The Company is organized and operated as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"). In order to be treated as a REIT for
income tax purposes, the Company must meet the minimum distribution requirements
as well as certain asset, income and other tests specified by the Code. The
Company intends to conduct its business so as to continue to satisfy the REIT
provisions under the Code, including making distributions to its shareholders
sufficient to meet the minimum distribution requirements.
In 1998, the Company completed the exchange of its interests in most of the
Centers and other assets for partnership interests ("Partnership Units") in the
Operating Partnership. Also in 1998, the Operating Partnership issued units in
the Operating Partnership to unrelated third parties ("Investor Unit Rights") in
exchange for certain interests acquired. The Investor Unit Rights are held by
various unrelated third parties who may under certain circumstances exchange
their Investor Unit Rights for cash or, at the discretion of the Company, shares
of the Company's common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
The Company conducts its business through its Operating Partnership, wholly
owned subsidiaries and affiliates. The consolidated financial statements include
the accounts of the Company and all subsidiaries
F-8
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
over which the Company is able to exercise significant control. The Company does
not consider itself to be in control when the other partners have important
approval rights over major actions. Investments as general and limited partners
in non-controlled partnerships are accounted for using the equity method. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
INVESTMENT IN REAL ESTATE:
Buildings, improvements and equipment are stated at cost. Costs related to
the acquisition, development, construction and improvement of properties are
capitalized. Interest costs, real estate taxes, insurance and other development
related costs incurred during construction periods are capitalized and
depreciated on the same basis as the related assets. Expenditures for repairs
and maintenance are charged to expense when incurred. Certain repair and
maintenance costs are chargeable to the retailers as provided in their leases.
Such reimbursements are included in tenant recoveries in the Consolidated
Statements of Income. Depreciation is computed using the straight-line method
over the estimated useful life of each property, which generally ranges from 3
to 50 years.
When indicators of impairment are present, the Company reviews expected cash
flows to be generated by the Properties to determine whether the value of any of
the Properties have been impaired. An asset is considered to be impaired when
the undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amount. As of December 31, 1998, there were no
impairment indicators present.
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid investments with an original
maturity of three months or less at date of purchase to be cash equivalents.
RESTRICTED CASH:
Restricted cash represents funds totaling $19,092 set aside to pay operating
and capital expenditures on properties which are collateral for secured loan
facilities and funds totaling $6,728 to be utilized in the redevelopment of
Mission Valley West (see Note 8).
REVENUE RECOGNITION:
Shopping center space is generally leased to specialty retailers under
leases which are accounted for as operating leases. Minimum rent revenues are
recognized on a straight-line basis over the respective lease term. Percentage
rents are recognized on an accrual basis as earned. Recoveries from retailers
are recognized as income in the period during which the applicable costs are
incurred.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES:
The Company enters into interest rate swap contracts to reduce its exposure
to fluctuations in interest rates. Net interest differentials to be paid or
received related to these swap contracts are accrued as incurred or earned. Any
gain or loss from terminating current swap contracts is recognized in the period
the swap contract is terminated or reversed. Unamortized gains or losses are
recognized in income when
F-9
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
the related debt matures or is extinguished. At December 31, 1998, the Company
also holds a foreign exchange hedge agreement.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133 "Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 1999. The Statement
permits early adoption as of the beginning of any fiscal quarter after its
issuance. The Company expects to adopt the new Statement effective January 1,
2000. The Statement will require the Company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be adjusted to
fair value through income. If the derivative is a hedge, depending on the nature
of the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings.
ACCOUNTS RECEIVABLE:
Accounts receivable include amounts billed to retailers, deferred rent
receivables arising from straight-lining of rents and accrued recoveries from
retailers. Management periodically evaluates the collectibility of these
receivables and adjusts the allowance for doubtful accounts to reflect the
amounts estimated to be uncollectible.
DEFERRED EXPENSES AND OTHER ASSETS:
Deferred expenses and other assets include costs associated with notes
payable, retailer leases and prepaid expenses. Costs associated with obtaining
notes payable are amortized based on the effective interest rate method. Costs
related to leasing activities are capitalized and amortized over the initial
term of the related lease.
EARNINGS PER SHARE:
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflects the assumed conversion of all
dilutive securities using the treasury stock method.
INCOME TAXES:
The Company has elected to be treated as a REIT for income tax purposes. As
a REIT, the Company is required to meet the minimum distribution requirements as
well certain asset, income and other tests as specified by the Code. No
provision for income taxes has been included in the Company's financial
statements since, the Company will generally not be liable for federal income
taxes, provided it continues to distribute substantially all of its REIT taxable
income. State income and franchise taxes are minimal and included in general and
administrative expense.
SEGMENT REPORTING:
Effective January 1, 1998, the Company adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 131
"Disclosures about Segments of an Enterprise and
F-10
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Related Information." Statement No. 131 establishes standards for the way public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. Statement No.
131 also establishes standards for related disclosures about products and
services, geographic areas, and major customers. As management views the Company
as operating in a single business segment as described in Note 1, the adoption
of Statement No. 131 did not result in additional disclosure of segment
information as management does not operate its Properties based upon segments.
USE OF ESTIMATES:
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
RECLASSIFICATION:
Certain amounts in the 1997 and 1996 consolidated financial statements have
been reclassified to conform with the 1998 presentation.
3. ACQUISITIONS:
During 1998, the Company invested approximately $1.8 billion to acquire
interests in 16 shopping centers, including interests in 12 shopping centers
from TrizecHahn Centers, Inc. ("TrizechHahn").
F-11
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
3. ACQUISITIONS: (CONTINUED)
Interests in the Centers acquired from TrizecHahn (the "Hahn Centers") and other
independent third-parties are as follows:
<TABLE>
<CAPTION>
PROPERTY LOCATION INTEREST ACQUIRED
- ----------------------- ----------------------- ----------------------------------------------------------------
<S> <C> <C>
HAHN CENTERS:
Capital Mall........... Olympia, WA 49% managing, non-controlling interest acquired in October 1998
and the remaining 51% acquired in December 1998.
Cerritos............... Cerritos, CA 50% managing, non-controlling interest acquired in July 1998 and
the remaining 50% acquired in November 1998.
Downtown Plaza......... Sacramento, CA 100% interest acquired in October 1998.
Fox Hills(1)........... Culver City, CA 100% interest acquired in October 1998.
Horton Plaza........... San Diego, CA 100% interest acquired in October 1998.
North County Fair...... Escondido CA The remaining 55% interest not previously owned by the Company
acquired in October 1998.
Oakridge............... San Jose, CA 100% interest acquired in October 1998.
Parkway Plaza.......... El Cajon, CA 100% interest acquired in September 1998.
Santa Anita(2)......... Arcadia, CA 39.7% managing, non-controlling interest acquired in September
1998, an additional 50% interest acquired in December 1998
which provided the Company with a controlling interest in the
property.
Solano................. Fairfield, CA 100% interest acquired in September 1998.
University Towne....... San Diego, CA 100% interest acquired in July 1998.
Valley Fair............ San Jose, CA 50% managing, non-controlling interest acquired in July 1998.
OTHER ACQUISITIONS:
Crestwood.............. St. Louis, MO 100% interest acquired in January 1998
Independence Mall...... Wilmington, NC 60% interest acquired in August 1998 and an additional 10%
interest acquired in October 1998.
Promenade.............. Woodland Hills, CA 100% interest acquired in June 1998.
Topanga................ Canoga Park, CA The remaining 58% interest not previously owned by the Company
acquired in November 1998.
</TABLE>
- ------------------------
(1) In July 1998, the Company acquired a note receivable secured by Fox Hills,
which was retired when the Company acquired the property in October 1998,
(2) In December 1998, in conjunction with the acquisition of the additional 50%
interest in Santa Anita, the Company acquired the land and related ground
lease under the Center.
F-12
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
3. ACQUISITIONS: (CONTINUED)
In conjunction with the above acquisitions, the Company assumed mortgage
debt as described in Note 8.
During 1997, the Company invested approximately $349,000 to acquire the
following properties:
<TABLE>
<CAPTION>
PROPERTY LOCATION INTEREST ACQUIRED
- ----------------------- ----------------------- ----------------------------------------------------------------
<S> <C> <C>
Wheaton................ Wheaton, MD 68% managing, non controlling interest acquired in June 1997.
Annapolis.............. Annapolis, MD The remaining 70% interest not previously owned by the Company
plus an additional 13.2 acre parcel of land adjacent to the
Center acquired in June 1997.
Meriden................ Meriden, CT The remaining 50% interest not previously owned by the Company
acquired in September 1997.
Northwest Plaza........ St. Ann, MO 100% interest acquired in December 1997.
</TABLE>
Additionally, in May 1997, the Company made a participating loan totaling
$145,000 (the "Garden State Plaza Loan") to two wholly-owned, indirect
subsidiaries of WHL which have a combined 50% partnership interest in Westland
Garden State Plaza Limited Partnership, the owner of Garden State Plaza, a
super-regional shopping center located in Paramus, New Jersey. The non-recourse
loan provides for interest only at a fixed annual rate of 8.5% and is secured by
the borrowers' 50% indirect interest in Garden State Plaza. The Company is
entitled to receive participating interest payments based on 80% of the
borrowers' share of the adjusted cashflow (as defined) from Garden State Plaza
subject to an annual aggregate limit of fixed and participating interest in an
amount equal to 11%. The loan matures in May 2007. During each of the years
ended December 31, 1998, and 1997, the Company earned participating interest of
$2,420 and $728, respectively.
4. DISPOSITIONS:
In conjunction with the Offering, the Company acquired 49 million
non-transferable warrants (the "WHL Warrants") to acquire ordinary shares of
WHL. The Company's December 31, 1997 balance sheet has been restated to reflect
the fair value of the WHL Warrants, which at the time of the Offering exceeded
the Company's cost basis. In April 1998, with the consent of WHL, the Company
exercised the WHL Warrants by electing to receive the profit element of the WHL
Warrants. As a result of the exercise, the Company received 20,339,066 WHL
ordinary shares which the Company sold for proceeds totaling $99,670.
In August 1998, the Company recognized a loss totaling $11,806, resulting
from the reversal of certain deferred interest rate swap agreements. This loss
was netted against the gain from the sale of investments for purposes of
financial statement presentation.
F-13
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS:
As of December 31, 1998, the Company holds unconsolidated interests as a
general and managing partner in four real estate partnerships and both a general
and limited partner in one real estate partnership. In October 1998, the Company
acquired the 55% interest in North County Fair that it did not already own and
in November 1998, the Company acquired the 58% interest in Topanga that it did
not already own. In June 1997, the Company acquired the 70% interest in
Annapolis that it did not already own and in September 1997, the Company
acquired the 50% interest in Meriden that it did not already own. The Company's
interest in each unconsolidated partnership as of December 31, 1998 is as
follows:
<TABLE>
<CAPTION>
PERCENT
PROPERTY LOCATION INTEREST
- ---------------------- -------------------- -----------
<S> <C> <C>
Valley Fair San Jose, CA 50.0%
Vancouver Vancouver, WA 50.0%
West Valley Canoga Park, CA 42.5%
Plaza Camino Real Carlsbad, CA 40.0%
Independence Mall Wilmington, NC 70.0%
</TABLE>
A summary of the condensed combined balance sheet information for all
unconsolidated real estate partnerships is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
CONDENSED COMBINED BALANCE SHEET INFORMATION 1998 1997
- ------------------------------------------------------ --------- ---------
<S> <C> <C>
Investment in real estate:
Land, buildings and improvements, at cost........... $ 490,214 $ 290,092
Less accumulated depreciation and amortization...... (46,908) (105,495)
Construction in progress............................ 5,081 1,322
--------- ---------
Net investment in real estate......................... 448,387 185,919
Other notes payable................................... (185,674) (175,289)
Other assets and liabilities, net, and interest of
other partners...................................... (123,966) 38,761
--------- ---------
Investments in unconsolidated real estate
partnerships........................................ $ 138,747 $ 49,391
--------- ---------
--------- ---------
</TABLE>
A summary of the condensed combined statements of income for all
unconsolidated real estate partnerships which include the five real estate
partnerships noted above including Valley Fair following its acquisition in July
1998, Independence Mall following its acquisition in August 1998, Cerritos for
the period from July 1998 through November 1998, Santa Anita for the period from
September 1998 to December 1998, Capital Mall for the period from October 1998
to December 1998, North County Fair
F-14
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS: (CONTINUED)
through October 1998, Topanga through November 1998, Annapolis through June 1997
and Meriden through September 1997 is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
CONDENSED COMBINED STATEMENTS OF INCOME
INFORMATION 1998 1997 1996
- ------------------------------------------------ --------- --------- ---------
<S> <C> <C> <C>
Total revenues:................................. $ 82,620 $ 75,789 $ 85,767
Costs and expenses:
Operating, general and administrative
expenses.................................... 25,231 22,568 27,331
Interest expense, net......................... 24,025 21,982 22,342
Depreciation and amortization................. 16,867 18,314 25,338
--------- --------- ---------
Net income...................................... 16,497 12,925 10,756
Other partners' share of income................. (10,548) (9,038) (7,049)
--------- --------- ---------
Equity in income of unconsolidated real estate
partnerships.................................. $ 5,949 $ 3,887 $ 3,707
--------- --------- ---------
--------- --------- ---------
</TABLE>
Significant accounting policies used by the unconsolidated real estate
partnerships are similar to those used by the Company.
6. LEASES:
DIRECT FINANCING LEASES RECEIVABLE:
The Company owns certain properties that are leased to The May Department
Stores Company under direct financing leases. The leases' initial terms expire
in September 2017, and may be renewed for up to 14 additional five-year terms.
The May Department Stores Company has the option to purchase the property under
these leases at fair market value during the last 16 months of the initial term
or any of the renewal option terms.
The direct financing leases receivable are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Minimum lease payments receivable....................... $ 147,750 $ 155,630
Less unearned income (at 7%)............................ (64,536) (70,278)
--------- ---------
Direct financing leases receivable.................... $ 83,214 $ 85,352
--------- ---------
--------- ---------
</TABLE>
F-15
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
6. LEASES: (CONTINUED)
Excluding options to extend, future minimum rentals to be received by the
Company on the direct financing leases as of December 31, 1998, are as follows:
<TABLE>
<S> <C>
1999.............................................................. $ 7,880
2000.............................................................. 7,880
2001.............................................................. 7,880
2002.............................................................. 7,880
2003.............................................................. 7,880
Thereafter........................................................ 108,350
---------
$ 147,750
---------
---------
</TABLE>
PROPERTY RENTAL:
Substantially all of the property owned by the Company is leased to
third-party retailers under operating leases as of December 31, 1998. Lease
terms vary between retailers and some leases include percentage rental payments
based on sales volume.
Future minimum rental revenues under noncancelable operating leases as of
December 31, 1998, are as follows:
<TABLE>
<S> <C>
1999............................................................ $ 279,120
2000............................................................ 264,309
2001............................................................ 246,877
2002............................................................ 225,433
2003............................................................ 194,190
Thereafter...................................................... 705,536
---------
$1,915,465
---------
---------
</TABLE>
These amounts do not include percentage rentals which may become receivable
under certain leases on the basis of retailer sales in excess of stipulated
minimums.
GROUND LEASES:
The Company leases the land underlying portions of several of its Centers.
Future minimum annual ground lease payments for ground leases in effect as of
December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999............................................................... $ 1,437
2000............................................................... 1,435
2001............................................................... 1,438
2002............................................................... 1,449
2003............................................................... 1,449
Thereafter......................................................... 43,983
---------
$ 51,191
---------
---------
</TABLE>
F-16
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
6. LEASES: (CONTINUED)
These amounts do not include participation rentals which may become payable
under certain ground leases on the basis of gross rental receipts in excess of a
stipulated minimum.
7. DEFERRED EXPENSES AND OTHER ASSETS:
Deferred expenses and other assets are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Investment in WHL Warrants (see Note 4)................... $ -- $ 37,870
Lease costs, net of accumulated amortization of $10,867
and $4,767 in 1998 and 1997, respectively............... 16,178 10,241
Loan costs, net of accumulated amortization of $4,070 and
$1,876 in 1998 and 1997, respectively................... 11,286 2,935
Prepaid and other assets.................................. 6,500 3,276
--------- ---------
$ 33,964 $ 54,322
--------- ---------
--------- ---------
</TABLE>
8. NOTES PAYABLE AND REVOLVING CREDIT FACILITY:
A summary of notes payable and revolving credit facility are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<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 non-recourse notes to an insurance company, interest
only payable monthly at 6.15%, due in 1999. These notes were repaid
and retired in December 1998....................................... -- 172,000
Collateralized recourse note to an insurance company, interest only
payable monthly at 8.09%, due in 1999. This note was repaid and
retired in December 1998........................................... -- 15,000
Senior collateralized non-recourse notes, interest at 6.39%,
principal and interest payable quarterly, due in 2004.............. 16,782 19,392
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....................................... 136,456 140,866
Unsecured revolving credit facility with a group of banks with a
maximum commitment of $600,000, interest only at LIBOR + 1.50%
(7.21% effective rate at December 31, 1998) payable monthly, due in
2000 with options to extend........................................ 490,000 463,000
</TABLE>
F-17
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
8. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Unsecured bridge facility with a group of banks, interest only at
LIBOR + 1.5% (7.63% effective rate at December 31, 1998) payable
monthly, due in 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
+ 1.5% (7.39% effective rate at December 31, 1998) payable monthly,
due in 1999........................................................ 44,000 --
Secured bridge facility with a group of banks, interest only at LIBOR
+ 1.75% (7.54% effective rate at December 31, 1998) payable
monthly, due in 1999. This note was repaid and retired in January
1999............................................................... 95,000 --
Collateralized non-recourse note payable to an insurance company,
interest at 7.20%, principal and interest payable monthly, due in
2006............................................................... 81,041 --
Collateralized non-recourse note payable to an insurance company,
effective interest at 7.00%, principal and interest payable
monthly, due in 2018............................................... 19,026 --
Collateralized non-recourse note payable to an insurance company,
effective interest at 7.00%, principal and interest payable
monthly, due in 2006............................................... 23,043 --
Collateralized non-recourse note payable to a bank, interest at LIBOR
+ 1.5% (6.53% effective rate at December 31, 1998), interest only
payable monthly, due in 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............................................... 73,745 --
Collateralized non-recourse note payable to an insurance company,
effective interest at 7.00%, principal and interest payable
monthly, due in 2002............................................... 61,603 --
Collateralized non-recourse notes payable to an insurance company,
effective interest at 7.00%, principal and interest payable
monthly, due in 2004............................................... 63,488 --
Collateralized note payable, interest only payable monthly at LIBOR +
0.53% (6.38% effective rate at December 31, 1998) due in 2001...... 746,100 --
Unsecured subordinated notes to Australian investors, interest
payable semi-annually at LIBOR + 2.32% (8.38% effective rate at
December 31, 1998), due in equal installments in 2001, 2002 and
2003............................................................... 301,088 --
--------- ---------
$2,641,015 $1,107,425
--------- ---------
--------- ---------
</TABLE>
In June, 1998 the Company issued $301,088 of unsecured subordinated notes
("Capital Notes") to Australian investors, repayable in three equal installments
due in June 2001, 2002 and 2003. The Capital Notes, which are listed on the
Australian Stock Exchange, are denominated in Australian dollars. In conjunction
with the issuance of the Capital Notes, the Company entered into interest rate
swap and foreign currency hedge agreements which effectively fixed the interest
and principal payments due to holders of the Capital Notes in U.S. dollars and
fixed the interest rate at 8.38%. The unrealized loss on the interest rate swap
and foreign currency hedge agreements was approximately $12,551 at December 31,
1998. The Capital Notes have not been, and will not be, registered under the
Securities Act of 1933, as
F-18
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
8. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
amended, and may not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements.
At December 31, 1998, notes payable and revolving credit facility include
mortgages assumed in conjunction with the acquisition of the Hahn Centers
totaling $352,819. The fixed rate mortgages assumed were recorded at their
estimated fair value at the time of their assumption. The mortgage debt secured
by North County Fair also requires the Company to pay contingent interest equal
to 30% of the excess of gross rental receipts over a stipulated minimum. During
each of the years ended December 31, 1998, 1997 and 1996, contingent interest
totaled $668, $587 and $563, respectively.
Also in conjunction with the Centers acquired in 1998, the Company obtained
borrowings totaling $239,000 through secured and unsecured loan facilities.
In October and December 1998, the Company obtained borrowings totaling
$746,100 under a secured loan facility to finance a portion of the Hahn Centers
acquisition and to refinance an existing non-recourse note payable to an
insurance company and the unsecured revolving credit facility. The loan bears
interest at LIBOR + 0.53% and is collateralized by certain properties owned by
the Company with a maturity date of December 2001. In connection with the
borrowings made under this loan, the Company entered into an interest rate swap
agreement which effectively fixed the variable rate of the loan at 6.38%.
In conjunction with the acquisition of Topanga, the Company assumed a
mortgage balance with a fair value of $61,603 at December 31, 1998. The assumed
mortgage was recorded at its estimated fair value at the time of its assumption.
Senior collaterized non-recourse notes totaling $71,949 and $74,559 at
December 31, 1998 and 1997, respectively, are collateralized by the related
direct financing leases receivable.
Interest costs capitalized for the years ended December 31, 1998, 1997 and
1996, were $1,558, $1,404 and $1,503, respectively.
On December 31, 1997, the Company issued collateralized commercial notes
("Notes") totaling $75,000 to refinance existing debt collateralized by Mission
Valley and to provide construction financing for the redevelopment of Mission
Valley-West. Notes totaling $40,000 bear interest at 6.78% and Notes totaling
$35,000 bear interest at LIBOR + 0.70%. In conjunction with the issuance of the
Notes, the Company entered into an interest rate cap agreement and interest rate
floor agreement which effectively fix the floating rate Notes at 6.78%.
Certain notes payable and revolving credit facility agreements provide for
restrictive covenants relating to the maintenance of specified financial
performance ratios such as minimum net worth, debt service coverage ratio, loan
to value, ownership percentages and restrictions on future distribution
payments. As of December 31, 1998, the Company was in compliance with these
covenants.
F-19
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
8. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
The annual maturities of notes payable and the revolving credit facility as
of December 31, 1998, are as follows:
<TABLE>
<S> <C>
1999............................................................ $ 346,433
2000............................................................ 632,572
2001............................................................ 1,025,110
2002............................................................ 165,368
2003............................................................ 111,016
Thereafter...................................................... 360,516
---------
$2,641,015
---------
---------
</TABLE>
9. INTEREST RATE SWAP CONTRACTS:
It is the Company's policy to enter into interest rate swap contracts only
to the extent necessary to reduce its exposure to fluctuations in interest
rates. The Company does not enter into interest rate swap contracts for
speculative purposes. At December 31, 1998, the Company had 31 interest swap
agreements. Interest rate swaps are contractual agreements between the Company
and third parties to exchange fixed and floating interest payments periodically
without the exchange of the underlying principal amounts (notional amounts). In
the unlikely event that a counterparty fails to meet the terms of an interest
rate swap contract, the Company's exposure is limited to the interest rate
differential on the notional amount. The Company does not anticipate
non-performance by any of the counterparties.
The Company has also entered into deferred interest rate exchange agreements
to manage future interest rates. The agreements consist of swaps and involve the
future receipt, corresponding with the expiration of existing fixed rate debt,
of a floating rate based on LIBOR and the payment of a fixed rate.
<TABLE>
<CAPTION>
RANGE OF RANGE OF
NOTIONAL AMOUNT FIXED RATES MATURITY DATES
---------------- ------------------ ---------------------
<S> <C> <C> <C>
Current Swaps where the Company
is a receiver of LIBOR......... $ 1,700,000 5.85% to 6.03% 1/30/99 to 12/11/08
Deferred swaps where the Company
is a receiver of LIBOR......... 1,017,000 5.99% to 6.26% 2/11/02 to 04/01/08
</TABLE>
The net unrealized loss on the interest rate swap contracts was
approximately $88,675 at December 31, 1998.
As of March 12, 1999, the net unrealized loss on the interest rate swap
contracts was approximately $17,234 (unaudited).
F-20
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
10. CAPITAL STOCK:
At December 31, 1998 and 1997, the total number of shares authorized, issued
and outstanding were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
NUMBER OF NUMBER NUMBER OF NUMBER
SHARES OF SHARES SHARES OF SHARES
AUTHORIZED OUTSTANDING AUTHORIZED OUTSTANDING
------------- ------------ ------------- ------------
Common stock, $.01 par value........................... 200,000,000 73,337,691 200,000,000 73,329,535
Excess stock, $.01 par value........................... 205,000,000 -- 205,000,000 --
Non-voting senior preferred stock, $1.00 par value..... 200 2 200 2
Preferred stock, $1.00 par value of which 940,000
shares are designated Series A cumulative redeemable
preferred stock, 270,000 shares are designated Series
B cumulative redeemable preferred stock, 416,667
shares are designated Series C cumulative convertible
redeemable preferred stock, 138,889 shares are
designated Series C-1 cumulative convertible
redeemable preferred stock, 138,889 shares are
designated Series C-2 cumulative convertible
redeemable preferred stock, 694,445 shares are
designated Series D cumulative convertible redeemable
preferred stock and 138,889 shares are designated
Series D-1 cumulative convertible redeemable
preferred stock...................................... 5,000,000 2,737,779 5,000,000 1,210,000
</TABLE>
SENIOR PREFERRED STOCK:
Prior to redemption, holders of the Company's non-voting senior preferred
stock were entitled to receive, when declared, cash dividends at an annual rate
of $35 per share, payable quarterly. In February, 1999, the Company redeemed the
senior preferred stock at $550 per share, plus unpaid accrued dividends totaling
approximately $5 per share.
SERIES A AND B PREFERRED STOCK:
The holder of the Company's Series A and B preferred stock is entitled to
receive, when declared, cumulative cash dividends equal to the greater of $8.50
per annum per share or an amount currently equal to 6.2461, for Series A
preferred stock, or 6.6667 for Series B preferred stock, times the dollar amount
of dividends declared on the Company's common stock. The Company has an option
to redeem the Series A and Series B preferred stock anytime after July 2003 and
May 2004, respectively, at a redemption price of $100 per share, which is equal
to the liquidation preference.
Concurrent with the issuance of the Series A preferred stock in 1996 and the
Series B preferred stock in 1997, the Company issued warrants (the "1996
Warrants" and "1997 Warrants") to Westfield America
F-21
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
10. CAPITAL STOCK: (CONTINUED)
Trust, an Australian public company and an affiliate of the Company, ("WAT") to
purchase the Company's common stock. The 1996 Warrants, which expire in July
2016, entitle WAT to purchase 6,246,096 shares of the Company's common stock at
an exercise price of $16.01 per share. The 1997 Warrants, which expire in May
2017, entitle WAT to purchase 2,089,550 shares of the Company's common stock at
an exercise price of $15.00 per share. The holder of the Series A and B
preferred stock also holds WAT Series A and B special options which entitle such
holder to exchange each share of Series A and B preferred stock for WAT
ownership units. Upon receipt of the Series A and B preferred stock, WAT can,
with the Company's consent at such time, surrender the Series A and B preferred
stock as consideration for the exercise of the 1996 and 1997 Warrants.
SERIES C AND D PREFERRED STOCK:
The Series C, C-1, C-2, D and D-1 cumulative convertible redeemable
preferred stock (collectively the "Series C and D Preferred Stock") are separate
designations of preferred stock with similar terms. Holders of the Series C and
D Preferred Stock are entitled to receive, when declared, cumulative cash
dividends equal to the greater of $15.30 per annum per share or an amount equal
to 10.0 times the dollar amount declared on the Company's common stock during
the period. At any time, holders of the Company's Series C and D Preferred Stock
have the right to convert all, or any portion, of their shares into 10 shares of
common stock for each share of Series C and D Preferred Stock. Conversion of the
Series D and D-1 preferred stock is subject to approval of the Company's
stockholders. The Company has the option to redeem the Series C and D Preferred
Stock anytime on or after August 2008 at a redemption price of $180 per share,
which is equal to the liquidation preference. The original holders of the
Company's Series C and D Preferred Stock have the right to require the Company
to redeem the Series C and D Preferred Stock if the Company ceases to qualify as
a REIT for federal tax purposes. Additionally, if there is a change in control,
as defined, or, if after August 2008, the market price of the Company's common
stock is less than $18.00 per share, holders of the Company's Series C and D
Preferred Stock have the right to require the Company to redeem the Series C and
D Preferred Stock.
Holders of the Company's preferred stock are entitled to dividends before
dividends are distributed to common stockholders. In general, preferred
stockholders have no voting rights unless dividends are reduced or not declared
on the preferred stock or common stock at which time the holders have certain
rights to elect additional directors to the board of directors. Once all
distributions in arrears are restored and paid in full, the directors elected by
the preferred shareholders will cease to be directors and the number of
directors on the board will be reduced accordingly.
COMMON STOCK:
The holders of the Company's common stock vote together as a class on all
matters and are entitled to receive distributions declared after payment of
dividends on preferred stock. A distribution was declared on December 18, 1998
to stockholders of record on December 31, 1998 of $33,043 or $0.355 per common
share, for the quarter ended December 31, 1998. This distribution was paid on
January 29, 1999. The Company declared distributions of $1.42 per common share
for the year ended December 31, 1998.
In May 1998, the Company entered into a stock subscription agreement ("1998
Subscription Agreement") with WAT. Subject to shareholder approval, the Company
has the right to sell, and WAT has the
F-22
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
10. CAPITAL STOCK: (CONTINUED)
obligation to purchase, up to AUS $465,000 (approximately US $285,000 at
December 31, 1998 foreign currency exchange rates) 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.
Based upon the foreign currency exchange rate on March 12, 1999, the Company
will receive approximately US $296,000 (unaudited).
OPERATING PARTNERSHIP UNITS:
Under certain circumstances investors in the 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.
EARNINGS PER SHARE
The following is a summary of the elements used in basic and diluted
earnings per share ("EPS") calculations:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Net income............................................ $ 106,188 $ 46,865 $ 24,696
Less: preferred stock dividends....................... (17,619) (11,428) (4,264)
---------- ---------- ----------
Income available to common shareholders (numerator)... $ 88,569 $ 35,437 $ 20,432
---------- ---------- ----------
---------- ---------- ----------
Weighted average common shares outstanding
(denominator for basic EPS)......................... 73,334,315 65,504,877 49,062,952
Dilutive equivalent common shares:
1996 and 1997 Warrants.............................. 71,240 42,824 --
1998 Subscription Agreement......................... 495,024 N/A N/A
---------- ---------- ----------
Weighted average common shares and common share
equivalents outstanding (denominator for diluted
EPS)................................................ 73,900,579 65,547,701 49,062,952
---------- ---------- ----------
---------- ---------- ----------
EPS:
Basic............................................... $ 1.21 $ 0.54 $ 0.42
---------- ---------- ----------
---------- ---------- ----------
Diluted............................................. $ 1.20 $ 0.54 $ 0.42
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The Company's convertible preferred shares were not included in the earnings
per share calculation as their effect is antidilutive.
F-23
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
11. NON CASH INVESTING AND FINANCING INFORMATION:
North County Fair ("NCF") was accounted for under the equity method until
October 1998, when the Company acquired the remaining 55% interest that it did
not already own. NCF is now consolidated with the Company. The Company's 45%
interest in the condensed assets and liabilities of NCF in October 1998, were as
follows:
<TABLE>
<S> <C>
Net investment in real estate..................................... $ 25,261
Cash and cash equivalents......................................... 1,007
Accounts receivable............................................... 1,167
Deferred expense and other assets, net............................ 582
Note payable...................................................... (22,191)
Accounts payable and accrued liabilities.......................... (939)
---------
WEA's investment in NCF........................................... $ 4,887
---------
---------
</TABLE>
Topanga was accounted for under the equity method until November 1998, when
the Company acquired the remaining 58% interest that it did not already own.
Topanga is now consolidated with the Company. The Company's 42% interest in the
condensed assets and liabilities of Topanga in November 1998, were as follows:
<TABLE>
<S> <C>
Net investment in real estate..................................... $ 37,944
Cash and cash equivalents......................................... 913
Accounts receivable............................................... 583
Deferred expense and other assets, net............................ 995
Note payable...................................................... (23,842)
Accounts payable and accrued liabilities.......................... (723)
---------
WEA's investment in Topanga....................................... $ 15,870
---------
---------
</TABLE>
Annapolis was accounted for under the equity method until June 1997, when
the Company acquired the remaining 70% partnership interest that it did not
already own. Annapolis is now consolidated with the Company. The Company's 30%
interest in the condensed assets and liabilities of Annapolis in June 1997, were
as follows:
<TABLE>
<S> <C>
Net investment in real estate...................................... $ 38,676
Cash and cash equivalents.......................................... 184
Accounts receivable................................................ 323
Deferred expenses and other assets, net............................ 322
Accounts payable................................................... (91)
---------
WEA's investment in Annapolis...................................... $ 39,414
---------
---------
</TABLE>
Meriden was accounted for under the equity method until September 1997 when
the Company acquired the remaining 50% interest that it did not already own.
Meriden is now consolidated with the
F-24
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
11. NON CASH INVESTING AND FINANCING INFORMATION: (CONTINUED)
Company. The Company's 50% interest in the condensed assets and liabilities of
Meriden in September 1997, were as follows:
<TABLE>
<S> <C>
Net investment in real estate..................................... $ 35,373
Cash and cash equivalents......................................... 235
Accounts and notes receivable..................................... 381
Deferred expenses and other assets, net........................... 527
Accounts payable.................................................. (291)
Note payable...................................................... (25,000)
---------
WEA's investment in Meriden....................................... $ 11,225
---------
---------
</TABLE>
The Company's purchase of a 68% managing interest in June 1997, in Wheaton,
resulted in an increase in minority interest totaling $24,000.
During 1998 and 1997, construction in process totaling $36,570 and $94,473,
respectively, was placed into service.
12. INCOME TAXES: (UNAUDITED)
Effective February 12, 1994, the Company elected to be treated as a REIT for
income tax purposes. As a REIT, the Company will not incur significant Federal
income taxes provided it continues to satisfy the various REIT Code
requirements, does not dispose of certain properties and continues to distribute
all of its REIT taxable income. On a per share basis, taxable cash distributions
representing ordinary income to shareholders for the years ending December 31,
1998, 1997 and 1996 were $1.64, $0.65 and $0.88, respectively. The excess of
distributions paid (for tax purposes) over the taxable portion of the
distribution, if any, represents a non-taxable return of capital to the
Company's shareholders.
13. RELATED PARTIES:
The Manager entered into an agreement with WEA to manage and lease the
properties in the Company's portfolio, beginning January 1, 1995. In
consideration for providing these management services, the Manager is reimbursed
certain recoverable property operating costs including mall related payroll and
is entitled to receive gross fees of 5% of minimum and percentage rents received
by the Company. Property management fees totaling $6,264, $4,074 and $3,191, net
of capitalized leasing fees of $4,605, $2,988 and $1,667 were expensed by WEA
for the years ended December 31, 1998, 1997 and 1996, respectively. Included in
accounts payable and accrued expenses at December 31, 1998 and 1997, are
management fees payable to the Manager totaling $1,299 and $1,068, respectively.
In addition to the management fees, the Manager was reimbursed for
recoverable operating costs including mall related payroll costs totaling
$17,543, $14,431 and $8,409 for the years ended December 31, 1998, 1997 and
1996, respectively.
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 WEA's wholly owned shopping
centers and to endeavor to have the Developer be
F-25
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
13. RELATED PARTIES: (CONTINUED)
appointed by the relevant partner to carry out similar activities for jointly
owned real estate partnerships. During 1998, 1997 and 1996, the Company
reimbursed the Developer $51,224, $46,859 and $21,535, 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"), as defined, in excess of the Advisory FFO Amount ($142,183
at December 31, 1998), but not to exceed 55 basis points of the Net Equity Value
(as defined) of the Company's assets. The Advisory FFO amount is increased
whenever the Company issues additional Common Stock. The Advisory Fee, which
first became payable in 1998, was $6,140 for the year ended December 31, 1998.
Included in interest and other income for the year ended December 31, 1998
and 1997, is interest income earned on the Garden State Plaza Loan totaling
$14,745 and $8,326, respectively.
14. FINANCIAL INSTRUMENTS:
The estimated fair value of the Company's financial instruments have been
determined by the Company, using available market information and appropriate
valuation methodologies. However, considerable judgment is necessarily required
in interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1998 and 1997. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts as of December 31, 1998, future estimates of fair value and the
amounts which may be paid or realized in the future may differ significantly
from the amounts presented herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- --------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Assets:
Participating loan to an affiliate.............. $ 145,000 $ 145,000 $ 145,000 $ 145,000
Direct financing leases receivable.............. 83,214 85,571 85,352 83,000
Cash............................................ 25,272 25,272 11,003 11,003
Restricted Cash................................. 25,820 25,820 28,305 28,305
Accounts receivable............................. 45,325 45,325 27,499 27,499
WHL Warrants.................................... -- -- 37,870 62,136
Liabilities:
Notes payable................................... 2,641,015 2,650,376 1,107,425 1,089,935
Accounts payable and accrued expenses........... 82,658 82,658 38,352 38,352
</TABLE>
F-26
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
14. FINANCIAL INSTRUMENTS: (CONTINUED)
PARTICIPATING LOAN TO AN AFFILIATE, CASH, RESTRICTED CASH, ACCOUNTS RECEIVABLE,
AND ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
The carrying amounts of these items are a reasonable estimate of their fair
value.
WHL WARRANTS
The fair value of WHL Warrants was based on the Black Scholes Model with a
volatility of 33%, a risk free interest rate of 5.17% and a dividend yield of
1.51% and the Australian currency exchange rate on December 31, 1997.
NOTES PAYABLE AND DIRECT FINANCING LEASES RECEIVABLE:
The fair value of notes payable and direct financing leases receivable are
based upon current market rates for financial instruments with similar terms.
15. COMMITMENTS AND CONTINGENCIES:
The Company is currently involved in several development projects and had
outstanding commitments with contractors totaling approximately $54,290 at
December 31, 1998.
The Redevelopment Agency of the City of West Covina (the "West Covina
Agency") issued $45,000 of special tax assessment municipal bonds ("Original
Bonds") on March 1, 1990 to finance land acquisition for expansion of the
shopping center and additional site improvements. During 1996, the West Covina
Agency refinanced the Original Bonds by issuing certain serial and term bonds
with a total face amount of $51,220 ("New Bonds"), proceeds of which were
partially used to redeem the Original Bonds. Special taxes levied against the
property, together with incremental property tax, incremental sales tax, and
park and ride revenues will be used to pay the principal and interest on the New
Bonds and the administrative expense of the West Covina Agency. Principal and
interest payments began in 1996 and continue to 2022 in graduating amounts
ranging from $2,030 to $5,289. WEA has the contingent obligation to satisfy any
shortfall in annual debt service requirements after tenant recoveries.
Pursuant to a Development and Disposition Agreement ("DDA Agreement") with
the Redevelopment Agency of the City of San Diego (the "San Diego Agency"), the
San Diego Agency conveyed certain parcels of land for the development of Horton
Plaza. In connection with the DDA Agreement, the Company pays an Agency fee
equal to 10% of the gross rental income, as defined, in excess of $8,750.
The Company is subject to the risks inherent in the ownership and operation
of commercial real estate. These include, among others, the risks normally
associated with changes in the general economic climate, trends in the retail
industry, including creditworthiness of retailers and competition for retailers,
changes in tax laws, interest rate levels, the availability of financing, and
potential liability under environmental and other laws.
Substantially all of the properties have been subjected to Phase I
environmental reviews. Such reviews have not revealed, nor is management aware
of, any probable or reasonably possible environmental costs that management
believes would be material to the consolidated financial statements.
F-27
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
15. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
WEA currently is neither subject to any other material litigation nor, to
management's knowledge, is any material litigation currently threatened against
WEA other than routine litigation and administrative proceedings arising in the
ordinary course of business. Based on consultation with counsel, management
believes that these items will not have a material adverse impact on the
Company's consolidated financial position or results of operations.
16. QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly data for 1998 and 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1998
Total Revenues.......................................... $ 69,917 $ 68,679 $ 78,661 $ 111,208 $ 328,465
Net Income.............................................. $ 12,551 $ 78,647 $ 2,997 $ 11,993 $ 106,188
Net Income (Loss) Applicable to Common Shares........... $ 9,828 $ 75,924 $ (2,055) $ 4,872 $ 88,569
Earnings (Loss) per Common Shares:
Basic................................................. $ 0.13 $ 1.04 $ (0.03) $ 0.07 $ 1.21
Dilutive.............................................. $ 0.13 $ 0.97 $ (0.03) $ 0.07 $ 1.20(1)
Weighted Average Shares Outstanding
Basic................................................. 73,330 73,333 73,337 73,338 73,334
Dilutive.............................................. 73,397 81,192 74,689 74,324 73,901
1997
Total Revenues.......................................... $ 46,925 $ 47,999 $ 57,806 $ 64,078 $ 216,808
Net Income.............................................. $ 7,964 $ 10,808 $ 13,144 $ 14,949 $ 46,865
Net Income Applicable to Common Shares.................. $ 5,966 $ 6,746 $ 10,459 $ 12,266 $ 35,437
Earnings per Common Share:
Basic................................................. $ 0.11 $ 0.11 $ 0.14 $ 0.17 $ 0.54(1)
Dilutive.............................................. $ 0.11 $ 0.11 $ 0.14 $ 0.17 $ 0.54(1)
Weighted Average Shares Outstanding
Basic................................................. 52,929 62,121 73,330 73,330 65,505
Dilutive.............................................. 52,929 62,121 73,330 73,370 65,548
</TABLE>
- ------------------------
(1) Total earnings per share are calculated based on annual results, which may
differ from the summation of quarterly earnings per share.
F-28
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
17. SCHEDULE OF REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION AS OF
DECEMBER 31, 1998:
<TABLE>
<CAPTION>
ACQUISITION
DATE/
BUILDINGS & ACCUMULATED REDEVELOPMENT DEPRECIABLE
WESTFIELD SHOPPING TOWN LAND IMPROVEMENTS TOTAL DEPRECIATION ENCUMBRANCES DATE LIFE
- ------------------------ --------- ------------- --------- ------------ ------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Annapolis............... $ 48,359 $ 182,548 $ 230,907 $ (68,986) $ -- 1997/1998(1) 3-20 yrs.
Capital Mall............ -- 55,057 55,057 (286) 27,802 1998 39 yrs.
Cerritos................ 15,753 175,682 191,435 (442) 95,000 1998 39 yrs.
Connecticut Post........ 6,356 131,991 138,347 (8,304) -- 1994 3-40 yrs.
Crestwood............... 65,640 41,096 106,736 (995) 74,699 1998 39 yrs.
Downtown Plaza.......... -- 150,581 150,581 (660) 92,476 1998 39 yrs.
Eagle Rock.............. 3,624 13,600 17,224 (4,370) -- 1994 5-31.5 yrs.
Eastland................ 16,609 33,376 49,985 (2,446) -- 1994/1997 5-30 yrs.
Enfield................. 8,468 32,976 41,444 (6,635) 36,706 1994 3-31.5 yrs.
Fox Hills............... 10,224 70,239 80,463 (418) 46,699 1998 39 yrs.
Horton Plaza............ 838 209,405 210,243 (922) 111,900 1998 39 yrs.
Meriden................. 11,375 95,605 106,980 (24,060) -- 1997(1) 5-30 yrs.
Mid Rivers.............. 10,816 62,191 73,007 (15,322) 53,229 1994/1996 3-35 yrs.
Mission Valley.......... 747 85,386 86,133 (30,702) 75,000 1994/1997 3-50 yrs.
Mission Valley West..... 537 23,629 24,166 (117) -- 1994/1998
Montgomery Mall......... 32,420 163,997 196,417 (41,412) 121,515 1994 5-20 yrs.
North County Fair....... -- 154,668 154,668 (15,551) 73,745 1998(2) 40 yrs.
Northwest Plaza......... 28,400 84,197 112,597 (2,107) 79,052 1997 40 yrs.
Oakridge................ -- 79,469 79,469 (470) 37,004 1998 39 yrs.
Parkway Plaza........... 17,225 148,178 165,403 (1,010) 82,417 1998 39 yrs.
Plaza Bonita............ 22,994 80,287 103,281 (23,888) 76,678 1994 3-39 yrs.
Promenade............... 4,583 30,124 34,707 (630) -- 1998 39 yrs.
Santa Anita............. 11,500 130,939 142,439 (1,005) 63,488 1998 39 yrs.
Solano.................. 8,998 82,236 91,234 (564) 42,069 1998 39 yrs.
South County............ 13,259 35,600 48,859 (11,314) 28,735 1994 5-40 yrs.
South Shore............. 29,071 150,713 179,784 (8,189) -- 1994/1997 3-40 yrs.
Topanga................. 13,521 130,897 144,418 (15,293) 105,603 1998(2) 3-50 yrs.
Trumbull................ 16,405 167,175 183,580 (11,016) 136,456 1994 3-40 yrs.
UTC..................... 9,540 177,925 187,465 (1,899) 81,041 1998 39 yrs.
West County............. 6,506 22,642 29,148 (7,467) 16,750 1994 3-20 yrs.
West Covina............. 18,922 84,821 103,743 (19,920) 89,837 1994 3-20 yrs.
Westland................ 5,162 13,212 18,374 (3,899) -- 1994/1994 3-50 yrs.
West Park............... 2,633 25,022 27,655 (7,878) 30,077 1994 3-15 yrs.
Wheaton................. 17,316 60,505 77,821 (2,550) -- 1997 3-39 yrs.
--------- ------------- --------- ------------ -------------
$ 457,801 $ 3,185,969 $3,643,770(3) $ (340,727) $ 1,677,978
--------- ------------- --------- ------------ -------------
--------- ------------- --------- ------------ -------------
</TABLE>
- ------------------------------
(1) A partnership interest was purchased in 1994 and the remaining partnership
interest was purchased in 1997.
(2) A partnership interest was purchased in 1994 and the remaining partnership
interest was purchased in 1998.
F-29
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE, UNIT AND PER SHARE AMOUNTS)
17. SCHEDULE OF REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION AS OF
DECEMBER 31, 1998: (CONTINUED)
(3) The following is a reconciliation of the real estate investment and related
accumulated depreciation from January 1, 1998 to December 31, 1998:
<TABLE>
<S> <C>
Real Estate:
Balance at January 1, 1998.................................................. $1,793,327
Cash additions.............................................................. 1,318,104
Other additions, net (4).................................................... 469,637
Improvements................................................................ 62,702
---------
Balance at December 31, 1998................................................ $3,643,770
---------
---------
Accumulated Depreciation:
Balance at January 1, 1998.................................................. $(236,220)
Additions charged to expenses............................................... (74,593)
Other additions, net (5).................................................... (29,914)
---------
Balance at December 31, 1998.................................................. $(340,727)
---------
---------
</TABLE>
(4) Amount represents non cash additions related to mortgage debt assumed in
conjunction with the acquisitions of the Hahn Centers, consolidation of
investments in North County Fair and Topanga previously accounted for under
the equity method and the acquisition of a 50% interest in Capital Mall in
exchange for Investor Unit Rights.
(5) Amount represents additions in conjunction with the acquisition of Topanga
and North County Fair previously accounted for under the equity method.
F-30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C>
WESTFIELD AMERICA, INC.
Date: March 15, 1999 By: /s/ PETER S. LOWY
-----------------------------------------
Peter S. Lowy
Director and Co-President
Date: March 15, 1999 By: /s/ RICHARD E. GREEN
-----------------------------------------
Richard E. Green
Co-President
Date: March 15, 1999 By: /s/ MARK A. STEFANEK
-----------------------------------------
Mark A. Stefanek
Chief Financial Officer and Treasurer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ FRANK P. LOWY
- ------------------------------ Director and Chairman of March 15, 1999
Frank P. Lowy the Board
/s/ PETER S. LOWY
- ------------------------------ Director and Co-President March 15, 1999
Peter S. Lowy
/s/ ROY L. FURMAN
- ------------------------------ Director March 15, 1999
Roy L. Furman
/s/ FREDERICK G. HILMER
- ------------------------------ Director March 15, 1999
Frederick G. Hilmer
/s/ DAVID H. LOWY
- ------------------------------ Director March 15, 1999
David H. Lowy
/s/ HERMAN HUIZINGA
- ------------------------------ Director March 15, 1999
Herman Huizinga
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ BERNARD MARCUS
- ------------------------------ Director March 15, 1999
Bernard Marcus
/s/ LARRY A. SILVERSTEIN
- ------------------------------ Director March 15, 1999
Larry A. Silverstein
/s/ FRANCIS T. VINCENT, JR.
- ------------------------------ Director March 15, 1999
Francis T. Vincent, Jr.
/s/ GEORGE WEISSMAN
- ------------------------------ Director March 15, 1999
George Weissman
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION*
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement for Purchase and Sale of Partnership Interest and Real Property, dated as of June 4, 1997,
between RREEF USA Fund III/Annapolis, Inc. and Westfield America, Inc. of Annapolis (Exhibit 2.1(5)).
2.2 Asset Purchase Agreement, dated as of April 6, 1994, between TrizecHahn Centers, Inc. ("TrizecHahn"),
The Rouse Company and Westfield America, Inc (the "Company") (Exhibit 10.1 (4)).
2.3 Amendment No. 1 to Asset Purchase Agreement, dated as of July 31, 1998, between TrizecHahn, The Rouse
Company and the Company (Exhibit 10.2(6)).
2.4 Amendment No. 2 to Asset Purchase Agreement, dated as of August 31, 1998, between TrizecHahn, The Rouse
Company and the Company (Exhibit 10.3(7)).
2.5 Amendment No. 3 to Asset Purchase Agreement, dated as of September 23, 1998, between TrizecHahn, The
Rouse Company and the Company (Exhibit 10.4(7)).
2.6 Amendment No. 4 to Asset Purchase Agreement, dated as of September 25, 1998, between TrizecHahn, The
Rouse Company and the Company (Exhibit 10.5(7)).
2.7 Amendment No. 5 to Asset Purchase Agreement, dated as of October 7, 1998, between TrizecHahn, The Rouse
Company and the Company (Exhibit 10.6(7)).
2.8 Amendment No. 6 to Asset Purchase Agreement, dated as of October 22, 1998 between TrizecHahn, The Rouse
Company and the Company (Exhibit 10.7(8)).
2.9 Amendment No. 7 to Asset Purchase Agreement, dated as of October 30, 1998, between TrizecHahn, The Rouse
Company and the Company (Exhibit 10.8(8)).
2.10 Amendment No. 8 to Asset Purchase Agreement, dated as of November 17, 1998, between TrizecHahn, The
Rouse Company and the Company (Exhibit 10.9(9)).
2.11 Amendment No. 9 to Asset Purchase Agreement, dated as of December 3, 1998, between TrizecHahn, The Rouse
Company and the Company (Exhibit 10.8(10)).
2.12 Amendment No. 10 to Asset Purchase Agreement, dated as of December 9, 1998, between TrizecHahn, The
Rouse Company and the Company (Exhibit 10.9(9)).
3.1 Restated Articles of Incorporation of the Company (Exhibit 3.1(4)).
3.2 Second Amended and Restated By-Laws of the Company (Exhibit 3.2(3)).
3.3 Amendment No. 1 to the Second Amendment and Restated By-Laws of the Company (Exhibit 3.3(10)).
3.4 Amendment No. 2 to the Second Amendment and Restated By-Laws of the Company (Exhibit 3.4(10)).
4 Specimen of Common Stock Certificate (Exhibit 4.1(1)).
10.1 Mortgage Pledge and Security Agreement, together with the Promissory Note attached thereto, dated as of
May 21, 1997, among Westland Realty, Inc., Westfield Partners, Inc., Westland Management, Inc. and the
Company.
10.2 WHL Option Deed, dated May 21, 1997, between Westfield Holdings Limited ("WHL") and the Company.
10.3 Warrant of the Company, dated July 1, 1996 (Exhibit 10.4(1)).
10.4 Common Stock Purchase Warrant of the Company, dated as of May 21, 1997.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION*
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.5 Special Option Deed, dated May 14, 1996 among Westfield America Management Limited ("WAM"), the
Perpetual Trustee company Limited (the "WAT Trustee") and the Company (Exhibit 10.6(1)).
10.6 Deed of Variation, dated as of June 24, 1996, among WAM, the WAT Trustee and the Company (Exhibit
10.7(1)).
10.7 Special Option Deed, dated as of May 21, 1997, among WAM, the WAT Trustee and Stichting Pensioenfonds
ABP ("ABP").
10.8 Advisory Agreement dated as of July 1, 1996, between the Company and Westfield U.S. Advisory, L.P. (the
"Advisor") (Exhibit 10.9(1)).
10.9 First Amendment to Advisory Agreement, dated as of May 21, 1997, between the Company and the Advisor.
10.10 Master Development Framework Agreement, dated as of July 1, 1996, between the Company and Westfield
Corporation, Inc. (the "Developer" or "WCI") (Exhibit 10.11(1)).
10.11 First Amendment to Master Development Framework Agreement, dated as of May 1997 between the Company and
the Developer.
10.12 Property Management Letter Agreement, dated as of July 1, 1996, between the Company and Centermark
Management Company ("CMC") (Exhibit 10.13(1)).
10.13 First Amendment to Property Management Letter Agreement dated as of May 21, 1997, between the Company
and CMC.
10.14 Management Agreements, dated as of December 16, 1997 between Northwest Plaza LLC and Westfield
Management Company ("WMC") (including a schedule of substantially identical agreements).
10.15 Amended and Restated Assignment of Management Agreements, dated May 21, 1997, between the Company and
CMC (including a schedule of substantially identical agreements).
10.16 Amended and Restated Subcontract of Management Rights, dated May 21, 1997, between the Company and CMC
(including a schedule of substantially identical agreements).
10.17 Garden State Plaza Option Agreement, dated as of July 1, 1996, between the Company and Westfield Capital
Corporation Finance Pty Limited (Exhibit 10.21(1)).
10.18 First Amendment to Garden State Plaza Option Agreement, dated as of May 21, 1997 between the Company and
Westfield Capital Corporation Finance Pty Limited.
10.19 Trade Name License Agreement, dated as of July 1, 1996, between the Company and WCI (Exhibit 10.23(1)).
10.20 First Amendment to Trade Name License Agreement, dated as of May 21, 1997, between WCI. and the Company.
10.21 Registration Rights Agreement, dated as of May 21, 1997, between the Company and WHL.
10.22 Investors Agreement dated as of May 21, 1997, among the Company, WHL, the WAT Trustee and WAM, WCI and
WAI.
10.23 Non-Competition Agreement, dated as of May 21, 1997, among the Company, Frank P. Lowy, David H. Lowy,
Peter S. Lowy and Steven M. Lowy.
10.24 Subscription Agreement, dated as of as of May 21, 1997, among WAM, the WAT Trustee, ABP, and the
Company.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION*
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.25 Side Letter dated as of May 21, 1997, by WHL.
10.26 Credit Agreement, dated as of May 30, 1997, among the Company, Commonwealth Bank of Australia, Australia
and New Zealand Banking Group Limited, Union Bank of Switzerland and National Australia Bank Limited
(Exhibit 10.1(2)).
10.27 Credit Agreement Amendment, dated as of January 15, 1998, among Westfield America, Inc., Commonwealth
Bank of Australia and Australia and New Zealand Banking Group Limited, and Union Bank of Switzerland,
New York Branch, and National Australia Bank Limited, New York Branch (Exhibit 10.1(3)).
10.28 Stock Subscription Agreement, dated as of May 29, 1998, between the Company, the WAT Trustee and WAM.
10.29 WAI Subscription Agreement, dated as of June 25, 1998, between Westfield America, Inc., Westfield
American Investments Pty Limited and Westfield Holdings Limited. (Exhibit 10.2(4)).
10.30 WAT Subscription Agreement, dated as of June 25, 1998, between the Company, the WAT Trustee and WAM
(Exhibit 10.3(4)).
10.31 Consolidated WEA Capital Note Trust Deed Incorporating the Deed of Variation No 1, dated as of June 11,
1998, between the Company and the WAT Trustee (Exhibit 10.4(4)).
10.32 Loan Agreement between Fox Hills Mall LLC, Horton Plaza LLC, Oakridge Mall LLC, Parkway Plaza LLC and
The Capital Company of America LLC, dated as of October 30, 1998 (Exhibit 10.1(10)).
10.33 Assumption and Amendment Agreement by Northwest Plaza LLC, WEA Crestwood Plaza LLC, Enfield Square LLC,
Plaza Bonita LLC, Plaza West Covina LLC, Mid Rivers Mall LLC, West Park Partners, L.P., Capital Mall
Company, Fox Hills Mall LLC, Horton Plaza LLC, Oakridge Mall LLC, Parkway Plaza LLC and The Capital
Company of America LLC, dated as of December 9, 1998 (Exhibit 10.2(10)).
10.34 The First Amended and Restated Agreement of Limited Partnership of Westfield America Limited
Partnership, dated as of August 3, 1998 (the "OP Agreement") (Exhibit 10.3(10)).
10.35 Amendment No. 1 to the OP Agreement, dated as of August 12, 1998 (Exhibit 10.4(10)).
10.36 Amendment No. 2 to the OP Agreement, dated as of December 8, 1998 (Exhibit 10.5(10)).
10.37 Amendment No. 3 to the OP Agreement, dated as of December 24, 1998 (Exhibit 10.6(10)).
10.38 Amendment No. 4 to the OP Agreement, dated as of December 29, 1998 (Exhibit 10.7(10)).
10.39 Management Agreement between May Centers, Inc. ("MCI") and Mission Valley Partnership, dated as of April
8, 1986
10.40 First Amendment to Management Agreement between Center Mark Properties ("CMP") and Mission Valley
Partnership, dated as of February 1, 1994.
10.41 Property Management Agreement between Hahn Property Management Corporation and Anita Associates, dated
as of January 1, 1989.
10.42 First Amendment to Property Management Agreement between Hahn Property Management Corporation and Anita
Associates, dated as of July 1, 1993.
10.43 Management Agreement between CMP and Plaza Camino Real, dated as of February 11, 1994.
10.44 Management Agreement between MCI and Topanga Plaza Partnership, dated as of December 31, 1985.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION*
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.45 First Amendment to Management Agreement between CMP and Topanga Plaza Partnership, dated February 1,
1994.
10.46 Joint Venture Agreement between MCI and Vancouver Associates, dated September 29, 1975.
10.47 Amendment to Joint Venture Agreement between MCI and Vancouver Associates, dated May 12, 1976.
10.48 Second Amendment to Joint Venture Agreement between May Centers of Vancouver, Inc. and Vancouver
Associates, dated as of September 1, 1990.
10.49 Third Amendment to Joint Venture Agreement between May Centers of Vancouver, Inc. and Vancouver
Associates, dated as of September 1, 1990.
10.50 Fourth Amendment to Joint Venture Agreement between CenterMark Properties of Vancouver, Inc. and
Vancouver Associates, dated as of January 1, 1992.
10.51 Amended and Restated Limited Partnership Agreement of West Valley Partnership, dated as of December 31,
1985.
10.52 Amendment to Amended and Restated Agreement of Limited Partnership of West Valley Partnership, dated as
of November 19, 1987.
10.53 Assignment and Assumption of Property Management Side Letter Agreement between WEA and Westfield America
Limited Partnership, dated as of November 12, 1997.
11 Statements regarding Computation of Per Share Earnings.
12 Statement regarding Computation of Ratios.
21 List of Subsidiaries of the Company.
23 Consent of Ernst & Young LLP.
24 Powers of Attorney.
27 Financial Data Schedule.
</TABLE>
- ------------------------
(1) Incorporated by reference to designated exhibit to Amendment No. 2 to the
Company's Registration Statement on Form S-11, filed on April 24, 1997.
(2) Incorporated by reference to designated exhibit to the Company's quarterly
report of Form 10-Q for the quarterly period ended June 30, 1997.
(3) Incorporated by reference to designated exhibit to the Company's quarterly
report of Form 10-Q for the quarterly period ended March 31, 1998.
(4) Incorporated by reference to designated exhibit to the Company's quarterly
report of Form 10-Q for the quarterly period ended June 30, 1998.
(5) Incorporated by reference to designated exhibit to the Company's current
report of Form 8-K filed on June 19, 1997.
(6) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K filed on August 12, 1998.
(7) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K/A, filed on October 16, 1998.
(8) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K, filed on November 13, 1998
4
<PAGE>
(9) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K, filed on December 2, 1998.
(10) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K, filed on February 17, 1999.
* Some of the schedules and supplemental material to the exhibits have been
omitted but will be provided to the Securities and Exchange upon request.
5
<PAGE>
EXHIBIT 10.1
----------------------------------------------------------------------
----------------------------------------------------------------------
MORTGAGE, PLEDGE AND SECURITY AGREEMENT
among
WESTLAND REALTY, INC.,
WESTFIELD PARTNERS, INC.,
WESTLAND MANAGEMENT, INC.
and
WESTFIELD AMERICA, INC.
Dated as of May 21, 1997
----------------------------------------------------------------------
----------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .2
SECTION 2. SECURITY FOR SECURED OBLIGATIONS . . . . . . . . . . . . . . .3
SECTION 3. GRANTING OF SECURITY . . . . . . . . . . . . . . . . . . . . .4
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . .5
SECTION 5. VOTING RIGHTS, DIVIDENDS AND OTHER DISTRIBUTIONS,ETC.. . . . .7
5.1. Prior to Event of Default . . . . . . . . . . . . . . . . . .7
5.2. After Event of Default. . . . . . . . . . . . . . . . . . . .7
SECTION 6. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.1. General Covenants . . . . . . . . . . . . . . . . . . . . . .8
6.1.1. Sale of Collateral, etc.. . . . . . . . . . . . . . . . . . .8
6.1.2. Filing of Financing Statements, etc. . . . . . . . . . . . .8
6.1.3. Other Distributions . . . . . . . . . . . . . . . . . . . . .8
6.1.4. Payment of Loan . . . . . . . . . . . . . . . . . . . . . . .8
6.1.5. Books and Records . . . . . . . . . . . . . . . . . . . . . .9
6.1.6. Chief Executive Office. . . . . . . . . . . . . . . . . . . .9
6.1.7. Further Assurances. . . . . . . . . . . . . . . . . . . . . .9
6.1.8. Estoppel Certificates . . . . . . . . . . . . . . . . . . . .9
6.1.9. Consent of Westland Realty. . . . . . . . . . . . . . . . . .9
6.2. Covenants Relating to the Property. . . . . . . . . . . . . 10
6.2.1. Additional Debt and Liens . . . . . . . . . . . . . . . . . 10
6.2.2. No Refinancing of Prudential Debt . . . . . . . . . . . . . 10
6.2.3. Amendments of Certain Documents . . . . . . . . . . . . . . 10
6.2.4. Warranty of Title . . . . . . . . . . . . . . . . . . . . . 10
6.2.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2.6. Payment of Taxes, etc.. . . . . . . . . . . . . . . . . . . 13
6.2.7. Leases and Rents. . . . . . . . . . . . . . . . . . . . . . 14
6.2.8. Maintenance of Property . . . . . . . . . . . . . . . . . . 17
6.2.9. Performance of Other Agreements . . . . . . . . . . . . . . 18
6.2.10. Hazardous Substances. . . . . . . . . . . . . . . . . . . . 18
6.2.11. Asbestos. . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7. RIGHTS OF THE PLEDGEE. . . . . . . . . . . . . . . . . . . . 20
(i)
<PAGE>
7.1. No Obligations or Liability to the Pledgors . . . . . . . . 20
7.2. Right of Pledgee to Perform Pledgors' Covenants, etc. . . . 20
7.3. Additional Security . . . . . . . . . . . . . . . . . . . . 20
7.4. Release of the Pledge and Security Interest Created Hereby. 21
SECTION 8. EVENTS OF DEFAULT; REMEDIES AND ENFORCEMENT. . . . . . . . . 21
8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . 21
8.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.3. Application of Proceeds Following Event of Default. . . . . 24
8.4. Purchase of Collateral by Pledgee . . . . . . . . . . . . . 24
8.5. Receipt Sufficient Discharge. . . . . . . . . . . . . . . . 25
8.6. Sale a Bar Against the Pledgors . . . . . . . . . . . . . . 25
8.7. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . 25
SECTION 9. PLEDGORS' OBLIGATIONS NOT AFFECTED . . . . . . . . . . . . . 26
SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 27
10.1. Amendments, etc.. . . . . . . . . . . . . . . . . . . . . . 27
10.2. Successors and Assigns. . . . . . . . . . . . . . . . . . . 27
10.3. Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . 28
10.4. Severability. . . . . . . . . . . . . . . . . . . . . . . . 28
10.5. Non-Recourse. . . . . . . . . . . . . . . . . . . . . . . . 28
10.6. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 29
10.7. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 30
Schedule I -- UCC Filing Offices
Schedule II -- New Leases
Schedule III -- Prudential Financing Documents
(ii)
<PAGE>
MORTGAGE, PLEDGE AND SECURITY AGREEMENT, dated as of May __, 1997, among
WESTLAND REALTY, INC, a Maryland corporation ("WESTLAND REALTY"), WESTFIELD
PARTNERS, INC., a Delaware corporation ("WESTFIELD PARTNERS"), and WESTLAND
MANAGEMENT, INC., a Delaware corporation ("WESTLAND MANAGEMENT", together with
Westfield Partners, the "PLEDGORS"), and WESTFIELD AMERICA, INC., a Missouri
corporation (the "PLEDGEE"). Capitalized terms used herein without other
definition have the respective meanings specified in Section 1.
R E C I T A L S
A. Westland Realty is the sole stockholder of Westfield Partners and
Westland Management.
B. Westfield Partners is a limited partner of Westland Garden State
Plaza, Limited Partnership, a Delaware limited partnership (the "PARTNERSHIP"),
and Westland Management is a general partner of the Partnership.
C. The Pledgee has agreed to make a loan to the Pledgors in the amount
of $145,000,000 (the "LOAN").
D. The Pledgors have jointly and severally agreed to repay the Loan on
the terms set forth in the Promissory Note, dated the date hereof (the "NOTE"),
issued by the Pledgors to the Pledgee.
E. It is a condition to the obligation of the Pledgee to make the Loan
that Westfield Partners and Westland Management mortgage and pledge their
respective partnership interests in the Partnership to the Pledgee, in each case
as security for the performance of the obligations of the Pledgors under the
Note.
F. The Pledgors and the Pledgee intend that the Loan, as secured by the
Pledgors' partnership interest in the Partnership, shall be treated for Federal
income tax purposes as a "real estate asset" within the meaning of Section
856(c)(6)(B) of the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, to induce the Pledgee to make the Loan, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
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acknowledged, each Pledgor and Westland Realty (but only to the extent set forth
herein) hereby agrees with the Pledgee as follows:
SECTION 1. CERTAIN DEFINITIONS.
The following capitalized terms are used herein with the respective
meanings set forth below.
COLLATERAL: the meaning given in Section 3.
DEEMED APPROVED LEASE: the meaning given in Section 6.2.7.
EASEMENT AGREEMENT: the meaning given in Section 6.2.4.
EVENT OF DEFAULT: the meaning given in Section 8.
FAIR MARKET RENTAL TERMS: the meaning given in Section 6.2.7.
HAZARDOUS ASBESTOS: the meaning given in Section 6.2.11.
HAZARDOUS SUBSTANCES: the meaning given in Section 6.2.10.
INTEREST: Fixed Interest and Contingent Interest (each as defined in
the Note).
LEASES: the meaning given in Section 6.2.7.
LIEN: as to any Person, any mortgage, lien, pledge, adverse claim,
charge, security interest or other encumbrance in or on, or any interest or
title of any vendor, lessor, lender or other secured party to or of such Person
under any conditional sale or other title retention agreement or capital lease
with respect to, any property or asset owned or held by such Person.
LOAN: the meaning given in Paragraph C of the Recitals.
MAJOR LEASES: the meaning given in Section 6.2.7.
MANAGEMENT AGREEMENT: the Management Agreement, dated July 1, 1993,
between the Partnership and Westfield Corporation, Inc., as amended,
supplemented or modified from time to time in accordance with the terms thereof
and hereof.
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NON-MAJOR LEASE: the meaning given in Section 6.2.7.
NOTE: the meaning given in Paragraph D of the Recitals.
NYUCC: the Uniform Commercial Code of the State of New York.
PARTNERSHIP: the meaning given in Paragraph B of the Recitals.
PARTNERSHIP AGREEMENT: the Agreement of Limited Partnership of the
Partnership, dated as of July 1, 1993, as amended, modified or supplemented from
time to time in accordance with the provisions thereof and hereof.
PERMITTED ENCUMBRANCES: the meaning given in Section 6.2.4.
PERSON: a corporation, an association, a partnership, a limited
liability company, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
PLEDGORS: the meaning given in the first paragraph of the Recitals.
POLICIES: the meaning given in Section 6.2.5.
PROPERTY: the Garden State Plaza Shopping Center located in Paramus,
New Jersey.
PRUDENTIAL FINANCING DOCUMENTS: the documents listed on Schedule III
attached hereto relating to the existing $260,020,000 mortgage loan on the
Property held by The Prudential Insurance Company of America, each as amended,
modified or supplemented from time to time in accordance with the provisions
thereof and hereof.
SECURED OBLIGATIONS: the meaning given in Section 2.
TAXES: the meaning given in Section 6.2.6.
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SECTION 2. SECURITY FOR SECURED OBLIGATIONS.
This Agreement is made for the benefit of Pledgee to secure (a) the
payment of the principal of and Interest on the Note (including, without
limitation, Interest accruing after the date of any filing by any Pledgor of any
petition in bankruptcy or the commencement of any bankruptcy, insolvency or
similar proceeding with respect to any Pledgor) as and when the same shall
become due and payable in accordance with the terms thereof, whether at maturity
or by prepayment, acceleration or otherwise, (b) the payment of all other
indebtedness and other amounts payable by the Pledgors to the Pledgee under the
Note and this Agreement, including, without limitation, the Make-Whole Amount
(as defined in the Note) payable upon any prepayment of the Note following the
occurrence of an Event of Default, and (c) the due and punctual performance by
the Pledgors of and compliance by the Pledgors with all of their other
obligations owed to the Pledgee under the Note and this Agreement. All of the
payment and performance obligations referred to in this Section 2 are referred
to collectively as the "SECURED OBLIGATIONS".
SECTION 3. GRANTING OF SECURITY.
As security for the payment and performance of the Secured Obligations
when due (whether at maturity or by prepayment, acceleration or otherwise) each
of Westfield Partners and Westland Management hereby conveys, assigns, grants,
hypothecates, mortgages, pledges, transfers and delivers to the Pledgee, and
hereby grants to the Pledgee a lien and charge upon, and a security interest in,
all the following property, whether now owned or hereafter acquired and whether
now or in the future existing:
(a) all the right, title and interest of such Pledgor as a limited or
general partner of the Partnership;
(b) any and all payments or distributions of whatever kind or character,
whether in cash or in property, at any time made, owing or payable to such
Pledgor in respect of or on account of its interest in the Partnership,
whether representing profits, distributions pursuant to complete or partial
liquidation or dissolution, repayment of capital contributions, proceeds from
the sale of any portion of such Pledgor's interest in the Partnership or
otherwise;
(c) the right to receive, receipt for, use and enjoy all such payments,
distributions and proceeds;
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(d) all right, title and interest of such Pledgor in and to all real and
personal property of the Partnership and every other right, however
characterized, now or hereafter held by the Partnership attributable to any
interest of such Pledgor in the Partnership or received in respect thereof;
and
(e) all cash and non-cash proceeds thereof
(collectively, the "COLLATERAL").
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Each of Westland Realty, Westfield Partners and Westland Management
hereby represents and warrants (to the extent such representation or warranty is
applicable to such entity) that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own and operate its properties
(including the Property), to carry on its business as now conducted and as
proposed to be conducted, and to enter into and carry out the terms of this
Agreement and the Note. The Partnership is duly formed, validly existing and
in good standing under the laws of Delaware and has all requisite power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted.
(b) The execution, delivery and performance of this Agreement and the
Note will not result in any violation of, conflict with or constitute a
default under any term of its certificate of incorporation or by-laws or any
agreement or instrument to which it is a party or by which it is bound
(including, without limitation, the Partnership Agreement and the Prudential
Financing Documents), or any term of any applicable law, ordinance, rule or
regulation of any governmental authority or any term of any applicable order,
judgment or decree of any court, arbitrator or governmental authority.
Except for the filing of a financing statement with respect to the Collateral
in the offices listed on Schedule I attached hereto, and continuation
statements with respect thereto, no consent, approval or authorization of, or
declaration or filing with, any governmental authority or regulatory body is
required for its valid execution, delivery and performance of this Agreement
and the Note.
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(c) Each of this Agreement and the Note has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to
the extent that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting the rights and remedies of creditors,
and by general equitable principles.
(d) There is no action, proceeding or investigation pending or threatened
(or, to its knowledge, any basis therefor) which questions the validity of
this Agreement or the Note or any action taken or to be taken pursuant to
this Agreement or the Note, or which might result, either in any case or in
the aggregate, in any material adverse change in its business, operations,
affairs, condition (financial or otherwise), properties or assets, or in any
liability on its part.
(e) No Event or Default or event or condition which, with notice or lapse
of time or both, would become an Event of Default has occurred or is
continuing.
(f) The principal place of business of Westland Realty is 11601 Wilshire
Boulevard, Los Angeles, California; the principal place of business of
Westfield Partners is 11601 Wilshire Boulevard, Los Angeles, California; and
the principal place of business of Westland Management is 11601 Wilshire
Boulevard, Los Angeles, California.
(g) Westland Realty is the record and beneficial owner of all of the
outstanding capital stock of Westfield Partners and Westland Management, free
and clear of any Lien.
(h) Westfield Partners and Westland Management own the respective
partnership interests pledged pursuant to this Agreement free and clear of
any Lien except for the Liens created by this Agreement and the Partnership
Agreement.
(i) The security interest granted by Westfield Partners and Westland
Management pursuant to this Agreement constitutes a valid security interest
in the Collateral, which is or will be perfected upon the filing of a
financing statement with respect to the Collateral in the offices listed on
SCHEDULE I attached hereto. Such security interest constitutes a first
priority security interest that is enforceable as such against all creditors
of Westfield Partners or Westland Management and any Persons purporting to
purchase any interest in the Partnership from Westfield Partners or Westland
Management.
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(j) No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Pledgee relating
to this Agreement.
(k) The Pledgors have delivered to the Pledgee true, correct and complete
copies of the Partnership Agreement, the Management Agreement, each of the
Prudential Financing Documents and the audited financial statements of the
Partnership for each of the years ended December 31, 1996 and December 31,
1995. There has been no material adverse change in the financial condition
of the Partnership from the condition disclosed by its most recent audited
financial statements.
SECTION 5. VOTING RIGHTS, DIVIDENDS AND OTHER DISTRIBUTIONS,
ETC.
5.1 PRIOR TO EVENT OF DEFAULT. (a) So long as no Event of Default
shall have occurred and be continuing, each of Westfield Partners and Westland
Management shall retain its rights to receive all cash payments and
distributions from the Partnership in respect of such Pledgor's partnership
interest in the Partnership for any purpose and shall retain all other rights as
a limited or general partner of the Partnership, provided that such rights are
not exercised in a manner that would cause a violation of any of the provisions
of this Agreement or the Note.
5.2 AFTER EVENT OF DEFAULT. For so long as an Event of Default is
continuing, (I) neither Westfield Partners nor Westland Management may exercise
any rights as a partner of the Partnership without the prior written consent of
the Pledgee, (II) all cash payments and distributions from the Partnership in
respect of the partnership interest of Westfield Partners or Westland Management
will be deemed held in trust by such Pledgor for the benefit of the Pledgee and
thereafter may not be commingled with other assets of such Pledgor, or applied
to any use other than the payment of Secured Obligations or the making of
capital contributions or loans to the Partnership, without the prior written
consent of the Pledgee, and (III) if the Pledgee shall have notified such
Pledgor that it elects to exercise rights as a partner of the Partnership
hereunder, (X) all rights of such Pledgor as a partner of the Partnership which
such Pledgor would otherwise be entitled to exercise pursuant to Section 5.1
shall cease, and (Y) all such rights shall thereupon become vested in the
Pledgee, who during the continuation of such Event of Default shall have
directly (or through its nominee) the sole right to exercise such rights as a
partner of the Partnership, all without liability except to account for property
actually received by it, but the Pledgee shall have no duty to such
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Pledgor to exercise any such right and shall not be responsible for any failure
to do so or delay in so doing.
SECTION 6. COVENANTS.
6.1. GENERAL COVENANTS.
6.1.1. SALE OF COLLATERAL, ETC. Unless the Note is simultaneously
prepaid in accordance with its terms or the Pledgee consents to such
transaction, no Pledgor will, directly or indirectly, (A) sell, assign,
transfer, convey or otherwise dispose of, or grant any option with respect
to, any of the Collateral, except as currently set forth in the Partnership
Agreement, or (B) create or permit to exist any Lien upon or with respect to
any of the Collateral, except for the lien and security interest created by
this Agreement or (C) do anything or suffer to exist anything, or omit to do
anything or suffer to exist any omission which would cause the value of the
Collateral to diminish in such a way as to have a material adverse effect on
the Pledgee or on its rights in respect of the Note, this Agreement or the
Collateral, including without limitation any dilution of the partnership
interests, except as currently set forth in the Partnership Agreement.
Notwithstanding the foregoing, the provisions of this Section 6.1.1 shall not
apply to (I) any transfer of any interest in any Pledgor to an entity all of
the outstanding voting equity interests of which are owned, directly or
indirectly, by Westfield Holdings Limited or (II) any transfer of any shares
of stock of Westfield Holdings Limited, PROVIDED that the Pledgors shall give
the Pledgee at least 10 days' prior written notice of any such transfer under
clause (I) above and shall execute and deliver to the Pledgee such documents
as the Pledgee may reasonably request in connection therewith.
6.1.2. FILING OF FINANCING STATEMENTS, ETC. Each Pledgor will immediately
cause Uniform Commercial Code financing statements with respect to the
Collateral to be filed in the offices listed on Schedule I attached hereto and
will cause the Partnership to make such notations in its books and records of
the pledge of the partnership interests of Westfield Partners and Westland
Management hereunder as may be necessary or desirable in order to perfect the
pledge of such partnership interests granted pursuant hereto.
6.1.3. OTHER DISTRIBUTIONS. Except for cash payments and distributions
from the Partnership permitted to be paid to Westfield Partners and Westland
Management pursuant to Section 5.1, each of Westfield Partners and Westland
Management will cause all payments and distributions of any kind on its
partnership interest in the Partnership (including any sums paid upon or in
respect of such partnership interest upon the liquidation or dissolution of the
Partnership) to be paid directly to the Pledgee (and if any such payments or
distributions are received by such Pledgor, such Pledgor will hold them in trust
for the benefit of, and will immediately turn them over to, the
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Pledgee) and the Pledgee will hold and dispose of all such payments and
distributions as part of the Collateral.
6.1.4. PAYMENT OF LOAN. The Pledgors, jointly and severally, agree to
pay the Loan in accordance with the terms set forth in the Note.
6.1.5. BOOKS AND RECORDS. Each Pledgor will keep full and accurate books
and records relating to the Collateral, and will comply with the provisions of
the Note relating to the delivery of financial statements.
6.1.6. CHIEF EXECUTIVE OFFICE. No Pledgor will change its name or change
the location of its chief executive office (A) to a location outside of the
United States and (B) unless such Pledgor shall have (I) given the Pledgee at
least 30 days' prior notice thereof and (II) made all filings or recordings, and
taken all other action, necessary or desirable under applicable law to protect
and continue the priority of the Lien created by this Agreement.
6.1.7. FURTHER ASSURANCES. Each Pledgor will at any time and from time
to time, at its own expense, promptly execute, acknowledge, file, deliver,
record and publish all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and all such further certificates, instruments and documents, and take all such
further action, as may be required by applicable law, or as may be necessary or
desirable, or that the Pledgee may reasonably request, to (A) grant more
effectively a security interest in favor of the Pledgee in all or any portion of
the Collateral, (B) maintain, preserve or perfect the security interest and lien
created or purported to be created by this Agreement, (C) preserve and defend
against any Person its title to the Collateral and the rights purported to be
granted therein by this Agreement to the Pledgee, (D) enable the Pledgee to
exercise and enforce its rights and remedies hereunder, and (E) carry out more
effectively the purposes of this Agreement.
6.1.8. ESTOPPEL CERTIFICATES. From time to time, upon request of any
Pledgor, the Pledgee will deliver to such Pledgor a statement as to (A) the
outstanding principal of, and accrued and unpaid Interest on, the Note and (B)
whether the Pledgee is aware that any Event of Default, or any event or
condition which, with notice or lapse of time or both, would become an Event of
Default, has occurred and is continuing. From time to time, upon request of the
Pledgee, each Pledgor will deliver to the Pledgee a statement as to (I) the
outstanding principal of, and accrued and unpaid Interest on, the Note and (II)
whether such Pledgor is aware that any Event of Default,
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or any event or condition which, with notice or lapse of time or both, would
become an Event of Default, has occurred and is continuing.
6.1.9. CONSENT OF WESTLAND REALTY. Westland Realty, as the sole
shareholder of the capital stock of each of Westfield Partners and Westland
Realty, hereby acknowledges that it has approved the pledge of the Collateral to
the Pledgee and hereby covenants to cause the Pledgors to comply with the terms
of the Note and this Agreement.
6.2 COVENANTS RELATING TO THE PROPERTY.
6.2.1. ADDITIONAL DEBT AND LIENS. To the extent within Pledgors'
control, no Pledgor will permit the Partnership to incur any indebtedness for
borrowed money secured by a Lien on the Property or any other assets of the
Partnership, other than the indebtedness incurred pursuant to the Prudential
Financing Documents or as may be approved by the prior written consent of
Pledgee.
6.2.2. NO REFINANCING OF PRUDENTIAL DEBT. To the extent within Pledgors'
control, no Pledgor will permit the Partnership to refund or refinance the
indebtedness incurred pursuant to the Prudential Financing Documents without the
prior written consent of the Pledgee.
6.2.3. AMENDMENTS OF CERTAIN DOCUMENTS. To the extent within Pledgors'
control, no Pledgor will permit the Partnership to amend, modify or terminate,
or to grant any waiver or consent under, the Partnership Agreement, the
Management Agreement or any of the Prudential Financing Documents without the
prior written consent of the Pledgee. To the extent within Pledgors' control,
the Pledgors will cause the Partnership to comply with all of its obligations
under each of the Partnership Agreement, the Management Agreement and the
Prudential Financing Documents.
6.2.4. WARRANTY OF TITLE. The Pledgors warrant that the Partnership has
good and marketable title to the Property, that the Partnership possesses an
unencumbered and indefeasible fee estate in the Property and that the
Partnership owns the Property free and clear of all liens, encumbrances and
charges whatsoever except for those incurred pursuant to the Prudential
Financing Documents and those approved by the Pledgee (which includes all
matters existing of record as of the date hereof) (collectively, the "PERMITTED
ENCUMBRANCES"). To the extent within Pledgors' control, the Pledgors will not
permit the Partnership to further encumber the Property except as permitted by
this Agreement. Notwithstanding the foregoing, the Pledgors may permit the
Partnership to grant to the appropriate parties easements for utility purposes
(including easements for utility rights of way) affecting the Property, in the
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ordinary course of business or development of the Property, provided that such
easements have no material, adverse effect on the Property or any part thereof,
the value thereof or the use thereof as a first-class regional shopping center,
and the Pledgee agrees that such utility easements which meet all of the
foregoing requirements shall be deemed Permitted Encumbrances hereunder. The
Pledgors will forever warrant, defend and preserve such title to the Pledgee
against the claims of all persons whomsoever. The Partnership has entered into
that certain Easement and Option to Purchase Agreement (the "EASEMENT
AGREEMENT") as of July 1, 1993 with Westland Properties, Inc., recorded in the
Register's Office on July 7, 1993 in Deed Book 7617, Page 684, pursuant to which
Easement Agreement the Partnership is granted an easement over certain adjacent
property for ingress and egress purposes and parking of vehicles and other uses
and activities approved by Westland Properties, Inc. The Easement Agreement
also grants to the Partnership an option to purchase the property. To the
extent within the Pledgors' control, the Pledgors covenant and agree that they
will not permit the Partnership to exercise any option to purchase the property
under the Easement Agreement or make use of the easement for any purpose other
than ingress and egress and for the parking of vehicles without first obtaining
the prior written consent of the Pledgee.
6.2.5. INSURANCE. (a) To the extent within the Pledgors' control, the
Pledgors will cause the Partnership, at its sole cost and expense, to keep the
Property insured during the entire term of this Agreement for the benefit of,
among other parties, the Pledgors and the Pledgee against loss or damage by fire
and against loss or damage by other risks embraced by coverage of the type now
known as "fire and extended coverage", including, but not limited to, riot and
civil commotion, vandalism, malicious mischief, burglary, theft and mysterious
disappearance, in an amount (I) equal to at least 100% of the then "full
replacement cost" of the improvements and equipment, without deduction for
physical depreciation, and (II) such that the insurer would not deem the
Partnership a co-insurer under such policies. The policies of insurance carried
in accordance with this Section 6.2.5 shall be paid in advance (in such
installments as the Partnership may elect to pay under the terms of such
policies without being in default in payment of premiums) and shall contain the
"Replacement Cost Endorsement" with a waiver of depreciation.
(b) To the extent within the Pledgors' control, the Pledgors will cause
the Partnership, at its sole cost and expense, for the mutual benefit of, among
other parties, the Pledgors and the Pledgee, to obtain and maintain during the
entire term of this Agreement the following policies of insurance:
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(i) Flood Insurance if the Property is located in an area identified by
the Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the
National Flood Insurance Act of 1968 (and any successor act thereto) in an
amount at least equal to the outstanding principal amount of the Note and
the Prudential Financing or the maximum limit of coverage available with
respect to the improvements and equipment under said Act, whichever is less.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and person injuries (including death
resulting therefrom) coverages.
(iii) Rental loss insurance in an amount equal to at least 100% of the
aggregate annual amount of all rents and additional rents payable by all of
the tenants under the leases at the Property (whether or not such leases are
terminable in the event of a fire or casualty), such rental loss insurance to
cover rental losses for a period from the date of the fire or casualty in
question through the date which is 365 days after the completion of the
restoration of the damage caused by such fire or casualty. The amount of such
rental loss insurance shall be modified annually to reflect all increased rent
and increased additional rent payable by all of the tenants under the leases.
(iv) Insurance against loss or damage from explosion of steam boilers,
air conditioning equipment, high pressure piping, machinery and equipment,
pressure vessels or similar apparatus now or hereafter installed in the
improvements.
(v) To the extent within the Pledgors' control, such other insurance
(excluding earthquake insurance) as may from time to time be reasonably
required by the Pledgee in order to protect its interests, provided such
insurance is available at commercially reasonable rates and is customarily
carried in the regional shopping center industry.
(c) To the extent within the Pledgors' control, all policies of
insurance (the "POLICIES") required pursuant to this Section 6.2.5 (i) shall be
issued by an insurer reasonably satisfactory to the Pledgee (it being agreed
that any unrelated third party insurer having all required authority to issue
insurance policies relating to property located in the State of New Jersey, and
having an A.M. Best Property/Casualty Rating of A- or better and an A.M. Best
Financial Size Rating of Class VIII or better, shall be deemed satisfactory to
the Pledgee), (ii) shall be maintained throughout the term of the Note without
cost to the Pledgee, (iii) shall contain such provisions as the Pledgee
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deems reasonably necessary or desirable to protect its interest, including,
without limitation, endorsements providing that neither the Partnership, the
Pledgee nor any other party shall be a co-insurer under such Policies and that
the Pledgee shall receive at least 30 days' prior written notice of any
modification or cancellation, and (IV) shall be reasonable satisfactory in form
and substance to the Pledgee and shall be subject to the Pledgee's approval
(which approval shall not be unreasonably withheld or delayed) as to amounts,
form, risk coverage, deductibles, loss payees and insureds (provided that the
Pledgee's agreement to be reasonable in approving amounts, form, risk coverage,
deductibles, loss payees and insureds shall in no way affect or limit the
specific insurance requirements otherwise required to be observed by the
Pledgors under this Section 6.2.5). The Pledgors may permit the Partnership to
obtain blanket policies covering the Property and other property owned by
affiliates of the Partnership in satisfaction of the foregoing insurance
requirements, provided that such blanket policies meet all of the foregoing
insurance requirements, including, without limitation, amounts and deductibles
as to the Property and loss payees and insureds. Not later than five days prior
to the expiration date of each of the Policies, the Pledgors will deliver to the
Pledgee satisfactory evidence of the renewal of each of the Policies.
(d) If the Property shall be damaged or destroyed, in whole or in
part, by fire, or other casualty, the Pledgors will give prompt written notice
thereof to the Pledgee and prior to the making of any repairs thereto, PROVIDED,
HOWEVER, that no such notice shall be required where the loss or damage is
$2,000,000 or less and no Event of Default shall have occurred and be
continuing. If the loss or damage exceeds $2,000,000, then, subject to the
terms of the existing mortgage on the Property and to the extent within the
Pledgors' control, the Pledgors will cause the Partnership promptly to commence
and diligently to continue to perform the repair and restoration of the Property
so damaged or destroyed so as to restore the Property to substantially as good,
or better, condition as existed immediately prior to such damage or destruction.
To the extent within the Pledgors' control, the Pledgors will cause the Property
to be repaired and restored in accordance with all legal requirements, pursuant
to plans reasonably approved by the Pledgee and otherwise in accordance with the
requirements of this Agreement.
6.2.6. PAYMENT OF TAXES, ETC. (a) To the extent within the Pledgors'
control, the Pledgors will cause the Partnership to pay all taxes, assessments,
water rates and sewer rents, now or hereafter levied or assessed or imposed
against the Property or any part thereof (the "TAXES") and all maintenance
charges, other governmental impositions, and other charges prior to delinquency
and before interest and/or penalties become due. The Pledgors will deliver to
the Pledgee, promptly upon the Pledgee's request, evidence reasonably
satisfactory to the Pledgee that the Taxes
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and such charges, fees and impositions have been so paid and are not then
delinquent. To the extent within the Pledgors' control, the Pledgors will not
permit the Partnership to suffer, and will promptly cause to be paid and
discharged, any Lien which may be or become a Lien (including, without
limitation, tax liens and mechanics' liens) against the Property (other than the
Permitted Encumbrances), and will promptly pay for all utility services provided
to the Property.
(b) Notwithstanding the provisions of subsection (a) of this Section
6.10, the Pledgors may permit the Partnership to contest in good faith the
amount or validity of any such Lien (including, without limitation, tax liens
and mechanics' liens) referred to in the last sentence of subsection (a) above
(or in connection with any tenant mechanics' lien to enforce the Partnership's
rights under the lease to cause tenant to remove such mechanics' lien) by
appropriate legal proceedings and in accordance with all applicable law, after
notice to, but without cost or expense to, the Pledgee, PROVIDED that: (I) the
Partnership pays all Taxes prior to delinquency and before interest and/or
penalties become due, unless the Pledgors deliver evidence that, as a result of
the Partnership's contest, the Partnership's obligation to pay such Taxes has
been deferred by the appropriate governmental authority, in which event the
Pledgors may permit the Partnership to defer such payment of such Taxes until
the date specified by such governmental authority; (II) such contest shall be
promptly and diligently prosecuted by and at the expense of the Partnership;
(III) the Pledgee shall not thereby suffer any civil penalty, or be subjected
to any criminal penalties or sanctions; (IV) such contest shall be discontinued
if at any time all or any part of the Property shall be in imminent danger of
being foreclosed, sold, forfeited, or otherwise lost; and (V) during such
contest the Pledgors will, at the option of the Pledgee, provide security
satisfactory to the Pledgee, indemnifying and protecting the Pledgee against any
liability, loss or injury by reason of such contest (PROVIDED that the Pledgee
shall not require that the Pledgors post a bond as security in connection with
the contest of a mechanic's lien but it will post other security reasonably
satisfactory to the Pledgee).
6.2.7. LEASES AND RENTS. (a) To the extent within the Pledgors'
control, the Pledgors will cause the Partnership to use its reasonable efforts
to require that leases of the Property (the "LEASES") provide for rental rates
comparable to other similarly postured first class regional shopping center
malls in the relevant market area and be arm's-length stand-alone transactions
with independent third parties. To the extent within the Pledgors' control, all
Leases shall be subject to the prior written approval of the Pledgee, which
approval shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, a proposed Lease shall automatically be deemed approved by the
Pledgee (a "DEEMED APPROVED LEASE") if (I) such Lease covers an area of 10,000
square feet or less, or, to the extent the Lease is with a "national or
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regional" tenant (as hereinafter defined), covers an area of 18,000 square feet
or less, (II) such Lease provides a term of not less than five years nor more
than ten years, excluding renewal options (or 15 years, including renewal
options), (III) such Lease does not grant the tenant any options to purchase, or
rights of first refusal with respect to, all or any portion of the Property, or
any options, or rights of first refusal with respect to, expansion of the
premises demised thereby, (IV) such Lease does not grant the tenant any right of
self help or set-off, (V) such Lease or the provisions thereof does not violate,
or cause any violation of any other Lease or the provisions thereof, and (VI)
the rental of the Lease is upon Fair Market Rental Terms (hereinafter defined).
As used herein, the term "FAIR MARKET RENTAL TERMS" shall mean that all of the
rental terms of a lease, including, without limitation, base rent, additional
rent, percentage rent and payment of escalations, and taking into account all
concessions, when taken as a whole, shall be at or above the then current market
rental rates for comparable space located in the applicable market.
Notwithstanding anything to the contrary in this subsection (a), the Pledgors
shall not be required to obtain the Pledgee's approval in connection with
temporary/seasonal occupancy arrangements (which are licenses, not leases). For
purposes of this subsection, the term "national or regional tenant" shall mean
an entity then operating under a single business name in four or more shopping
centers in the United States each of which shopping centers contains more than
400,000 square feet of leasable retail space, including, without limitation,
anchors.
(b) (i) To the extent within the Pledgors' control, the Pledgors
will not permit the Partnership, without the prior written consent of the
Pledgee, which consent shall not be unreasonably withheld or delayed, to
(A) cancel, terminate, amend or modify the terms of any Lease listed on Schedule
II attached hereto (the "MAJOR LEASES") or accept a surrender thereof,
(B) consent to any assignment of or subletting under any Major Lease, or
(C) cancel, terminate, abridge or otherwise modify any guaranty of any Major
Lease or the terms thereof.
(ii) The Pledgors may permit the Partnership, without the prior written
consent of the Pledgee, to (A) cancel, terminate, amend or otherwise modify the
terms of any Deemed Approved Lease, or accept a surrender thereof, (B) consent
to an assignment or subletting under any Deemed Approved Lease or (C) cancel,
terminate, amend or modify any guaranty of a Deemed Approved Lease or the terms
thereof, PROVIDED that (X) no Event of Default shall have occurred and be
continuing hereunder, (Y) the Deemed Approved Lease, after any such modification
or amendment, will continue to meet the requirements set forth in clauses (i)
through (vi) of subsection (a) above, provided, however, that with respect to
clause (ii) of subsection (a) above, if the remaining term of the Deemed
Approved Lease is less than five years immediately prior to the time of
amendment, then the fact that such term is less than five years shall
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not cause the Pledgee's consent to be required with respect to such amendment so
long as the Partnership does not reduce such term any further as part of such
amendment by more than the number of years equal to 20% of the original term
(excluding renewal options) of such Lease, and (Z) such cancellation,
termination, amendment or modification, or acceptance of a surrender, of a
Deemed Approved Lease or such guaranty thereof, when taken together with other
cancellations, terminations, amendments, modifications or acceptances of
surrender of Deemed Approved Leases or guarantees thereof over the prior six
month period, will not materially adversely affect the Property or the value
thereof, provided that the Partnership may in any event terminate a Deemed
Approved Lease on account of a material default by the tenant thereunder.
(iii) The Pledgors may permit the Partnership, without the prior written
consent of the Pledgee, to (A) cancel, terminate, amend or otherwise modify the
terms of any Lease other than Leases described under subsections (i) and (ii)
above (each, a "NON-MAJOR LEASE"), or accept a surrender thereof, (B) consent to
an assignment or subletting under any Non-Major Lease or (C) cancel, terminate,
amend or modify any guaranty of a Non-Major Lease or the terms thereof, provided
that (X) no Event of Default shall have occurred and be continuing hereunder,
and (Y) without the prior written consent of the Pledgee, to the extent within
the Pledgors' control, the Pledgors will not permit the Partnership to (1)
change the rental, economics or term of any such Non-Major Lease (or grant to
tenant options to purchase or rights of first refusal with respect to all or any
portion of the Property, or grant to tenant options or rights of first refusal
with respect to expansion space, or add landlord obligations to construct, or
modify termination or cancellation rights or self help or offset rights, or add
or modify environmental indemnities), (2) cancel or terminate such Non-Major
Lease except for a material default thereunder, or (3) consent to an assignment
of or subletting with respect to such Non-Major Lease except to the extent the
tenant has the right so to assign or sublet the leased premises without the
Partnership's consent.
To the extent within the Pledgors' control, the Pledgors will cause the
Partnership not to accept prepayments of installments of rents for a period or
more than one month in advance without the prior written consent of the Pledgee
(provided that this provision shall not be deemed to apply to installments of
rents delivered to the Partnership as a security deposit under such Lease).
(c) With respect to each Lease, to the extent within the Pledgors'
control, the Pledgors will cause the Partnership to (I) fulfill or perform each
and every material provision thereof on the lessor's part to be fulfilled or
performed, (II) promptly send copies to the Pledgee of all material notices of
default which the Partnership shall send
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or receive thereunder, and (III) enforce all of the material terms, covenants
and conditions contained in such Lease upon the lessee's part to be performed,
PROVIDED, HOWEVER, that the Partnership shall not be required to terminate
Leases as part of such enforcement. Notwithstanding the foregoing sentence,
with respect to any Lease covering an area of less than 10,000 square feet, (A)
the Partnership shall not be required to perform its obligations with respect to
such Lease set forth in clauses (i) and (iii) of the foregoing sentence, if such
failure to perform such obligations, when taken together with the Partnership's
failure to perform its obligations under clauses (i) and (iii) of the foregoing
sentence with respect to other Leases covering an area of less than 10,000
square feet over the prior 12 month period, will not materially, adversely
affect the Property or the value thereof, and (B) notwithstanding the provisions
of clause (A) above, the Partnership shall at all times be required to perform
its obligations under clauses (i) and (iii) of the foregoing sentence with
respect to any provisions in such Leases concerning life, safety or
discrimination issues.
(d) To the extent the Pledgee's consent is required under this
Section 6.11, the Pledgee agrees that it will not unreasonably withhold or delay
such consent.
(e) The Pledgors will deliver to the Pledgee on an annual basis
commencing on June 1, 1998, (I) an updated rent roll for the Property, which
shall be highlighted to show all material changes due to the modification or
termination of Leases or guarantees thereof pursuant to subsection (c) above,
and (II) lease abstracts in form reasonably satisfactory to the Pledgee with
respect to such modifications, the items required under clauses (i) and (ii)
above to be certified by an authorized officer of Westland Management.
6.2.8. MAINTENANCE OF PROPERTY. (a) To the extent within the Pledgors'
control, the Pledgors will cause the Partnership, at its sole cost and expense,
to keep and maintain the Property, including, without limitation, the parking,
the recreational and landscaped portions thereof and the loading docks, in its
current order and condition and in accordance with the Partnership's current
standards of maintenance. To the extent within the Pledgors' control, the
Pledgors will not permit the Partnership to diminish, remove or demolish the
improvements and the equipment on the Property (except up to an aggregated
amount of $1,000,000 in any given calendar year or, in addition, with respect to
equipment, unless the Partnership concurrently therewith replaces the same with
reasonably similar and comparable items of equal or greater value) or materially
altered, and to the extent within the Pledgors' control, the Pledgors will not
permit the Partnership to erect any new buildings, structures or building
additions on the Property without the prior written consent of the Pledgee
(provided that such consent shall not be unreasonably withheld or delayed with
respect to new
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buildings, structures or building additions on the Property). To the extent
within the Pledgors' control, the Pledgors will cause the Partnership promptly
to comply in all material respects with all laws, orders and ordinances
affecting the Property, or the use thereof, PROVIDED, HOWEVER, that nothing in
the foregoing clause shall require the Partnership to comply with any such law,
order or ordinance so long as the Partnership shall in good faith, after notice
to, but without cost or expense to, the Pledgee, contest the validity of such
law, order or ordinance by appropriate legal proceedings and in accordance with
all applicable law, which proceedings must operate to prevent (1) the
enforcement thereof, (2) the payment of any fine, charge or penalty by the
Pledgee, (3) the sale or forfeiture of the Property or any part thereof, (4) the
imposition of criminal liability on the Pledgee and (5) the imposition, unless
stayed, of civil liability on the Pledgee; PROVIDED that during such contest, if
requested by the Pledgee and to the extent within the Pledgors' control, the
Pledgors will, or will cause the Partnership to, provide security reasonably
satisfactory to the Pledgee (after taking into account the financial wherewithal
of the Partnership), indemnifying and protecting the Pledgee against any
liability, loss or injury by reason of such non-compliance or contest, and
provided further, that such contest shall be promptly and diligently prosecuted
by and at the expense of the Partnership. To the extent within the Pledgors'
control, (A) the Pledgors will cause the Partnership promptly, at its sole cost
and expense, to repair, replace or rebuild any part of the Property which may
become damaged, worn or dilapidated, (B) the Pledgors will not permit the
Partnership to commit any waste at the Property, (C) the Pledgors will cause the
Partnership to operate the Property at all times as a first-class regional
shopping center, and (D) the Pledgors will cause the Partnership to be managed
at all times by an manager approved by the Pledgee (which approval will not be
required for any affiliate of Westfield Holdings Limited).
6.2.9. PERFORMANCE OF OTHER AGREEMENTS. To the extent within the
Pledgors' control, the Pledgors will cause the Partnership to observe and
perform all of the material terms to be observed and performed by the
Partnership pursuant to the terms of any material agreement or material recorded
instrument affecting or pertaining to the Property (including the loan on the
Property).
6.2.10. HAZARDOUS SUBSTANCES. To the extent within the Pledgors'
control, the Pledgors will cause the Partnership, at no cost or expense to the
Pledgee, to comply with and will cause all occupants of the Property to comply
with all applicable federal state and local laws, rules, regulations and orders
with respect to the discharge, generation, removal, transportation, storage and
handling of hazardous or toxic wastes or substances, including, without
limitation, PCB material (collectively "HAZARDOUS SUBSTANCES"), remove or cause
the removal of any Hazardous Substances from the Property that are in violation
of applicable law, pay immediately when due the cost of
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removal of any Hazardous Substances removed from the Property, and keep the
Property free of any Lien imposed pursuant to such laws, rules, regulations and
orders PROVIDED, HOWEVER, with respect to tenants under Leases, the Partnership
shall have 180 days to cause such tenants under Leases to comply with such laws,
rules, regulations and orders. To the extent within the Pledgors' control, the
Pledgors will not permit the Partnership or any occupant of the Property to use,
discharge, transport, or install any PCB material. To the extent within the
Pledgors' control, the Pledgors will cause the Partnership to maintain the
integrity of all storage tanks and drums on or under the Property during the
term of the loan in compliance with all applicable laws, rules, regulations and
orders. To the extent within the Pledgors' control, the Pledgors will cause the
Partnership to follow an operation and maintenance program with respect to all
storage tanks and drums on or under the Property after the date hereof, which
program has been approved in writing by the Pledgee. The Pledgors will indemnify
the Pledgee and hold the Pledgee harmless from and against all loss, cost,
damage and expense (including, without limitation, attorneys' fees and costs
incurred in the investigation, defense and settlement of claims) that the
Pledgee actually incurs as a result of the assertion against the Pledgee of any
claim relating to the presence or removal of any Hazardous Substances or storage
tanks or drums referred to in this paragraph, or compliance with any federal,
state or local laws, rules, regulations or orders relating thereto. The
obligations and liabilities of Pledgors under this Section 6.2.10 shall survive
full payment of the Note, any entry of judgment of foreclosure or a deed in lieu
of foreclosure.
6.2.11. ASBESTOS. To the extent within the Pledgors' control, the
Pledgors will not permit the Partnership or install or permit to be installed in
the Property, friable asbestos or any substance containing asbestos
(collectively, "HAZARDOUS ASBESTOS"). With respect to any such Hazardous
Asbestos currently present in the Property, to the extent within the Pledgors'
control, the Pledgors will cause the Partnership, at no cost or expense to the
Pledgee, promptly to comply with, and to cause all occupants of the Property to
comply with, all applicable federal, state or local laws, rules, regulations or
orders; provided, however, with respect to tenants under Leases, the Partnership
shall, have 180 days to cause such tenants under Leases to comply with such
applicable laws, rules, regulations and orders. The Pledgors will indemnify the
Pledgee and hold the Pledgee harmless from and against all loss, cost, damage
and expense (including, without limitation, attorneys' fees and costs incurred
in the investigation, defense and settlement of claims) that the Pledgee
actually incurs as a result of the assertion against the Pledgee of any claim
relating to the presence or removal of any Hazardous Asbestos, or compliance
with any federal, state or local laws, rules, regulations or orders relating
thereto. The obligations and liabilities of the
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Pledgors under this Section 6.2.11 shall survive full payment of the Note, any
entry of judgment of foreclosure or a deed in lieu of foreclosure.
SECTION 7. RIGHTS OF THE PLEDGEE.
7.1. NO OBLIGATIONS OR LIABILITY TO THE PLEDGORS. The rights of the
Pledgee hereunder shall not be conditioned or contingent upon the pursuit by the
Pledgee of any right or remedy against any Pledgor or against any other Person
which may be or become liable in respect of all or any part of the Secured
Obligations or against any other collateral security therefor, guarantee
therefor or right of offset with respect thereto. The rights and powers of the
Pledgee hereunder are solely to protect its interest in the Collateral, and the
Pledgee shall not be liable for any failure to demand, collect or realize upon
all or any part of the Collateral or for any delay in doing so, nor shall the
Pledgee be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. Prior to
foreclosure and sale or other transfer of the Collateral, neither the pledge of
and granting of a security interest in the Collateral under Section 3 nor any
action or inaction on the part of the Pledgee hereunder shall release any
Pledgor from any of its obligations hereunder, or constitute an assumption of
any such obligations on the part of the Pledgee, or cause the Pledgee to become
subject to any obligation or liability to any Pledgor. The Pledgee has no
obligation to perform any of the obligations or duties of any Pledgor as a
partner of the Partnership.
7.2. RIGHT OF PLEDGEE TO PERFORM PLEDGORS' COVENANTS, ETC. If any
Pledgor fails to make any payment or to perform any agreement required to be
made or performed hereunder after notice and opportunity to cure, the Pledgee
may (but need not) at any time thereafter make such payment or perform such act,
or otherwise cause such payment or performance. No such action will create any
liability to any Pledgor on the part of the Pledgee. All amounts so paid by the
Pledgee and all costs and expenses (including, without limitation, attorneys'
fees and expenses) incurred by the Pledgee in any such performance shall accrue
interest from the date paid or disbursed until reimbursed to the Pledgee in full
by or on behalf of the Pledgors at the rate of 12% per annum. All such amounts
shall constitute additional indebtedness of the Pledgors secured hereunder and
shall be payable on demand.
7.3. ADDITIONAL SECURITY. Without notice to or consent of any Pledgor
and without impairment of the security interest and rights granted pursuant to
this Agreement, the Pledgee may accept, from any Person or Persons, additional
security
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for the Secured Obligations. Neither the giving of this Agreement nor the
acceptance of any such additional security will prevent the Pledgee from
resorting, first to such additional security, or, first to the security created
by this Agreement, in either case without affecting the Pledgee's security
interest and rights granted pursuant to this Agreement.
7.4. RELEASE OF THE PLEDGE AND SECURITY INTEREST CREATED HEREBY. Upon
payment in full of the outstanding principal amount of, and accrued Interest on
the Note in accordance with its terms and payment or satisfaction of all other
Secured Obligations, the Pledgee will, upon the written request of the Pledgors,
return to the respective Pledgors all Collateral held by the Pledgee and, if the
Pledgors so request, execute and deliver to, or as directed in writing by, the
Pledgors an appropriate instrument (in due form for recording or filing)
sufficient to release from the pledge and security interest created hereby the
Collateral and all other property subject thereto.
SECTION 8. EVENTS OF DEFAULT; REMEDIES AND ENFORCEMENT.
8.1. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall exist if any of the
following conditions or events shall occur and be continuing:
(a) any Pledgor fails to make any payment under this Agreement, the
Note or any other agreement executed by any Pledgor as security for the payment
of the Note, within five days of the date when any such payment is due; or
(b) any Pledgor, within 30 days after written notice from the Pledgee
(or, if not curable within 30 days, such Pledgor does not commence cure of such
default within such 30 day period and thereafter diligently pursue such cure),
fails to perform or violates any other of the terms or conditions contained in
this Agreement, in the Note or under any other agreement executed by any Pledgor
as security for the payment of the Note; or
(c) any representation or warranty made in writing by or on behalf of
any Pledgor in this Agreement or in the Note or in any writing furnished in
connection with the transactions contemplated hereby proves to have been false
or incorrect in any material respect on the date as of which made; or
(d) an event of default shall occur and be continuing under the
Prudential Financing and Prudential shall have accelerated the payments of
the indebtedness represented by the Prudential Financing and commenced the
exercise of remedies under the Prudential Financing.
(e) any Pledgor (I) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (II) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or
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any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (III) makes an assignment for the benefit of its creditors, (IV)
consents to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, (V) is adjudicated as insolvent or to be liquidated, or (VI)
takes corporate action for the purpose of any of the foregoing; or
(e) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by any Pledgor, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of any Pledgor, or any such petition shall be filed against any
Pledgor and such petition shall not be dismissed within 60 days.
8.2. REMEDIES. If an Event of Default shall have occurred and be
continuing, then, in addition to the actions referred to in Section 5.2, the
Pledgee may take any or all of the following actions, without demand of
performance or other demand, advertisement or notice of any kind to or upon any
Pledgor or any other Person (except the notice specified in Section 8.2(b) of
time and place of public or private sale), all and each of which demands,
advertisements and/or notices are hereby expressly waived:
(a) The Pledgee may, as assignee of the respective Pledgors with
respect to the Collateral, in its own name or, at its sole option, in the name
of such Pledgor, exercise any or all of the rights, powers and privileges of,
and pursue any or all of the remedies accorded to, such Pledgor as a partner of
the Partnership, and may exclude such Pledgor and all Persons claiming by,
through or under such Pledgor wholly or partly from the Collateral, including,
without limitation, the right to ask for, demand, take, collect, sue for,
receive, compromise and settle all payments in respect of the Collateral which
such Pledgor, except for the execution hereof, could ask for, demand, take,
collect, sue for, receive, compromise and settle for its own use, and in
connection therewith, the Pledgee may enforce all rights and remedies as a
partner of the Partnership, which such Pledgor could enforce if this Agreement
had not been made, and such Pledgor hereby ratifies any action which the Pledgee
shall take to enforce its rights hereunder.
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(b) The Pledgee may forthwith collect, recover, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, give an option or options to purchase, contract to sell or otherwise
dispose of and deliver the Collateral, or any part thereof, in one or more
parcels at public or private sale or sales, or at any of the Pledgee's offices
or elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Pledgee need not make any sale of Collateral
even if notice thereof has been given, may reject any and all bids that in its
normally reasonable discretion it shall deem adequate, and may adjourn any
public or private sale. Without limiting the foregoing, the Pledgors agree that
the Pledgee need not give more than five days' notice of the time and place of
any public sale or of the time after which a private sale or other intended
disposition is to take place and that such notice is reasonable notification of
such matters, and waives all other demands or notices of any kind.
(c) The Pledgee shall as a matter of right and without notice to any
Pledgor or any Person claiming by, through or under such Pledgor, and without
regard to the then value of the Collateral or the interest of such Pledgor
therein, be entitled to the appointment of a receiver for all or any part of the
Collateral or otherwise, and such Pledgor hereby irrevocably consents to the
appointment of such receiver and will not oppose any such appointment.
(d) In addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to any of the Secured Obligations, the Pledgee shall have and may
exercise with respect to the Collateral or any Pledgor any and all the rights
and remedies of a secured party under the NYUCC.
Each Pledgor consents to and ratifies any action which the Pledgee may
take to enforce its rights under this Section 8.2. Each Pledgor waives the
benefit of all appraisement, valuation, stay, extension, moratorium and
redemption laws now or hereafter in force and all rights of marshaling in the
event of the sale of the Collateral or any part thereof or any interest therein.
Each Pledgor will execute and deliver such documents as the Pledgee deems
advisable or necessary in order that any such sale or disposition be made in
compliance with applicable law.
Any sale or other disposition of the Collateral or any part thereof or
interest therein in the exercise of any remedy hereunder will constitute a
perpetual bar against each Pledgor and any Persons claiming by, through or under
such Pledgor. Upon any
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such sale or other disposition, the receipt of the officer making the sale or
other disposition or of the Pledgee is a sufficient discharge to the purchaser
for the purchase money, and such purchaser will have no duty to see to the
application thereof.
8.3. APPLICATION OF PROCEEDS FOLLOWING EVENT OF DEFAULT. All amounts
held or collected by the Pledgee as part of the Collateral (including, without
limitation, all amounts realized as a result of the exercise of any rights and
remedies hereunder) following the occurrence of any Event of Default will be
applied forthwith by the Pledgee as follows:
FIRST: to the payment of all costs and expenses of such exercise
(including, without limitation, the cost of evidence of title and the costs and
expenses, if any, of taking possession of, retaining custody over and preserving
the Collateral or any part thereof, or any interest therein prior to such
exercise), all costs and expenses of any receiver of the Collateral or any part
thereof, or any interest therein, any taxes, assessments or charges with respect
to any of the Collateral, whether or not prior to the lien of this Agreement,
which the Pledgee may consider it necessary or desirable to pay and all amounts
due and payable to the Pledgee under Section 6.1.7 or 7.2 and unpaid;
SECOND: to the payment of the accrued and unpaid Interest in accordance
with the provisions of the Note;
THIRD: if the Note has not become due and payable in full, to the payment
of all outstanding principal of then due and payable on the Note;
FOURTH: if the Note has become due and payable in full whether at
maturity, by prepayment, acceleration, declaration of default or otherwise, to
the ratable payment of the outstanding principal of the Note in accordance with
the provisions of the Note and the Make-Whole Amount (as defined in the Note);
FIFTH: to the payment of all other obligations secured hereunder for
which moneys have not theretofore been applied; and
SIXTH: at such time as all of the obligations of the Pledgors under the
Note have been paid in full in cash in accordance with the terms of the Note and
all other Secured Obligations have been paid or performed to the satisfaction of
the Pledgee, the remainder, if any, will be paid over to Pledgors, their
respective successors or assigns, or to whomsoever may be lawfully entitled to
receive the same, as determined by a court of competent jurisdiction.
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8.4. PURCHASE OF COLLATERAL BY PLEDGEE. The Pledgee may be a purchaser
of the Collateral or any part thereof or any interest therein at any sale or
other disposition hereunder and may apply against the purchase price the
indebtedness secured hereby, in the case of the Pledgee, the indebtedness
secured hereby owing to such purchaser, to the extent of such purchaser's
distributive share of the purchase price. The Pledgee shall, upon any such
purchase, acquire good title to the Collateral so purchased free of the lien and
security interest created by this Agreement and free of all rights of equity or
redemption in any Pledgor, which right of equity and redemption each Pledgor
hereby expressly waives and releases, and each Pledgor hereby covenants to
warrant and defend the title of such purchaser against all claims arising by,
through or under any Pledgor.
8.5. RECEIPT SUFFICIENT DISCHARGE. Upon any sale or other disposition
hereunder of the Collateral or any part thereof or any interest therein, the
receipt of the officer making the sale under judicial proceedings or of the
Pledgee shall be a sufficient discharge to the purchaser for the purchase money,
and such purchaser shall have no duty to see to the application thereof.
8.6. SALE A BAR AGAINST THE PLEDGORS. Any sale or other disposition
hereunder of the Collateral or any part thereof or any interest therein shall
forever be a bar against any Pledgor to assert any claim of ownership to the
Collateral or any part thereof or such interest therein.
8.7. NO WAIVER; CUMULATIVE REMEDIES. The Pledgee shall not by any action
or inaction be deemed to have waived any of its rights, powers or remedies
hereunder except pursuant to a writing, signed by the Pledgee, and then only to
the extent therein set forth. A waiver by the Pledgee of any right, power or
remedy hereunder on any one occasion shall not bar the exercise of any right,
power or remedy hereunder on any future occasion. No failure to exercise nor
delay in exercising on the part of the Pledgee any right, power or remedy
hereunder shall preclude the exercise of any other right, power or remedy. By
accepting payment of any amount secured hereby after its due date, the Pledgee
shall not be deemed to waive its right to require prompt payment when due of all
other amounts payable hereunder. Each right, power and remedy of the Pledgee
provided for in this Agreement or now or hereafter existing at law or equity or
by statute or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power or remedy provided for herein or therein or
now or hereafter existing at law or in equity or by statute or otherwise, and
the exercise of any one or more of the rights, powers or remedies provided for
herein or therein with respect to a part only of the Collateral shall not
preclude the simultaneous or later
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<PAGE>
exercise by the Pledgee of any or all such other rights, powers or remedies with
respect to any other part of the Collateral.
SECTION 9. PLEDGORS' OBLIGATIONS NOT AFFECTED.
The covenants and agreements of the Pledgors set forth herein are and
shall be joint and several primary obligations of each Pledgor, and, to the
extent permitted by applicable law, such obligations shall be absolute and
unconditional, shall not be subject to any counterclaim, set-off, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by each Pledgor with its obligations
hereunder) based upon any claim any Pledgor, the Partnership or any other Person
may have against the Pledgee or any other Person, and shall remain in full force
and effect without regard to, and shall not be released, discharged or in any
way affected by, any circumstance or condition whatsoever, foreseeable or
unforeseeable and without regard to whether any Pledgor, the Partnership or the
Pledgee shall have any knowledge or notice thereof, including, without
limitation:
(a) any termination, amendment, modification, addition, deletion or
supplement to or other change to any of the terms of any other instrument or
agreement applicable to any of the parties hereto or thereto, or any
assignment or transfer of any thereof, or any furnishing or acceptance or
release of additional security for any Secured Obligation or for the
obligations of any Person under this Agreement or the Note, or the failure of
any security or the failure of any Person to perfect any interest in any
collateral (including, without limitation, the Collateral);
(b) any waiver of, or extension of time for the performance of, the
payment, performance or observance of any of the obligations, conditions,
covenants or agreements contained in this Agreement or the Note, or any other
waiver, forbearance, consent, extension, renewal, indulgence, compromise,
release, settlement, refunding or other action or inaction under or in respect
of this Agreement or the Note or any other instrument or agreement, or under
or in respect of any obligation or liability of any Pledgor, the Partnership
or the Pledgee or any exercise or non-exercise of any right, remedy, power or
privilege under or in respect of any such instrument of agreement or any such
obligation or liability;
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(c) any failure, omission or delay on the part of the Pledgee to
enforce, assert or exercise any right, power or remedy conferred on it in this
Agreement or the Note to give notice to any Pledgor of the occurrence of an
Event of Default;
(d) any voluntary or involuntary bankruptcy, insolvency,
reorganization, moratorium, assignment for the benefit of creditors,
receivership, liquidation, marshaling of assets and liabilities or similar
proceedings with respect to any Pledgor or the Partnership or any other Person
or any of their respective properties or creditors, or any action taken by any
trustee or receiver or by any court in any such proceeding;
(e) any limitation on the liability or obligations of the Partnership
or any Pledgor under this Agreement or the Note or any other instrument or
agreement, which may now or hereafter be imposed by law, or any discharge,
termination, cancellation, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any thereof;
(f) any merger, consolidation or amalgamation of any Pledgor or the
Partnership into or with any other Person, or sale, lease or transfer of any
of the assets of any Pledgor or the Partnership to any other Person or change
in the ownership of any shares of capital stock of any Pledgor or any change
in the relationship between any Pledgor and any other Pledgor or the
Partnership, or any termination of any such relationship; or
(g) any other occurrence, circumstance, happening or event whatsoever,
whether similar or dissimilar to the foregoing, whether foreseen or
unforeseen, and any other circumstance (other than full and irrevocable
performance and payment of the Secured Obligations) which might otherwise
constitute a legal or equitable defense, release or discharge or which might
otherwise limit recourse against any Pledgor, whether or not the Pledgor shall
have notice or knowledge of the foregoing.
SECTION 10. MISCELLANEOUS.
10.1. AMENDMENTS, ETC. Any amendment, alteration, modification or waiver
of any term or provision of this Agreement, or consent to any departure by any
Pledgor therefrom, must be in writing and signed by the Pledgee. Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it is given.
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10.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the respective successors
and permitted assigns of the parties hereto, whether so expressed or not.
10.3. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, telecopy or cable
communication) and shall be sent (a) if to Westland Realty at its address at
11601 Wilshire Boulevard, Los Angeles, California 90025, Attention: President,
(b) if to Westfield Partners, at its address at 11601 Wilshire Boulevard, Los
Angeles, California 90025, Attention: President, (c) if to Westland Management,
at its address at 11601 Wilshire Boulevard, Los Angeles, California 90025,
Attention: President, (d) if to the Pledgee, at its address at 11601 Wilshire
Boulevard, Los Angeles, California 90025, or (e) as to each party, at such other
address as shall be designated by such party in a written notice to the other
parties. All such notices and communications shall be effective when received.
10.4. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent made necessary by such prohibition or
unenforceability. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable (i) the remaining provisions hereof
or (ii) such provision in any other jurisdiction.
10.5. NON-RECOURSE. Notwithstanding any provision herein or in the Note
to the contrary, the Pledgee agrees with the Pledgors that in the event the
Pledgee shall at any time take action to enforce the collection of the Note, it
shall proceed first to foreclose its pledge under this Agreement (including sale
under power of sale hereunder) and to exercise its remedies with respect to
other collateral securing the Note instead of instituting suit upon the Note and
if, as a result of such foreclosure and sale of the property described therein,
a lesser sum is realized therefrom than the amount then due and owing hereunder
and under the Note, the Pledgee will never institute any action, suit, claim or
demand in law or in equity against any Pledgor or any partner, shareholder,
officer or director of any Pledgor for or on account of such deficiency;
PROVIDED, HOWEVER, that nothing in this Section 10.5 contained shall in any way
affect or impair the Lien of this Agreement or any other collateral or any
representation or warranty of title made in this Agreement by any Pledgor, all
of which shall remain in full force and inure to the benefit of the Pledgee.
The Pledgee shall, nevertheless, be entitled to institute such an action, suit,
claim, or demand against, and to recover a judgment against, the Pledgors for
any such deficiency to the extent that such deficiency results from:
(a) intentional or willful fraud or misrepresentation by any Pledgor in
connection with the execution and delivery of, or in connection with the
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representations and warranties provided in, this Agreement, the Note or any
other documents executed by any Pledgor securing the Note or the performance of
any Pledgor's obligations under this Agreement, the Note or such other documents
or (b) the retention by any Pledgor of any rental or other income arising with
respect to the Property which is collected by such Pledgor after the Pledgee has
given notice to such Pledgor that such Pledgor is in default under the Note,
this Agreement, or any other document executed by any Pledgor securing the Note.
10.6. MISCELLANEOUS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Except as otherwise indicated, references
herein to any "Section" means a "Section" of this Agreement. The table of
contents and the section headings in this Agreement are for purposes of
reference only and shall not limit or define the meaning hereof.
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<PAGE>
10.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their representative officers thereunto duly
authorized as of the date first above written.
WESTLAND REALTY, INC.
By /s/ Richard Green
-----------------------------------
Name: Richard Green
Title: President
WESTFIELD PARTNERS, INC.
By /s/ Richard Green
-----------------------------------
Name: Richard Green
Title: President
WESTLAND MANAGEMENT, INC.
By /s/ Richard Green
-----------------------------------
Name: Richard Green
Title: President
WESTFIELD AMERICA, INC.
By /s/ Peter S. Lowy
-----------------------------------
Name: Peter S. Lowy
Title: Director and/Co-President
30
PLEDGE AND SECURITY AGREEMENT
<PAGE>
PROMISSORY NOTE
$145,000,000 New York, New York
May 21, 1997
FOR VALUE RECEIVED, the undersigned, WESTFIELD PARTNERS, INC., a
Delaware corporation ("WESTFIELD PARTNERS"), and WESTLAND MANAGEMENT, INC., a
Delaware corporation ("WESTLAND MANAGEMENT", together with Westfield Partners,
the "MAKERS"), jointly and severally promise to pay to WESTFIELD AMERICA, INC.,
a Missouri corporation (the "HOLDER"), or order, during regular business hours
at its offices at 11601 Wilshire Boulevard, 12th Floor, Los Angeles, California
90025, or at such other place as may be designated from time to time in writing
by Holder, the principal sum of ONE HUNDRED FORTY-FIVE MILLION AND 00/100
DOLLARS ($145,000,000), together with Fixed Interest (as hereinafter defined) on
so much thereof as is from time to time outstanding and unpaid, and Contingent
Interest (as hereinafter defined), all in lawful money of the United States of
America which shall at that time be deemed to be legal tender in payment of all
debts and dues, public and private. The principal amount hereof, the Fixed
Interest and the Contingent Interest shall be paid by the Makers to the Holder
as set forth below.
1. DEFINITIONS. As used in this Note, the following terms shall
have the following meanings.
"ACCELERATION DATE" shall mean the date on which the outstanding
principal balance hereof is declared to be immediately due and payable
pursuant to Section 8.
"CONTINGENT INTEREST" shall mean an amount computed with respect to
each fiscal quarter equal to the product of (A) 80% and (B) the excess of
the Gross Adjusted Cash Flow over the amount of Fixed Interest, subject, in
each case, to year-end audit adjustment as provided in Section 3, PROVIDED
that the aggregate amount payable by the Makers on account of Fixed
Interest and Contingent Interest for any Fiscal Year shall not exceed 11%
per annum on the outstanding principal balance of this Note.
"DEFAULT RATE" shall mean 12% per annum.
<PAGE>
"EVENT OF DEFAULT" shall have the meaning set forth in the Pledge
Agreement.
"FISCAL YEAR" shall mean the 12 calendar months commencing on January
1 and terminating on December 31 of each year until such time as the
principal amount of this Note shall have been paid in full. The first
Fiscal Year shall be the period commencing on the date hereof and ending on
December 31, 1997.
"FIXED INTEREST" shall have the meaning specified in Section 2.
"GROSS ADJUSTED CASH FLOW" shall mean an amount computed with respect
to each fiscal quarter equal to the aggregate net cash flow derived by each
of Westfield Partners and Westland Management from their respective
partnership interests in the Partnership, PROVIDED, however, that the
amount of such net cash flow shall be adjusted and computed as if any
mortgage loan to the Partnership secured by the Partnership's interest in
the Property (a "Mortgage") bears interest at a rate of 7.25% per annum but
computed otherwise in a manner consistent with the terms of such Mortgage.
"HOLDER" shall mean Westfield America, Inc., a Missouri corporation.
"MAKER" shall mean each of Westfield Partners and Westland Management.
"MAKE-WHOLE AMOUNT" shall mean the amount obtained by discounting all
Remaining Scheduled Payments from their respective scheduled due dates to
the Acceleration Date in accordance with accepted financial practice and at
a discount factor (applied on the same periodic basis as that on which
Fixed Interest is payable) equal to the Reinvestment Yield, PROVIDED that
the Make-Whole Amount may in no event be less than zero.
"MATURITY DATE" shall mean May 21, 2007.
"PARTNERSHIP" shall mean Westland Garden State Plaza Limited
Partnership, a Delaware limited partnership.
"PLEDGE AGREEMENT" shall mean the Mortgage, Pledge and Security
Agreement, dated as of the date hereof, among the Makers, Westland Realty,
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<PAGE>
Inc. and the Holder, as the same may from time to time be amended, modified
or supplemented.
"PROPERTY" shall mean the Garden State Shopping Center located in
Paramus, New Jersey.
"REINVESTMENT YIELD" shall mean the yield to maturity implied by (I)
the yields reported, as of 10:00 A.M. (New York City time) on the second
business day preceding the Acceleration Date, on the display designated as
"Page 678" on the Telerate Access Service (or such other display as may
replace Page 678 on the Telerate Access Service) for actively traded U.S.
Treasury securities having a maturity date of May 21, 2002, or (II) if such
yields are not reported as of such time or the yields reported as of such
time are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as
of the second business day preceding the Acceleration Date, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a maturity
date of May 21, 2002. Such implied yield will be determined, if necessary,
by (A) converting U.S. Treasury bill quotations to bond-equivalent yields
in accordance with accepted financial practice and (B) interpolating
linearly between (1) the actively traded U.S. Treasury security with the
duration closest to and greater than May 21, 2002 and (2) the actively
traded U.S. Treasury security with the duration closest to and less than
May 21, 2002.
"REMAINING SCHEDULED PAYMENTS" shall mean Fixed Interest and
Contingent Interest that would be due after the Acceleration Date until May
21, 2002 assuming that each such payment was made on its scheduled due date
and that the Contingent Interest borne by this Note was the maximum amount
permitted (I.E., together with Fixed Interest, an aggregate amount equal to
11% per annum).
"WESTFIELD PARTNERS" shall mean Westfield Partners, Inc., a Delaware
corporation.
"WESTLAND MANAGEMENT" shall mean Westland Management, Inc., a Delaware
corporation.
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<PAGE>
2. FIXED INTEREST. Fixed interest shall accrue on the principal
balance outstanding hereunder at the rate of 8.5% per annum during the period
from and including the date hereof through and including the payment in full of
the principal balance of the Note (the "FIXED INTEREST"). Fixed Interest shall
be payable in arrears on the last day of each March, June, September and
December commencing on June 30, 1997. Fixed Interest shall be computed on the
basis of a 360-day year of twelve 30-day months. Each Maker acknowledges that
the Fixed Interest shall be calculated on an aggregate basis and that each Maker
shall be jointly and severally liable for the payment of the entire amount of
Fixed Interest.
3. CONTINGENT INTEREST. (a) In addition to the Fixed Interest and
principal hereinabove provided for, the Makers hereby jointly and severally
promise, covenant and agree to pay the Contingent Interest to the Holder. Each
Maker acknowledges that the Contingent Interest shall be calculated on an
aggregate basis for Westfield Partners and Westland Management and that each
Maker shall be jointly and severally liable for the payment of the entire amount
of Contingent Interest. Each Maker's obligation to pay Contingent Interest will
become operative and will begin to accrue on the date hereof and shall continue
so long as this Note remains outstanding. Payments of Contingent Interest shall
be made quarterly in arrears, within 30 days of the end of each fiscal quarter
for which such Contingent Interest relates, except that the last installment of
Contingent Interest shall be paid on the date on which this Note is paid in
full.
(b) The Holder shall not, as a result of the rights granted herein,
including, without limitation, the right to receive Contingent Interest, be
considered as a co-owner, co-partner or co-venturer in the Property or under any
of the leases thereof or otherwise or under any other obligation, with any of
the Makers. It is further agreed that the Holder shall not be required to
perform or discharge any obligation, duty or liability under any of the leases
and the Makers shall and do hereby jointly and severally agree to indemnify and
hold the Holder harmless from and against any and all liability, loss or damage
which it may or might incur as a result hereof and of and from any and all
claims or demands whatsoever which may be instituted against it by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the terms, covenants or agreements contained in any of the leases; and should
the Holder incur any such liability under any of the leases, or under or by
virtue of this Note or the Pledge Agreement, or in defense of any claims or
demands, the amount thereof, including costs, expenses and reasonable attorney's
fees, shall be secured by the Pledge Agreement and the Makers agree to reimburse
the Holder therefor immediately upon demand and upon the failure of the Makers
to do so, the Holder may consider such
4
<PAGE>
failure a default under this Note (subject to any applicable notice and cure
provisions in this Note) and declare this Note immediately due and payable.
(c) At maturity or upon any voluntary prepayment of this Note in
accordance with Clause 7, then in addition to all other sums which may be
due, accrued Contingent Interest for the last fiscal quarter and for any
prior fiscal quarter if not yet paid shall also be due and payable. For
purposes of computing the amount of Contingent Interest required to be paid
for the last fiscal quarter or the fiscal quarter preceding the last fiscal
quarter if a financial statement thereof is not yet required to be delivered,
Contingent Interest shall be deemed to be the greater of (I) the average
annual amount of Contingent Interest for the preceding three full fiscal
quarters for which financial statements were received; and (II) the average
annual amount of Contingent Interest for all previous fiscal quarters for
which financial statements were received. The Contingent Interest payable
for the last fiscal quarter shall be a pro-rata share (based on the time
elapsed in the last fiscal quarter) of the Contingent Interest figure
calculated in accordance with the foregoing.
4. PAYMENT OF PRINCIPAL. The entire unpaid balance of this Note,
together with all unpaid accrued interest (including, without limitation,
accrued Fixed Interest and Contingent Interest) and all sums due hereunder and
under the Pledge Agreement shall be due and payable on the Maturity Date.
5. FINANCIAL STATEMENTS; BOOKS AND RECORDS. (a) Commencing not
later than July 30, 1997, and continuing not later than on the last day of
January, April, July and October in each succeeding Fiscal Year thereafter until
this Note shall have been paid in full, and again on the day when the last
payment against the principal hereof is made, each of Westfield Partners and
Westland Management shall deliver to the Holder unaudited financial statements
prepared in accordance with generally accepted accounting principles
consistently applied for the Property, certified by the principal financial
officer of Westland Management and Westfield Partners, respectively, for such
fiscal quarter and (in the case of the second, third and fourth fiscal quarters)
for the period from the beginning of the applicable Fiscal Year to the end of
such fiscal quarter, which shall include, with respect to the Property, a
Statement of Rents and Expenses and a Statement of Cash Flows and all data
necessary for calculation of Contingent Interest for the preceding fiscal
quarter, together with the Contingent Interest payment required under this Note
for such fiscal quarter.
(b) Commencing not later than April 30, 1998, and continuing not
later than the thirtieth day of April in each succeeding Fiscal Year thereafter
until this Note shall have been paid in full, each of Westfield Partners and
Westland Management shall deliver to the Holder an original annual audit report
prepared in accordance
5
<PAGE>
with generally accepted accounting principles consistently applied for the
Property, certified by an independent certified public accountant acceptable to
the Holder (it being agreed that any nationally-recognized public accounting
firms is acceptable to the Holder), which shall include, with respect to the
Property, a Statement of Rents and Expenses and a Statement of Cash Flows and
all data necessary for calculation of Contingent Interest for the preceding
Fiscal Year. There shall also be submitted by the Makers with such audited
statement and audit report, a certificate of compliance with the provisions of
this Note, which certificate of compliance shall be executed by the principal
financial officers of the Makers and a reconciliation between the audited
financial report and the Contingent Interest statement. If, as a result of
audit adjustments in connection with such audited financial statements, the
aggregate amount of Contingent Interest payable for such Fiscal Year shall be
greater or less than the amount calculated on the basis of the unaudited
financial statements for the four quarters of such Fiscal Year, the Makers will
promptly pay to the Holder the amount of any such underpayment or the Holder
will promptly pay to the Makers the amount of any such overpayment, in each case
without interest.
(c) Commencing not later than July 30, 1997, and continuing not later
than on the last day of January, April, July and October in each succeeding
Fiscal Year thereafter until this Note shall have been paid in full, and again
on the day when the last payment against the principal hereof is made, each of
Westfield Partners and Westland Management shall deliver to the Holder unaudited
financial statements prepared in accordance with generally accepted accounting
principles consistently applied for such Maker, certified by the principal
financial officer of such Maker, for such fiscal quarter and (in the case of the
second, third and fourth fiscal quarters) for the period from the beginning of
the applicable Fiscal Year to the end of such fiscal quarter, which shall
include, with respect to such Maker, a balance sheet, a Statement of Income and
Expenses and a Statement of Cash Flows.
(d) Concurrently with the delivery thereof to the partners of the
Partnership, the Makers will cause to be delivered to the Holder copies of the
Form K-1 of the Partnership for each Fiscal Year and any other financial
information distributed generally to partners of the Partnership.
(e) The Makers further agree to keep full, true and accurate
accounts, records and books of all monies and income received from the Property
and other information necessary or pertinent to determining the amount of
Contingent Interest due the Holder, all of which accounts, records and books
shall be kept by the Makers at their respective principal offices. The Makers
agree that the books and
6
<PAGE>
records for each particular Fiscal Year shall be kept available for at least
three years after such statements have been rendered as hereinabove required.
(f) The Holder shall have the right at all reasonable times to
inspect the books, papers and records of each Maker for the purposes of
determining the correctness of any statements delivered to it by the Makers.
Such inspection shall be made at the offices of the Makers or at such other
place as the Makers may designate in writing provided the Holder approves the
same. If upon such inspection it is found that an error has occurred with
respect to the amount of Contingent Interest, the Makers and the Holder shall
adjust any differences that shall have occurred by an appropriate payment to the
Holder or credit to the Makers. In addition, if the Holder should find that any
statements furnished by the Makers have understated Contingent Interest, then,
and in that event, the Makers shall promptly, upon demand, reimburse the Holder
for any sums expended by the Holder in making such inspection. The inspection
on behalf of the Holder may be made by any officer thereof or by any agent or
accountant appointed for that purpose.
(g) In the event that the Makers shall refuse or fail to furnish any
statements as afore-described, or in the event of the failure of the Makers to
permit the Holder or its representative to inspect its books and records on
request, as provided in clauses (e) and (f) hereof, the Holder may consider such
acts as a default under this Note (subject to any applicable notice and cure
provisions in this Note) and proceed in accordance with the rights and remedies
afforded it at law and under the provisions of this Note and the Pledge
Agreement.
6. SALE OF COLLATERAL, ETC. Unless this Note is simultaneously
prepaid in accordance with its terms or the Holder gives its prior written
consents to such transaction, no Maker will, directly or indirectly, (A)
sell, assign, transfer, convey or otherwise dispose of, or grant any option
with respect to, any of the Collateral (as defined in the Pledge Agreement),
except as currently set forth in the Partnership Agreement (as defined in the
Pledge Agreement), or (B) create or permit to exist any Lien (as defined in
the Pledge Agreement) upon or with respect to any of the Collateral, except
for the lien and security agreement created by the Pledge Agreement or (C) do
anything or suffer to exist anything, or omit to do anything or suffer to
exist any omission which would cause the value of the Collateral to diminish
in such a way as to have a material adverse effect on the Holder or on its
rights in respect of this Note, the Pledge Agreement or the Collateral,
including, without limitation, any dilution of the partnership interests,
except as currently set forth in the Partnership Agreement. Notwithstanding
the foregoing, the provisions of this Section 6 shall not apply to (I) any
transfer of any interest in any Maker to an entity all of the outstanding
voting equity interests of which are owned, directly or indirectly, by
Westfield Holdings Limited or (II) any transfer of any shares of stock of
Westfield Holdings Limited; PROVIDED that the Makers shall give the Holder at
least 10 days' prior written notice of any such transfer under clause (i)
above and shall execute and deliver to the Holder such documents as the
Holder may reasonably request in connection therewith.
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<PAGE>
7. PREPAYMENT. No Maker shall have the right to prepay the
principal balance hereof in whole or in part except as expressly set forth in
this Note. The Makers shall be entitled to prepay at any time after the fifth
anniversary of the date hereof, on not less than 30 days' prior written notice
to Holder, all or any portion of the principal balance of this Note, together
with all unpaid accrued Fixed Interest and, in the case of a prepayment in
whole, unpaid Contingent Interest and all other sums then due and owing under
this Note and the Pledge Agreement, without premium. If this Note shall be
prepaid on or prior to May __, 2002 as a result of the acceleration of the
principal balance hereof following the occurrence of an Event of Default, the
Makers shall, in addition to the payment of the principal balance hereof, the
accrued Fixed Interest and the accrued Contingent Interest, pay to the Holder,
on a joint and several basis, the Make-Whole Amount.
8. ACCELERATION UPON DEFAULT. If an Event of Default shall occur
and be continuing, then, at the option of the Holder, the entire principal sum
evidenced hereby and secured by the Pledge Agreement, plus all other sums then
outstanding under this Note or the Pledge Agreement, shall immediately become
due and payable. Failure to exercise this option by the Holder shall not
constitute a waiver of the right to exercise same in the event of any subsequent
default.
9. DEFAULT INTEREST. In the event (A) the Makers fail to make any
payment hereunder, under the Pledge Agreement or under any other agreement
securing this Note when due, or (B) of any default hereunder or under the Pledge
Agreement and upon acceleration of the entire indebtedness aforesaid, fixed
interest shall accrue thereafter on the unpaid principal balance from and
including the date of such default (until the date such default is cured and the
indebtedness is reinstated) at the Default Rate, such interest to be compounded
annually.
10. ATTORNEYS' FEES. If any suit or action be instituted on this
Note, the Makers jointly and severally promise to pay the Holder, in addition to
the costs and disbursements allowed by law, such sum as the court may adjudge
reasonable as attorneys' fees in said suit or action.
11. WAIVERS. The Makers and all endorsers hereof and all others who
may become liable for all or any part of this obligation agree hereby to be
jointly and severally bound, and they jointly and severally waive and renounce,
to the extent permitted by law, the benefit of all valuation and appraisement
privileges as against this debt or any renewal or replacement thereof and waive
demand, protest, notice of nonpayment and any and all lack of diligence or
delays in collection or enforcement hereof, waive the right to plead any and all
statutes of limitation as a defense to any
8
<PAGE>
demand on this Note or under the Pledge Agreement and expressly consent to any
extension of time, release of any party liable for this obligation, release of
any of the security of this Note, acceptance of other security therefor, or any
other indulgence or forbearance. Any such extension, release, indulgence or
forbearance may be made without notice to any party and without in any way
affecting the personal liability of any party.
12. ESTOPPEL CERTIFICATES. From time to time, upon request of any
Maker, the Holder will deliver to such Maker a statement as to (A) the
outstanding principal of, and accrued and unpaid Fixed Interest and Contingent
Interest on, this Note and (B) whether the Holder is aware that any Event of
Default under the Pledge Agreement, or any event or condition which, with notice
or lapse of time or both, would become an Event of Default under the Pledge
Agreement, has occurred and is continuing. From time to time, upon request of
the Holder, each Maker will deliver to the Holder a statement as to (I) the
outstanding principal of, and accrued and unpaid Fixed Interest and Contingent
Interest on, this Note and (II) whether such Maker is aware that any Event of
Default under the Pledge Agreement, or any event or condition which, with notice
or lapse of time, or both, would become an Event of Default under the Pledge
Agreement, has occurred and is continuing.
13. NON-RECOURSE. Notwithstanding any provision herein or in the
Pledge Agreement securing this Note to the contrary, the Holder agrees with the
Makers that in the event the Holder shall at any time take action to enforce the
collection of this Note, it shall proceed first to foreclose against the
Collateral under the Pledge Agreement (including sale under power of sale
thereunder) and to exercise its remedies with respect to other collateral
securing this Note instead of instituting suit upon this Note and if, as a
result of such foreclosure and sale of the property described therein, a lesser
sum is realized therefrom than the amount then due and owing hereunder and under
the Pledge Agreement, the Holder will never institute any action, suit, claim or
demand in law or in equity against any Maker or any partner, shareholder,
officer or director of any Maker for or on account of such deficiency; PROVIDED,
HOWEVER, that nothing in this paragraph contained shall in any way affect or
impair the lien of the Pledge Agreement or any other collateral, all of which
shall remain in full force and inure to the benefit of the Holder. The Holder
shall, nevertheless, be entitled to institute such an action, suit, claim, or
demand against, and to recover a judgment against, the Makers for any such
deficiency to the extent that such deficiency results from: (A) fraud or
intentional misrepresentation by any Maker in connection with the execution and
delivery of, or in connection with the representations and warranties provided
in, the Pledge Agreement, this Note, or any other documents executed by any
Maker securing this Note or the performance of any
9
<PAGE>
Maker's obligations under the Pledge Agreement, this Note, or such other
documents or (B) the retention by any Maker of any rental or other income
arising with respect to the Property which is collected by such Maker after the
Holder has given notice to such Maker that such Maker is in default under this
Note, the Pledge Agreement, or any other document executed by any Maker securing
this Note.
14. PLEDGE AGREEMENT. This Note is secured by the Pledge Agreement.
15. MISCELLANEOUS. (a) This Note is intended as a contract under and
shall be construed and enforced in accordance with the laws of the State of New
York.
(b) As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective successors, legal representatives and assigns, whether
by voluntary action by the parties or by the operation of law.
(c) The headings used herein are for convenience of reference only
and shall not limit or otherwise affect any of the terms hereof.
(d) All obligations of the Makers hereunder shall be joint and
several obligations.
(e) The Maker and Holder intend that Fixed Interest and any
Contingent Interest payable hereunder shall be treated for Federal income tax
purposes as interest on obligations secured by mortgages on real property or on
interests in real property within the meaning of Section 856(c)(3)(B) of the
Internal Revenue Code of 1986, as amended.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Promissory Note as of the day and year first above written.
WESTFIELD PARTNERS, INC.
By /s/ Peter S. Lowy
Name: Peter S. Lowy
Title: Vice President
WESTLAND MANAGEMENT, INC.
By /s/ Peter S. Lowy
Name: Peter S. Lowy
Title: Vice President
11
<PAGE>
EXHIBIT 10.2
WESTFIELD HOLDINGS LIMITED
(ACN 001 671 496)
("MANAGER")
WESTFIELD AMERICA, INC.
("OPTION HOLDER")
WHL OPTION DEED
MINTER ELLISON
Lawyers
44 Martin Place
SYDNEY NSW 2000
DX 117 SYDNEY
Telephone (02) 210 4444
Facsimile (02) 235 2711
Reference 10501485
<PAGE>
WHL OPTION DEED
DEED dated May 21 1997
BETWEEN WESTFIELD HOLDINGS LIMITED ACN 001 671 496 of Level 24, 100 William
Street, Sydney NSW ("WHL")
AND WESTFIELD AMERICA, INC a Missouri corporation of 11601 Wilshire
Boulevarde, 12th Floor, Los Angeles CA 90025, USA ("OPTION HOLDER")
RECITALS
WHL has agreed to grant to the Option Holder WHL Options on the terms and
conditions of this Deed.
OPERATIVE PROVISIONS
1. DEFINITIONS
"ASX" means Australian Stock Exchange Limited.
"BUSINESS HOURS" means the hours between 9am and 5pm, (Sydney time)
excluding weekends and New South Wales public holidays.
"COMPLETION DATE" means the date which the United States initial public
offering of common stock of Westfield America, Inc is completed.
"EXERCISE PERIOD" means, the period:
(a) commencing on the date which is the third anniversary after the
Completion Date;
(b) expiring on:
(i) the date being the fifth anniversary after the Completion Date,
or
(ii) if the Corporations Laws is amended so as to permit the WHL
<PAGE>
2
Options to have a term of seven of more years, then the date being the
seventh anniversary after the Completion Date.
"EXPERT" means an independent, international investment banking firm agreed
to by the WHL and the Option Holder, or (in default of agreement), an
independent, international investment banking firm nominated (at the
request of any party) by the President or the head for the time being of
the Australian Institute of Chartered Accountants.
"FINANCIAL YEAR" means a 12 month period from 1 January to 31 December.
"NOTICE OF EXERCISE" means a notice in the form set out in ANNEXURE A to
the Schedule.
"OPTION CONSIDERATION" means A$2.00 per WHL Option.
"OPTION TERMS" means the terms of the WHL Options as set out in SCHEDULE
1.
"WHL OPTION" means an option granted by WHL under CLAUSE 2 to the Option
Holder to subscribe for one (1) WHL Ordinary Share.
"WHL ORDINARY SHARES" means ordinary shares in WHL which are fully paid.
2. GRANT OF WHL Options
2.1 WHL agrees to grant on the Completion Date to the Option Holder 9.8 million
WHL Options and the Option Holder agrees to pay the Option Consideration to
WHL on the Completion Date in respect of each WHL Option. WHL Options will
have the terms set forth in the Option Terms.
2.2 WHL will:
(a) register the issue of WHL Options to the Option Holder; and
(b) issue and deliver WHL Options, as evidenced by Option Certificates in
accordance with the Schedule hereto, to the Option Holder.
<PAGE>
3
3. PREREQUISITES TO EXERCISE OF OPTIONS
3.1 A WHL Option may not be exercised (and WHL will be under no obligation to
issue a WHL Ordinary Share in respect of any WHL Option) unless the Option
Holder complies in all material respects with all WHL Option Terms.
3.2 If the Option Holder wishes to exercise a WHL Option and:
(a) gives a Notice of Exercise; and
(b) otherwise complies in all material respects with the requirements for
exercise of Options, as set out in the WHL Option Terms,
WHL must comply with the provisions of this Deed and of the WHL Option
Terms in respect of the exercise of the WHL Options.
4. REPRESENTATIONS AND COVENANTS
4.1 WHL represents and warrants for the benefit of the Option Holder that:
(a) all WHL Options granted under this Deed have been duly authorised,
validly issued and outstanding, and are entitled to the rights under
this Deed;
(b) the WHL Ordinary Shares issuable upon exercise of the WHL Options will
be duly authorised, validly issued, fully paid and non-assessable;
(c) there are no pre-emptive or similar rights to purchase any such WHL
Ordinary Shares upon exercise on the part of any holders of any class
of securities of WHL;
(d) this Deed has been duly authorised, executed and delivered by WHL and
is a valid and binding obligation of WHL enforceable in accordance
with the terms of this Deed; and
(e) WHL will ensure that at all times while WHL Options are outstanding,
WHL will have sufficient authorised and unissued share capital
available for issue upon exercise of Options and all other options
outstanding with
<PAGE>
4
respect to WHL Ordinary Shares.
4.2 (a) WHL covenants that if prior to the expiration of the Exercise Period:
(i) an application is filed seeking an order for the winding up of
WHL; or
(ii) the board of directors of WHL resolves to convene (or WHL
receives a requisition from shareholders, which requires it to
convene) a meeting of members of WHL to consider the passing of a
resolution for the winding up of WHL,
WHL will immediately give written notice to the Option Holder of the
application, resolution or requisition (as the case may be) and at any
time after the date of such notice but before WHL is wound up, the
Option Holder may exercise one or more of its WHL Options in
accordance with the provisions of this Deed.
(b) WHL covenants that, until the expiration of the Exercise Period, prior
to any reorganisation or reconstruction of the share capital of WHL
(contemplated by paragraph 8.1 of the Option Terms), it will provide
not less than 30 days prior written notice of such reorganisation or
reconstruction to the Option Holder and the Option Holder shall have
the right at any time following delivery of such notice to exercise
its WHL Options.
4.3 WHL covenants that it will use its best endeavours to ensure that the WHL
Ordinary Shares issued on exercise of the WHL Options are officially quoted
on the Australian Stock Exchange, immediately on issuance and that such
official quotation is maintained.
5. REGISTER OF OPTION HOLDERS
5.1 WHL covenants and agrees that it will maintain a register of Option Holders
and the Option Holder may:
(a) inspect such register at any time during business hours; and
<PAGE>
5
(b) obtain copies of such register.
5.2 WHL must send to the Option Holder copies of all notices, accounts and
other statements sent to holders of WHL Ordinary Shares.
5.3 For the purposes of CLAUSE 5.2, notices, accounts and other statements sent
to joint Option Holders will be deemed to be sent to all those Option
Holders, if sent to the Option Holder named first on the register.
5.4 If the Option Holder:
(a) has lost a certificate in respect of any WHL Options; and
(b) provides WHL with a statutory declaration of loss in respect of such
certificate,
WHL shall cancel the lost certificate and issue a replacement certificate
to the Option Holder.
5.5 The parties acknowledge that there is currently no intention to apply for
quotation of the WHL Options on any stock exchange.
6. ASSIGNMENT
A party must not assign this Deed or any right under this Deed without the
prior written consent of the other party.
7. DISPUTES
7.1 If a dispute arises between the parties in relation to an adjustment to the
number of WHL Options held by the Option Holder or any other adjustment
to be made pursuant to PARAGRAPHS 7 and 8 of the Option Terms either party
is entitled to refer the dispute (but no other disputes) to an Expert.
7.2 The Expert must:
(a) resolve the dispute in a timely manner as an expert and not as an
arbitrator;
<PAGE>
6
(b) determine the party or parties responsible for paying the costs of the
Expert having regard to his findings concerning resolution of the
dispute.
7.3 The determination of the Expert will be final and binding on the parties.
8. COSTS AND STAMP DUTY
8.1 The Option Holder must pay all stamp duty on this Deed and any stamp duty
payable on exercise of the WHL Options.
8.2 Each party shall pay its own costs in relation to the preparation and
execution of this Deed.
9. FURTHER ACTION
9.1 Each party to this Deed must:
(a) use reasonable efforts to do all things necessary or desirable to give
full effect to this Deed; and
(b) refrain from doing anything that might hinder performance of this
Deed.
10. GOVERNING LAW AND JURISDICTION
10.1 This Deed is governed by the law applicable in New South Wales,
Australia.
10.2 Each party irrevocably and unconditionally submits to the non-exclusive
jurisdiction of the courts of New South Wales, Australia.
11. SERVICE OF PROCESS
11.1 The Option Holder appoints Minter Ellison (attention Mr Leigh Brown) of
44 Martin Place, Sydney as its agent to accept on its behalf service of
initiating process in any proceedings relating to or arising out of
this Deed ("PROCESS AGENT").
11.2 The Option Holder may from time to time appoint a replacement of the
Process
<PAGE>
7
Agent or any replacement Process Agent by giving notice to each other party.
12. NOTICES
12.1 A party giving notice or notifying under this Deed must do so in
writing:
(a) directed to the recipient's address specified in this CLAUSE 12, as
varied by any notice; and
(b) hand delivered or sent by prepaid post or facsimile to that address.
The parties' addresses and facsimile numbers are:
WHL: Westfield Holdings Limited
Level 24, Westfield Tower
100 William Street
SYDNEY NSW 2011
Facsimile Number: (02) 9358 7077
OPTION HOLDER: Westfield America, Inc
11601 Wilshire Boulevarde
12th Floor, Los Angeles CA 90025
USA
Facsimile Number: 310 444 9071
12.2 A notice given in accordance with CLAUSE 12.1 is taken to be received:
(a) if hand delivered, on delivery;
(b) if sent by prepaid post, 5 days after the date of posting;
(c) if sent by facsimile, when the sender's facsimile system generates a
message confirming successful transmission of the total number of
pages of the notice unless, within eight business hours after that
transmission, the recipient informs the sender that it has not
received the entire notice.
<PAGE>
8
12.3 WHL will promptly deliver to the Option Holder copies of any notice
changing the foregoing addresses.
13 INTERPRETATION
In this Deed, unless the contrary intention appears:
(a) headings are for ease of reference only and do not affect the meaning
of this Deed;
(b) the singular includes the plural and vice versa and words importing a
gender include other genders;
(c) other grammatical forms of defined words or expressions have
corresponding meanings;
(d) a reference to a clause, paragraph, schedule or annexure is a
reference to a clause or paragraph of or schedule or annexure to this
Deed and a reference to this Deed includes any schedules and
annexures;
(e) a reference to a document or agreement, including this Deed, includes
a reference to that document or agreement as novated, altered or
replaced from time to time;
(f) a reference to "A$", "$A", "dollar" or "$" is a reference to
Australian currency;
(g) a reference to a specific time for the performance of an obligation is
a reference to that time in the State, Territory or other place where
that obligation is to be performed;
(h) a reference to a party includes its executors, administrators,
successors and permitted assigns;
(i) words and expressions importing natural persons include partnerships,
bodies corporate, associations, governments and governmental and local
authorities and agencies; and
<PAGE>
9
(j) a reference to any legislation or statutory instrument or regulation
is construed in accordance with the Acts Interpretation Act 1901 (Cth)
or the equivalent State legislation, as applicable.
14 AMENDMENT
This Deed may be amended only in writing signed by each party.
EXECUTED as a deed.
THE COMMON SEAL of WESTFIELD )
HOLDINGS LIMITED is affixed in )
accordance with its articles of association in )
the presence of )
/s/ Timothy Walsh /s/ Stephon Johns
- ------------------------------------ -------------------------------------
Secretary Director [SEAL]
Timothy Walsh Stephon Johns
- ------------------------------------ -------------------------------------
Name of secretary (print) Name of director (print)
<PAGE>
10
SIGNED SEALED AND DELIVERED )
by WESTFIELD AMERICA INC )
through its duly authorised )
representative in the )
presence of )
/s/ Barry Mills /s/ Mark Stefanek
- ---------------------------------- -------------------------------------
Signature of witness WESTFIELD AMERICA INC
Barry Mills
- ----------------------------------
Name of witness (print)
<PAGE>
SCHEDULE
WHL OPTION CERTIFICATE
CERTIFICATE NUMBER
WESTFIELD HOLDINGS LIMITED ACN 001 671 496
WHL OPTION CERTIFICATION
NUMBER OF OPTIONS CLASS DISTINCTIVE NUMBERS
[ ] WHL Options FROM [ ]
TO [ ]
These WHL Options are issued in accordance with the WHL Option Terms annexed.
This is to certify that:
(a) [ ] of [ ] is, subject to
the terms of the WHL Option Terms annexed, the registered holder of
the WHL Options set out in the panel above; and
(b) all of the terms and conditions of the WHL Option Deed and the WHL
Option Terms are incorporated herein by reference for the benefit of
the Option Holder.
SIGNED FOR AND ON BEHALF of Westfield Holdings Limited,
<PAGE>
1-2
---------------------------------------
Authorised Person
---------------------------------------
Witness
<PAGE>
1-3
WHL OPTION TERMS
(Attached to Certificate)
1. ENTITLEMENT
Each WHL Option will entitle the Option Holder to subscribe for one (1) WHL
Ordinary Share.
2. EXERCISE PERIOD
A WHL Option may be exercised at any time during the Exercise Period.
3. PREREQUISITE TO EXERCISE
Each WHL Option must be exercised as part of a parcel of WHL Options
which, on exercise, entitles the Option Holder to WHL Ordinary Shares
having a value not less than the minimum amount required under the
Corporations Law (currently $A500,000) for the issue by WHL of WHL
Ordinary Shares on exercise of such WHL Options to constitute an excluded
issue pursuant to SECTION 66(2)(A) of the Corporations Law (or any
successor statute).
4. MANNER OF EXERCISE
4.1 In this PARAGRAPH 4,
<PAGE>
1-4
"EXERCISE PRICE" means a price equal to the weighted average of the selling
prices for WHL Ordinary Shares traded on the ASX during the 20 business
days preceding the Completion Date.
"MARKET VALUE" the weighted average of the selling prices of WHL Ordinary
Shares on the ASX traded during the 20 business days immediately preceding
the date that the WHL Options are exercised.
"PROFIT ELEMENT" means the Australian dollar amount by which the Exercise
Price of the number of the WHL Options exercised is less than the Market
Value of the number of WHL Shares (adjusted as provided in PARAGRAPHS 7 and
8) that the Option Holder would be entitled to acquire if such WHL Options
had been exercised in the manner described in PARAGRAPH 4.2(A).
4.2 During the Exercise Period, the Option Holder may exercise the WHL Options
in whole or in part by:
(a) giving an irrevocable Notice of Exercise to WHL and tendering to WHL
on the Exercise Date a bank cheque or cleared funds for the Exercise
Price and WHL will issue to the Option Holder on the Exercise Date one
ordinary share in WHL for each WHL Option exercised (subject to any
adjustment referred to PARAGRAPHS 7 AND 8); or
(b) giving an irrevocable Notice of Exercise to WHL to acquire a number of
WHL Ordinary Shares that has an aggregate Market Value equal to the
Profit Element ("THE PREMIUM NUMBER").
4.3 If the Option Holder exercises the WHL Options on the basis described in
PARAGRAPH 4.2(B), WHL may either:
(a) issue to the Option Holder on the Exercise Date the premium number of
WHL Ordinary Shares and apply the Option Consideration in payment of
the nominal value and any premium in respect of those WHL Ordinary
Shares; or
(b) pay to the Option Holder on the Exercise Date an amount of cleared
funds in Australian dollars equal to the Profit Element.
<PAGE>
1-5
4.4 A Notice of Exercise must specify a date (being not less than six and not
more than 30 days from the date of the Notice of Exercise) on which it
wishes to exercise WHL Options ("EXERCISE DATE").
4.5 Option Holder may request advance notice of WHL's election under
paragraph 4.3(a) or 4.3(b) above upon an exercise of the WHL Option under
paragraph 4.2(b) above. Upon such a request, WHL shall advise the Option
Holder of the election under paragraph 4.3(a) or 4.3(b) that WHL will make
if the WHL Option is exercised by Option Holder under paragraph 4.2(b)
within the following 30 days.
5. RANKING OF WHL ORDINARY SHARES ON EXERCISE OF WHL OPTIONS
A WHL Ordinary Share allotted on exercise of an WHL Option will rank in all
respects equally with the existing WHL Ordinary Shares on issue at the date
of allotment.
6. RESTRICTION ON TRANSFER
The WHL Options will not be assignable other than with the prior written
consent of WHL (which may be given or withheld by WHL in its absolute
discretion) to a written request by the Option Holder for permission to
transfer the WHL Options in whole or in part.
7 NEW ISSUES
7.1 The entitlement to WHL Ordinary Shares conferred by the WHL Options will be
subject to adjustment to reflect any bonus issue made to the holders of WHL
Ordinary Shares on the basis of the number of WHL Ordinary Shares that
would have been received by the Option Holder if the WHL Options had been
exercised before the record date for that bonus issue.
7.2 The Option Holder is entitled to subscribe for WHL Ordinary Shares or other
securities as part of any pro rata rights issue by WHL that may be made to
the holders of WHL Ordinary Shares with such subscription being made:
(a) on the same basis that holders of WHL Ordinary Shares are entitled to
participate in the rights issue; and
(b) as if the WHL Options had been exercised prior to the record date for
that rights issue.
8. REORGANISATION
<PAGE>
1-6
8.1 In the event of a reorganisation or reconstruction of the share capital of
WHL (including without limitation, any consolidation, share split or share
dividend, subdivision or reduction or return of capital or other capital
distribution, or any similar capital transaction other than ordinary
periodic cash dividends) prior to exercise, the entitlement to either or
both:
(a) WHL Ordinary Shares conferred by the WHL Options; and
(b) the exercise price of the WHL Options (if applicable),
will be dealt with as follows:
(i) in a consolidation of capital - the number of WHL Options
will be consolidated in the same ratio as the ordinary
capital of WHL and the exercise price will be amended in
inverse proportion to that ratio;
(ii) in a subdivision of WHL's capital or a share dividend - the
number of WHL Options must be subdivided in the same ratio
as the ordinary WHL capital and the exercise price of the
WHL Option will be amended in inverse proportion to that
ratio;
(iii) in a reduction of par value of WHL Ordinary Shares by a
return of capital - the number of WHL Options will remain
the same, and the exercise price of each WHL Option will be
reduced by the same amount as a reduction of the par value
of each WHL ordinary share;
(iv) in a reduction of par value of WHL Ordinary Shares by a
cancellation of share capital that is lost or is not
represented by available assets - the number of WHL Options
and the exercise price of each WHL Option will remain
unaltered;
(v) in a pro rata cancellation of WHL share capital - the number
of WHL Options will be reduced in the same ratio as the
ordinary WHL capital and the exercise price of each WHL
Option will
<PAGE>
1-7
be amended in inverse proportion to that ratio; and
(vi) in any other case, the number of WHL Options or the exercise
price (if applicable) or both must be reorganised in a
manner that is fair and reasonable to the Option Holder so
that the Option Holder will not receive a benefit or suffer
a detriment that the holders of WHL Ordinary Shares do not
receive, and the holders of WHL Ordinary Shares do not
receive a benefit or suffer a detriment that the Option
Holder does not receive.
8.2 If prior to exercise of the WHL Options, WHL:
(a) is merged or consolidated into a new entity; or
(b) transfers all or substantially all of its assets to another entity,
then, the entitlement of the holder of WHL Options to acquire WHL Ordinary
Shares will be appropriately adjusted so that such holder will not be
disadvantaged. Such adjustment will include the receipt of an entitlement
to securities in the new entity or the transferee entity or cash as if the
WHL Options had been exercised immediately prior to such transaction
occurring. Prior to any such merger or consolidation or transfer of all or
substantially all of its assets, WHL shall obtain all necessary approvals
and comply with all applicable laws and ASX Listing Rules to permit the
adjustments required pursuant to this PARAGRAPH 8.2.
8.3 Nothing in these Option Terms prevents a WHL Option being reorganised as
required by the ASX Listing Rules on a reorganisation or reconstruction of
the share capital of WHL.
9. RIGHT TO VOTE
A WHL Option does not confer on the Option Holder any right to vote at a
meeting of WHL. WHL Ordinary Shares issued on exercise of WHL Options
will have the same voting rights as other WHL Ordinary Shares on issue.
<PAGE>
1-8
10. SECURITIES LAW RESTRICTION
10.1 The Option Holder acknowledges that the WHL Options have not been
registered under the US SECURITIES ACT of 1933, as amended (the "US
SECURITIES ACT").
10.2 The Option Holder acknowledges that WHL Ordinary Shares issuable upon
exercise of the WHL Options will not be registered under the US
SECURITIES ACT and may not be offered or sold by the Option Holder
after exercise of a WHL Option except:
(a) pursuant to an effective registration statement under the US
SECURITIES ACT or pursuant to an exemption from the registration
requirements thereunder;
(b) outside the United States to non-US persons (which term shall include
US dealers or other professional fiduciaries acting on a discretionary
basis for non-US beneficial owners (other than an estate or trust)) in
reliance upon Rules 901, 903 and 904 of the Regulations under the US
SECURITIES ACT or otherwise in compliance with applicable securities
law;
(c) in "regular way transactions" on the ASX, provided that neither the
seller, nor any person acting on its behalf, knows that the
transaction has been pre-arranged with a buyer that is a US person or
is located in the US; or
(d) as otherwise agreed by WHL.
10.3 The Option Holder acknowledges and agrees that the WHL Ordinary Shares
issuable upon exercise of the WHL Options may not be transferred if,
directly as a result of such transfer, WHL would be required to
register the WHL Ordinary Shares under the US Securities Exchange Act
of 1934, as amended.
10.4 The foregoing restrictions shall be noted in the share register
maintained by WHL and may (at WHL's discretion) be noted in
certificates representing WHL Ordinary Shares. WHL agrees that it will
cause any notation to be removed from the share register and the share
certificates at such time as the WHL Ordinary Shares may be transferred
without restriction under applicable law.
<PAGE>
1-9
Ordinary Shares may be transferred without restriction under applicable law.
<PAGE>
ANNEXURE A (TO THE SCHEDULE)
NOTICE OF EXERCISE
TO: WESTFIELD HOLDINGS LIMITED
NUMBER OF WHL OPTIONS
Westfield America, Inc. a Missouri Corporation of
____________________________gives notice that it wishes to exercise [ ] WHL
Options registered in its name on [ ], being a date not less than [6]
and not more than [30] days after the date of this Notice ("EXERCISE DATE").
MANNER OF EXERCISE [DELETE ALTERNATIVE WHICH IS NOT APPLICABLE]
A. This Notice of Exercise is given pursuant to PARAGRAPH 4.2(A) of the WHL
Option Terms and a bank cheque for the Exercise Price in respect of the
number of WHL Options exercised is attached to this notice.
B. This Notice of Exercise is given pursuant to PARAGRAPH 4.2(B) of the WHL
Option Terms.
CONFIRMATION
Westfield America, Inc. confirms that:
(a) this Notice of Exercise is irrevocable;
(b) it has read the restrictions on exercise of WHL Options and on
transferability of units set forth in the WHL Option Deed. Westfield
America, Inc. understands that the WHL Ordinary Shares have not been,
and will not be, registered under the U.S. Securities Act of 1933, as
amended (the "SECURITIES ACT"), and may not be offered or sold except
as permitted by the WHL Option Deed or the WHL Option Certificate and
that such restrictions may be required to be noted in the WHL Ordinary
Share register as set forth in the WHL Option Deed. Westfield America
Inc. agrees, on its own behalf and on behalf of any
<PAGE>
A-2
accounts for which it is acting as hereinafter stated, that if it
should reoffer, resell, pledge or transfer any WHL Ordinary Shares, we
will do so only in accordance with the WHL Option Deed or the WHL
Option Certificate.
DATED: __________________________
SIGNED by WESTFIELD AMERICA, )
INC through its duly authorised )
representative [ ] in the presence of )
- --------------------------------------- ---------------------------------
Signature of witness WESTFIELD AMERICA, INC
- ---------------------------------------
Name of witness (print)
<PAGE>
EXHIBIT 10.4
THIS WARRANT IS SUBJECT TO THE PROVISIONS OF AN INVESTORS' AGREEMENT, DATED AS
OF May 21, 1997, AND THIS WARRANT IS NOT ASSIGNABLE OR OTHERWISE TRANSFERABLE
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH INVESTORS' AGREEMENT (INCLUDING
PROVISIONS UNDER WHICH THE HOLDER HEREOF GRANTS A RIGHT OF FIRST REFUSAL ON THE
SALE OF THIS WARRANT), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
ISSUER. THE COMMON STOCK OR OTHER SECURITIES RECEIVABLE UPON EXERCISE HEREOF
ARE ALSO SUBJECT TO THE OWNERSHIP LIMITATIONS SET FORTH IN THE ISSUER'S ARTICLES
OF INCORPORATION.
THIS WARRANT AND THE COMMON STOCK OR OTHER SECURITIES RECEIVABLE UPON EXERCISE
HEREOF MAY NOT BE TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (A)(i) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) THE HOLDER HEREOF SHALL HAVE
DELIVERED TO THE ISSUER AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL
BE SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH DISPOSITION IS EXEMPT
FROM THE PROVISIONS OF SECTION 5 OF THAT ACT, OR (iii) A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION, SATISFACTORY TO COUNSEL FOR THE ISSUER,
SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH DISPOSITION AND (B) SUCH
DISPOSITION IS PURSUANT TO REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION THEREFROM.
No. 2 New York, New York
May 21, 1997
WESTFIELD AMERICA, INC.
COMMON STOCK PURCHASE WARRANT
WESTFIELD AMERICA, INC., a Missouri corporation (the "COMPANY"),
hereby certifies that, for value received, PERPETUAL TRUSTEE COMPANY LIMITED
(the "WAT Trustee"), in its capacity as Trustee of Westfield America Trust
("WAT"), a public unit trust constituted under the laws of Australia
<PAGE>
pursuant to the Westfield America Trust Deed, dated March 28, 1996, as
amended on May 9, 1996, is entitled, subject to the terms and conditions set
forth below, (a) to purchase from the Company Two Million Eighty-nine
Thousand Five Hundred Fifty-two (2,089,552)(1) duly authorized, validly
issued, fully paid and nonassessable shares of common stock, par value $.01
per share, of the Company, (the "COMMON STOCK") at a purchase price per share
of $[ ](2) (as adjusted from time to time, the "EXERCISE PRICE"), at any
time or from time to time on or after the date hereof and (b) to exercise the
other rights set forth herein. The number and character of such shares of
Common Stock and the Exercise Price are subject to adjustment as provided
herein.
I. EXERCISE OF WARRANT. This Warrant may be exercised at any time
and from time to time on or after the date hereof and prior to May 21, 2017 (the
"EXPIRATION DATE") by the holder hereof, in whole or in part, on any business
day by:
A. the presentation of this Warrant, together with a duly executed
copy of the Exercise Form attached hereto as Exhibit A and the other
documentation set forth therein, to the Secretary of the Company at its
principal offices, upon which presentation the Secretary of the Company
shall make appropriate notations in the stock transfer records (and other
records, as appropriate) of the Company indicating the number of shares of
Common Stock issued pursuant to such exercise and the number of shares of
Common Stock, if any, into which the Warrant thereafter shall remain
exercisable; and
- --------------------
1. This number will be equal to $43 million divided by the initial price to
public per share of Common Stock issued in the Company's initial public
offering of Common Stock (the "IPO").
2. This number will be equal to the initial price to public per share of
Common Stock issued in the IPO.
2
<PAGE>
B. the payment, by wire transfer of immediately available funds or
certified or official bank check payable to the order of the Company of an
amount equal to the amount obtained by multiplying (i) the number of
shares of Common Stock designated in such Exercise Form by (ii) the
Exercise Price.
This Warrant shall expire on the Expiration Date.
II. CERTIFICATES FOR SHARES OF COMMON STOCK. As soon as practicable
after the proper exercise of this Warrant in whole or in part, and in any event
within 30 days thereafter, the Company will cause to be issued in the name of
and delivered to the holder hereof:
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock to
which the holder hereof shall be entitled upon such exercise;
(b) in case such exercise is in part only, a new Warrant of like
tenor, calling on its face for the number of shares of Common Stock equal
to the number of such shares called for on the face of this Warrant minus
the number of such shares designated by the holder hereof upon such
exercise as provided in Section 1 hereof.
III. RESERVATION OF SHARES OF COMMON STOCK. The Company covenants
that it will at all times keep available such number of authorized shares of its
Common Stock issuable upon exercise of the Warrant, which will be sufficient to
permit the exercise of the Warrant for the full number of shares of Common Stock
into which the Warrant is exercisable during the exercise period specified
herein. The Company further covenants that such shares of Common Stock, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable.
3
<PAGE>
IV. ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK. The number and
kind of securities purchasable upon exercise of the Warrant shall be subject to
adjustment from time to time as follows:
A. SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the Company
shall at any time prior to the Expiration Date subdivide its Common Stock
by stock split or otherwise, or combine its capital stock by reverse stock
split or otherwise, or issue additional securities as a dividend with
respect to any shares of its Common Stock, as the case may be, the number
of shares of Common Stock issuable on the exercise of this Warrant shall
forthwith be proportionately increased and the Exercise Price shall be
proportionately decreased in the case of a subdivision or stock dividend,
and the number of shares of Common Stock issuable on the exercise of this
Warrant shall forthwith be proportionately decreased and the Exercise Price
shall be proportionately increased in the case of a combination. Any
adjustment under this Section 4(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or
as of the record date of such dividend, or in the event that no record date
is fixed, upon the payment of such dividend.
B. RECONSTRUCTION. If prior to the Expiration Date, the Company
effects a capital reconstruction (other than a subdivision, combination or
stock dividend covered by paragraph (a) above), merger, consolidation or
any return of capital or other capital distribution, except for periodic
distributions made pro-rata among the shareholders of a class of stock or
units which are not in redemption of any shares of Common Stock, or any
similar capital transaction that would affect the capital structure of the
Company, excluding any payment of an ordinary cash dividend in respect of
the operations of the Company, then in such event (i) the number of shares
of Common Stock issuable
4
<PAGE>
upon exercise hereof, (ii) the Exercise Price, or (iii) some or all of such
factors, will be adjusted, as appropriate, in a manner (x) approved by the
Company and the holder hereof and (y) which is fair and equitable to the
holder hereof and the holders of Common Stock.
C. MERGERS, ETC. If prior to the Expiration Date, the Company shall
be merged or consolidated into a new entity or if the Company shall
transfer all or substantially all of its assets to another entity, then
upon a subsequent exercise of this Warrant, the holder hereof shall be
entitled to receive securities in the new transferee entity equal to what
the holder hereof would have received had it exercised this Warrant and
owned shares of Common Stock immediately prior to such transaction.
D. NOTICE OF ADJUSTMENT. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of this Warrant,
the Company promptly shall notify the holder of this Warrant of such event
and of the number of shares and the type of securities or property
thereafter purchasable upon exercise of this Warrant.
E. DISPUTES. If a dispute arises between the Company and the holder
hereof in relation to an adjustment to: (i) the number of shares of
Common Stock issuable upon exercise hereof, (ii) the Exercise Price, or
(iii) some or all of such factors, to be made pursuant to this Section 4,
either party is entitled to refer the dispute (but no other dispute) to an
Expert. "EXPERT" means an independent, international investment banking
firm agreed to by the Company and the holder hereof, or (in default of
agreement), an independent, international investment banking firm nominated
(at the request of any party) by the President or the head for the time
being of the Australian Institute of Chartered Accountants. The Expert
must: (1) resolve the dispute
5
<PAGE>
in a timely manner as an expert and not as an arbitrator, and (2) determine
the party or parties responsible for paying the costs of the Expert having
regard to his findings concerning resolution of the dispute, provided that
the holder hereof will not bear any expense in excess of its pro rata
interest in the Company.
V. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the exercise price then in effect with respect
to this Warrant.
VI. RESTRICTIONS ON TRANSFER AND EXERCISABILITY. (a) This Warrant
shall be subject to certain limited restrictions on transferability (including a
right of first refusal) set forth in the Investors' Agreement, dated as of May
[ ], 1997, among the Company, the original holder of this Warrant and certain
other parties, a copy of which shall be furnished without charge to the holder
hereof upon request. In addition, the shares of Common Stock or other
securities receivable upon exercise hereof are subject to the ownership
limitations set forth in the Company's articles of incorporation.
(b) Neither this Warrant nor the Common Stock issuable upon exercise
hereof may be transferred, sold, pledged, hypothecated or otherwise disposed of,
and this Warrant may not be exercised, unless (A) such disposition or exercise
is pursuant to an effective registration statement under the Securities Act, (B)
the holder hereof shall have delivered to the Company an opinion of counsel,
which opinion and counsel shall be satisfactory to the Company, to the effect
that such disposition or exercise is exempt from the provisions of Section 5 of
the Securities Act, (C) a no-action letter from the Securities and Exchange
Commission, satisfactory to counsel for the Company, shall have been obtained
with respect to such disposition or exercise, or (D) the Warrant or Common Stock
is being exercised by (or
6
<PAGE>
transferred to) the WAT Trustee, the manager of WAT or any of its affiliates.
(c) Each Warrant certificate shall bear the legend set forth on the
first page of this certificate.
(d) Any certificates representing Common Stock issued upon exercise
hereof shall bear the following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (A) (i)
SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, (ii) THE HOLDER HEREOF SHALL HAVE
DELIVERED TO THE ISSUER AN OPINION OF COUNSEL, WHICH OPINION AND
COUNSEL SHALL BE SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THAT ACT, OR
(iii) A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION,
SATISFACTORY TO COUNSEL FOR THE ISSUER, SHALL HAVE BEEN OBTAINED WITH
RESPECT TO SUCH DISPOSITION AND (B) SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
ISSUER'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST
UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). NO
INDIVIDUAL MAY BENEFICIALLY OWN COMMON SHARES IN EXCESS OF THE THEN
APPLICABLE OWNERSHIP LIMIT WITH RESPECT TO COMMON SHARES, WHICH MAY
DECREASE OR INCREASE FROM TIME TO TIME, UNLESS SUCH INDIVIDUAL IS AN
EXISTING HOLDER. ANY INDIVIDUAL WHO ATTEMPTS TO BENEFICIALLY OWN
SHARES IN EXCESS OF THE ABOVE LIMITATION MUST IMMEDIATELY NOTIFY THE
COMPANY. ALL
7
<PAGE>
TERMS USED IN THIS LEGEND WITHOUT DEFINITION HAVE THE MEANINGS DEFINED IN
THE ISSUER'S ARTICLES OF INCORPORATION, AS THE SAME MAY BE FURTHER AMENDED
FROM TIME TO TIME, 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 WILL BE AUTOMATICALLY EXCHANGED FOR EXCESS
SHARES AND WILL BE DEEMED TRANSFERRED TO A SPECIAL TRUST AS PROVIDED IN THE
ARTICLES OF INCORPORATION.
THIS SECURITY IS ISSUED PURSUANT TO AND IS SUBJECT TO THE TERMS AND
CONDITIONS OF THE ISSUER'S ARTICLES OF INCORPORATION, AS AMENDED,
LIMITING THE NUMBER OF HOLDERS OF RECORD OF THE ISSUER'S COMMON STOCK.
VII. SUCCESSORS AND ASSIGNS. The terms and provisions of this
Warrant shall inure to the benefit of, and be binding upon, the Company and the
holders hereof and their respective successors and assigns.
VIII. AMENDMENTS. This Warrant may not be supplemented, amended
or otherwise modified without the prior written consent of the Company and the
holder hereof. Any such amendment shall be binding upon each subsequent holder
of this Warrant.
IX. GOVERNING LAW. This Warrant shall be governed by the laws of
the State of New York as applied to
8
<PAGE>
agreements among New York residents made and to be performed entirely within the
State of New York.
WESTFIELD AMERICA, INC.
By: /s/ Mark Stefanek
-------------------------------
Name: Mark Stefanek
Title: Chief Financial Officer &
Treasurer
9
<PAGE>
EXHIBIT A
EXERCISE FORM
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by the attached Warrant, to purchase __________ shares of Common
Stock of Westfield America, Inc. (the "COMPANY"), par value $.01 per share
("COMMON STOCK"), as provided for in the Warrant Certificate and herewith
tenders in payment for such shares of Common Stock payment of the purchase
price in full in the form of cash or a check payable to the order of the
Company in the amount of $_______, all in accordance with the terms of the
Warrant Certificate. The undersigned requests that a certificate for such
shares of Common Stock be registered in the name of ______________________,
whose address is _______________________________________, and that such
certificate shall be delivered to _______________________________ at the
following address: ________________________________________________________.
The undersigned hereby acknowledges and agrees:
(a) the undersigned has read the restrictions on exercise and on
transferability set forth in the Warrant Certificate and in the Company's
articles of incorporation. The undersigned is acquiring the Common Stock for its
own account and not with a view to, or for sale in connection with, any
distribution thereof that would violate or require registration under any U.S.
federal or state securities or "Blue Sky" laws. The undersigned understands
that the Common Stock has not been, and will not be, registered under the U.S.
Securities Act of 1933, as amended (the "SECURITIES ACT"), may not be offered
or sold except as permitted by the Warrant Certificate and shall be required to
bear a legend as set forth in the Warrant Certificate and in the Company's
articles of incorporation. The undersigned agrees, on its own behalf and on
behalf of any account[s] for which the undersigned is acting as hereinafter
stated, that if the
10
<PAGE>
undersigned should reoffer, resell, pledge or transfer any Common Stock, the
undersigned will do so only in accordance with the Warrant Certificate; and
(b) APPLICABLE PARAGRAPH TO BE INSERTED
NOTE 1: the following paragraph to be included in a notice of exercise by the
trustee of Westfield America Trust ("WAT EXERCISE"):
[The undersigned is the trustee of Westfield America Trust, an Australian
trust].
NOTE 2: the following paragraph to be included in a notice of exercise other
than a WAT Exercise:
[We are delivering herewith [a written opinion of a nationally recognized United
States counsel, which opinion and counsel shall be satisfactory to the Company,]
[a no-action letter from the Securities and Exchange Commission, satisfactory to
counsel to the Company] to the effect that the offer of the Common Stock to and
the purchase of the Common Stock by the undersigned is exempt from registration
under the Securities Act.]
Dated: ______________________
----------------------------------
By: /s/ Mark Stefanek
-------------------------------
Name: Mark Stefanek
Title: Chief Financial Officer
Treasurer
11
<PAGE>
EXHIBIT 10.7
PERPETUAL TRUSTEE COMPANY LIMITED
(ACN 000 001 007)
("TRUSTEE")
WESTFIELD AMERICA MANAGEMENT LIMITED
(ACN 072 780 619)
("MANAGER")
STICHTING PENSIOENFONDS ABP
("ABP")
SPECIAL OPTION DEED
MINTER ELLISON
Lawyers
44 Martin Place
SYDNEY NSW 2000
DX 117 SYDNEY
Telephone (02) 210 4444
Facsimile (02) 235 2711
Reference SCJ:10501485
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2. GRANT OF SPECIAL OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 4
3. PREREQUISITES TO EXERCISE OF OPTIONS. . . . . . . . . . . . . . . . . . . 5
4. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5. REGISTRATION, TRANSFERS AND LISTING OF OPTIONHOLDERS. . . . . . . . . . . 8
6. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. DISPUTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
8. CONDITION PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9. FURTHER ACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
10. GOVERNING LAW AND JURISDICTION. . . . . . . . . . . . . . . . . . . . . .11
11. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12. INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
13. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14. TRUSTEE'S LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . 13
SCHEDULE - SPECIAL OPTION CERTIFICATE
<PAGE>
SPECIAL OPTION DEED
DEED dated May 21 1997
BETWEEN PERPETUAL TRUSTEE COMPANY LIMITED (ACN 000 001 007) of 39 Hunter
Street, Sydney, New South Wales, in its capacity as trustee of the
Westfield America Trust ("WAT"), constituted by Trust Deed dated 28
March 1996, as amended ("TRUSTEE")
AND WESTFIELD AMERICA MANAGEMENT LIMITED (ACN 072 780 619) of Level 24,
Westfield Tower, 100 William Street, Sydney, New South Wales 2011 in
its capacity as manager of WAT ("MANAGER")
AND STICHTING PENSIOENFONDS ABP, an entity established under the laws of
the Kingdom of the Netherlands, of PO Box 2889, 6401 DJ Heerien, the
Netherlands ("ABP")
RECITALS
A. WAT was constituted by the Trust Deed.
B. By CLAUSE 8.5 of the Trust Deed, the Manager may, subject to certain
provisos, issue Units to any person at a price and on terms approved by the
Trustee.
C. Pursuant to that certain Subscription Agreement ("SUBSCRIPTION AGREEMENT")
dated as of 24th April 1997, among Westfield America, Inc. ("WEA"), the
Trustee, the Manager and ABP, in conjunction with the sale by WEA of the
same number of Preferred Shares to ABP, the Manager has agreed, pursuant to
clauses 6.9 and 11 of the Trust Deed but subject to Completion, to grant
400,000 Special Options (subject to adjustment as provided in the
Subscription Agreement) to ABP in accordance with the provisions of this
Deed.
<PAGE>
2
OPERATIVE PROVISIONS
1. DEFINITIONS
"ASX" means Australian Stock Exchange Limited.
"BUSINESS HOURS" means the hours between 9.00am and 5.00pm, (Sydney time)
excluding weekends and New South Wales public holidays.
"COMMON SHARE" means one fully paid share of Common Stock in WEA or any
other class of Common Stock in WEA into which shares of Common Stock are
subsequently converted and "COMMON SHAREHOLDER" or "COMMON SHARES" has a
corresponding meaning.
"COMPLETION" means completion of the Initial Public Offering which is
expected to occur on or about 15 May 1997.
"COMPLETION DATE" means the date on which Completion actually occurs.
CONSIDERATION RATIO" means one Preferred Share for the Special Option
Number of Units or such other ratio that results from the application of
CLAUSE 4.1 or CLAUSE 4.2.
"EXPERT" means an independent, international investment banking firm agreed
to by the Manager, the Trustee, WEA and all Special Optionholders or (in
default of agreement between them), an independent, international
investment banking firm nominated (at the request of any of them) by the
President or the head for the time being of the Australian Institute of
Chartered Accountants.
"FINANCIAL YEAR" means a 12 month period from 1 January to 31 December.
"INITIAL PUBLIC OFFERING" means the initial public offering of Common Stock
of WEA to be made in 1997.
"PLACEMENT" means the placement by WEA of Preferred Shares to ABP.
<PAGE>
3
"PREFERRED SHARE" means one fully paid share of Series B Preferred Stock in
WEA and "PREFERRED SHAREHOLDER" or "PREFERRED SHARES" has a corresponding
meaning.
"QUARTER" means a three month period in a Financial Year commencing on one
of the following dates:
(a) 1 January ("FIRST QUARTER");
(b) 1 April ("SECOND QUARTER");
(c) 1 July ("THIRD QUARTER"); and
(d) 1 October ("FOURTH QUARTER").
"RECONSTRUCTION" means a capital reconstruction (including, without
limitation, any consolidation, stock split or stock dividend, subdivision
or reduction of capital), merger or any return of capital or other capital
distribution, except for ordinary periodic distributions made pro-rata
among shareholders of a class or issues of stock or units which are not in
redemption of any shares of stock or units, or any similar capital
transaction that would affect the capital structure of WAT or WEA, in each
case of or in respect of WEA or WAT (as the case may be), excluding the
payment of an ordinary periodic cash distributions in respect of the
operations of WEA or WAT (as the case may be).
"SPECIAL OPTION" means an option to subscribe for that number of Units
equal to the Special Option Number on the Special Option Terms, and
"SPECIAL OPTIONHOLDER" has a corresponding meaning.
"SPECIAL OPTION NUMBER" is the number equal to (a) 100, divided by (b) the
amount equal to (1) the price that Common Shares are sold to the public in
the Initial Public Offering divided by (2) 20, as adjusted pursuant to
CLAUSES 4.1 and 4.2.
"SPECIAL OPTION PERIOD" means the period:
(a) commencing on the date which is 24 months from the date when the
Special Option is issued to the Special Optionholder; and
<PAGE>
4
(b) expiring on the date which is the fifteenth anniversary of the date
when the Special Options are issued to the Special Optionholder pursuant to
CLAUSE 2.1; and
(c) any additional period for exercise of the Special Options pursuant to
CLAUSE 4.5.
"SPECIAL OPTION TERMS" means the terms of the Special Options as set out in
the Schedule.
"SUBSCRIPTION AGREEMENT" has the meaning specified in Recital C.
"TRUST DEED" means the Trust Deed dated 28 March 1996 between the Trustee
and the Manager, as amended by Deeds of Variation dated 9 May 1996 and 24
June 1996.
"UNIT" means an undivided share in the beneficial interest in the Trust as
provided in the Trust Deed and "UNITHOLDER" has a corresponding meaning.
"WAT" means the trust known as the Westfield America Trust.
2. GRANT OF SPECIAL OPTIONS
2.1 In consideration of payment to the Trustee of the consideration set forth
in the Subscription Agreement for the sale of the Special Options, on
Completion the Manager must grant 400,000 Special Options (subject to
adjustment as provided in the Subscription Agreement) to ABP.
2.2 ABP agrees to hold Special Options in accordance with and abide by the
Special Option Terms and other terms of this Deed.
2.3 The Manager will:
(a) register the issue of Special Options to ABP; and
(b) issue and deliver Special Options, as evidenced by Option Certificates
in accordance with the Schedule hereto, to ABP.
<PAGE>
5
3. PREREQUISITES TO EXERCISE OF OPTIONS
3.1 A Special Option may not be exercised (and the Manager will be under no
obligation to issue a Unit in respect of any Special Option) unless:
(a) the Special Option is exercised as part of a parcel of Special Options
which, on exercise, entitles the Special Optionholder to a parcel of
Units having a value not less than the amount required by the
CORPORATIONS LAW (currently A$500,000) for the issue of each such Unit
to constitute an excluded issue pursuant to SECTION 66(2)(a) of the
CORPORATIONS LAW (or any successor provision); and
(b) the Special Optionholder complies in all material respects with all
the other Special Option Terms.
3.2 The Manager covenants and agrees, for the benefit of the Special
Optionholders, that it will promptly advise the Special Optionholders of
changes in the amount required by the CORPORATIONS LAW as referred to in
CLAUSE 3.1(a).
3.3 If a Special Optionholder which wishes to exercise a Special Option:
(a) gives a Notice of Exercise (as set out in ANNEXURE A to the Schedule);
and
(b) otherwise complies in all material respects with the requirements for
exercise of a Special Option, set out in the Special Option Terms,
the Manager must comply with the provisions hereof and of the Special
Option Terms in respect of the exercise of the Special Option.
4. COVENANTS
4.1 Subject to CLAUSE 4.2, if during the Special Option Period:
(a) WEA carries out a Reconstruction; or
(b) WAT carries out a Reconstruction,
<PAGE>
6
then, in each such event:
(c) the number of Special Options held by a Special Optionholder; or
(d) the Consideration Ratio and the Special Option Number; or
(e) some or all such factors,
will be adjusted, as appropriate, in a manner:
(f) approved by the Trustee and the Special Optionholders; and
(g) which is fair and equitable to the Unitholders and Special
Optionholders.
4.2 (a) If during the Special Option Period, either WEA or WAT carries out a
Reconstruction which involves:
(i) a subdivision, stock split, or stock dividend; or
(ii) a reverse stock split or consolidation,
the adjustment to be made under CLAUSE 4.1 shall be made in the manner
set out in ANNEXURE C to the Schedule.
(b) If during the Special Option Period WAT shall be merged or
consolidated into a new entity or WAT shall transfer all or
substantially all of its assets to another entity, then upon a
subsequent exercise of the Special Options, the Special Optionholder
shall be entitled to receive securities in the new transferee entity
equal to what the Special Optionholder would have received had it
exercised such Special Options and owned WAT Units immediately prior
to such transaction.
(c) If during the Special Option Period WEA shall be merged or
consolidated into a new entity or if WEA shall transfer all or
substantially all of its assets to another entity and the Preferred
Shareholders shall receive stock in such entity in consideration of
their Preferred Shares, then upon a subsequent exercise of the Special
Options, the Special Optionholder shall be entitled to use such new
preference shares received in such transaction (in lieu of the
Preferred Shares) as the consideration for the issuance of Units based
on a revised Special Option Number ratio which is fair and equitable
to the Unitholders and the Special Optionholders.
<PAGE>
7
(in lieu of the Preferred Shares) as the consideration for the
issuance of Units based on a revised Special Option Number ratio which
is fair and equitable to the Unitholders and the Special
Optionholders.
4.3 The Manager covenants that the Manager will, on exercise of Special
Options, accept Preferred Shares or cash in accordance with the Special
Option Terms (as the case may be), as consideration for the issue of Units.
4.4 The Manager represents and warrants for the benefit of all the Special
Optionholders, that:
(a) all Special Options granted under this Deed have been duly authorised,
validly issued and outstanding, and are entitled to the rights under
this Deed;
(b) the Units issuable upon exercise of the Special Options will be duly
authorised, validly issued, fully paid and non-assessable;
(c) there are no pre-emptive rights or similar rights to purchase any such
Units upon such exercise on the part of any holders of any class of
securities of WAT;
(d) this Deed has been duly authorised, executed and delivered by the
Manager and the Trustee and is a valid and binding obligation of the
Manager and the Trustee, enforceable in accordance with the terms
hereof; and
(e) the Manager will ensure that at all times while Special Options are
outstanding, WAT will have sufficient authorised and unissued Units
available for issue upon exercise of Special Options and all other
options outstanding with respect to Units.
4.5 (a) Each of the Trustee and Manager agrees for the benefit of the Special
Optionholders, that if prior to the expiration of the Special Option
Period it receives:
(i) notice of a proposal to terminate WAT; or
<PAGE>
8
(ii) a requisition from Unitholders to convene a meeting of
Unitholders for the purpose of passing a resolution to
terminate WAT,
then:
(iii) it will immediately give written notice to the Special
Optionholders of the proposal or requisition; and
(iv) at any time after the date of such notice but before WAT is
terminated, the Special Optionholder may exercise one or more
of its Special Options in accordance with the provisions of this
Deed.
(b) The Manager agrees that, until the expiration of the Special Option
Period, prior to any Reconstruction of WAT it will provide
not less than 30 days prior written notice of such
transaction to the Special Optionholders in the event of
any such Reconstruction or in the event of any
Reconstruction of WEA, each Special Optionholder shall have the
right at any time following delivery of such notice to exercise
its Special Options.
4.6 The Manager covenants that it will use its best endeavours to ensure that
the Units (including the Units issued on the exercise of the Special
Options) are officially quoted on the ASX, immediately upon issuance and
that such official quotation is maintained.
5. REGISTRATION, TRANSFERS AND LISTING OF OPTIONHOLDERS
5.1 The Manager covenants and agrees that it will maintain a register of the
Special Optionholders, and the Trustee and each Special Optionholder may:
(a) inspect such register at any time during business hours; and
(b) obtain copies of such register.
5.2 The Manager must send to Special Optionholders copies of all notices
(including, without limitation, notices of Unitholders' meetings),
accounts and other statements sent to Unitholders.
<PAGE>
9
5.3 For the purposes of CLAUSE 5.2, notices, accounts and other statements
sent to joint Special Optionholders will be deemed to be sent to all those
Special Optionholders, if sent to the Special Optionholder named first on
the register.
5.4 Subject to the securities law restrictions referred to in the Special
Option Terms, Special Options are fully transferrable, and may be
transferred as follows:
(a) by delivery of a duly executed and stamped transfer by the Transferor
to the Manager, together with certificates for the Special Options
to which the transfer relates; and
(b) the Manager registering the transfer of the Special Options, subject
to the terms and conditions of the Trust Deed, which Manager agrees
to do promptly.
5.5 If a Special Optionholder:
(a) has lost a certificate in respect of any Special Options; and
(b) provides the Manager with a statutory declaration of loss in respect
of such certificate,
the Manager shall cancel the lost certificates and issue replacement
certificates to the Special Optionholder.
5.6 The parties acknowledge that there is currently no intention to apply for
quotation of the Special Options on any stock exchange.
6. ASSIGNMENT
A party must not assign this Deed or any right under this Deed without the
prior written consent of each other party and all Special Optionholders,
PROVIDED that ABP may transfer its rights hereunder to any transferee of
the Special Options and FURTHER PROVIDED that nothing in this CLAUSE 6
affects the right of a Special Optionholder to transfer a Special Option.
<PAGE>
10
7. DISPUTES
7.1 If a dispute arises between any of the parties (including for this purpose
the Special Optionholders) in relation to an adjustment to:
(a) the number of Special Options held by a Special Optionholder; or
(b) the Consideration Ratio and the Special Option Number; or
(c) some or all such factors,
or any other adjustment to be made pursuant to CLAUSE 4.1 or CLAUSE 4.2,
any such party is entitled to refer the dispute (but no other disputes) to
an Expert.
7.2 The Expert must:
(a) resolve the dispute in a timely manner as an expert and not as an
arbitrator; and
(b) determine the party or parties responsible for paying the costs of
the Expert having regard to his findings concerning resolution of the
dispute.
7.3 The determination of the Expert will be final and binding on the parties.
8. CONDITION PRECEDENT
8.1 This Deed (excluding this CLAUSE 8) is conditional on and shall not be
effective until satisfaction of the following condition precedent
("CONDITION"), namely simultaneous completion of the Initial Public
Offering.
8.2 The parties acknowledge that:
(a) the Condition is for the benefit of all parties; and
(b) the Condition may not be waived in whole or in part except by written
waiver of all parties.
<PAGE>
11
8.3 If the Condition is not satisfied or waived on or before 5.00pm on 31 July
1999, any party may terminate this Deed by written notice to each other
party.
8.4 On termination of this Deed pursuant to CLAUSE 8.3, all rights and
obligations of the parties shall cease and no party shall have any
liability under this Deed.
9.1 FURTHER ACTION
9.1 Each party to this Deed must:
(a) use reasonable efforts to do all things necessary or desirable to
give full effect to this Deed; and
(b) refrain from doing anything that might hinder performance of this
Deed.
10. GOVERNING LAW AND JURISDICTION
10.1 This Deed is governed by the law applicable in New South Wales, Australia.
10.2 Each party irrevocably and unconditionally submits to the non-exclusive
jurisdiction of the courts of New South Wales, Australia.
11. NOTICES
11.1 A party giving notice or notifying under this Deed must do so in writing:
(a) directed to the recipient's address specified in this CLAUSE 11, as
varied by any notice; and
(b) hand delivered or sent by prepaid post or facsimile to that address.
The parties' addresses and facsimile numbers are:
TRUSTEE: Perpetual Trustee Company Limited
39 Hunter Street
SYDNEY NSW 2000
Facsimile Number: (02) 9223 7688
<PAGE>
12
MANAGER: Westfield America Management Limited
Level 24, Westfield Tower
100 William Street
SYDNEY NSW 2011
Facsimile Number: (02) 9358 7077
ABP: Stichting Pensioenfonds ABP
PO Box 2889 640 DJ Heerien
The Netherlands
Facsimile Number: -
11.2 A notice given in accordance with CLAUSE 11.1 is taken to be received:
(a) if hand delivered, on delivery;
(b) if sent by prepaid post, 5 days after the date of posting;
(c) if sent by facsimile, when the sender's facsimile system generates a
message confirming successful transmission of the total number of
pages of the notice unless, within eight business hours after that
transmission, the recipient informs the sender that it has not
received the entire notice.
11.3 The Trustee will promptly deliver to each Special Optionholder copies of
any notices delivered hereunder, including any notice changing the
foregoing addresses.
12. INTERPRETATION
In this Deed, unless the contrary intention appears:
(a) headings are forease of reference only and do not affect the meaning
of this Deed;
(b) the singular includes the plural and vice versa and words importing
a gender include other genders;
(c) other grammatical forms of defined words or expressions have
corresponding meanings;
<PAGE>
13
(d) a reference to a clause, paragraph, schedule or annexure is a
reference to a clause or paragraph of or schedule or annexure to this
Deed and a reference to this Deed includes any schedules and
annexures;
(e) a reference to a document or agreement, including this Deed, includes
a reference to that document or agreement as novated, altered or
replaced from time to time;
(f) a reference to "A$", "$A", "dollar" or "$" is a reference to
Australian currency;
(g) a reference to a specific time for the performance of an obligation
is a reference to that time in the State, Territory or other place
where that obligation is to be performed;
(h) a reference to a party includes its executors, administrators,
successors and permitted assigns;
(i) words and expressions importing natural persons include
partnerships, bodies corporate, associations, governments and
governmental and local authorities and agencies; and
(j) a reference to any legislation or statutory instrument or regulation
is construed in accordance with the Acts Interpretation Act 1901 (Cth)
or the equivalent State legislation, as applicable.
13. AMENDMENT
This Deed may be amended only in writing signed by each party and all
Special Optionholders.
14. TRUSTEE'S LIMITATION OF LIABILITY
14.1 Except as provided in CLAUSE 14.2, as the Trustee enters into this Deed
only in its capacity as trustee of WAT, the Trustee is liable under
this Deed only up to the extent to which it is indemnified out of
the assets of WAT.
<PAGE>
14
14.2 The Trustee is only personally liable to the extent that it is fraudulent,
negligent, or in breach of trust.
14.3 If the Trustee is not personally liable, the parties other than the
Trustee must not sue the Trustee personally or seek to wind it up to
recover any outstanding money, and the Trustee is entitled to plead
this clause as a bar to the taking of any such proceedings.
14.4 Nothing contained in CLAUSE 14.1 shall limit the right of any party to
bring action for performance by the Trustee or limit any party's right to
recover damages from the assets of the Trust to the extent that the
Trustee is liable under this Deed.
<PAGE>
15
EXECUTED as a deed.
SIGNED SEALED AND DELIVERED by)
PERPETUAL TRUSTEE COMPANY )
LIMITED through its duly )
appointed attorney )
/s/ Allan Cowper
------------------------------ ------------------------------------------
ALLAN COWPER
------------------------------ ------------------------------------------
THE COMMON SEAL of WESTFIELD )
AMERICA MANAGEMENT LIMITED is )
affixed in accordance with its)
articles of association in the)
presence of )
/s/ Timothy Walsh /s/ Stephon Johns
------------------------------- ------------------------------------------
Secretary Director [SEAL]
Timothy Walsh Stephon Johns
------------------------------- ------------------------------------------
Name of secretary (print) Name of director (print)
<PAGE>
16
EXECUTED as a deed.
SIGNED SEALED AND DELIVERED by)
PERPETUAL TRUSTEE COMPANY )
LIMITED through its duly )
appointed attorney )
------------------------------ ------------------------------------------
------------------------------ ------------------------------------------
THE COMMON SEAL of WESTFIELD )
AMERICA MANAGEMENT LIMITED is )
affixed in accordance with its)
articles of association in the)
presence of )
/s/ Peter S. Lowy
------------------------------- ------------------------------------------
Secretary Director
Peter S. Lowy
------------------------------- ------------------------------------------
Name of secretary (print) Name of director (print)
<PAGE>
17
SIGNED SEALED AND DELIVERED by) W. BORGDORFF
STICHTING PENSIOENFONDS ABP ) MANAGING DIRECTOR
through its duly authorised ) ABP INVESTMENTS
representative ) REAL ESTATE
)
in the presence of ) /s/ Authorized Officer
MANAGING DIRECTOR
ABP INVESTMENTS
(Chief Investment
Officer)
/s/ L. F. PALMEN /s/ Authorized Officer
------------------------------- ------------------------------------------
Signature of witness Authorised representative
L. F. PALMEN
------------------------------
Name of witness (print)
SENIOR LEGAL AND TAX COUNSEL
ABP INVESTMENTS
<PAGE>
SCHEDULE
SPECIAL OPTION CERTIFICATE
CERTIFICATE NUMBER
WESTFIELD AMERICA TRUST
Constituted by Trust Deed dated 28 March 1996, as amended
SPECIAL OPTION CERTIFICATE
- -------------------------------------------------------------------------------
NUMBER OF OPTIONS CLASS DISTINCTIVE NUMBERS
----------------- ----- -------------------
[ ] Special Options FROM [ ]
TO [ ]
- -------------------------------------------------------------------------------
These options are issued in accordance with the Trust Deed of the Westfield
America Trust, and the Special Option Terms annexed.
This is to certify that:
(a) [ ] of [ ]
is, subject to the terms of the Trust Deed and the Special Option
Terms annexed, the registered holder of the options in Westfield
America Trust set out in the panel above; and
(b) all of the terms and conditions of the Special Option Deed and the
Special Option Terms are incorporated herein by reference for the
benefit of each Special Optionholder, including, in particular, all
of the representations, warranties and covenants of the Manager and
the Trustee set forth in that
<PAGE>
Deed and the Special Option Terms
shall be deemed to be restated, mutatis mutandis, for the benefit of
the Special Optionholders from time to time.
SIGNED FOR AND ON BEHALF of Perpetual Trustee Company Limited, in its capacity
as trustee of Westfield America Trust.
-----------------------------------------------------
Director
-----------------------------------------------------
Secretary
<PAGE>
SPECIAL OPTION TERMS
(ATTACHED TO CERTIFICATE)
1. ENTITLEMENT
Each Special Option will entitle a Special Optionholder to subscribe for
that number of Units equal to the Special Option Number.
2. EXERCISE PERIOD
A Special Option may be exercised at any time during the Special Option
Period.
3. PREREQUISITE TO EXERCISE
Each Special Option must be exercised in compliance with all the securities
law restrictions set out in PARAGRAPH 11 and as part of a parcel of Special
Options which, on exercise, entitles the Special Optionholder to Units
having a value not less than the minimum amount required under the
CORPORATIONS LAW (currently $A500,000) for the issue by the Trustee of
Units on exercise of such Special Option to constitute an excluded issue
pursuant to SECTION 66(2)(a) of the CORPORATIONS LAW (or any successor
statute).
4. UNIT ISSUE PRICE
The issue price payable to the Trustee per Unit on exercise of a Special
Option shall be equal to the price that Common Shares are sold to the
public in the Initial Public Offering (after conversion to Australian
dollars as at the Completion Date) divided by 20.
5. EXERCISE PRICE
5.1 On exercise of a Special Option, the Exercise Price payable on exercise of
each Special Option may be satisfied by:
(a) the payment of US$100 to the Trustee; or
(b) the transfer of a Preferred Share to the Trustee.
5.2 On exercise of a parcel of Special Options, the Special Optionholder will
receive a number of Units equal to the number of that parcel of Special
Options multiplied by the Special Option Number, provided that if this
multiplication results in a total
<PAGE>
that includes a fraction of one Unit, that fraction will be
rounded up to be one additional Unit.
6. RANKING OF UNITS ON EXERCISE OF SPECIAL OPTIONS
6.1 Subject to PARAGRAPH 6.2, a Unit allotted on exercise of a Special Option
will rank in all respects equally with the existing Units on issue at the
date of allotment.
6.2 A Unit allotted on exercise of a Special Option during a Quarter will rank
for distribution of the distributable income of WAT from the first day of
that Quarter unless:
(a) the date of allotment occurs subsequent to the expiration of the First
or Third Quarter but prior to a date when the entitlement of holders
of Preferred Shares to receive dividends payable in respect of a
First Quarter or Third Quarter is determined by WEA, in which event
the Unit will rank for distributions by WAT of distributable income
from the first day of that previous Quarter; or
(b) the date of allotment occurs subsequent to the expiration of the
Second Quarter or Fourth Quarter but prior to the date when the
entitlement of holders of Preferred Shares to receive dividends
payable in respect of a Second Quarter or Fourth Quarter is
determined by WEA, in which event the Unit will rank for
distributions by WAT of distributable income from the first day of
the previous Quarter.
7. MANNER OF EXERCISE
7.1 If a Special Optionholder wishes to exercise a Special Option, it must
give an irrevocable (subject to PARAGRAPH 7.2) written notice in the form
set out in ANNEXURE A ("NOTICE OF EXERCISE") to the Manager (and a copy to
the Trustee), specifying:
(a) the number of Special Options in the parcel of Special Options
which the Special Optionholder wishes to exercise in compliance with
PARAGRAPH 3;
(b) the specific date (being not less than 6 and not more than 30 days
from the date of the Notice of Exercise) on which it wishes to
exercise those Special Options ("EXERCISE DATE");
(c) the number of Units ("RELEVANT NUMBER") (being equal to the Special
Option Number multiplied by the number of Special Options to which
the
<PAGE>
Notice of Exercise relates) which the Special Optionholder
should be allotted on the Exercise Date; and
(d) those matters demonstrating compliance with the U.S. securities laws
restrictions set forth in PARAGRAPH 11.
7.2 Within 5 days from receipt of the Notice of Exercise, the Manager will
provide the Special Optionholder with all material filed by it with the ASX
in respect to WAT since the last annual report issued to Special
Optionholders and the Special Optionholder will (by written notice to the
Manager, and a copy to the Trustee) be entitled to revoke the Notice of
Exercise at any time during the 15 days immediately following receipt of
such material.
7.3 Subject to PARAGRAPH 7.2, on the Exercise Date:
(a) the Special Optionholder must deliver to the Trustee the total
Exercise Price, either:
(i) in cash; or
(ii) by the transfer of that number of Preferred Shares equal to
the number of Special Options to which Notice of Exercise
relates; or
(iii) partly in the manner referred to in PARAGRAPH (i) and partly
in manner referred to PARAGRAPH (ii); and
(b) in consideration of the payment of the total Exercise Price either
in cash or by the transfer of Preferred Shares pursuant to
PARAGRAPH (A), the Manager must issue to the Special Optionholder
the Relevant Number of Units.
7.4 A Special Optionholder who elects to transfer Preferred Shares either in
full or part payment of the Exercise Price, must ensure that any
Preferred Share transferred pursuant to PARAGRAPH 7.3(b) (if any), is
(immediately prior to transfer) owned by the Special Optionholder, (free
of all mortgages, charges, liens and other encumbrances or prior claims)
and has attached all rights (including rights to receive dividends)
attaching or accruing to the Preferred Share on the Exercise Date provided
that if the Special Option is exercised after the record date for a
Quarterly dividend by WEA and prior to payment of such dividend, then
the transfer of a Preferred Share shall not include such unpaid dividends.
<PAGE>
8. TRANSFER OF SPECIAL OPTIONS
Subject to the securities law restrictions set out in PARAGRAPH 11, a
Special Option will be fully transferable.
9. NEW ISSUES BY WAT
9.1 A Special Option will not confer any right on the Special Optionholder to
participate in any new issues of Units or Special Options to subscribe for
new Units by WAT or any distributions by WAT.
9.2 Special Optionholders who exercise Special Options prior to the books
closing date for an issue or distribution by WAT, will be entitled to
participate in that issue or distribution as a Unitholder to the extent
set out in the Trust Deed.
10. RIGHT TO VOTE
In accordance with CLAUSE 7.10 of the Trust Deed, no Special Option confers
on the Special Optionholder:
(a) any right to vote at a meeting of Unitholders; or
(b) any right to require the Manager of WAT to redeem or repurchase the
Special Option; or
(c) except as expressly provided in the Trust Deed or this Deed, any other
entitlement under the Trust Deed consequent on holding the Special
Option.
11. SECURITIES LAW RESTRICTIONS
11.1 The Special Options have not been registered under the U.S. Securities Act
and may not be offered, sold or exercised except:
(a) pursuant to an effective registration statement under the U.S.
Securities Act;
(b) within the United States to or, in the case of exercise, by
Institutional "Accredited Investors' within the meaning of
Rule 501(a)(1), (2), (3) and (7) under the Securities Act in a
transaction exempt from registration requirements of the Securities
Act upon delivery of a purchaser's letter in the form of ANNEXURE B-1
or B-2, as applicable;
<PAGE>
(c) outside the United States to or, in the case of exercise, by non-U.S.
persons in a transaction meeting the requirements of Rules 901, 903
or 904 of Regulation S under the U.S. Securities Act;
(d) to WEA, its affiliates, the Trustee, the Manager or their
affiliates; or
(e) as otherwise agreed by the Manager and Trustee.
The Special Options shall bear a legend to the foregoing effect:
Special Options issued to non-U.S. persons pursuant to Regulation S under
the U.S. Securities Act shall bear the following additional legend:
"THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT
(A) THE SECURITY MAY BE EXERCISED ONLY BY A NON-U.S. PERSON UPON
DELIVERY OF EITHER (i) A WRITTEN CERTIFICATE THAT IT IS NOT BEING
EXERCISED ON BEHALF OF A U.S. PERSON OR (ii) A WRITTEN OPINION OF
COUNSEL TO THE EFFECT THAT THE SECURITY AND THE UNITS DELIVERED UPON
EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OR
ARE EXEMPT FROM REGISTRATION THEREUNDER AND (B) THE SECURITY MAY BE
EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THE OPTION DEED."
All other Special Options shall bear the following additional legend:
"THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT
(A) THE SECURITY MAY BE EXERCISED ONLY BY (1) A NON-U.S. PERSON UPON
DELIVERY OF EITHER (i) A WRITTEN CERTIFICATE THAT IT HAS NOT BEEN
EXERCISED ON BEHALF OF A U.S. PERSON, OR (ii) A WRITTEN OPINION OF
COUNSEL TO THE EFFECT THAT THE SECURITY AND THE UNITS DELIVERED UPON
EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR ARE
EXEMPT FROM REGISTRATION THEREUNDER OR (2) AN INSTITUTIONAL ACCREDITED
INVESTOR UPON DELIVERY OF A LETTER SUBSTANTIALLY IN THE FORM ANNEXED
TO THE SPECIAL OPTION DEED AND (B) THIS SECURITY MAY BE EXERCISED ONLY
IN ACCORDANCE WITH THE TERMS OF THE OPTION DEED."
<PAGE>
11.2 Units issuable upon exercise of the Special Options will not be
registered under the U.S. Securities Act and may not be offered or sold by
an Optionholder after exercise of an Option except:
(a) pursuant to an effective registration statement under the U.S.
Securities Act or pursuant to an exemption from the registration
requirements thereunder;
(b) outside the United States to non-U.S. persons (which term shall
include U.S. dealers or other professional fiduciaries acting on a
discretionary basis for non-U.S. beneficial owners (other than an
estate or trust)) in reliance upon Rules 903 and 904 of Regulation S
under the U.S. Securities Act;
(c) in "regular way transactions' on the ASX, provided that neither the
seller, nor any person acting on its behalf, knows that the
transaction has been pre-arranged with a buyer that is a US person
or is located in the US;
(d) to the Trustee or the Manager or its affiliates; or
(e) as otherwise agreed by the Manager and Trustee.
The foregoing restrictions shall be noted in the Unit register maintained
by the Manager. The Manager agrees that it will cause the notation to be
removed from the Unit register at such time as the Units may be transferred
without restriction under applicable law.
11.3 A Special Option may only be exercised by a non-U.S. person upon delivery
of either:
(a) a written certification that the Special Optionholder is not a U.S.
person and the Special Option is not being exercised on behalf of a
U.S. person; or
(b) a written opinion of counsel to the effect that the Special Option
and the Units delivered upon exercise thereof have been registered
under the U.S. Securities Act or are exempt from registration
thereunder.
11.4 A Special Option may only be exercised by a U.S. person upon delivery of a
purchaser's letter for "Accredited Investors' in the form of ANNEXURE B-1,
certifying that the Special Optionholder is an "Accredited Investor" as
defined in that letter, together with the other materials referred to
therein.
<PAGE>
11.5 A Special Option may not be transferred to any person if the effect of such
transfer would be that the ownership limitations contained in WEA's
Restated Articles of Incorporation would be violated.
11.6 Any withholding obligation of WAT upon receipt of a Preferred Share may be
satisfied by delivery of an amount in United States dollars by the Special
Optionholder.
12. BENEFIT OF COVENANTS
To the extent that any covenant contained in the Special Option Deed is
made for the benefit of Special Optionholders, such covenant shall be
enforceable against the Trustee or the Manager by a Special Optionholder.
13. OEF ELECTION
If a Special Optionholder intends to make the election provided for in
Section 1295(b) of the Internal Revenue Code of 1986, as amended ("Code"),
then such Special Optionholder shall so notify the Manager and the Trustee
and the Manager shall be required, at WAT's expense, to take such actions
as may be required by the Code and the authorities thereunder to have WAT
be treated as a qualified electing fund (within the meaning of Section 1295
of the Code) with respect to a Unitholder or Special Optionholder that
makes the election provided for under Section 1295(b) of the Code.
<PAGE>
ANNEXURE A (TO THE SCHEDULE)
NOTICE OF EXERCISE
TO: WESTFIELD AMERICA MANAGEMENT LIMITED
Manager of Westfield America Trust
[ ]
COPY: PERPETUAL TRUSTEE COMPANY LIMITED
Trustee of Westfield America Trust
[ ]
I/We [ ] of [ ] give notice that I/we wish to
exercise [ ] [Special Options] registered in my/our name on [ ],
being a date not less than [6] and not more than [30] days after the date of
this Notice ("EXERCISE DATE").
I/We confirm that:
(a) [ ] Preferred Shares in WEA registered in our name will on the
Exercise Date be free of all mortgages, charges, liens and other
encumbrances or prior claims;
(b) the Units in the Westfield America Trust to be issued to me/us on
exercise of the Special Options to which this Notice of Exercise
relates, have a value of not less than the amount required by the
CORPORATIONS LAW for the issue of each such Unit to constitute an
excluded issue pursuant to Section 66(2)(a) of the CORPORATIONS LAW;
(c) this Notice of Exercise is irrevocable (subject to PARAGRAPH 7.2 of
Special Option Terms);
(d) I/we have read the restrictions on exercise of Special Options and on
transferability of units set forth in the Special Option Deed. I/we
understand that the Units have not been, and will not be, registered
under the U.S. Securities Act of 1933, as amended (the "SECURITIES
ACT"), and may not be offered or sold except as permitted by the
Special Option Deed and that such restrictions may be required to be
noted in the Unit register as set forth in the Special Option Deed.
We agree, on our own behalf and on behalf of any accounts for which
we are acting as hereinafter stated, that if we should reoffer,
resell, pledge or transfer any Units, we will do so only in accordance
with the Special Option Deed; and
(c) APPLICABLE PARAGRAPH TO BE INSERTED
<PAGE>
NOTE: the following paragraph to be included in a notice of exercise by a
non-U.S. person requesting that units be delivered to an address outside of
the United States:
[We are not a U.S. person, we are not acquiring any units for the account
of any U.S. person, and we have not offered, sold or delivered, and will
not offer, sell or deliver, directly or indirectly, or as principal or
agent, any units acquired by us in the United States or to any U.S. person.
U.S. person has the meaning set forth in Regulation S under the Securities
Act, and includes, among other persons, any national, citizen or resident
of the United States or the estate or trust of any such person, any
corporation, partnership or other entity created or organised in or under
the laws of the United States, or any political subdivision thereof, any
trust or estate (other than a foreign trust or estate) and any United
States branch of a non-U.S. person. "United States' means the United
States of America, its territories and possessions.]
NOTE: the following paragraph to be included in a notice of exercise by an
"accredited investor" (a person meeting the requirements of Rule 501(a) of
Regulation D under the Securities Act):
[We are delivering herewith a purchaser's letter for accredited investors
in the form of Annexure B-1 to the Special Option Deed's Schedules and the
other materials referred to therein, and certify that each of us is an
"accredited investor" as defined in that letter.]
NOTE: the following paragraph to be included in a notice of exercise by a
non-U.S. person requesting that units be delivered to an address in the
United States or who does not meet the standards set forth in NOTE 2.
[We are not a U.S. person]. [We are delivering herewith a written opinion
of nationally recognised United States counsel to the effect that the
Special Options and the units delivered upon exercise have been registered
under the Securities Act or are exempt from registration thereunder.]
<PAGE>
ANNEXURE B-1 (TO THE SCHEDULE)
FORM OF PURCHASER'S LETTER BY ACCREDITED INVESTOR
ACQUISITION OR TRANSFER OF UNITS
TO: WESTFIELD AMERICA MANAGEMENT LIMITED
Manager of Westfield America Trust
[ ]
COPY: PERPETUAL TRUSTEE COMPANY LIMITED
Trustee of Westfield America Trust
[ ]
Dear Ladies and Gentlemen:
In connection with our proposed acquisition of Units of Westfield America Trust
("TRUST") [in exchange for Preferred Stock of Westfield America, Inc.], we
confirm that:
1. We have received a copy of the Special Option Deed dated 1997 ("OPTION
DEED") relating to issuance of Units.
2. We understand that the Units have not been, and will not be, registered
under the U.S. Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered or sold except as permitted in the following
sentence.
3. We agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we should reoffer, resell, pledge or
transfer any Units, we will do so only:
(a) pursuant to an exemption from registration provided by Rule 144 under
the Securities Act (if available);
(b) outside the United States in a transaction meeting the requirements of
Rule 903 or 904 of Regulation S under the Securities Act;
(c) to an institutional "accredited investor" (as defined below) pursuant
to any other exemption from the registration requirements of the
Securities Act, subject to:
(i) the receipt by the Trust of a letter substantially in the form
provided in the Special Option Deed,
<PAGE>
(ii) unless such transfer is of Units with a purchase price of not
less than US$250,000 to an "accredited investor" (as defined
below), the receipt by the Manager of an opinion of counsel
acceptable to the Manager that such reoffer, resale, pledge or
transfer is in compliance with the Securities Act;
(d) to the Trustee, the Manager or its affiliates; and
in each case, in accordance with any applicable securities laws of any
State or the United States of America or any other applicable jurisdiction.
4. So long as the foregoing restrictions are required to be noted in the Unit
register, the undersigned will, and each subsequent holder is required to,
notify any subsequent purchaser from it of the resale restrictions set
forth above.
5. We understand that, on any proposed reoffer, resale, pledge or transfer of
any Units, we will be required to furnish to the Manager and the registrar
and transfer agent for the Units, such certification and other information
as the Manager may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions and the provisions of the Special
Option Deed pursuant to which the Units were issued. We further
understand that the foregoing restrictions will be noted in the Unit
register.
[Insert applicable paragraph.]
6. [We are an institutional "accredited investor" (an entity meeting the
requirements of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Units, and we and any accounts for which we are acting
are each able to bear the economic risk of our or its investment.]
7. [insert applicable paragraph]
[We are acquiring the Units purchased by us for our own account or for one
or more accounts (each of which is an "accredited investor") as to each of
which we exercise sole investment discretion and for each of which we are
acquiring Units with a purchase price of not less than US$250,000 in each
case for investment and not with a view to, or for sale in connection with
any distribution thereof within the meaning of the Securities Act.]
[We have delivered to the Manager an opinion of counsel acceptable to the
Manager that such offer, sale, pledge or transfer of the Units to us is in
compliance with the Securities Act.]
<PAGE>
You are entitled to rely upon this letter and are irrevocably authorised to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[Purchaser]
By:
-----------------------
Name:
Title:
Dated:
Signed by [ ] through its )
duly authorised representative )
[ ] in the presence of: )
or
THE COMMON SEAL of # is )
affixed in accordance with its)
articles of association in the)
presence of )
- ------------------------------ ------------------------------------------------
Secretary Director
- ------------------------------ ------------------------------------------------
Name of secretary (print) Name of director (print)
<PAGE>
ANNEXURE B-2 (TO THE SCHEDULE)
FORM OF PURCHASER"S LETTER BY ACCREDITED INVESTOR
TRANSFER OF OPTIONS
TO: WESTFIELD AMERICA MANAGEMENT LIMITED
Manager of Westfield America Trust
[ ]
COPY: PERPETUAL TRUSTEE COMPANY LIMITED
Trustee of Westfield America Trust
[ ]
Dear Ladies and Gentlemen:
In connection with our proposed acquisition of Special Options of Westfield
America Trust ("TRUST"):
1. We have received a copy of the Special Option Deed dated 1997 ("OPTION
DEED") relating to issuance of Units.
2. We understand that the Special Options and the Units issuable upon exercise
thereof have not been, and will not be, registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold except as permitted in the following sentence and in the
Special Option Deed.
2. We agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we should reoffer, resell, pledge or
transfer any Special Options, we will do so only:
(a) outside the United States to a foreign person in a transaction
meeting the requirements of Rule 903 or 904 of Regulation S under
the Securities Act;
(b) to an institutional "accredited investor" (as defined below) pursuant
to an exemption from the registration requirements of the Securities
Act, subject to:
(i) the receipt by the Trust of a letter substantially in the form
provided in the Special Option Deed,
(ii) unless such transfer is of Special Options with a purchase
price of not less than US$250,000 to an "accredited investor"
(as defined below), the receipt by the Trust of an opinion of
counsel
<PAGE>
acceptable to the Manager that such reoffer, resale, pledge or
transfer is in compliance with the Securities Act;
(c) to Westfield America Inc, its affiliates, the Trustee, the Manager or
its affiliates; and
in each case, in accordance with any applicable securities laws of any
State or the United States of America or any other applicable
jurisdiction.
4. The undersigned will, and each subsequent purchaser from it is required to,
notify any subsequent purchaser from it of the resale restrictions set
forth above.
5. We understand that, on any proposed reoffer, resale, pledge or transfer of
any Special Options, we will be required to furnish to the Manager and the
registrar and transfer agent for the Units, such certification and other
information as the Manager may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions and the provisions
of the Special Option Deed pursuant to which the Special Options were
issued. We further understand that the foregoing restrictions will be
noted in the a legend on the Special Options.
[Insert applicable paragraph.]
6. [We are an institutional "accredited investor" (an entity meeting the
requirements of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
our investment in the Units, and we and any accounts for which we are
acting are each able to bear the economic risk of our or its investment.]
7. [insert applicable paragraph]
[We are acquiring the Special Options purchased by us for our own account
or for one or more accounts (each of which is an "accredited investor") as
to each of which we exercise sole investment discretion and for each of
which we are acquiring Special Options with a purchase price of not less
than US$250,000 in each case for investment and not with a view to, or for
sale in connection with any distribution thereof within the meaning of the
Securities Act.]
[We have delivered to the Manager an opinion of counsel acceptable to the
Manager that such offer, sale, pledge or transfer of the Special Options to
us is in compliance with the Securities Act.]
<PAGE>
You are entitled to rely upon this letter and are irrevocably authorised to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[Purchaser]
By:
-----------------------
Name:
Title:
Dated:
Signed by [ ] through its )
duly authorised representative )
[ ] in the presence of: )
or
THE COMMON SEAL of # is )
affixed in accordance with its)
articles of association in the)
presence of )
- ------------------------------ ------------------------------------------------
Secretary Director
- ------------------------------ ------------------------------------------------
Name of secretary (print) Name of director (print)
<PAGE>
ANNEXURE C
ADJUSTMENTS
1. STOCK SPLITS, REVERSE STOCK SPLITS AND STOCK DIVIDENDS IN WEA
If at any time WEA consolidates or subdivides its Preferred Shares or
issues a stock dividend, then on exercise of a Special Option:
(a) to the extent that the Exercise Price is to be satisfied in cash,
such subdivision or consolidation shall have no effect on the Exercise
Price; and
(b) to the extent that such Exercise Price is to be satisfied by the
transfer of Preferred Shares, the number of Preferred Shares required
to be transferred to the Trustee on the Exercise Date shall be
proportionately increased or decreased so that the Special
Optionholder is effectively transferring to the Trustee the
same percentage interest in WEA as it would have been required to
transfer on exercise of the Special Option immediately prior to the
consolidation or subdivision or stock dividend.
2. STOCK SPLITS, REVERSE STOCK SPLITS AND STOCK DIVIDENDS BY WAT
2.1 Subject to PARAGRAPH 2.2, if the Trustee or Manager gives effect to a
subdivision or consolidation of Units or issues a dividend payable in
Units, then on exercise of a Special Option, a Special Optionholder shall
be entitled to receive a proportionately greater or lesser number of Units,
so that the number of Units which it receives represents the same
percentage interest in WAT as it would have obtained if it had exercised
the Special Option immediately prior to the consolidation or subdivision
or dividend.
2.2 The Manager's obligation to issue a greater or lesser number of Units
(pursuant to PARAGRAPH 2.1) for the same cash amount, is subject to the
Trustee being able to amend the Trust Deed in accordance with section
1069A(7) of the CORPORATIONS LAW provided that the Manager and the
Trustee will use their best efforts to obtain an appropriate amendment
to the Trust Deed.
<PAGE>
EXHIBIT 10.9
FIRST AMENDMENT TO
ADVISORY AGREEMENT
THIS FIRST AMENDMENT TO ADVISORY AGREEMENT is made as of May 21,
1997, by and between WESTFIELD AMERICA, INC., a Missouri corporation (formerly
known as CenterMark Properties, Inc.) ("Owner"), and WESTFIELD U.S. ADVISORY,
L.P., a Delaware limited partnership ("Advisor").
W I T N E S S E T H:
WHEREAS, Owner and Advisor are parties to that certain Advisory
Agreement (the "Original Advisory Agreement"), dated as of July 1, 1996; and
WHEREAS, Owner and Advisor desire to amend the Original Advisory
Agreement in the manner hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Owner and Advisor agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the respective meanings set forth in the Original Advisory Agreement.
2. AMENDMENT TO SECTION 3.1. Section 3.1 of the Original Advisory
Agreement is hereby amended by deleting such section in its entirety and
substituting the following therefor:
"3.1. ADVISORY FEE:
The Owner shall pay to the Advisor an annual Advisory
Fee equal to the lesser of (a) .55% of the Net Equity Value
of the Owner for such annual period, or (b) 25% of the
annual "Funds from Operations" (as hereinafter defined) in
excess of the "Advisory FFO Amount" (as hereinafter
defined). The Advisory Fee shall be paid in U.S. Dollars
and shall be payable quarterly in arrears at the end of each
calender quarter based on the budgeted annual Advisory Fee
for the then calender year, subject to final adjustment
within 90 days after the end of each calender year. The
Advisory Fee shall not be payable for the period through
December 31, 1997. The first payment on account of the
Advisory Fee shall be made on March 31, 1998 for the
quarterly period from January 1, 1998 through March 31,
1998.
"Funds from Operations" means net income (loss) (computed in
accordance with generally accepted accounting
<PAGE>
principles ("GAAP")) excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for
consolidated partnerships and joint ventures. Additionally,
leasing commissions which are capitalized in accordance with
GAAP are subtracted. Funds from Operations shall be calculated
before payment of or deduction for the Advisory Fee.
"Advisory FFO Amount" means, as of the date hereof,
$111,456,090 which amount shall be subject to adjustment
whenever the Owner issues additional common stock so as to be
equal to the sum of the then applicable Advisory FFO Amount and
the "FFO Adjustment Factor" (as hereinafter defined). The FFO
Adjustment Factor shall be equal to 103% (except that 100% shall
be used with respect to common stock issued under the Owner's
dividend reinvestment plan) multiplied by (a) a fraction the
numerator of which is the aggregate "Funds from Operations
Available for Common Stock" (as hereinafter defined) of the Owner
for each of the four full calendar quarters immediately preceding
the date of the new issuance and the denominator of which is the
aggregate number of shares of common stock (on a fully diluted
basis as required by GAAP) of the Owner then outstanding
immediately prior to the date of the new issuance multiplied by
(b) the number of shares of common stock issued in the new
issuance (on a fully diluted basis as required by GAAP). "Funds
From Operations Available for Common Stock" means Funds from
Operations less (i) the Advisory Fee payable for the applicable
four full calendar period, and (ii) dividends paid or accrued on
the Owner's preferred shares during the applicable four full
calendar quarter period."
3. AMENDMENT TO SECTION 3.3. Section 3.3 of the Original Advisory
Agreement is hereby amended by (i) deleting the period at the end of Section
3.3(b) and substituting "; and" therefor and (ii) inserting the following as
new subparagraph (c):
"(c) all costs of preparing and filing required reports with the
Securities and Exchange Commission, the costs payable by the
Owner to any transfer agent and registrar in connection with the
listing and trading of the Owner's stock on the New York Stock
Exchange, the fees payable by the Owner to the New York Stock
Exchange in connection with its listing, costs of preparing,
printing and mailing the Owner's annual report to its
shareholders and proxy materials with respect to any annual
meeting of the shareholders of the Owner."
2
<PAGE>
4. AMENDMENT TO SECTION 4.1. Section 4.1 of the Original Advisory
Agreement is hereby amended by deleting subsections A and B thereof in their
entirety and substituting the following therefor:
"A. TERM. From and after the date of the First Amendment to
Advisory Agreement, dated as of May 21, 1997, between Owner and
Manager, the term of this Agreement shall be for an initial term of
three years expiring on May 20, 2000. Thereafter, until this
Agreement is terminated in accordance with its terms, this Agreement
shall be deemed renewed automatically each year for an additional one
year period unless the trustee (the "WAT Trustee") of the Westfield
America Trust, an Australia publicly listed property trust, and 75% of
the Independent Directors (as such term is defined in the Third
Amended and Restated Articles of the Owner) of the Owner's Board of
Directors agree that either (i) there has been unsatisfactory
performance that is materially detrimental to the Owner or (ii) the
fees payable to Advisor are not fair, PROVIDED that Owner shall not
have the right to terminate this Agreement under clause (ii) above if
Advisor agrees to continue to provide advisory services for the
Property at a fee that the WAT Trustee and 75% of the independent
members of the Board have determined to be fair and PROVIDED FURTHER
that the WAT Trustee's agreement with respect to the matters set forth
in clauses (i) or (ii) will only be required if the WAT Trustee is the
owner of 10% or more of the outstanding capital stock of the Owner.
If Owner shall elect not to renew the term of this Agreement at the
expiration of the initial term or any extended term as set forth
above, Owner shall deliver to Advisor prior written notice of Owner's
determination not to renew this Agreement based on the terms set forth
in this subparagraph A not less than 30 days prior to the expiration
of the then existing term. If Owner elects not to renew this
Agreement, Owner shall designate the date, not less than 60 nor more
than 180 days from the date of the notice, on which Advisor shall
cease to provide services hereunder and this Agreement shall terminate
on such date.
B. NON-CURABLE TERMINATING EVENTS. (i) The Owner may terminate
this Advisory Agreement on not less than 30 days written notice to
Advisor upon the occurrence of any of the following events:
(x) the Bankruptcy of Advisor; or
(y) an act of fraud, embezzlement or theft constituting a
felony against Owner or its Affiliates which causes it material
injury is perpetrated by Advisor or by Developer or by Manager in
its corporate capacity (as distinguished from the acts of any
employees of such entities which are taken without the approval
or complicity of the Board of Directors of such entities'
managing general partner) under this Agreement, the Management
Agreements, the Development Framework
3
<PAGE>
Agreements, any Development Agreement or any Leasing Agreement.
(ii) This Agreement shall terminate if Advisor shall notify Owner
that advisory services shall cease to be one of the principal business
undertakings of Westfield Holdings Limited in the United States,
PROVIDED that this Advisory Agreement shall continue for a period of
180 days after delivery of such notice to Owner if Owner shall be
reasonably satisfied with Advisor's ability to continue providing the
services required hereunder during such period."
5. RATIFICATION. Except as amended hereby, the Original Advisory
Agreement is hereby ratified and remains in full force and effect.
6. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Amendment may be detached
from any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Amendment
identical in form hereto but having attached to it one more additional signature
pages.
7. EFFECTIVE DATE. This Amendment shall be effective as of the
closing of the initial public offering of common stock of the Owner pursuant to
its Registration Statement on Form S-11 (No. 333-22731).
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
OWNER:
WESTFIELD AMERICA, INC.
/s/ Peter S. Lowy
----------------------------------
Name: Peter S. Lowy
Title: Co-President
ADVISOR:
WESTFIELD U.S. ADVISORY, L.P.
By: Westfield Services, Inc.
a general partner
By: /s/ Richard Green
-------------------------
Name: Richard Green
Title: President
5
<PAGE>
EXHIBIT 10.11
FIRST AMENDMENT TO MASTER
DEVELOPMENT FRAMEWORK AGREEMENT
THIS FIRST AMENDMENT TO MASTER DEVELOPMENT FRAMEWORK AGREEMENT is made
as of May 21, 1997 by and between WESTFIELD AMERICA, INC. a Missouri
corporation (formerly known as CenterMark Properties, Inc). ("Owner"), and
WESTFIELD CORPORATION, INC., a Delaware corporation ("Developer").
W I T N E S S E T H:
WHEREAS, Owner and Developer are parties to that certain Master
Development Framework Agreement, dated as of July 1, 1996; and
WHEREAS, Owner and Developer desire to amend the Master Development
Framework Agreement in the manner hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Owner and Developer agree as
follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the respective meanings set forth in the Master Development Framework
Agreement.
2. AMENDMENT TO SECTION 6.4 OF THE MASTER DEVELOPMENT FRAMEWORK
AGREEMENT. Section 6.4 of the Master Development Framework Agreement is hereby
amended by deleting subsection 6.4.1 thereof in its entirety and substituting
the following therefor:
"6.4.1. Upon the approval of the trustee (the "WAT Trustee") of
the Westfield America Trust, an Australian publicly listed property
trust, and 75% of the Independent Directors (as such term is defined
in the Third Amended and Restated Articles of the Owner) of the
Owner's Board of Directors, Owner may terminate this Agreement if
Owner has previously terminated the Advisory Agreement and the
Management Agreements in accordance with their terms, PROVIDED that
such termination shall not be applicable to any development project
for which Developer has performed substantial pre-development services
prior to the date of termination or for which a Development Agreement
has previously been executed and PROVIDED FURTHER that the WAT
Trustee's agreement will only be required if the WAT Trustee is the
owner of 10% or more of the outstanding capital stock of the Owner.
If Owner elects to terminate this Agreement, Owner shall designate the
date, not less than 60 nor more than 180 days from the date of the
termination notice, on which this Agreement shall terminate."
<PAGE>
3. RATIFICATION. Except as amended hereby, the Master Development
Framework Agreement is hereby ratified and remains in full force and effect.
4. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Amendment may be detached
from any counterpart of this Amendment without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Amendment
identical in form hereto but having attached to it one more additional signature
pages.
5. EFFECTIVE DATE. This Amendment shall be effective as of the
closing of the initial public offering of common stock of the Owner pursuant to
its Registration Statement on Form S-11 (No. 333-22731).
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
OWNER:
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
---------------------------------
Name: Peter S. Lowy
Title: Co-President
DEVELOPER:
WESTFIELD CORPORATION, INC.
By: /s/ Richard Green
---------------------------------
Name: Richard Green
Title: President
3
<PAGE>
FIRST AMENDMENT TO
MANAGEMENT LETTER AGREEMENT
THIS FIRST AMENDMENT TO MANAGEMENT LETTER AGREEMENT, dated as of
May 21, 1997, by and between WESTFIELD AMERICA, INC., a Missouri corporation
(formerly known as CenterMark Properties, Inc.) ("Owner"), and CENTERMARK
MANAGEMENT COMPANY, a Delaware partnership ("Manager").
W I T N E S S E T H:
WHEREAS, Owner and Manager are parties to that certain Letter
Agreement (the "Original Management Letter Agreement"), dated as of July 1,
1996, relating to the management by the Manager of certain properties owned
by the Owner or in which the Owner or its subsidiaries is a joint venture
partner;
WHEREAS, Exhibit A to the Original Management Letter Agreement is
the form of management agreement (the "Form Management Agreement") to be used
by the Manager and the Owner (or its subsidiary or Joint Venture) with
respect to any future property to be managed by the Manager for Owner (or its
subsidiary or Joint Venture);
WHEREAS, Owner and Manager desire to amend the Original Management
Letter Agreement in the manner hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Owner and Manager agree as
follows:
1. DEFINITIONS. All capitalized terms used herein without
definition shall have the respective meanings set forth in the Original
Management Letter Agreement.
2. AMENDMENT TO EXHIBIT A TO THE ORIGINAL MANAGEMENT LETTER
AGREEMENT. Exhibit A to the Original Management Letter Agreement is hereby
amended by substituting the Exhibit A attached hereto therefor so as to
reflect certain agreed upon modifications to the Form Management Agreement.
3. RATIFICATION. Except as amended hereby, the Original
Management Letter Agreement is hereby ratified and remains in full force and
effect.
4. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and
thereafter shall be deemed an original, and all of which shall be taken to be
one and the same instrument, with the same effect as if all parties hereto
had all signed the same signature page. Any signature page of this Amendment
may be detached from any counterpart of this Amendment without impairing the
legal effect of any signatures thereon and may be attached to another
counterpart of this Amendment identical in form hereto but having attached to
it one more additional signature pages.
<PAGE>
5. EFFECTIVE DATE. This Amendment shall be effective as of the
closing of the initial public offering of common stock of the Owner pursuant
to its Registration Statement on Form S-11 (No. 333-22731).
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed as of the date first above written.
OWNER:
WESTFIELD AMERICA, INC.
By: /s/ Peter Lowy
------------------------
Name: Peter Lowy
Title: Co-President
MANAGER:
CENTERMARK MANAGEMENT
COMPANY
By: Westfield Services, Inc.
a general partner
By: /s/ Richard Green
-------------------
Name: Richard Green
Title: Co-President
3
<PAGE>
EXHIBIT A*
- --------
* The Form of Management Agreement is set forth on Exhibit 10.14 and is hereby
incorporated by reference.
<PAGE>
EXHIBIT 10.14
NORTHWEST PLAZA
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
MANAGEMENT AGREEMENT
BETWEEN
NORTHWEST PLAZA LLC,
AS OWNER,
AND
WESTFIELD MANAGEMENT COMPANY,
AS MANAGER.
DATED AS OF DECEMBER 16, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
MANAGEMENT AGREEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS .................................... 1
ARTICLE II APPOINTMENT ............................................ 11
ARTICLE III MANAGER'S DUTIES ....................................... 12
A. Operating Standard; Duties .......................... 12
B. Independent Contractor; Employees ................... 14
C. Compliance with Requirements ........................ 14
D. Implementation of Annual Plan ....................... 15
E. Property Manager .................................... 15
F. No Default .......................................... 15
G. Powers .............................................. 16
ARTICLE IV LEASING THE PROPERTY ................................... 17
A. Leasing Obligations ................................. 17
B. Brokers ............................................. 18
C. Temporary Leases .................................... 19
D. Small Shop Leases ................................... 19
E. Large Shop Leases and Nonconforming Small Shop
and Temporary Leases ................................ 19
F. Anchor Leases ....................................... 19
G. Leasing Fee ......................................... 20
H. Occupant Improvements ............................... 20
ARTICLE V TENANT RELATIONS ....................................... 20
A. Reasonable Efforts .................................. 20
B. Procedures .......................................... 20
C. Enforcement of Leases ............................... 20
i
<PAGE>
ARTICLE VI RECEIPTS ............................................... 21
A. Cash Receipts ....................................... 21
B. Security Deposit Account ............................ 21
ARTICLE VII ANNUAL PLAN ............................................ 21
A. Initial Annual Plan ................................. 21
B. Submission of Annual Plans .......................... 21
C. Owner's Approval .................................... 22
D. Miscellaneous Provisions ............................ 23
ARTICLE VIII DISBURSEMENTS .......................................... 24
A. Payment of Operating Expenses ....................... 24
B. Checks .............................................. 24
ARTICLE IX ADVANCES FOR OPERATING EXPENSES ........................ 24
A. Notification ........................................ 24
B. Owner's Advances .................................... 25
C. Indemnification ..................................... 25
ARTICLE X FIDELITY INSURANCE COVERAGE ............................ 26
ARTICLE XI MAINTENANCE OF THE PROPERTY ............................ 26
A. Standard ............................................ 26
B. Supplies and Equipment .............................. 27
C. Enforcement of Contracts ............................ 27
D. Emergencies ......................................... 27
ARTICLE XII RECORDS AND REPORTS .................................... 27
A. Monthly Reports ..................................... 27
B. Financial Statements ................................ 29
C. Records ............................................. 31
D. Production of Records and Information ............... 32
E. Tax Returns ......................................... 33
F. General Qualifications .............................. 33
ARTICLE XIII COSTS AND EXPENSES - COMPENSATION ...................... 34
A. Management Fee ...................................... 34
ii
<PAGE>
B. Expense Reimbursement ............................... 35
C. Leasing ............................................. 35
ARTICLE XIV INSURANCE .............................................. 36
ARTICLE XV ALTERATIONS ............................................ 36
ARTICLE XVI TERMINATION ............................................ 36
A. Term ................................................ 36
B. Non-Curable Terminating Events ...................... 36
C. Curable Defaults .................................... 38
D. Manager's Rights and Obligations on Termination ..... 39
ARTICLE XVII DELIVERY OF DOCUMENTS AND NOTICES ...................... 40
ARTICLE XVIII MISCELLANEOUS PROVISIONS ............................... 41
A. Law to Apply ........................................ 41
B. Incorporation by Reference .......................... 41
C. Section Headings and References ..................... 41
D. Terms ............................................... 41
E. Waiver .............................................. 41
F. Severability ........................................ 42
G. Counterparts ........................................ 42
H. Time ................................................ 42
I. Incorporation of Prior Agreements ................... 42
J. Further Assurances .................................. 42
K. Attorneys' Fees ..................................... 42
L. Personal Agreement .................................. 42
M. No Partnership ...................................... 43
N. Amendments .......................................... 43
O. Indemnities ......................................... 43
P. Object of Agreement ................................. 44
Q. Owner's Lenders and/or Purchasers ................... 44
R. Confidentiality ..................................... 44
</TABLE>
EXHIBITS
A - Other Management Agreements
iii
<PAGE>
THIS MANAGEMENT AGREEMENT ("Agreement") is made and entered into as
of the 16th day of December, 1997 by and between NORTHWEST PLAZA LLC, a
Delaware limited liability company ("Owner"), and WESTFIELD MANAGEMENT
COMPANY ("Manager"), a Delaware partnership.
W I T N E S E T H:
WHEREAS, Owner is the owner of that certain shopping center located
in St. Ann, Missouri, and commonly known as Northwest Plaza; and
WHEREAS, Owner and Manager desire to enter into this Agreement to
appoint Manager to manage the Property (as defined below), it being the
understanding that the object of this Agreement is the provision of property
management and leasing services by Manager to Owner, upon all of the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings respectively set forth in this Article I:
"ADVISOR" means Westfield U.S. Advisory, L.P., a Delaware limited
partnership, and its permitted successors and assigns under the Advisory
Agreement.
"ADVISORY AGREEMENT" means that certain Advisory Agreement, dated
as of July 1, 1996, between Westfield America, Inc. (formerly known as
CenterMark Properties, Inc.) and Advisor, as the same may be amended from
time to time.
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"AFFILIATE" means, with respect to any Person (the "SUBJECT
PERSON"), any other Person controlling, controlled by or under common control
with the Subject Person. As used in this definition of "AFFILIATE," the term
"CONTROL" means, with respect to any Person, the right to the exercise,
directly or indirectly, of 50% or more of the voting rights attributable to
such Person.
"ANCHOR LEASE" means a Lease for an Anchor Tenant.
"ANCHOR TENANT" means an Occupant that is a department store having
not less than seventy-five thousand (75,000) square feet of usable space at
the Property.
"ANNUAL PLAN" means the plan for the operation, leasing,
maintenance and improvement of the Property, including, without limitation,
the Operating Budget, prepared by Manager and approved by Owner as provided
herein for each Fiscal Year.
"BANKRUPTCY" of any Person means the occurrence of any of the
following events:
(i) if such Person shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent, or shall
file any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
for itself under the present or any future Federal bankruptcy act or any
other present or future applicable Federal, state or other statute or
law relating to bankruptcy, insolvency, or other relief for debtors, or
shall seek or consent to the appointment of any trustee, receiver,
conservator or liquidator of such Person of all, or substantially all,
of its property; or
(ii) if a court of competent jurisdiction shall enter an
order, judgment or decree approving a petition filed against such Person
seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or any
future Federal bankruptcy act, or any other present or future Federal,
state or other statute or law relating to bankruptcy, insolvency, or
other relief for debtors, and such order, judgment or decree shall
remain unvacated and unstayed for a period of ninety (90) days from the
date of entry thereof, or any trustee, receiver, conservator or
liquidator of such Person or of all or substantially all of its property
shall be appointed without the consent of such Person and such
appointment shall remain unvacated and unstayed for a period of ninety
(90) days, or if such Person shall file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding; or
(iii) if such Person shall admit in writing its inability
to pay its debts as they mature; or
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(iv) if such Person shall make a general assignment
for the benefit of creditors or take any other similar action for the
protection or benefit of creditors; or
(v) if any assets of such Person are attached, seized or
subjected to a garnishment or other action by a creditor of such Person
seeking to realize upon a judgment against such Person, and such
attachment, seizure, garnishment or other action is not vacated, stayed
or otherwise resolved within ninety (90) days thereafter.
"BUSINESS DAY" means a day which is not a Saturday, Sunday or
legally recognized public holiday in the United States.
"COMMON AREAS" means all those parts of the Property which are not
exclusively used or intended for the exclusive use of any particular Occupant.
Common Areas shall include, without limitation, the following areas within
the Property: parking areas and facilities, traffic control and information
signs and equipment, roadways, pedestrian sidewalks, public transportation
loading and unloading facilities not devoted to a single Occupant, truckways,
delivery areas, landscaped areas, community rooms, office facilities,
Property Manager's office, elevators, escalators, the enclosed mall,
including space occupied by carts or kiosks, roof, skylights, beams, stairs
and ramps not contained within any Occupant's floor area, public restrooms
and comfort stations, service areas, service and fire exit corridors and
passageways, those areas within the Property and adjacent to the Property
containing signs, pylons or structures advertising the Property, and other
areas, amenities, facilities and improvements provided by Owner for the
convenience and use of Owner, the Occupants and their respective
concessionaires, agents, employees, customers, invitees and other licensees.
"DEVELOPER" means Westfield Corporation, Inc., any entity wholly
owned by Westfield Corporation, Inc., and the permitted successors and
assigns of Westfield Corporation, Inc. or any entity wholly owned by
Westfield Corporation, Inc., under the Development Framework Agreement or any
Development Agreement and Leasing Agreement.
"DEVELOPMENT AGREEMENT" means any Design, Development and
Construction Agreement entered into between Westfield America, Inc. (formerly
known as CenterMark Properties, Inc.) or its Affiliate and Developer in
accordance with the terms of the Development Framework Agreement, as the same
may be amended from time to time.
"DEVELOPMENT FRAMEWORK AGREEMENT" means that certain Master
Development Framework Agreement, dated as July 1, 1996, between Westfield
America, Inc. (formerly known as CenterMark Properties, Inc.) and Developer,
as the same may be amended from time to time.
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"DISCRETIONARY EXPENSES" means all Operating Expenses that are not
Non-Discretionary Expenses.
"EMERGENCY" means an event which, in Manager's reasonable
judgment, requires action to be taken prior to the time that approval could
be obtained from Owner (as reasonably determined by Manager) in order to
comply with Legal Requirements or Insurance Requirements or to preserve the
Property, or for the safety of any employees, Occupants, customers or
invitees of the Property, or to avoid the suspension of any services
necessary to, or required by, the Occupants, customers or invitees thereof.
"FISCAL YEAR" means the calendar year.
"GROSS INCOME" in respect of a particular period means all minimum,
fixed and percentage rents and all other receipts, revenues, proceeds and
other monies received by Owner, or by Agent on behalf of Owner, from or in
connection with the operation of the Property in respect of such period,
directly or indirectly and from any source whatsoever including, without
limitation, all payments made to Owner by Occupants including, but not
limited to (i) minimum, fixed and percentage rent (including proceeds from
any litigation wherein damages equivalent to or based upon rent from a
defaulted tenant are recovered, exclusive of interest), (ii) Common Area
maintenance charges, (iii) contributions for personal and real property taxes
and sales taxes, insurance premiums and deductibles, utilities, heating,
ventilating and air conditioning, domestic water and waste handling,
sprinkler charges, Manager's administrative costs and any other expenses of
the Property for the payment of which Occupants are obligated to contribute
pursuant to their respective Leases, (iv) security deposits which have been
applied to rent, and (v) all proceeds from loss of rents insurance maintained
by Owner relating to the Property.
"INDEX" with respect to any applicable calculation that is provided
for herein, for each particular year or period in question, means the "All
Items" portion of the Consumer Price Index for All Urban Consumers: U.S. City
Average (1982-84 = 100), issued and published by the Bureau of Labor
Statistics of the United States Department of Labor. If the Index ceases to
use the 1982-84 average equaling 100 as the basis of calculation, or if a
change is made in the terms or number of items contained in the Index, or if
the Index is altered, modified, converted or revised in any way, then the
Index shall be determined by reference to the index designated as the
successor to the prior Index or other substitute index published by the
government of the United States and new index numbers shall be substituted for
the old index numbers in making the calculations, as may be appropriate. If at
any time the Bureau of Labor Statistics shall no longer publish such Index,
then any successor or substitute index to the Index published by said Bureau
or other governmental agency of the United States, and similarly adjusted as
aforesaid, shall be used. If such a successor or substitute index is not
available or may not lawfully be used for the purposes herein stated, a
reliable governmental or other non-partisan publication selected
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by Manager and reasonably acceptable to Owner shall be used in evaluating the
information theretofore used in determining the Index.
"INSURANCE REQUIREMENTS" means the requirements of any insurer or
insurance carrier, to the extent that such requirements are applicable to the
Property, or any portion thereof, the use or manner of use of the same, or to
Owner in its capacity as owner of the Property.
"LAND" means that certain parcel or parcels of real property on
which Northwest Plaza is located.
"LARGE SHOP LEASE" means any Lease which is not an Anchor Lease, a
Small Shop Lease or a Temporary Lease.
"LEASE" means any lease, sublease, license to occupy or other right
of occupancy, use or possession of the Property or any part of the Property,
entered into or granted by or on behalf of Owner or by or on behalf of
Owner's predecessors in title, whether temporarily or for a fixed or periodic
term, whether or not recorded, and whether oral or written including, without
limitation, any storage license, cart or kiosk lease or license, and any
other specialty lease or license. "LEASES" means each and every Lease in
effect at the applicable time, collectively.
"LEASING AGREEMENT" means any Leasing Agreement entered into
between Westfield America, Inc. (formerly known as CenterMark Properties,
Inc.) or its Affiliate and Developer in accordance with the terms of the
Development Framework Agreement, as the same may be amended from time to time.
"LEASING GUIDELINES" means the annual leasing guidelines for the
Property proposed by Manager and approved by Owner, which approval will not
be unreasonably withheld by Owner, as an element of each Annual Plan, as
such guidelines may be amended from time to time in accordance with the terms
hereof.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, ordinances,
orders, regulations, judgments, decrees and directions of all federal, state
and local governments and courts and the appropriate agencies, officers,
departments, boards, authorities and commissions thereof, whether now or
hereafter enacted, to the extent that the same are applicable to the use or
operation of the Property or any portion thereof.
"MARKETING FUND" means the media fund or other like fund or
organization established, operated and maintained by Manager in accordance
with the Operating Budget for the advertising, merchandising and promotion of
the Property.
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"NON-DISCRETIONARY EXPENSES" means those Operating Expenses, the
payment and amount of which are not within the discretion of Owner or
Manager, including without limitation utility charges, salaries and benefits
of Property employees, scheduled payments of principal and interest on
indebtedness encumbering the Property, real estate and personal property
taxes and assessments, insurance premiums, amounts due and payable under
service contracts and other agreements entered into in accordance with any
Annual Plan, and Operating Expenses required to be paid by Legal Requirements
or Insurance Requirements.
"OCCUPANTS" means all Persons using or in possession or occupation
of any portion of the Property from time to time under any Lease.
"OPERATING BUDGET" means the annual operating budget for the
Property proposed by Manager and approved by Owner, which approval will not
be unreasonably withheld by Owner, for the relevant Fiscal Year, as the same
may be amended from time to time in accordance with the terms hereof.
"OPERATING EXPENSES" means the total for each relevant period of
the costs and expenses incurred or accrued in respect of the Property by
Owner or by Manager on behalf of Owner in accordance with this Agreement.
Subject to the foregoing, Operating Expenses shall include, without
limitation:
(i) all rates, taxes, assessments and impositions
whatsoever (whether assessed, charged or imposed by or under Federal, State
or local Legal Requirements) assessed, charged or imposed in respect of the
Property or Owner in its capacity as owner of the Property, except to the
extent that Owner has elected to appeal the same until such time as such
taxes are paid, including, without limitation, sales taxes paid by Manager
with respect to goods or services benefiting the Property acquired or
provided in accordance with the Operating Budget;
(ii) charges for supply of water, sewerage, gas
electricity and other utilities supplied to the Common Areas, and the
disposal of all garbage and refuse from the Common Areas;
(iii) costs of operating, maintaining, repairing and
cleaning all areas of the Property, including the salary, wages, benefits and
other costs of (x) all on-site employees at the Property employed by Manager
or its Affiliates and (y) all off-site costs which are allocable to the
Property (which shall include home office or regional office operational
employees to the extent such employees perform services specifically related
to the Property), as may be necessary or appropriate for the proper operation
thereof and the performance by Manager of its obligations hereunder, all in
accordance with the Operating Budget;
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(iv) all charges for leasing or licensing, operating,
maintaining and repairing the lighting and HVAC systems, vertical or
horizontal transportation equipment, sanitary, security and fire detection
and fighting equipment and all other equipment, machinery and systems
provided for or to the Property from time to time, in accordance with the
Operating Budget;
(v) the portion of overhead costs incurred by or on
behalf of Manager in performing its duties under this Agreement which (x) are
for the sole benefit of the Property and (y) have been approved by Owner in
the Operating Budget for the applicable Fiscal Year;
(vi) the costs of leasing, maintenance, registration and
other expenses incurred in respect of vehicles used by employees of Manager
or a Related Person of Manager in connection with the performance of services
for the benefit of the Property which are properly incurred in the
performance by Manager of its duties and obligations under this Agreement, in
accordance with the Operating Budget;
(vii) all fees and charges incurred in connection with the
opening, maintenance and operation of any bank accounts operated for the
Property by Manager;
(viii) advertising, marketing and promotional costs for the
Property in accordance with the applicable Operating Budget or which
otherwise have been approved in writing by Owner;
(ix) the fees of attorneys and consultants incurred by
Manager in accordance with the Operating Budget or at the written request of
Owner in connection with the performance by Manager of its duties and
obligations under this Agreement including, without limitation, the
enforcement of all Leases;
(x) all contributions made by Owner or Manager on behalf
of Owner from time to time to the Marketing Fund;
(xi) the payment or reimbursement of the applicable
portion of costs incurred by Owner or by or on behalf of Manager for insurance
and claims management services for the Property in accordance with the
Operating Budget, whether such payment is incurred pursuant to any master
policy covering other properties under the management of Manager of any
Related Person, or otherwise;
(xii) all expenses incurred by Manager in accordance with
the Operating Budget or as otherwise approved in writing by Owner in
connection with equipment provided by or on behalf of the Manager or by
others for the purpose of the operation and maintenance of
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the Property or the applicable portion of such costs relating solely to the
Property including, without limitation, all financing, leasing and other
charges incurred in respect of such equipment and legal and other costs
associated with the arranging thereof;
(xiii) miscellaneous donations made by Manager from time to
time in the course of operations of the Property in accordance with the
Operating Budget or as otherwise approved in writing by Owner;
(xiv) third party audit and accountancy fees incurred in
accordance with the Annual Plan in connection with the preparation of any
accounts or financial statements relating solely to the Property prepared by
or on behalf of Owner for the purpose of providing the financial information
to Owner required by this Agreement and enabling Manager to perform its
obligations under this Agreement;
(xv) all third party costs and expenses incurred by
Manager directly for the benefit of the Property in connection with the lease
or license of space within the Property in accordance with the Operating
Budget or as otherwise approved in writing by Owner, excluding, however,
brokerage or agency fees, commissions or expenses payable to Manager or any
third parties;
(xvi) the Management Fee payable to Manager in accordance
with Article XIII hereof;
(xvii) general expenses associated with the Property
incurred in accordance with the Operating Budget or as otherwise approved in
writing by Owner; and
(xviii) all costs incurred in accordance with the Operating
Budget or as otherwise approved in writing by Owner in connection with (x)
complying with Legal Requirements and Insurance Requirements binding the
Property, binding Owner in its capacity as owner of the Property, or binding
Manager in its capacity as Owner's agent; and (y) enforcing compliance with
Legal Requirements and Insurance Requirements binding Occupants, contractors
or consultants, provided, however, that if any such noncompliance was caused
by Manager's gross negligence, willful misconduct or fraud, any incremental
increase in the cost of enforcing such compliance shall be borne by Manager
and shall not be an Operating Expense;
PROVIDED, HOWEVER, that notwithstanding the foregoing, "OPERATING EXPENSES"
shall exclude:
(a) income taxes, capital gains tax and any other taxes
imposed on Owner, Manager or Occupants in their capacities as individual
taxpayers;
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(b) the fees of consultants an other costs proven by Owner to
have been incurred as a direct result of Manager's gross negligence, willful
misconduct or fraud; and
(c) premiums and other costs payable by Manager for fidelity
bond insurance.
"OTHER MANAGEMENT AGREEMENTS" mean the management agreements listed
on Exhibit A attached hereto between Manager and certain Affiliates of Owner,
and any new management agreements entered into between Manager and Owner in
accordance with that certain letter agreement, dated as of the date hereof,
between Manager and Westfield America, Inc. (formerly known as CenterMark
Properties, Inc.) ("WEA").
"OWNER" means Northwest Plaza LLC, a Delaware limited liability
company, and its permitted successors or assigns hereunder. For purposes of
granting any approvals or consents under this Agreement with respect to the
operation, leasing or maintenance of the Property, Owner shall act through
the Board of Directors or through an executive committee of the Board of
Directors of the general partner of the Owner.
"OWNER'S ACCOUNT" means the account established by Owner into which
Manager is to deposit all amounts collected by Manager under Section VI.A.
"PERSON" means an individual, partnership, joint venture,
corporation, trust, unincorporated association or other entity.
"PRIME RATE" means the rate of interest announced by Morgan
Guaranty Trust Company of New York or its successors, from time to time in
its New York City office as its "prime" rate, or if no such rate is
announced, then the rate charged to its best corporate customers for demand
loans.
"PROPERTY" means the Land together with all of the improvements now
or hereafter erected thereon (including, without limitation, buildings,
parking structures, paved areas, landscaped areas, landscaping, sidewalks,
bridges and tunnels) commonly known as Northwest Plaza as it may be expanded
or renovated from time to time hereafter, together with all fixtures,
machinery, equipment, and other property located thereon belonging to or
leased or licensed by or for Owner and used in connection with the operation
thereof.
"RELATED PERSON" means, with respect to any Person (the "SUBJECT
PERSON"), any other Person having any of the following relationships with the
Subject Person:
(i) any Affiliate of the Subject Person;
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(ii) any other Person owning directly or indirectly more
than fifteen percent (15%) of the issued and outstanding stock of, or more than
a fifteen percent (15%) beneficial or voting interest in, the Subject Person; or
(iii) any other Person more than fifteen percent (15%) of the
issued and outstanding stock of which, or more than a fifteen percent (15%)
beneficial or voting interest in which, is owned directly or indirectly by
the Subject Person;
"SMALL SHOP LEASE" means any Lease which both (i) covers a gross
leasable area at the Property which is twenty thousand (20,000) square feet or
less, and (ii) has a term, including renewal options (if any), less than or
equal to ten (10) years; provided, however that the term "Small Shop Lease"
expressly excludes all Temporary Leases.
"STANDARD FORM OF SHOP LEASE" means the standard form leasing
documents for Small Shop Leases and Large Shop Leases at the Property as
approved by Owner, which approval will not be unreasonably withheld by Owner,
as the same may be amended or restated from time to time in accordance with
the provisions of this Agreement.
"TEMPORARY LEASE" means any Lease of a temporary or seasonal nature,
having a term, including renewal options (if any) of less than one (1) year,
including without limitation, short-term concessions or license agreements and
cart or kiosk leases or licenses for less than one year.
ARTICLE II
APPOINTMENT
Owner hereby appoints Manager to rent, lease, operate, manage and
direct the operation of the Property subject to the terms and conditions
hereinafter set forth. The appointment of Manager shall be exclusive to
Manager except to the extent that Manager otherwise agrees from time to time
in Manager's sole and absolute discretion. Manager agrees that during the
term of this Agreement it will not act as the property manager for any
regional shopping center which directly competes with the Property and which
is within the primary market area of the Property (a "Competing Mall"),
PROVIDED that the foregoing restriction shall not be deemed to be violated if
Manager shall acquire, either directly or indirectly, all or substantially
all of the assets of, or an interest in, an entity which is engaged in the
property management business and which manages, among other properties, a
regional shopping center which is a Competing Mall.
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Owner and Manager acknowledge that Owner has engaged Developer as the
exclusive developer for the Property pursuant to the Development Framework
Agreement with respect to any expansion, redevelopment or refurbishment of the
Property (any such expansion, redevelopment or refurbishment being hereinafter
referred to as a "Project"). Owner and Manager further acknowledge that to the
extent Developer is providing leasing services with respect to the initial
leasing of any portion of the Project pursuant to a Leasing Agreement, Manager
shall have no responsibility hereunder for the initial leasing of such portion
of the Project.
ARTICLE III
MANAGER'S DUTIES
A. OPERATING STANDARD; DUTIES. Manager shall exercise its powers and
perform its duties and obligations under this Agreement in a diligent manner,
and shall exercise professional competence in managing the Property at the
prevailing national standard of industry practice for properties of a similar
type and quality as the Property. Manager represents and warrants that it,
together with its Affiliates, has the skill and experience necessary to perform
its obligations in accordance with the terms of this Agreement. Owner
acknowledges that the prior management of the Property by Manager has met or
exceeded the standard set forth above. Without limiting the generality of the
foregoing, Manager shall perform the following duties, subject to the
limitations imposed by the Annual Plan and all other provisions of this
Agreement:
(1) The billing and collection of all amounts payable to Owner
by Occupants under the Leases and other amounts included in Gross Income and the
prompt deposit of all such amounts received by Manager in the Owner's Account;
(2) To the extent funds have been made available by Owner
through deposits into the Owner's Account, the payment of all Operating Expenses
and capital expenses of the Property;
(3) Subject to the Leasing Guidelines, the negotiation of
Leases, the administration and enforcement by commercially reasonable methods of
all Leases and all other service, maintenance and other agreements or contracts
made by or on behalf of Owner for the Property, and the performance of the
obligations specified in Article IV relating to the leasing of the Property;
(4) The selection, engagement, employment, payment,
supervision, direction and discharge of all Property employees reasonably
necessary or appropriate for the
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proper, safe and economic operation and maintenance of the Property, in number
and at wages in accordance with the Operating Budget, the carrying of Worker's
Compensation Insurance (and, when required by law, compulsory Non-Occupational
Disability Insurance) covering such employees, and the use of reasonable care in
the selection, supervision and discharge of such employees. Manager shall use
its diligent, good faith efforts to comply with all laws and regulations and
collective bargaining agreements, if any, affecting such employment. All persons
employed in connection with the operation and maintenance of the Property shall
be employees of Manager or its Affiliates or employees of contractors providing
contract services to the Property;
(5) The cleaning, maintenance, servicing and repair
of the Property (whether by employees of Manager or through supervision of
contractors), including all machinery, equipment and other items whether leased
or provided by Manager or provided by Owner for the operation of the Property,
in accordance with Article XI;
(6) The management and administration of the Marketing
Fund and the advertising, merchandising and promotion of the Property and the
Occupants' respective businesses in accordance with the Annual Plan and this
Agreement or as otherwise approved in writing by Owner;
(7) The provision to Owner of the financial, accounting and
reporting services relating to the Property specified in Article XII;
(8) The making of recommendations concerning the Property
(including, without limitation, as to the tenant mix, maintenance, refurbishment
of the Property and structural alterations or improvements to the Property) as
Owner may from time to time reasonably require;
(9) Preparing, maintaining and providing (at the
request of Owner) copies to Owner of all depreciation schedules for the
machinery, equipment and other property located at the Property;
(10) Notifying Owner in its quarterly report to the Board of
Directors of Owner of any material tax assessments, reassessments, or other
impositions relating to the Property or to Owner in its capacity as owner of the
Property received by or on behalf of Manager and the handling of any relevant
appeals at the request and cost of Owner;
(11) Attending, by telephone or, at the request of Owner, in
person, such meetings with any one or more of the representatives of Owner as
Owner may reasonably require (provided Manager receives reasonable notice
thereof) for the purposes of delivering Annual Plans, reports, financial
statements and other documents, making such recommendations or
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discussing such aspects of the operation and management of the Property as
Manager is required to provide under this Agreement, provided that this
provision will not be deemed to require Manager to deliver Annual Plans,
reports, financial statements or other documents at times earlier than the times
otherwise set forth herein;
(12) Formulating and, subject to the Annual Plan, implementing
an insurance program for the Property;
(13) The management, administration and coordination of all
design and construction associated with the maintenance, repair and/or leasing
of the Property including all tenant improvements to be constructed at the
Property, but excluding all initial construction and tenant improvements
associated with any expansion, redevelopment or refurbishment of the Property
(which will be covered in a separate Development Agreement), provided, however,
that Manager shall not be required to perform any actual design or construction
work, and provided further that with respect to tenant improvements, Manager
shall only be responsible for the approval, supervision and coordination of the
design of any Occupant's store to the extent contemplated in such Occupant's
Lease, including without limitation the design of such Occupant's store front
and the specifications of such Occupant's equipment;
(14) Keeping Owner reasonably informed through reports at
regular quarterly meetings of the Board of Directors of Owner with respect to
any other material matters relating to the management, leasing and operation of
the Property; and
(15) Performing all additional duties which Owner may reasonably
require Manager to perform from time to time which are (i) consistent with the
provisions of this Agreement, and (ii) generally performed by property managers
of properties of the type and quality as the Property.
B. INDEPENDENT CONTRACTOR; EMPLOYEES. In performing its duties
hereunder, Manager at all times shall be acting as an independent contractor
contracted by Owner (except where acting as agent for Owner as specifically
required pursuant to this Agreement) and all contractors or consultants engaged
or supervised by Manager shall be independent contractors or employees of
Manager. All Property employees shall be employed by Manager or its Affiliates
and Manager shall oversee such Property employees in the discharge of their
duties.
C. COMPLIANCE WITH REQUIREMENTS. Subject to the Annual Plan or as
otherwise approved or authorized in writing by Owner and Manager, Manager shall
manage, maintain, lease and operate the Property in compliance with (1) all
Legal Requirements concerning the Property; (2) the provisions of all mortgages,
notes, deeds of trust and any other instruments encumbering the Property,
provided that Manager shall not be obligated to comply
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with the terms of any amendments or modifications of such mortgages, notes or
deeds of trust unless Owner has delivered copies to Manager of any of such
amendments or modifications which impose new or additional requirements or
restrictions on Manager or the leasing or operation of the Property; (3) all
Insurance Requirements; (4) the Leases; and (5) all covenants binding Manager
under agreements or arrangements made with third parties including, without
limitation, contractors, consultants and the lessors of any leased equipment
or machinery, and, to the extent it is in Manager's legal capacity to do so,
Manager shall perform all obligations binding Owner under agreements or
arrangements made with third parties. If Manager ascertains that the
Property is not in compliance with any of the foregoing items and such
compliance is not contemplated by the Annual Plan, Manager shall notify Owner
in writing, and Owner shall instruct Manager in writing as to how to proceed.
To the extent that Manager complies with Owner's instructions relating to
Owner's, Manager's or the Property's compliance or non-compliance with any of
the foregoing items, Manager shall in no event be deemed in breach of any
provision of this Agreement, and Manager shall be fully indemnified under the
provisions of Section XVIII.O(2)
Notwithstanding the foregoing, Manager, with the prior written
approval of Owner, shall be entitled to contest in good faith any Legal
Requirement or Insurance Requirement provided that such contest is not
reasonably expected to result in the cancellation or interruption of insurance
coverage for the Property or subject Owner to any civil or criminal liability or
fines and is not reasonably expected to result in a breach, violation or
termination of any mortgage, Lease or other material contract or agreement
encumbering or relating to the Property. Manager's good faith noncompliance
with the applicable Legal Requirement or Insurance Requirement shall not be
deemed a default under this Agreement provided that Manager prosecutes such
contest in good faith and with due diligence to a final determination.
D. IMPLEMENTATION OF ANNUAL PLAN. Manager shall use its diligent good
faith efforts to implement the terms of each approved Annual Plan and shall
exercise control over and shall expend or otherwise transfer rents and other
sums received on behalf of Owner in accordance with the terms hereof. Manager
shall not take any actions which are inconsistent with the Annual Plan and are
not otherwise authorized in writing by Owner, PROVIDED that Manager may exceed
the annual Operating Budget with respect to the payment of Operating Expenses as
set forth in Article VIII.A.
E. PROPERTY MANAGER. Manager shall retain the services of an
experienced project manager (as an employee of Manager) (the "PROPERTY MANAGER")
at Owner's cost, to perform the on-site management functions specified herein.
F. NO DEFAULT. Notwithstanding anything to the contrary in this
Agreement, except to the extent that the payment of additional monies is proven
by Owner to have been
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required as a direct result of Manager's gross negligence, willful misconduct or
fraud Manager shall not be required to expend money in excess of that contained
in the Owner's Account or otherwise made available by Owner to be expended by
Manager hereunder. Manager will not be in breach or default of any obligation
under this Agreement if, upon receipt of a timely written request from Manager,
Owner fails to advance funds as provided in Article IX below, fails to make a
decision, recommendation or request, fails to give a direction, approval or
consent, fails to execute any notice or document required by Manager, or fails
to make a demand or other communication in any such case necessary for the
performance by Manager of that obligation under this Agreement.
G. POWERS. For the purposes of carrying out its duties referred to in
this Agreement, Manager is authorized from time to time during the continuance
of this Agreement:
(1) To enter upon the Property for the purposes of carrying out
the provisions of this Agreement;
(2) To negotiate Leases in Owner's name and implement rent
escalations, the terms of such Leases and rent escalations to be in accordance
with the Leasing Guidelines, PROVIDED that Manager is authorized to enter into
Leases having rent terms which do not vary by more than ten percent (10%) from
the terms of the Leasing Guidelines (except for Temporary Leases which will
not be covered by the Leasing Guidelines and may be negotiated by Manager on the
terms set forth in Article IV.C) and, to the extent it is in Manager's legal
capacity and commercially reasonable to do so, on Owner's behalf to fully
perform and exercise the rights of Owner under any such Leases;
(3) To execute in Owner's name all Temporary Leases, all Small
Shop Leases, all Large Shop Leases and all licenses or other occupancy
agreements negotiated for Common Areas, provided that Manager shall have
obtained Owner's prior written consent with respect to those Leases and
agreements requiring such consent pursuant to Article IV, and, for the purpose
only of such execution, Owner hereby appoints Manager as Owner's
attorney-in-fact;
(4) As agent for Owner and without need for consent of Owner,
to institute, prosecute, defend, settle or otherwise deal with (i) any claim or
legal proceeding against Owner which is not covered by Owner's insurance or
Owner's self-insured retention, but is likely to be settled or otherwise
resolved at a total cost to Owner (excluding attorneys' fees and expenses but
including payments made to any claimant or potential claimant) that is equal to
or less than Fifty Thousand Dollars ($50,000), subject to annual increase on
each January 1 commencing on January 1, 1997 based on the percentage increase in
the Index during the preceding Fiscal Year, (ii) any collection or enforcement
action or eviction proceeding with respect to any Lease other than an Anchor
Lease or a Large Shop Lease, and (iii) any claim, lawsuit or proceeding against
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Owner which is (A) covered by the Owner's self insured retention, to the
extent that payments made from such self-insured retention are recoverable
from Occupants, and in the event that the entire amount of such self-insured
retention set forth in the Operating Budget for any Fiscal Year has been
exhausted, only if such claim, lawsuit or proceeding is settled or resolved
at a cost to Owner (excluding attorneys' fees) of less than Fifty Thousand
Dollars ($50,000), subject to annual increase on each January 1 commencing on
January 1, 1997 based on the percentage increase in the Index during the
preceding Fiscal Year, or (B) covered by insurance and is being defended,
pursued or settled by Owner's insurance company or adjuster; and, subject to
the prior written consent of Owner, to commence, prosecute or defend or
otherwise deal with any other legal or other action relating to any other
matter concerning the Property;
(5) As agent for Owner, to accept and receive all Gross
Income for deposit into the Owner's Account;
(6) To advertise, merchandise and promote the Property in
accordance with the Annual Plan or as otherwise approved in writing by Owner;
(7) To select, retain, engage, employ, replace, supervise,
dismiss, or otherwise deal with any contractors or consultants as may be
reasonably necessary or desirable for the efficient management and operation
of the Property by Manager, PROVIDED that such contractor is not a Related
Person of Manager and the applicable contract or agreement shall not be for a
term longer than one (1) year unless such contract may be terminated on no
more than thirty (30) days' notice without charge or penalty; and
(8) Subject to the Annual Plan or as otherwise authorized or
approved in writing by Owner, to do and perform in respect of the Property
all things reasonably necessary or appropriate on the part of Manager in
compliance with the covenants and obligations of Manager herein contained to
fully and effectively manage the Property and otherwise perform its
obligations hereunder.
ARTICLE IV
LEASING THE PROPERTY
A. LEASING OBLIGATIONS. Manager shall use its diligent, good
faith efforts during the term of this Agreement to lease the Property in
accordance with the Annual Plan. In connection therewith, Manager shall:
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(1) assist in the preparation of and make recommendations to
Owner as to variations to the Standard Form of Shop Lease to be used at the
Property from time to time;
(2) use the Standard Form of Shop Lease as the basis for the
negotiation of all Small Shop Leases and Large Shop Leases;
(3) subject to the terms of the Leasing Guidelines,
negotiate the terms and conditions of all Leases, including, without
limitation, all extensions, renewals, amendments and modifications thereto,
in accordance with the Annual Plan, with such immaterial variances from the
Standard Form of Shop Lease as may be reasonably required, unless otherwise
authorized in writing by Owner; PROVIDED that Manager may negotiate terms and
conditions for Leases which vary from the rent terms set forth in the
Leasing Guidelines by up to ten percent (10%);
(4) arrange for the execution of Leases and all amendments
and modifications thereto by all parties thereto, and distribute copies
thereof in accordance with this Agreement;
(5) locate and endeavor to secure, in accordance with the
Annual Plan, suitable Occupants for all areas of the Property that may be
vacant from time to time or are to be come vacant in the near future and are
reasonably available for occupation or use, including, to the extent
applicable, the Common Areas;
(6) review the general suitability of prospective Occupants
and, to the extent Manager may deem it reasonably necessary or appropriate,
seek references from prospective Occupants and conduct such other
investigations as will establish whether or not the prospective Occupant is
capable of performing all obligations which the prospective Occupant would be
required to perform under its Lease;
(7) coordinate the activities of management, leasing, design
and engineering personnel and/or consultants to implement the leasing program
for the Property; and
(8) perform such other leasing activities as may be required
by and consistent with the prevailing national standard for properties of a
similar type and quality as the Property.
B. BROKERS. Manager may engage and cooperate with brokers, as may
be reasonably necessary or appropriate, so as to secure prospective tenants
for the Property. Unless otherwise specifically contemplated under the
Annual Plan or, unless otherwise approved in writing by Owner, Manager shall
be responsible for the payment of any commissions payable
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in connection with procuring tenants for the Property and Manager does hereby
indemnify and hold Owner harmless from and against any and all loss, cost,
liability or damage (including attorneys' fees and expenses incurred in good
faith and court costs), incurred by Owner in connection with any claim for
leasing commissions in connection with the leasing of the Property after the
date hereof.
C. TEMPORARY LEASES. If the terms and conditions of any Temporary
Lease are consistent with the budget for Temporary Leases (subject to a
variance of up to ten percent (10%) on the rent terms) and are on the
standard form of lease for Temporary Leases (without material modification
thereto) or have otherwise been approved in writing by Owner, Manager is
authorized to execute such Temporary Leases on behalf of Owner, without
seeking Owner's consent thereto. Manager shall deliver a conformed copy of
any such Temporary Lease to Owner promptly after Owner's request therefor.
D. SMALL SHOP LEASES. If the terms and conditions of any Small
Shop Lease are consistent with the Annual Plan and the Leasing Guidelines
(subject to a variance of up to ten percent (10%) on the rent terms) or have
otherwise been approved in writing by Owner, Manager is authorized to execute
such Small Shop Lease on behalf of Owner, without seeking Owner's consent
thereto. Manager shall deliver a conformed copy of each such Small Shop Lease
to Owner within ten (10) Business Days after Manager's execution thereof.
E. LARGE SHOP LEASES AND NONCONFORMING SMALL SHOP AND TEMPORARY
LEASES. Manager shall obtain the written consent of Owner to the terms and
conditions of any Large Shop Lease or any Small Shop or Temporary Lease which
Manager is not authorized to execute on behalf of Owner pursuant to the terms
hereof, by delivering such Lease to Owner together with all reasonably
relevant information. Owner shall grant or deny (with specificity) its
approval of the terms and conditions of any such Lease within ten (10)
Business Days after Owner's receipt of such Lease and relevant information.
In the event that Owner shall fail to notify Manager (by telephone, facsimile
or otherwise) of its approval or rejection within such ten (10) Business Day
period, Owner shall be deemed to have approved such Lease. Upon Owner's
approval or deemed approval of any such Lease, Manager shall be authorized
to execute such Lease on behalf of Owner, and shall deliver a conformed copy
thereof to Owner within ten (10) Business Days after Manager's execution of
such Lease.
F. ANCHOR LEASES. Manager shall obtain the written consent of
Owner to the terms and conditions of any Anchor Lease by delivering such
Anchor Lease to Owner together with all reasonably relevant information.
Owner shall grant or deny (with specificity) its approval of the terms and
conditions of any Anchor Lease within twenty-one (21) days after Owner's
receipt of such Lease and relevant information. Manager will deliver each
fully negotiated and approved Anchor Lease to Owner for Owner's execution
thereof, and provided that the terms of
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any such Anchor Lease are consistent with the terms approved in writing by
Owner, Owner shall execute any such Anchor Lease within fifteen (15) Business
Days after Owner's receipt thereof.
G. LEASING FEE. Except for any amounts to be reimbursed to Manager in
accordance with the terms hereof, Manager shall be entitled to receive fees and
commissions in connection with the negotiation and execution or administration
of Leases in accordance with Section XIII.C as its sole compensation for the
leasing services contemplated by this Article IV.
H. OCCUPANT IMPROVEMENTS. Manager shall review, approve and
coordinate the design of the Occupants' stores to the extent contemplated in the
Occupants' respective Leases, including without limitation obtaining and
reviewing design drawings for Occupants' store fronts and specifications for
Occupants' equipment, and monitoring the progress of Occupants' construction of
standard tenant improvements at the Property.
ARTICLE V
TENANT RELATIONS
A. REASONABLE EFFORTS. Manager shall exercise its diligent good faith
efforts consistent with Article IV to maintain good tenant relations with
Occupants of the Property in a reasonable manner.
B. PROCEDURES. Manager shall establish procedures for the prompt
receipt, investigation and handling of Occupant requests and complaints, and
shall request that any and all allegations by Occupants of defaults by Owner or
Manager under the Leases be made in writing.
C. ENFORCEMENT OF LEASE. Manager shall establish procedures
consistent with this Agreement for the collection and receipt of rent and all
other charges due Owner under and in accordance with the Leases, including
procedures for advising Occupants of overdue rent. To the extent commercially
reasonable, Manager shall, on behalf of Owner:
(1) subject to the limitations set forth in Section III.G(4),
engage attorneys experienced in the field of landlord-tenant relations to
prosecute defaults under any of the Leases;
(2) take such other action as may be directed by Owner to
enforce the Leases; and
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(3) hire auditors to audit Occupants in order to collect
applicable sales information, and charge the reasonable costs of such auditors
to the Property.
ARTICLE VI
RECEIPTS
A. CASH RECEIPTS. Except as provided in Section B of this Article,
all rent and other monies with respect to the Property received by Manager from
whatever source (the "CASH RECEIPTS") shall promptly be deposited by Manager
into the Owner's Account.
B. SECURITY DEPOSIT ACCOUNT. Manager shall deposit into a
segregated interest bearing account (hereinafter referred to as the "SECURITY
DEPOSIT ACCOUNT"), prior to the close of business of the third succeeding
Business Day after receipt by Manager, all security deposits. If any Lease
requires the security deposit or any other payment to be in an interest
bearing account, Manager shall so comply. Manager shall hold all security
deposits received in a form other than cash (e.g., letters of credit or
certificates of deposit) in a safe and secure location. Manager shall from
time to time withdraw funds from any Security Deposit Account (and convert
any non-cash security deposits to cash) and deposit the same in the Owner's
Account in accordance with the terms of the Leases. Manager shall not
commingle security deposits with any funds or other property of Manager.
ARTICLE VII
ANNUAL PLAN
A. INITIAL ANNUAL PLAN. Owner and Manager have agreed upon and
adopted an initial Annual Plan for the remainder of the 1997 Fiscal Year.
B. SUBMISSION OF ANNUAL PLANS. At least thirty (30) days prior to
the beginning of each Fiscal Year Manager shall deliver to Owner for its
approval an Annual Plan for the succeeding Fiscal Year which shall
incorporate:
(1) an Operating Budget for that Fiscal Year setting forth,
with reasonable specificity, the estimated Gross Income and Operating
Expenses for the Property and showing ongoing expenses and extraordinary
expenses and the approximate dates upon which funds therefor will be needed;
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(2) a capital expenditures budget for that Fiscal Year;
(3) the projected timing and estimated amount(s) of any
required capital advances by Owner for that Fiscal Year;
(4) Manager's marketing and leasing plan for the Property for
the following Fiscal Year, and any modifications to the Leasing Guidelines, if
any, proposed by Manager;
(5) the type and coverage levels and premiums of all insurance
for the Property to be maintained during the subsequent Fiscal Year if not
covered by Owner's or its Affiliate's corporate leasing program;
(6) a summary of all agreements relating to the Property
between Manager and any Related Persons of Manager; and
(7) such other matters as Owner may reasonably require to be
included in such Annual Plan from time to time.
The Annual Plan shall be in form and substance reasonably acceptable to Owner,
and shall be submitted together with a report containing recommendations for the
subsequent Fiscal Year in relation to any matters deemed appropriate by Manager
or reasonably requested by Owner.
C. OWNER'S APPROVAL. Owner shall approve or disapprove Manager's
proposed Annual Plan within thirty (30) days after receipt thereof. Owner shall
specify the reasons for any disapproval. Owner's failure to respond within such
thirty (30)-day period shall be deemed to be an approval of the Annual Plan as
submitted. Upon Manager's timely receipt from Owner of a notice of disapproval
or a request for supplemental information regarding the proposed Annual Plan or
any component thereof, Manager shall diligently undertake to modify the
disapproved matters or to provide Owner with such requested supplemental
information. Owner and Manager shall act in good faith in order to agree upon
each Annual Plan and provide for the continued orderly operation of the
Property. Pending the resolution of any such dispute, the submitted Annual Plan
shall control with the sole exception of those specific items not approved by
Owner, and the Annual Plan for the preceding Fiscal Year (exclusive of any line
items relating to expenditures for specified capital works which shall be
established by Owner) shall control with respect to those specific items not
approved by Owner; provided, however, that unless Owner and Manager otherwise
agree:
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(1) individual unapproved line items may be increased to
such amount as may be necessary for Non-Discretionary Expenses and any
Operating Expenses incurred in connection with any Emergency;
(2) any other unapproved line item relating to Operating
Expenses payable to third parties who are not Related Persons to Manager, or
pursuant to existing contracts with third parties who are Related Persons to
Manager which are known at that time to have increased or decreased in cost
shall be increased or decreased, as applicable, to the then current level as
of the end of such prior Fiscal Year;
(3) any line items relating to expenditures for capital
works or other capital expenditure in the Annual Plan for the preceding
Fiscal Year shall be disregarded except where the capital expenditure
approved for the preceding Fiscal Year remains to be paid in accordance with
the approval;
(4) with respect to each other unapproved line item of the
submitted Operating Budget, the amount for such line item set forth in the
Operating Budget for the preceding Fiscal year shall be increased by five
percent (5%).
D. MISCELLANEOUS PROVISIONS. Manager shall operate the Property in
accordance with the applicable Operating Budget with such variances as may be
permitted pursuant to Section VIII.A, or as otherwise expressly provided by
this Agreement. Manager may from time to time recommend to Owner proposed
amendments to the then current Annual Plan or Operating Budget, and upon
Owner's written approval thereof, Manager shall operate the Property in
accordance with the Annual Plan or Operating Budget as so amended. Any
inconsistencies between the terms and conditions of this Agreement and the
provisions of any Annual Plan shall be governed by the provisions of the
Annual Plan. Manager shall not be deemed to be in breach of its obligation to
comply with the operating standards provided in this Agreement to the extent
that the failure to comply with such standards results from insufficient
funds due to Owner's refusal to approve any element of an Annual Plan
proposed by Manager, or insufficient funds being on deposit in the Owner's
Account due to withdrawals by Owner, provided that the foregoing shall not be
deemed to relieve Manager from liability for such obligations if the need for
such funds resulted from Manager's gross negligence, willful misconduct or
fraud.
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ARTICLE VIII
DISBURSEMENTS
A. PAYMENT OF OPERATING EXPENSES. Subject to the provisions of
Article IX, Manager shall pay, prior to delinquency, during each month of the
term hereof from funds on deposit in the Owner's Account as provided in
Section B of this Article, all Operating Expenses due and payable in
accordance with the Operating Budget without further consent of Owner, and
such further sums as Owner may have directed in writing Manager to pay. In
addition, Manager may pay the following Operating Expenses without obtaining
Owner's consent whether or not the amount thereof is in excess of the
respective amounts set forth therefor in the Operating Budget: (1) all
Non-Discretionary Expenses, (2) Emergency expenditures in accordance with
Section XI.D, and (3) Discretionary Expenses exceeding any individual line
item in the Operating Budget, provided that the aggregate amount of such
excess Discretionary Expenses in any Fiscal Year, exclusive of any amounts
expended pursuant to the foregoing clauses (1) or (2), shall not exceed five
percent (5%) of the aggregate amount of all Discretionary Expenses set forth
in the Operating Budget for such Fiscal Year, without Owner's prior written
consent.
B. CHECKS. Manager shall designate one or more officers or
employees to sign checks for the payment of Operating Expenses from the
Owner's Account. Except for the drawing of certain checks on the Owner's
Account as expressly authorized herein, Manager shall not have any authority
to withdraw funds from, or otherwise give instructions relating to, the
Owner's Account. Owner shall designate one or more representatives of Owner
as signatories on the Owner's Account which representatives shall have the
right to sign checks, draw funds from and otherwise give instructions
relating to the Owner's Account, PROVIDED that Owner shall not withdraw funds
from the Owner's Account which would, in the reasonable judgment of Manager,
be necessary to be retained to ensure that all Operating Expenses and capital
expenses can be paid from time to time as and when they become due.
ARTICLE IX
ADVANCES FOR OPERATING EXPENSES
A. NOTIFICATION. Pursuant to Section XII.A(16), Manager shall
submit to Owner, on a monthly basis, an estimate of the Operating Expenses
and other items required to be paid by Manager hereunder which will become
due during the ensuing calendar month and the dates on which such amounts
will be payable. In addition, if, during any month within the term of this
Agreement, Manager determines that the balance in the Owner's Account is or
will be insufficient to pay Operating Expenses and any other items required
to be paid by Manager hereunder,
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Manager shall promptly notify Owner of that event and of the amount of the
deficiency, actual or anticipated. Such notice shall be accompanied by an
explanation for any variance from the Operating Budget, and, unless any such
variance is the result solely of a change of not more than thirty (30) days
in the timing of payment of certain Operating Expenses, or is the result of
Owner's withdrawal of funds from the Owner's Account, then as promptly as
practicable thereafter Manager shall deliver to Owner for Owner's reasonable
approval a revised Operating Budget for the remainder of the applicable
Fiscal Year.
B. OWNER'S ADVANCES. Promptly after receipt of the Manager's
estimate under Section A of this Article or upon request by Manager, Owner
may advance or cause to be advanced to the Owner's Account such funds as are
necessary to pay Operating Expenses as they become due. Manager's obligation
to pay the obligations of the Property and Owner under this Agreement is
conditioned upon the availability of sufficient funds (from a Person other
than Manager) to perform such obligation, and, Manager shall not be deemed in
default of any provision of this Agreement for its failure to pay or
discharge any Operating Expenses or other Property expenses to the extent the
balance of the Owner's Account is insufficient to pay the same.
C. INDEMNIFICATION. Owner hereby agrees to indemnify, defend and
protect Manager and to hold Manager harmless from and against any and all
causes of action, losses, costs, damages, expenses or liabilities (including
reasonable attorneys' fees and expenses incurred in good faith and court
costs) suffered or incurred by Manager as a result of Owner's failure to
advance funds to cover a deficiency in the Owner's Account if:'
(1) the expense relates solely to the Property;
(2) the deficiency in the Owner's Account has not been
caused by Manager's gross negligence, willful misconduct or fraud; and
(3) Manager promptly notified Owner of the existence and the
amount of the deficiency in accordance with Section A of this Article.
ARTICLE X
FIDELITY INSURANCE COVERAGE
Manager and all officers and employees of Manager who may handle or
are responsible for the handling of receipts or disbursements shall be
covered by insurance maintained by Manager, at its sole cost and expense, in
an amount not less than One Million
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Dollars ($1,000,000) for employee dishonesty coverage against any and all
loss, theft, embezzlement or other fraudulent acts on the part of Manager or
Manager's employees, and not less than One Hundred Thousand Dollars
($100,000) for money and securities on and off the premises, transit and
depositors forgery coverage, indemnifying Owner, as obligees, against any and
all loss, theft, embezzlement or other fraudulent acts on the part of Manager
or Manager's employees.
ARTICLE XI
MAINTENANCE OF THE PROPERTY
A. STANDARD. Manager shall cause the Property and all buildings,
improvements and systems comprising same to be maintained at a standard not
less than the prevailing national standard of industry practice for
properties of a similar type and quality as the Property. In connection
therewith, Manager shall use its diligent good faith efforts to contract in
the name and at the expense of Owner, for all services and utilities
necessary for the efficient maintenance and operation of the Property, as
contemplated by the Annual Plan. Manager shall not enter into any contracts
on behalf of Owner without the prior written consent of Owner unless (1) the
payments required to be made by Manager and/or Owner under such contract, in
the aggregate, are contemplated by the applicable Annual Plan or will be less
than or equal to One Hundred Thousand Dollars ($100,000) per Fiscal Year,
subject to annual increase on each January 1 commencing on January 1, 1997
based on the percentage increase in the Index during the preceding Fiscal
Year, and such expense is included within a line item in the Operating
Budget, (2) such contract is for a term no longer than one year unless such
contract may be terminated on no more than thirty (30) days' notice without
charge or penalty, and (3) such contract is not with a Related Person to
Manager, in which event Manager shall be entitled to enter into such contract
without Owner's consent. All work for the maintenance and repair of the
Property shall be performed by independent contractors or affiliates of
Manager, or by Property employees, except to the extent required by Manager's
gross negligence, willful misconduct or fraud.
B. SUPPLIES AND EQUIPMENT. Manager shall, at Owner's expense,
purchase such supplies, equipment and services as are necessary for the
maintenance and operation of the Property; PROVIDED, HOWEVER, that except as
otherwise expressly permitted hereunder no disbursement for this purpose
shall exceed the amount set forth in the Operating Budget (subject to
variances permitted by Section VIII.A) and no such disbursement shall be made
unless the necessary funds are available to Manager from the Owner's Account.
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C. ENFORCEMENT OF CONTRACTS. In connection with the maintenance
and operation of the Property, Manager shall take all commercially reasonable
steps, including legal action when authorized in writing by Owner, to enforce
all maintenance, service and supply contracts, guarantees, warranties, bonds
and other third party contractual undertakings, if any.
D. EMERGENCIES. In the event of an Emergency, Manager may make such
repairs to the Property and take such other actions as Manager may deem
reasonably necessary irrespective of any cost limitations or other
restrictions imposed by this Agreement, provided, however, that Manager will
use its diligent good faith efforts to notify Owner prior to making any such
repair or taking any such action and shall not take any such action if Owner
has otherwise directed Manager in writing following receipt of such
notification. Promptly after an Emergency, or after knowledge of any
conditions which require maintenance or repair work at a projected cost in
excess of the annual amounts authorized in the Annual Plan, Manager shall
deliver a notice thereof to Owner together with its recommendations with
regard thereto.
ARTICLE XII
RECORDS AND REPORTS
A. MONTHLY REPORTS. Manager shall maintain at its offices and
deliver to Owner at Owner's request a report in form reasonably acceptable to
Owner containing the following information with respect to the Property within
thirty (30) days after the end of each calendar month (or within thirty (30)
days after the end of such other period as may be agreed between the
parties) (each such month or other period being referred to herein as a
"PERIOD"):
(1) An itemized statement of Cash Receipts for the Period and
cumulatively for the Fiscal Year to date and the amount of all deposits into
the Owner's Account for the Period and cumulatively for the Fiscal Year to
date;
(2) An itemized statement of capital receipts for the Period
and cumulatively for the Fiscal Year to date;
(3) An itemized statement showing the Operating Expenses for
the Period and the cumulative Operating Expenses for the Fiscal Year to date;
(4) An itemized statement showing the capital expenditures
and significant maintenance items of a capital nature for the Period and
cumulatively for the Fiscal Year to date;
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(5) A list of debtors, aging such debtors as at the end of
the Period and specifying the source of the debt;
(6) To the extent such information is available to Manager,
a reconciliation statement for the Period of the Owner's Account and any
other account opened by the Manager for the purposes of this Agreement or
maintained by the Manager in the name of or on behalf of Owner;
(7) A statement of net operating income for the Period and
cumulatively for the Fiscal Year to date;
(8) A statement of variations between the Operating Budget
and the net operating income for the Period and cumulatively for the Fiscal
Year to date;
(9) A statement of variations between the capital budget and
capital expenditures for the Period and cumulatively for the Fiscal Year to
date;
(10) A leasing status report for all Occupants containing a
rent roll, a statement of vacancies in the Property at the end of the Period
(showing the rental value of the premises and the status of any negotiations
with potential Occupants) and any new or renewed Leases executed, pending or
under negotiation and highlighting all changes in the status of any Leases
since the last such monthly report, PROVIDED, HOWEVER, that with respect to
Temporary Leases, Manager need provide in its monthly report only aggregate
amounts for income and expenses and delineate any in-line space occupied
under any Temporary Leases;
(11) Details of rent and fee reviews negotiated during the
Period under all Leases other than Temporary Leases;
(12) A statement of the respective sales figures achieved by
each Occupant (except for Occupants under Temporary Leases) during the Period
and during the current Fiscal Year to date, including comparisons with the
same period in the previous Fiscal Year; and, to the extent that any
Occupants are required for that Period to, and in fact do, deliver audited
statements under their Leases or Manager has carried out an audit as
permitted under such Leases, an audited statement of such Occupants'
respective sales figures;
(13) A statement containing full details of any Emergency
occurring during the Period including details of the action taken by Manager
under Article XI and an itemized schedule of costs incurred by Manager in
respect of the Emergency;
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(14) A management report summarizing significant events or
activities affecting the Property which occurred during the Period or which
are likely to occur in subsequent months;
(15) An estimate of any Operating Expenses and other items
required to be paid by Manager hereunder becoming due during the ensuing
month and the dates on which such amounts will become due;
(16) For every three-month period, a report of the amount
spent on marketing, advertising and promotion of the Property and Occupants'
respective businesses in the immediately preceding three-month period; and
(17) Any other information or statements reasonably requested
by Owner from time to time.
B. FINANCIAL STATEMENTS. (1) Manager shall maintain or cause to
be maintained accurate and complete financial accounts (including the
appropriate ledgers and journals) and supporting documents (including
invoices and receipts) for the Property showing assets, liabilities, income,
operations, transactions and the financial position of the Property to enable
the financial statements referred to in Section B(2) of this Article to be
properly and efficiently prepared (including, without limitation, by
maintaining proper computer programs and systems), and must keep "hard"
copies of such financial accounts and supporting documents at its principal
office, or otherwise ensure that such copies are readily available, for at
least seven (7) years. Owner acknowledges that (unless Owner shall have
contributed to the cost of acquiring or developing such software) the
computer software maintained by Manager for the purposes of this Section B
belongs to Manager if the software is used by Manager or Related Persons in
connection with other shopping centers or assets.
(2) Manager shall deliver to Owner, within thirty (30) days
after the end of each fiscal quarter, except for the last quarter of any
Fiscal Year in which case the applicable period shall be sixty (60) days
after the end of such Fiscal Year:
(i) for the periods ending March 31, June 30 and September 30
in the relevant Fiscal Year, unaudited financial statements for the Property
for the respective periods and for the Fiscal Year to date; and
(ii) for the period ending December 31, in the relevant
Fiscal Year, unaudited financial statements for the Property for the
respective period and for the Fiscal Year to date,
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in each case including, without limitation, a profit and loss statement, a
balance sheet and reconciliations for the Owner's Account and any other
account operated by Manager for the purposes of this Agreement.
(3) The financial reports delivered pursuant to Section B(2)
of this Article shall be accompanied by:
(i) a revised projection for the balance of the Fiscal Year
comparing the Property's position with the Annual Plan, taking into account
the actual Gross Income, Operating Expenses and capital expenses received
from or incurred for the Property to the relevant date and of the estimated
sums for the balance of the Fiscal Year of anticipated Operating Expenses,
capital expenses, Gross Income and capital receipts, together with an
explanation of material variances from the Annual Plan;
(ii) a revised statement of anticipated events or activities
affecting the Property which are expected to take place;
(iii) such other information, including, without limitation,
such reports as may be required by any lender or mortgagee of Owner, as Owner
may reasonably request in good faith concerning the Property; and
(iv) for the period ending December 31, in each Fiscal Year
only, an inventory of all equipment, machinery and other property owned by
Owner showing their current depreciated values as at December 31, of the
relevant Fiscal Year for tax purposes.
(4) All financial reports prepared pursuant to this Article
shall be prepared on a basis of presentation as agreed upon by Owner and
Manager from time to time.
C. RECORDS. (1) Manager shall maintain proper and sufficient
management accounts and records for the Property to enable Manager to
efficiently perform its obligations under this Agreement and to enable Owner
to promptly obtain any information concerning the Property required by Owner,
and Manager shall keep such management accounts and records at the Property
or another location in the continental United States reasonably approved by
Owner for at least seven (7) years. All records maintained by Manager
pursuant to this Agreement shall be the property of Owner and shall be
delivered to Owner upon the termination of this Agreement or, at Owner's
request, prior to disposal by Manager. Manager shall maintain files with the
originals, or if the originals have been delivered to Owner, copies of all
Leases and other material contracts and agreements relating to the Property.
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Expenses for any Fiscal Year as determined by any such audit or inspection
differs by more than five percent (5%) from the amount of Gross Income or
total Operating Expenses for such Fiscal Year recorded in Manager's books
and records, in which case Manager shall be responsible for the cost of such
audit or inspection; and
(3) from time to time, as may be reasonably appropriate in
order to give Owner time to make any necessary or appropriate decisions in
response thereto, provide information and recommendations to Owner as to:
(i) market conditions and trends affecting the Property;
(ii) changes or proposed changes to Legal Requirements
affecting the Property (including, without limitation, reassessments carried
out by any responsible authority) and any changes or proposed changes to
practices or procedures adopted by a majority of property owners or managers
or both concerning the prevailing national standard of industry practice with
respect to the management, operation and leasing of properties of a type and
quality similar to the Property of which Manager is aware;
(iii) any proposed or recommended amendments to the Standard
Form of Shop Lease or other standard documents for the Property, the rules
for the Property or the memorandum or articles of association of any
committee, merchants association or similar body appointed to operate and
administer the Media Fund;
(iv) any improvements which may be made to the Property, this
Agreement, the procedures employed by Manager for carrying out its
obligations under this Agreement, the Operating Budget, the capital budget or
any other matter to improve the value, economical operation and efficiency or
appearance of the Property;
(v) the occupancy mix within the Property;
(vi) the type of insurance maintained for the Property, the
coverage level of insurance under any policy effected for the Property and
alterations to the terms of any insurance policy held by or on behalf of
Owner for the Property; and
(vii) any other matters which should be disclosed to Owner in
the proper performance of its obligations under this Agreement or which may
be reasonably requested by Owner from time to time, including, without
limitation, any additional information or financial reports and statements
that Owner may reasonably require to provide to its lenders, bankers,
partners, shareholders, joint venturers or any similar Person, PROVIDED that
Owner shall be
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responsible for any additional costs of Manager in providing such additional
information or reports.
E. TAX RETURNS. Within ninety (90) days after the end of each
Fiscal Year, Manager will provide the information relating to the Property
necessary to complete the tax returns of Owner and will cooperate with Owner
and its attorneys, accountants and tax advisers with respect to the completion
thereof in good faith.
F. GENERAL QUALIFICATIONS. Owner acknowledges that Manager and its
Affiliates manage shopping centers other than the Property on behalf of
proprietors other than Owner (collectively, "OTHER MANAGEMENT ACTIVITIES").
Owner further acknowledges that:
(1) in order to undertake effectively the Other Management
Activities in accordance with their respective obligations under agreements
relating to those Other Management Activities, Manager and Related Persons
employ reasonable standardized and uniform information and accounting
procedures and systems (collectively, the "MANAGEMENT INFORMATION SYSTEMS");
and
(2) the obligations of Manager under this Agreement to provide
information (I.E., additional information that is not specifically described
in this Agreement and which is requested by Owner pursuant to this Article
XII, pertaining to the management and operations of the Property
(collectively, "OWNER'S ADDITIONAL INFORMATION REQUIREMENTS")) are not
intended to operate in such a way as to cause unreasonable disruption to the
Management Information Systems or to require Manager to incur unreasonable
costs and expenses in obtaining and adapting the Management Information
Systems in order to provide Owner's Additional Information Requirements.
Notwithstanding the foregoing, and any other provisions of this Agreement,
unless any such requested information is Confidential Information as defined
below, Manager will comply with Owner's Additional Information Requirements
and will supply the information requested; PROVIDED, however, that Owner
will reimburse Manager for the reasonable direct additional costs that
Manager demonstrates Manager or any Affiliate incurred in complying with such
request, if it is not common practice for managers of regional
malls of a kind similar to the Property to provide the information requested
pursuant to the Owner's Additional Information Requirements.
Notwithstanding anything to the contrary contained in this
Agreement, in no event shall Manager be obligated to provide to Owner any
information, document or report which (i) is prepared for the purposes of, or
any minutes of proceedings of, the board of directors of Manager or any
Affiliate of Manager, (ii) directly and primarily relates to commercially
confidential information concerning other shopping centers by any Affiliates
of Manager, or (iii) is prepared for the direct and primary purposes of, or
constitutes a report to the
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Westfield Finance and Management Committee or other corporate management
committee performing similar functions (collectively, "CONFIDENTIAL
INFORMATION").
Notwithstanding anything to the contrary contained herein, Owner
shall in no event acquire any rights with respect to Manager's Management
Information Systems or Manager's plans, programs or processes for the
management and operation of the Property.
ARTICLE XIII
COSTS AND EXPENSES - COMPENSATION
A. MANAGEMENT FEE. Manager shall be entitled to a management and
leasing fee (the "MANAGEMENT FEE") for rendering the services herein required
during the term of this Agreement equal to five percent (5.0%) of all
minimum, fixed and percentage rent (including without limitation (1) proceeds
from any litigation wherein damages equivalent to or based upon rent payable
to Owner from a defaulted Occupant are recovered, exclusive of interest, (2)
all security deposits which have been applied to rent payable to Owner, and
(3) all proceeds from loss of rents insurance maintained by Owner relating to
the Property but excluding income from specialty leasing which is paid to
Owner on a net basis) under all Leases at the Property during each Fiscal
Year (or the pro rata portion of such amounts for any partial Fiscal Year
during the term of this Agreement). Subject to adjustment as hereinafter
provided, such fee shall be payable monthly by Owner in arrears at the end of
each month during the term of this Agreement based on the minimum, fixed and
percentage rent for such month as shown in the most recent leasing status
report delivered pursuant to Article XII.A(10). Manager is hereby authorized
to pay to itself on account of the Management Fee each such monthly
installment from the Owner's Account. The Management Fee shall be adjusted on
the following basis so that the aggregate Management Fee equals the amount
set forth in this Section A: (1) monthly on an interim basis as soon as
practicable after Manager has delivered to Owner the financial statements
specified in Section XII.A for such month. (2) quarterly on an interim basis
as soon as is practicable after the delivery to Owner of the quarterly
financial statements specified in Section XII.B(2)(i), and (3) annually on a
final basis as soon as is practicable after the delivery to Owner of the annual
financial statements specified in Section XII.B(2)(ii). Promptly after each
such adjustment, Owner or Manager, as the case may be, shall pay to the other
the amount of the applicable shortfall or overpayment of the Management Fee
as determined by such adjustment. In the event that there are insufficient
funds in the Owner's Account to pay the Management Fee due for any month
during the term of this Agreement, then if Owner does not pay the amount of
such Management Fee within ten (10) Business Days after receipt of notice of
such insufficiency, such unpaid Management Fee shall bear interest at a rate
equal to the lesser of (1) the Prime Rate plus two percent (2%), compounded
monthly, or (2) the highest rate allowable by law, for the period
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from the date such Management fee was due until the date that it is paid in
full by Owner to Manager. With respect to any partial Fiscal Year during the
term of this Agreement, for the purpose of calculating the Management Fee,
the percentage rent shall be allocated to the portion of the year during
which the Management Fee is payable by multiplying (1) the amount of
percentage rent received from the Property for the entire applicable Fiscal
Year, by (2) a fraction, the numerator of which shall be the applicable
Occupant's gross sales upon which the percentage rent is calculated with
respect to the portion of such Fiscal Year during which this Agreement was in
effect, and the denominator of which shall be such gross sales of the
applicable Occupants with respect to such entire Fiscal Year.
B. EXPENSE REIMBURSEMENT. In addition to the Management Fee
specified in Section A above, Manager shall be entitled to reimbursement as
an Operating Expense of the Property, for those costs and expenses relating to
the management, operation and leasing of the Property incurred by it and
specifically authorized for reimbursement under the terms of this Agreement.
Manager shall not be obligated to incur or bear any expenses of the Property
except those reimbursable under the terms of the immediately preceding
sentence.
C. LEASING. Manager shall be entitled to receive from Owner (1) a
lease preparation fee of Seven Hundred and Fifty Dollars ($750) per Lease and
(2) to the extent not recovered from any Occupant, a plan review fee of One
Thousand Dollars ($1,000) per Occupant, such amounts to be subject to annual
increase from and after January 1, 1997 based on the annual increase in the
Index during the preceding Fiscal Year.
ARTICLE XIV
INSURANCE
Unless such insurance is maintained by Owner and its Affiliate as
part of a corporate insurance program, Manager shall procure and maintain all
insurance required pursuant to the applicable Annual Plan or any mortgage or
deed of trust encumbering the Property, and shall procure such insurance in
such amount and from such companies as may be approved by Owner in the Annual
Plan or otherwise authorized by Owner in writing. Manager shall comply with
all Insurance Requirements in the management and operation of the Property
and shall use its diligent good faith efforts to cause all Occupants to
comply with any applicable Insurance Requirements.
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ARTICLE XV
ALTERATIONS
Manager shall make no changes or alterations in or additions to the
Property or any part thereof of a material nature without the prior written
consent of Owner, except as otherwise expressly set forth in the Annual Plan.
Except with respect to any expansion, redevelopment or refurbishment, or
preliminary services relating thereto, performed pursuant to a Development
Agreement for the Property, Manager shall supervise the performance of all
repairs, renovations and alterations performed at the Property, and shall
monitor all Occupant alterations of the Property on behalf of Owner in such a
manner as may be reasonably required of Manager. Manager shall promptly
report any liens on the Property to Owner.
ARTICLE XVI
TERMINATION
A. TERM. The term of this Agreement shall be for an initial term
expiring on May 20, 2000. Thereafter, until this Agreement is terminated in
accordance with its terms, this Agreement shall be deemed renewed automatically
each year for an additional one year period unless the trustee (the "WAT
Trustee") of the Westfield America Trust, an Australian publicly listed
property trust, and 75% of the Independent Directors (as such term is defined
in the Third Amended and Restated Articles of the Owner) of the Owner's Board
of Directors agree that either (i) there has been unsatisfactory performance
by the Manager that is materially detrimental to the Owner or (ii) the fees
payable to Manager are not fair, PROVIDED that Owner shall not have the right
to terminate this Agreement under clause (ii) above if Manager agrees to
continue to provide management services for the Property at a fee that the
WAT Trustee and 75% of the Independent Directors have determined to be fair
and PROVIDED FURTHER that the WAT Trustee's agreement with respect to the
matters set forth in clauses (i) or (ii) will only be required if the WAT
Trustee is the owner of 10% or more of the outstanding capital stock of the
Owner. If Owner shall elect not to renew the term of this Agreement at the
expiration of the initial term or any extended term as set forth above, Owner
shall deliver to Manager prior written notice of Owner's determination not to
renew this Agreement based on the terms set forth in this subparagraph A not
less than 30 days prior to the expiration of the then existing term. If Owner
elects not to renew this Agreement, Owner shall designate the date, not less
than 60 nor more than 180 days from the date of the notice, on which the
Manager shall turn over management of the Property to Owner and this
Agreement shall terminate as of such date.
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B. NON-CURABLE TERMINATING EVENTS. (1) Owner may terminate this
Agreement on not less than 15 days written notice to Manager upon the
occurrence of any of the following events:
(1) the Bankruptcy of Manager;
(2) Owner sells or transfers 100% of its interest in
the Property (other than to a Related Person), whether directly
or indirectly;
(3) any of the Other Management Agreements are validly
terminated by Owner or one of its Affiliates in accordance with
their terms by reason of Manager's material default thereunder;
(4) the foreclosure by any mortgagee upon the Property
or the taking of possession thereof by deed-in-lieu of
foreclosure, except as otherwise agreed in writing by Manager
and such Mortgagee;
(5) an act of fraud, embezzlement or theft constituting
a felony against Owner or its Affiliates which causes it
material injury is perpetrated by Manager or by Developer or by
Advisor in its corporate capacity (as distinguished from the
acts of any employees of such entities which are taken without
the approval or complicity of the Board of Directors of
Manager's managing general partner) under this Agreement, the
Advisory Agreement, the Development Framework Agreement, any
Development Agreement or any Leasing Agreement; or
(6) the Property or a substantial part of the Property
is damaged or destroyed where the Owner has determined not to
rebuild or reconstruct, provided, however, that in such event
Manager will continue to operate the Property for a reasonable
period of time until Owner winds down the operation of the
Property, and provided further that (i) this Agreement shall
be automatically reinstated if, within twenty-four (24) months
after the date of such damage or destruction, Owner determines
to rebuild the Property or develop a new shopping center as a
replacement for the Property, and (ii) in the case of the
destruction of only a substantial part of the Property, if
Owner elects to continue the operation of the remaining
portion of the Property, this Agreement shall remain in effect
with respect to the portion of the Property to be operated.
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(2) This Agreement shall terminate if Manager shall
notify Owner that management of regional shopping centers
shall cease to be one of the principal business undertakings
of Westfield Holdings Limited and its affiliates in the United
States, PROVIDED that this Agreement shall continue for a
period of 180 days after delivery of such notice to Owner if
Owner shall be reasonably satisfied with Manager's ability to
continue managing the Property during such period.
C. CURABLE DEFAULTS. (1) Either Owner or Manager may terminate
this Agreement by written notice to the other party in the event that the
other party shall default (the "Defaulting Party") in the performance or
observance of any material term, condition or covenant contained in this
Agreement in respect of the Property not falling under Section XVI.B or shall
fail to perform or observe the same in accordance with the required standard
under this Agreement and such default shall continue for a period of thirty
(30) days after written notice thereof shall have been received by the
non-defaulting party (the "Non-Defaulting Party") specifying such default and
requesting that the same be remedied in such thirty-day period, provided that
a ten (10) day period shall apply with respect to any failure to make a
monetary payment hereunder (a "DEFAULT NOTICE").
The Defaulting Party shall be deemed to have complied with a
Default Notice given under this Section XVI.C if the default (other than a
monetary default) is such that it cannot reasonably be remedied within thirty
(30) days and the Defaulting Party shall, in good faith, have commenced to
remedy the default specified therein as soon as is practicable after
receiving such Default Notice, and, thereafter shall have diligently
prosecuted the cure to its completion.
(2) A Non-Defaulting Party shall have the right to terminate
this Agreement based on a default by a Defaulting Party under this Section XVI.C
only if such default is determined to constitute an Adjudicated Default as
provided below. If a Non-Defaulting Party believes that the other party has
defaulted in the performance of a material obligation under this Agreement,
and that such default remains uncured following the delivery of a default
notice and the expiration of the applicable cure period provided in
Section XVI.C(1), then such Non-Defaulting Party may deliver a written notice
to the other party setting forth its intention to terminate this Agreement
pursuant to this Section (a "TERMINATION NOTICE"). If the Defaulting Party
desires to contest such termination, then the Defaulting Party shall so
notify the Non-Defaulting Party within ten (10) Business Days after receipt
of the Termination Notice, and a senior officer of each party shall meet
promptly and negotiate in good faith in order to resolve such dispute. If
such senior officers are unable to resolve the dispute within thirty (30)
days after the Defaulting Party's receipt of the Termination Notice, then the
Defaulting Party may institute an action in the appropriate judicial forum
within thirty (30) days thereafter to determine whether
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the Defaulting Party has defaulted in the performance of a material
obligation hereunder. An "ADJUDICATED DEFAULT" shall be deemed to have
occurred if:
(i) the parties' respective senior officers are
unable to resolve such dispute and the Defaulting Party does not institute a
judicial proceeding within sixty (60) days after it's receipt of a
Termination Notice;
(ii) a court renders a final decision finding that
the Defaulting Party has defaulted in the performance of a material
obligation hereunder, and the Defaulting Party does not deliver a notice of
appeal to the appropriate parties within the applicable appeal period; or
(iii) a court renders a final decision finding that
the Defaulting Party has defaulted in the performance of a material
obligation hereunder and an appeal is perfected by the Defaulting Party
within the applicable appeal period, and a second court renders a final
decision finding that the Defaulting Party has defaulted in the performance
of a material obligation hereunder.
D. MANAGER'S RIGHTS AND OBLIGATIONS ON TERMINATION. Upon
termination of this Agreement Manager shall:
(3) promptly surrender and deliver to Owner any space in the
Property occupied by Manager and pay to Owner or as Owner shall direct all
Gross Income and other monies related to the Property on hand and all moneys
due to Owner under this Agreement including any moneys received after
termination;
(4) promptly deliver to Owner originals in the possession of
or reasonably available to Manager, its Affiliates, agents or employees or,
if such originals are not in the possession or reasonably available to
Manager, copies of all contracts, documents, reports, market studies, files,
funds, surveys, insurance policies, papers, Leases, keys, records and other
property pertaining to this Agreement or to the Property in the possession of
or reasonably available to Manager, its Affiliates, agents or employees;
(5) furnish all such information and take all such action as
Owner may reasonably require in order to effect an orderly and systematic
termination of Manager's duties and activities hereunder and the appointment
of a substitute manager;
(6) as soon as is reasonably practicable, deliver to Owner,
at Owner's expense, audited financial statements reflecting the balance of
all Gross Income, all capital
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contributions, all Operating Expenses, all capital expenses and the credit
balance of all accounts maintained by the Manager under this Agreement as at
the date of termination;
(7) if requested by Owner, at Owner's cost, promptly give
written notice to the Occupants, in a form reasonably satisfactory to Owner,
that Manager no longer manages or is otherwise associated with the Property;
(8) immediately assign and transfer all accounts maintained
by Manager under this Agreement for Owner and assign all contracts with
respect to the Property to a person designated by Owner or as otherwise
directed by Owner and such person shall assume all of Manager's obligations
under such contracts; and
(9) be paid all Management Fees earned under the provisions
of this Agreement prior to such termination. Manager shall not be obligated
to refund any Management Fees earned and received from any month prior to the
month in which this Agreement is terminated, provided, however, that Manager
shall refund to Owner any overpayments of the Management Fee previously paid
to Manager.
ARTICLE XVII
DELIVERY OF DOCUMENTS AND NOTICES
In order to be deemed effective, all documents to be delivered and
all notices, approvals, authorizations and/or consents to be given or
obtained by any party to this Agreement shall be in writing and shall be
given by personal delivery, or sent by express mail or nationally recognized
overnight courier, or by registered or certified mail, postage prepaid,
return receipt requested, or by facsimile (with confirmed receipt) addressed
as follows:
To Manager: Westfield Management Company
c/o Westfield Corporation, Inc.
11601 Wilshire Blvd.
12th Floor
Los Angeles, CA 90025
Attention: Executive Director
Fax: 310-444-9071
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To Owner: c/o Westfield America Inc.
11601 Wilshire Blvd.
12th Floor
Los Angeles, CA 90025
Attention: President
Fax: 310-444-9071
The above addresses may be changed for future communications or delivery of
notice hereunder by giving notice of such change to the others listed above
in the manner prescribed by this Article. All notices shall be deemed
effective when received by all applicable parties at the addresses set forth
above (as such addresses may be changed by the parties in accordance
herewith). Notwithstanding the foregoing, no notice shall be deemed
ineffective because of any party's refusal to accept delivery at the address
specified for the giving of such notice in accordance herewith.
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
A. LAW TO APPLY. This Agreement is made in and shall be governed
by and construed in accordance with the laws of the State of New York.
B. INCORPORATION BY REFERENCE. Exhibit A, as attached hereto, is
hereby expressly incorporated herein to the same extent and with the same
effect as if fully set out herein.
C. SECTION HEADINGS AND REFERENCES. Headings at the beginning of
Articles and Sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. All references herein to
specific Articles or Sections are references to the applicable Articles or
Sections of this Agreement, unless otherwise indicated.
D. TERMS. When required by the context, whenever the singular
number is used in this Agreement, the same shall include the plural, and the
plural shall include the singular, and the masculine gender shall include the
feminine and neuter genders.
E. WAIVER. Any waiver, express or implied, by a party hereto, of
any breach of this Agreement by another party or parties, shall not be
considered a waiver of any subsequent breach.
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F. SEVERABILITY. The invalidity or unenforceability of any portion
of this Agreement shall not render the remainder hereof invalid or
unenforceable.
G. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and
thereafter shall be deemed an original, and all of which shall be taken to be
one and the same instrument, with the same effect as if all parties hereto
had all signed the same signature page. Any signature page of this Agreement
may be detached from any counterpart of this Agreement without impairing the
legal effect of any signatures thereon and may be attached to another
counterpart of this Agreement identical in form hereto but having attached to
it one more additional signature pages.
H. TIME. Time is of the essence of this Agreement and each of its
provisions.
I. INCORPORATION OF PRIOR AGREEMENTS. This Agreement contains all
of the agreements of the parties hereto with respect to the matters contained
herein, and no prior agreement or understanding pertaining to any such matter
shall be effective for any purpose. No provision of this Agreement may be
amended or added to except by an agreement in writing signed by the parties
hereto.
J. FURTHER ASSURANCES. Each party hereto hereby agrees to execute
and deliver any and all instruments, agreements and other documents
reasonably necessary to effect the acts contemplated hereby, to the extent
required by this Agreement.
K. ATTORNEYS' FEES. If any party commences an action against
another to enforce any of the terms hereof or because of the breach by any
party of any of the terms hereof, then the successful party after final
judgment shall be entitled to receive from the other party its reasonable
attorneys' fees and other costs and expenses incurred in connection with the
prosecution or defense of such action.
L. PERSONAL AGREEMENT. This Agreement shall be binding on the
parties hereto. No assignment by Manager shall be effective for any purpose
without the written consent and approval of Owner; PROVIDED, however, that
notwithstanding the foregoing provisions of this Section L, Manager shall
have the right to assign its rights and obligations under this Agreement
without Owner's prior consent to any Affiliate of WHL as long as the
transferee Person assumes the obligations and liabilities of Manager
hereunder from and after the effective date of such transfer. The transfer of
an interest in Manager or any constituent partner of Manager shall not be
deemed an assignment of this Agreement so long as WHL continues to own,
directly or indirectly, at least a 50% voting and economic interest in
Manager. Upon any such transfer, Manager shall be released from all
liabilities arising hereunder from and after the effective date of such
transfer. Manager agrees that it will not subcontract all or substantially
all of its
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management responsibilities under this Agreement, except to an Affiliate of
WHL, without the written consent and approval of Owner. Any attempted
assignment or sub-contract in violation of the provisions of this Section L
shall be void AB INITIO.
M. NO PARTNERSHIP. Nothing contained in this Agreement shall
constitute Owner and Manager as partners with one another. Subject to the
terms and provisions of this Agreement, each of the parties shall have the
right to engage in other businesses and business transactions and the other
party shall have no right or interest therein.
N. AMENDMENTS. No amendment to this Agreement shall be effective
unless signed by the party to be charged with any additional responsibilities
thereunder.
O. INDEMNITIES. (1) Manager hereby agrees to indemnify, defend and
protect Owner and its respective officers and directors (such persons
collectively called the "INDEMNIFIED PARTIES" for the purposes of this
Section XVIII.O(1)), and hold each of the Indemnified Parties harmless
against all losses, damages, costs, expenses and liabilities (including,
without limitation, attorneys' fees and expenses incurred in good faith and
court costs) incurred by the Indemnified Parties by reason of any claim or
demand being made upon or any action taken against any of the Indemnified
Parties arising from Manager's gross negligence or willful misconduct or
fraud with respect to its duties and obligations under this Agreement. The
Indemnified Parties shall, in good faith, endeavor to notify Manager in
writing as to every such claim, demand or action against the Indemnified
Parties within ten (10) Business Days after the Indemnified Parties become
aware that such claim or demand has been made or such action has been taken.
A failure to notify Manager shall not limit Manager's liability under this
Section XVIII.O(1) to the extent that such failure to notify does not
adversely affect Manager's rights with respect to such claim.
(2) Owner hereby agrees to indemnify, defend and protect Manager
and each of Manager's constituent partners and their respective officers and
directors (each such person collectively called the "INDEMNIFIED PARTIES" for
the purposes of this Section XVIII.O(2)), and hold each of the Indemnified
Parties harmless against all losses, damages, costs, expenses and liabilities
(including, without limitation, attorneys' fees and expenses incurred in good
faith and court costs) incurred by the Indemnified Parties by reason of any
claim or demand being made upon or any action taken against any of the
Indemnified Parties arising from (i) any gross negligence or willful
misconduct or fraud of Owner, except to the extent Manager or its Affiliate
is responsible for such gross negligence or willful misconduct, or (ii) any
act taken or omission made by Manager in the performance of its obligations
under this Agreement, which act or omission was not the result of Manager's
gross negligence or willful misconduct or fraud. The Indemnified Parties
shall, in good faith, endeavor to notify Owner in writing as to every such
claim, demand or action against the indemnified parties within ten (10)
Business Days after the Indemnified Parties become aware that such claim or
demand has been made or such action has
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been taken. A failure to notify Owner shall not limit Owner's liability under
this Section XVIII.O(2) to the extent that such failure to notify does not
adversely affect Owner's rights with respect to such claim.
(3) No person engaged as an independent contractor by Owner or
Manager shall be considered an employee, servant, agent or other Person that
Owner or Manager (as the case may be) shall be obligated to indemnify for the
purposes of this Section XVIII.O. Manager shall use its reasonable efforts to
cause Owner to be listed as an indemnified party in any indemnity contained
in an agreement with an independent contractor. The indemnity contained in
this Section XVIII.O made by Owner and Manager shall survive the termination
of this Agreement.
P. OBJECT OF AGREEMENT. The object of this Agreement is the
provision of services by Manager to Owner, and no tangible property will be
conveyed other than tangible property incidental to the provision of such
services.
Q. OWNER'S LENDERS AND/OR PUCHASERS. (1) Manager shall, at the
request of Owner, enter into agreements with lenders providing financing to
Owner encumbering all or any party of the Property, pursuant to which
agreements Manager (i) recognizes the collateral rights, if any, of such
lender(s) with respect to this Agreement, and (ii) acknowledges that if any
such lender forecloses upon Owner's interest in this Agreement, then such
lender or its assignee shall not be liable for any act or omission of Owner
under this Agreement prior to the date of such foreclosure or assignment;
provided that Manager shall not be obligated to enter into any such agreement
that materially increases Manager's obligations or materially diminishes
Manager's rights hereunder.
(2) Manager shall, at Owner's request, cooperate with and provide
information to any lender(s) providing financing to Owner or to any potential
purchaser(s) of the Property regarding actual facts and matters within the
knowledge of Manager's personnel engaged in the management of the Property.
R. CONFIDENTIALITY. (a) Manager agrees to hold in confidence and
not to use or disclose to others any confidential or proprietary information
of Owner heretofore or hereafter disclosed to Manager ("Owner Confidential
Information"), including, but not limited to, any data, information, plans,
programs, processes, costs, operations or the names of any tenants which may
come within the knowledge of Manager in the performance of, or as a result
of, its services, except where required by judicial or administrative order,
or where Owner specifically gives Manager written authorization to disclose
any of the foregoing to others or such disclosure hereunder. If Manager is
required by a judicial or administrative order to disclose any Owner
Confidential Information, Manager will promptly notify Owner thereof, consult
with Owner on the advisability of taking steps to resist or narrow such
request and cooperate with Owner in any
43
<PAGE>
attempt it may make to obtain an order or other assurance with confidential
treatment will be accorded to the Owner Confidential Information disclosed.
(b) Owner agrees to hold in confidence and not to use or disclose
to others any confidential or proprietary information of Manager heretofore
or hereafter disclosed to Owner ("Manager Confidential Information"),
including, but not limited to, any information, plans, programs, processes,
costs or operations which may come within the knowledge of Owner
as a result of the services performed by Manager, except where required by
judicial or administrative order, or where Manager specifically gives Owner
written authorization to disclose any of the foregoing to others or such
disclosure hereunder. If Owner is required by a judicial or administrative
order to disclose any Manager Confidential Information, Owner will promptly
notify Manager thereof, consult with Manager on the advisability of taking
steps to resist or narrow such request and cooperate with Manager in any
attempt it may make to obtain an order or other assurance with confidential
treatment will be accorded to the Manager Confidential Information disclosed.
IN WITNESS WHEREOF, the parties hereto have caused this agreement
to be executed as of the date first above written.
OWNER:
NORTHWEST PLAZA LLC, a Delaware limited liability company
By: Westfield America Investor L.P., a Delaware partnership, its
managing member
By: Westfield America G.P., Inc., a Delaware
corporation, its general partner
By: /s/ Irv Hepner
-------------------------------
Irv Hepner
Its: Secretary
44
<PAGE>
MANAGER:
WESTFIELD MANAGEMENT COMPANY
By: Westfield Services, Inc.,
a general partner
By: /s/ Irv Hepner
------------------
Name: Irv Hepner
Title: Secretary
45
<PAGE>
EXHIBIT A
OTHER MANAGEMENT AGREEMENTS
Separate Management Agreements, each dated as July 1, 1996, as
amended, with respect to each of the following shopping centers:
Connecticut Post Mall
Eagle Rock Plaza
Eastland Shopping Center
Enfield Center
Mid Rivers Mall
Montgomery Mall
Plaza Bonita
South County Center
South Shore Mall
Trumbull Mall
West County Center
Plaza at West Covina
West Park Mall
Westland Center
<PAGE>
Ex. 10.14
SCHEDULE OF SUBSTANTIALLY IDENTICAL AGREEMENTS
The filed agreement is substantially identical in all material respects
to the Company's management agreements for the following Properties:
<TABLE>
<CAPTION>
Property Parties to Agreement Date of Agreement
- -------- -------------------- -----------------
<S> <C> <C>
Annapolis Mall Annapolis Mall Limited Partnership June 4, 1997
and CMC
Capital Mall Capital Mall Company and WMC December 9, 1998
Crestwood Plaza WEA Crestwood Plaza LLC and WMC January 15, 1998
Downtown Plaza Downtown Plaza LLC and WMC October 30, 1998
Fox Hills Mall Fox Hills Mall LLC and WMC October 7, 1998
Horton Plaza Horton Plaza LLC and WMC October 30, 1998
Independence Mall Independence Mall Associates August 11, 1998
Limited Partnership and WMC
Los Cerritos Los Cerritos LLC and WMC November 17, 1998
Meriden Square Meriden Square Partnership, October 31, 1997
Westfield America M.S., Inc.
and WMC
North County Fair North County Fair LLC and WMC October 30, 1998
Oakridge Mall Oakridge Mall LLC and WMC October 7, 1998
Parkway Plaza Parkway Plaza LLC and WMC September 25, 1998
The Promenade Promenade LLC and WMC May 26, 1998
Solano Mall Solano Mall LLC and WMC September 25, 1998
University Towne University Towne Centre LLC July 31, 1998
Centre and WMC
Valley Fair VF Mall LLC and WMC July 31, 1998
Wheaton Plaza Wheaton Plaza Regional Shopping May 30, 1997
Regional Shopping Center LLP and CMC
Center
</TABLE>
<PAGE>
The filed agreement is substantially identical in all material respects to
the Company's management agreement, as amended, for the following Properties:
<TABLE>
<CAPTION>
Property Parties to Agreement Date of Agreement
- -------- -------------------- -----------------
<S> <C> <C>
Connecticut Post Mall Connecticut Post Limited July 1, 1996;
Partnership and CMC amended May 21, 1997
Eastland Shopping CMP and CMC July 1, 1996;
Center amended May 21, 1997
Enfield Square
Mid Rivers Mall
Montgomery Mall
Plaza at West Covina
Plaza Bonita
South County Center
West County Center
West Park Mall
Westland Shopping
Towne
Eagle Rock Plaza Eagle Rock Properties, Inc. July 1, 1996;
WEA and CMC amended May 21, 1997
South Shore Mall Westland South Shore Mall July 1, 1996;
L.P. and CMC amended May 21, 1997
Trumbull Shopping Westland Properties, Inc. July 1, 1996;
Park and CMC amended May 21, 1997
</TABLE>
2
<PAGE>
EXHIBIT 10.15
MERIDEN SQUARE
MERIDEN, CONNECTICUT
AMENDED AND RESTATED
ASSIGNMENT OF MANAGEMENT AGREEMENT
THIS AMENDED AND RESTATED ASSIGNMENT OF MANAGEMENT AGREEMENT is made
as of the 21st day of May, 1997, between WESTFIELD AMERICA, INC. (formerly known
as CenterMark Properties, Inc.), a Missouri corporation ("Assignor"), and
CENTERMARK MANAGEMENT COMPANY, a Delaware general partnership ("Assignee").
W I T N E S S E T H T H A T:
WHEREAS, Assignor was the manager of that certain regional shopping
center known as Meriden Square, located in Meriden, Connecticut (the "Premises")
pursuant to that certain Management Agreement, dated as of June 1, 1989, between
Meriden Square Partnership, a Connecticut general partnership ("Owner"), and
Assignor, as amended by that certain First Amendment to Management Agreement,
dated as of February 4, 1994, between Owner and Assignor (as amended, the
"Meriden Management Agreement");
WHEREAS, Assignor performed certain leasing and tenant coordination
services with respect to the Premises pursuant to that certain Leasing and
Tenant Coordination Agreement, dated as of June 1, 1989, between Owner and
Assignor, as amended by that certain First Amendment to Leasing and Tenant
Coordination Agreement, dated as of February 4, 1994, between Owner and Assignor
(as amended, the "Leasing and Tenant Coordination Agreement"; the Meriden
Management Agreement and the Leasing and Tenant Coordination Agreement are
hereinafter referred to collectively as the "Assigned Agreements");
WHEREAS, Assignor assigned its interest under the Assigned Agreements
to Assignee pursuant to an Assignment of Management Agreement, dated February
11, 1994, between Assignor and Assignee, as amended by Amended and Restated
Assignment of Management Agreement, dated as of July 1, 1996, between Assignor
and Assignee (as amended, the "Original Assignment"); and
WHEREAS, Assignor and Assignee desire to amend and restate the
Original Assignment in its entirety.
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree to amend
and restate the Original Assignment in its entirety to read as follows:
1. Assignor hereby assigns, transfers and sets over to Assignee all
of Assignor's right, title and interest in, to and under the Assigned
Agreements, and Assignee hereby accepts such assignment and assumes all
obligations arising thereunder from and after January 1, 1995. If Assignor
shall terminate or elect not to renew all of the Management Agreements
between Assignor or its affiliates and Assignee set forth on SCHEDULE I
attached hereto in accordance with the terms of Article XVI thereof,
Assignor shall have the right to simultaneously notify Assignee of its
election to have Assignee re-assign the Assigned Agreements (at no cost or
expense to Assignee) to Assignor.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Assignment as of
the date first above written.
ASSIGNOR
WESTFIELD AMERICA, INC.
By: /s/ Mark Stefanek
---------------------------------
Name: Mark Stefanek
Title: Chief Financial Officer &
Treasurer
ASSIGNEE
CENTERMARK MANAGEMENT COMPANY
By: WESTFIELD SERVICES, INC.,
managing general partner
By: /s/ Richard Green
----------------------------
Name: Richard Green
Title: President
3
<PAGE>
SCHEDULE 1
OTHER MANAGEMENT AGREEMENTS
Separate Management Agreements, each dated as July 1, 1996, as amended, with
respect to each of the following shopping centers:
Connecticut Post Mall
Eagle Rock Plaza
Eastland Shopping Center
Enfield Center
Mid Rivers Mall
Montgomery Mall
Plaza Bonita
South County Center
South Shore Mall
Trumbull Mall
West County Center
Plaza at West Covina
West Park Mall
Westland Center
<PAGE>
SCHEDULE OF SUBSTANTIALLY IDENTICAL AGREEMENTS
The filed agreement is substantially identical in all material
respects to the Amended and Restated Assignment of Management Agreements for
the following Properties:
<TABLE>
<CAPTION>
Property Parties to Agreement Date of Agreement
- -------- -------------------- -----------------
<S> <C> <C>
Mission Valley Center The Company and CMC May 21, 1997
Plaza Camino Real The Company and CMC May 21, 1997
Topanga Plaza The Company and CMC May 21, 1997
</TABLE>
<PAGE>
EXHIBIT 10.16
ANNAPOLIS MALL
ANNAPOLIS, MARYLAND
AMENDED AND RESTATED
SUBCONTRACT OF MANAGEMENT RIGHTS
THIS AMENDED AND RESTATED SUBCONTRACT OF MANAGEMENT RIGHTS, dated
as of May 21, 1997, is made by and between CENTERMARK PROPERTIES OF
ANNAPOLIS, INC., a Delaware corporation ("Managing Partner"), and CENTERMARK
MANAGEMENT COMPANY, a Delaware general partnership ("Sub-Manager").
RECITALS
A. Managing Partner is the managing general partner of Annapolis
Mall Limited Partnership (the "Partnership"), the owner of the Annapolis
Mall, Anne Arundel County, Maryland (the "Property").
B. Pursuant to that certain Limited Partnership Agreement, dated
May 2, 1979, for the Partnership, as amended (the "Partnership Agreement"),
Managing Partner is responsible for providing normal property management and
leasing services for the Property on the terms and conditions set forth
therein.
C. Managing Partner subcontracted the management services to
Sub-Manager pursuant to that certain Subcontract of Management Rights (the
"Original Subcontract"), dated as of July 1, 1996.
D. Managing Partner and Sub-Manager desire to amend and restate the
Original Subcontract in its entirety.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Managing Partner and
Sub-Manager hereby amend and restate the Original Subcontract in its entirety
as follows:
1. Manager hereby engages Sub-Manager, effective on the Assumption
Date (as such term is defined in that certain Letter Agreement, dated July 1,
1996, between Westfield America, Inc. (formerly known as CenterMark
Properties, Inc.) and Sub-Manager, as amended), to provide all of the
property management and leasing services relating to the Property required to
be performed by Managing Partner under the Partnership Agreement upon the
terms and conditions set forth in the form of Management Agreement
<PAGE>
attached hereto as Exhibit A (the "Form Management Agreement"), PROVIDED that
(A) all references in the Form Management Agreement to Owner shall be deemed
to refer to Managing Partner, (B) the Sub-Manager's rights and obligations
shall in all events be subject and subordinate to the terms of the
Partnership Agreement and in no event shall the Sub-Manager have any greater
rights or responsibilities with respect to the management and leasing of the
Property than are granted to or imposed on Managing Partner under the
Partnership Agreement or to the manager under the Form Management Agreement
and (C) the fee and other amounts payable to Sub-Manager shall be equal
to, and payable upon the same terms as, the management and related fees
payable to Managing Partner under the Partnership Agreement.
2. If Managing Partner shall terminate or elect not to renew all of
the Management Agreements between Managing Partner or its affiliates and
Sub-Manager set forth on Schedule I attached hereto in accordance with the
terms of Article XVI thereof, Managing Partner shall have the right to
simultaneously notify Sub-Manager of its election to terminate this
Subcontract.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
and year first above written.
WESTFIELD AMERICA, INC.
By: /s/ Mark Stefanek
---------------------------------
Name: Mark Stefanek
Title: Chief Financial Advisor &
Treasurer
CENTERMARK MANAGEMENT COMPANY
By: WESTFIELD SERVICES, INC.,
managing general partner
By: /s/ Richard Green
----------------------------
Name: Richard Green
Title: President
2
<PAGE>
EXHIBIT A*
- ---------
* The Form of Management Agreement is set forth on Exhibit 10.14 and is
hereby incorporated by reference.
<PAGE>
SCHEDULE 1
OTHER MANAGEMENT AGREEMENTS
Separate Management Agreements, each dated as July 1, 1996, as amended, with
respect to each of the following shopping centers:
Connecticut Post Mall
Eagle Rock Plaza
Eastland Shopping Center
Enfield Center
Mid Rivers Mall
Montgomery Mall
Plaza Bonita
South County Center
South Shore Mall
Trumbull Mall
West County Center
Plaza at West Covina
West Park Mall
Westland Center
<PAGE>
SCHEDULE OF SUBSTANTIALLY IDENTICAL AGREEMENTS
The filed agreement is substantially identical in all material
respects to the Amended and Restated Subcontract of Management Rights for the
following Property:
<TABLE>
<CAPTION>
Property Parties to Agreement Date of Agreement
- ------- -------------------- -----------------
<S> <C> <C>
Vancouver Mall Centermark Properties of Vancouver, May 21, 1997
Inc. and CMC
</TABLE>
<PAGE>
EXHIBIT 10.18
FIRST AMENDMENT TO
GSP OPTION AGREEMENT
THIS FIRST AMENDMENT TO GSP OPTION AGREEMENT, dated as of May 21,
1997, is made by and between WESTFIELD CAPITAL CORPORATION FINANCE PTY.
LIMITED, a corporation organized under the laws of New South Wales, Australia
("Grantor"), and WESTFIELD AMERICA, INC., a Missouri corporation (formerly
known as CenterMark Properties, Inc.) ("Grantee").
W I T N E S S E T H :
WHEREAS, the Grantor and Grantee are parties to that certain GSP
Option Agreement (the "Original GSP Option Agreement"), dated as of July 1,
1996, pursuant to which the Grantor granted to the Grantee the option to
acquire all of the outstanding common stock of Westland Realty, Inc.; and
WHEREAS, the Grantor and the Grantee desire to amend the Original
GSP Option Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Grantor and the Grantee
agree as follows:
1. DEFINITIONS: All capitalized terms used herein without
definition shall have the respective meanings set forth in the Original GSP
Option Agreement.
2. AMENDMENT TO SECTION 2. Section 2 of the Original GSP Option
Agreement is hereby amended by deleting such section in its entirety and
substituting the following therefor:
"2. OPTION TERM.
(a) The Grantee's right to exercise the Option shall
commence on the first business day after the date of delivery of
the Valuation Notice (as such term is defined in Section 5.2(b))
and shall continue until 5:00 p.m. (e.s.t.) on the 120th
consecutive day thereafter (the "Option Period").
(b) The Grantor shall deliver written notice (the
"Stabilization Notice") to the Grantee, delivered in the manner
provided in Section 16.5 hereof, upon the earlier to occur of the
following events:
(i) the completion and stabilization of the current
expansion of the property (as more generally described on
Exhibit A hereto) which shall be deemed to have occurred
<PAGE>
when 95% of the gross leasable area of the expansion
(excluding premises leased to anchor tenants) has been
leased to bona fide third party tenants; or
(ii) the date 18 months after the Grantee receives written
notice, delivered as provided in Section 16.5, from the
Grantor stating that the construction of the expansion has
been substantially completed.
(c) The valuation procedure resulting in the Valuation
Notice shall commence upon the earlier to occur of the following
events (the "Valuation Procedure Commencement Events"):
(i) The Grantee's delivery of written notice to the
Grantor, delivered at any time after the Grantee's receipt
of the Stabilization Notice, stating that the Grantee has
elected to commence the valuation procedure; or
(ii) January 3, 2000, as such date may be extended by
agreement of the Grantor and the Grantee;
provided that in any such case the Grantee shall deliver written
notice to the Grantor of its election to commence the valuation
procedure prior to 5:00 p.m. (e.s.t.) on January 3, 2000.
3. AMENDMENT TO SECTION 5.1(B). Section 5.1(b) of the Original GSP
Option Agreement is amended by deleting the reference to "Class B-2 common
stock" in the third line thereof and substituting "common stock" therefor.
4. AMENDMENT TO SECTION 5.2(A). Section 5.2(a) of the Original GSP
Option Agreement is amended by deleting such section in its entirety and
substituting the following therefor:
"(a) Promptly after the receipt by the Grantor of notice
from the Grantee under Section 2(c)(i) of the Grantee's
election to commence the valuation procedure, the Grantor
and the Grantee shall appoint Landauer Real Estate
Counselors ("Landauer") or such other independent real
estate appraiser as shall be agreed upon by the Grantor and
the Grantee as the appraiser to determine the fair market
value of the Property (the "Fair Market Value of the
Property"). Landauer or such other mutually agreed upon
appraiser shall be defined herein as the "Appraiser". If
the Grantor and/or the Grantee shall desire to appoint
another appraiser but cannot agree on the identity of such
other appraiser for any reason or no reason within 15
business days of the date of the Grantee's notice under
Section
2
<PAGE>
2(c), the Appraiser shall be Landauer. The determination
of the Fair Market Value of the Property determined by the
Appraiser shall be binding upon the Grantor and the Grantee,
and shall be delivered by the Appraiser in writing to the
Grantor and the Grantee within 30 days of the appointment of
the Appraiser."
5. AMENDMENT TO SECTION 16.1. Section 16.1 of the Original GSP
Option Agreement is amended by deleting clause (iv) thereof in its entirety and
renumbering clause (v) to be clause (iv).
6. AMENDMENT TO SCHEDULE I. Schedule I to the Original GSP Option
Agreement is hereby amended by substituting the Schedule I attached hereto
therefor so as to recognize that the $145,000,000 loan being made by the Grantee
to Westland Realty as of the date hereof may remain outstanding upon any
exercise of the Option.
7. AMENDMENT TO EXHIBIT A. Exhibit A to the Original GSP Option
Agreement is hereby amended by substituting the Exhibit A attached hereto
therefor.
8. RATIFICATION. Except as amended hereby, the Original GSP Option
Agreement is hereby ratified and remains in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument with the same effect as if all parties hereto had all signed the
same signature page. Any signature page of this Agreement may be detached from
any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one more additional signature
pages.
10. EFFECTIVE DATE. This Agreement shall be effective as of the
closing of the initial public offering of common stock of the Grantee pursuant
to its Registration Statement on Form S-11 (No. 333-22731).
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
WESTFIELD AMERICA, INC.
By: /s/ Richard Green
----------------------------------------------
Name: Richard Green
Title: Co-President
WESTFIELD CAPITAL CORPORATION
FINANCE PTY. LIMITED
By: /s/ Peter S. Lowy
----------------------------------------------
Name: Peter S. Lowy
Title: Director
4
<PAGE>
SCHEDULE I
SUBSIDIARY DEBT
1. $145,000,000 loan by Grantee to Westland Management, Inc. and Westfield
Partners, Inc.
5
<PAGE>
EXHIBIT A
DESCRIPTION OF EXPANSION
6
<PAGE>
EXHIBIT 10.20
FIRST AMENDMENT TO
TRADE NAME LICENSE AGREEMENT
THIS FIRST AMENDMENT TO TRADE NAME LICENSE AGREEMENT is made as of
May 21, 1997, by and between WESTFIELD CORPORATION, INC., a Delaware
corporation ("Licensor") and WESTFIELD AMERICA, INC., a Missouri corporation
(formerly known as CenterMark Properties, Inc.)("Licensee").
W I T N E S S E T H:
WHEREAS, Licensor and Licensee are parties to that certain Trade Name
License Agreement(the "Original License Agreement"), dated as of July 1, 1996;
and
WHEREAS, Licensor and Licensee desire to amend the Original License
Agreement in the manner hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Licensor and Licensee agree as
follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the respective meanings set forth in the Original License Agreement.
2. AMENDMENT TO SECTION 1.1 Section 1.1 of the Original License
Agreement is hereby amended by deleting such section in its entirety and
substituting the following therefor:
"1.1 GRANT. Subject to the following terms and
conditions, Licensor hereby grants to Licensee and Licensee
hereby accepts,
<PAGE>
during the Term (as defined in Section 6), throughout the
Territory:
(a) a non-transferable, non-exclusive, royalty-free right
and license to use (i) the Licensed Name in connection with the
Licensed Business but only as (x) "Westfield America, Inc." and
(y) "Westfield Shoppingtown;"
(b) subject to Licensor's prior written approval, the non-
transferable, non-exclusive, royalty-free right to permit each of
its wholly-owned subsidiaries (each a "Licensee Subsidiary") to
use the Licensed Name in connection with the Licensed Business
but only as Licensor expressly approves in writing prior to use;
and
(c) the non-transferable, non-exclusive, royalty-free right
and license to use the trademark set forth on Exhibit A hereto
(the "Trademark") in connection with the use of the Licensed Name
as permitted hereby."
3. AMENDMENT TO SECTION 1.2(C) Section 1.2(c) of the Original License
Agreement is hereby amended by deleting such section in its entirety and
substituting the following therefor:
"(c) Licensee shall not, without the prior written approval
of Licensor, join any name, mark or logo with the Licensed Name
so as to form a composite trade name or mark for use in
connection with Licensee's Business or otherwise other than (i)
"Westfield America, Inc.," (ii) "Westfield Shoppingtown," and
(iii) the Trademark."
2
<PAGE>
3. AMENDMENT TO SECTION 1.3(B) Section 1.3(b) of the Original License
Agreement is hereby amended by deleting the reference to "Westfield American
Properties, Inc." in the eleventh and twelfth lines thereof and substituting
"Westfield America, Inc." therefor.
4. RATIFICATION. Except as amended hereby, the Original License
Agreement is hereby ratified and remains in full force and effect.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Amendment may be detached
from any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Amendment
identical in form hereto but having attached to it one more additional signature
pages.
6. EFFECTIVE DATE. This Amendment shall be effective as of the
closing of the initial public offering of common stock of the Licensee pursuant
to its Registration Statement on Form S-11 (No. 333-22731), as amended.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
LICENSOR:
WESTFIELD CORPORATION, INC.
By: /s/ Richard Green
------------------------------------
Name: Richard Green
Title: President
LICENSEE:
WESTFIELD AMERICA, INC.
By: /s/ Mark Stefanek
------------------------------------
Name: Mark Stefanek
Title: Chief Financial Advisor &
Treasurer
4
<PAGE>
EXHIBIT 10.21
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of May 21, 1997 (this
"Agreement"), among Westfield America, Inc., a Missouri corporation (the
"Company"), Westfield Holdings Limited, an Australian public corporation
("WHL"), for the benefit of WHL and each of its subsidiaries (collectively,
"Westfield Holdings"). Capitalized terms used but not otherwise defined
herein have their respective meanings set forth in Section 1 of this
Agreement.
W I T N E S S E T H:
WHEREAS, the Company plans to commence an underwritten initial
public offering (the "Public Offering") of shares of Common Stock, par value
$.01 per share (the "Common Stock"), of the Company;
WHEREAS, in connection with the Public Offering, the Company
desires to enter into various agreements with WHL and certain of its
subsidiaries or amend existing contractual arrangements with such entities;
WHEREAS, the parties hereto desire to enter into this Agreement
for the purpose of providing for certain registration rights for the benefit
of the holders of Registrable Securities; and
WHEREAS, the execution and delivery of this Agreement is a
condition precedent to the various agreements and amendments with Westfield
Holdings in connection with the Public Offering.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to
and on the terms and conditions set forth, the parties hereto hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following respective meanings:
AFFILIATE: As applied to any Person, any Person directly or
indirectly controlling or controlled by or under common control with such
Person.
<PAGE>
BOARD: The Board of Directors of the Company.
BUSINESS DAY: Each day other than a Saturday, a Sunday or any
other day on which banking institutions in the City of New York are
authorized or obligated by law or executive order to be closed.
COMMISSION: The Securities and Exchange Commission and any
successor federal agency having similar powers.
COMMON STOCK: As defined in the first recital of this Agreement.
COMPANY: As defined in the introductory paragraph of this
Agreement.
EFFECTIVENESS DATE: The three-year anniversary of the closing of
the Public Offering.
EFFECTIVENESS PERIOD: As defined in Section 2.1(a).
INITIAL SHELF REGISTRATION: As defined in section 2.1(a).
INITIATING HOLDER: WHL and each subsidiary of WHL that holds or
will hold Registrable Securities or any transferee or transferees to whom
Registrable Securities shall have been transferred holding in the aggregate
at least 50% of the total number of Registrable Securities outstanding at the
time of any request pursuant to section 2.2.
OTHER SECURITIES: Any stock (other than Common Stock) and any
other securities of the Company or any other Person (corporate or otherwise)
which the holders of the Registrable Securities at any time shall be entitled
to receive, or shall have received, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock.
PERSON: Any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, government (or an agency or political
subdivision thereof) or other entity of any kind, including any successor
(by merger or otherwise) of such entity.
2
<PAGE>
PUBLIC OFFERING: As defined in the first recital of this Agreement.
REGISTRABLE SECURITIES: (i) The shares of Common Stock (or Other
Securities) held by Westfield Holdings upon completion of the Public
Offering, (ii) any other shares of Common Stock (or Other Securities)
thereafter acquired by Westfield Holdings and (iii) any securities issued or
issuable with respect to such shares of Common Stock (or Other Securities) by
way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (i) a registration statement
with respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (ii) such securities shall have
been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) such securities shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and in
the opinion of counsel to the Company reasonably acceptable to the holder of
such Registrable Security, each in their reasonable judgment, the subsequent
disposition of them shall not require registration or qualification of them
under the Securities Act or any similar state law then enforced, (iv) such
securities shall have ceased to be outstanding, or (v) such securities may be
sold or transferred pursuant to Rule 144(k) (or any similar provisions then
in force) under the Securities Act.
REGISTRATION EXPENSES: All expenses incident to the Company's
performance of or compliance with sections 2 and 3, including, without
limitation, all registration, filing and National Association of Securities
Dealers, Inc. fees, all fees and expenses of complying with securities or
blue sky laws and the preparation of a blue sky memorandum, all word
processing, duplicating and printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits
or "comfort" letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of one special counsel
retained by the holders of the Registrable Securities being registered, fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions, and fees
and expenses of any Person, including special experts, retained by the
Company and the Initiating Holders, PROVIDED that, in any case where
Registration Expenses are not to be borne by the Company, such expenses shall
not include salaries of Company personnel or general overhead expenses
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of the Company, auditing fees, or other expenses for the preparation of
financial statements or other data normally prepared by the Company in the
ordinary course of its business or which the Company would have incurred in
any event.
REQUIRED HOLDERS. Westfield Holdings or the holders of at least
25% of the Registrable Securities.
SECURITIES ACT: The Securities Act of 1933, as amended, or any
similar federal statute, as at the time in effect, and any reference to a
particular section of such Act shall include a reference to the comparable
section, if any, of any such similar federal statute.
SHELF REGISTRATION: A "shelf" registration for an offering to be
made on a continuous basis pursuant to Rule 415 of Regulation C (17 C.F.R.
Section 240.415) promulgated under the Securities Act, or similar rule that
may be adopted by the Commission.
SUBSEQUENT SHELF REGISTRATION: As defined in section 2.1(b).
2. REGISTRATION UNDER SECURITIES ACT, ETC. 2.1 SHELF
REGISTRATIONS. (a) INITIAL SHELF REGISTRATION. The Company agrees that,
upon the request of any Initiating Holder made at any time after the
Effectiveness Date, the Company shall use all reasonable efforts to prepare
and cause to be filed with the Commission a registration statement for a
Shelf Registration covering up to the aggregate number of Registrable
Securities and permitting sales in ordinary course brokerage or dealer
transactions (the "Initial Shelf Registration") on or as soon as practicable
after the Effectiveness Date. The Company agrees to use all reasonable
efforts to cause the Initial Shelf Registration to be declared effective
under the Securities Act within three months after it is filed with the
Commission (the "Initial Shelf Registration Statement"). The Initial Shelf
Registration Statement shall be on a Form S-3 or other appropriate form
permitting registration of such Registrable Securities for resale by such
holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company shall use all
reasonable efforts to keep the Initial Shelf Registration Statement
continuously effective under the Securities Act for the period ending when
(x) all Registrable Securities covered by the Initial Shelf Registration
Statement have been sold pursuant thereto, (y) no Registrable Securities
remain outstanding, or (z) a Subsequent Shelf Registration covering all of
the Registrable Securities has been declared effective under the Securities
Act.
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(b) SUBSEQUENT SHELF REGISTRATIONS. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for
any reason at any time during the Effectiveness Period (other than pursuant
to clauses (x) or (y) of section 2.1(a)), the Company shall use every
reasonable effort to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event within 120 days of such cessation of
effectiveness, amend such Shelf Registration in a manner reasonably expected
to obtain the withdrawal of such order or file an additional Shelf
Registration covering all of the Registrable Securities (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, the Company
shall use all reasonable efforts to cause the Subsequent Shelf Registration
to be declared effective as soon as practicable after such filing and to keep
such registration statement effective for a period equal to the Effectiveness
Period less the aggregate number of days during which the Initial Shelf
Registration or any Subsequent Shelf Registration was previously effective.
(c) REGISTRATION RIGHTS EXCLUSIVE. The Company will not register
securities for sale for the account of any Person other than holders of
Registrable Securities, and will not register any securities other than
Registrable Securities in any registration of Registrable Securities pursuant
to this section 2.1. The Company will not grant to any Person the right to
request a registration of securities not permitted by this subdivision (c).
(d) SUPPLEMENTS AND AMENDMENTS. The Company shall supplement and
amend the Initial Shelf Registration or any Subsequent Shelf Registration if
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration, if
required by the Securities Act or if reasonably requested by any underwriter
of such Registrable Securities. Notwithstanding the foregoing, but subject
to the rights of holders of Registrable Securities under section 2.3, if the
Company shall furnish to the Initiating Holders a certificate signed by a
President or an Executive Vice President of the Company stating that in the
good faith judgment of the Board it would be significantly disadvantageous to
the Company and its shareholders for any such Shelf Registration Statement to
be amended or supplemented, the Company may defer such amending or
supplementing of such Shelf Registration Statement for not more than 60 days
and in any such event the holders shall be required to discontinue
disposition of any Registrable Securities covered by such Shelf Registration
Statement during such period.
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2.2 REGISTRATION ON REQUEST. (a) REQUEST. At any time after the
Effectiveness Date, upon the written request of one or more Initiating
Holders, requesting that the Company effect the registration under the
Securities Act (which shall be a Shelf Registration if requested by the
Initiating Holders), of all or part of such Initiating Holders' Registrable
Securities and specifying the intended method or methods of disposition
thereof, the Company will promptly, but in any event within 20 days, give
written notice of such requested registration to all holders of Registrable
Securities and thereupon will use all reasonable efforts to effect the
registration under the Securities Act of all Registrable Securities of the
Initiating Holders requested to be registered within 15 days after receipt of
the Company's notice, all to the extent required to permit the disposition
(in accordance with the intended methods thereof as aforesaid) of Registrable
Securities so to be registered, PROVIDED that the Company shall not be
required to effect a registration pursuant to this section 2.2 until a period
of six months shall have elapsed from the effective date of the most recent
registration previously effected pursuant to this section 2.2, and PROVIDED
further that, the Company shall not be required to effect more than three
such registrations in the aggregate at the request of Initiating Holders
pursuant to this section 2.2. Notwithstanding the foregoing, but subject to
the rights of holders of Registrable Securities under section 2.3, if the
Company shall furnish to the Initiating Holders a certificate signed by a
President or an Executive vice President of the Company stating that in the
good faith judgment of the Board it would be significantly disadvantageous to
the Company and its shareholders for such registration statement to be filed
on or before the filing which would otherwise be required pursuant to this
section 2.2, the Company may defer the filing (but not the preparation) of
the registration statement which is required to effect any registration
pursuant to this section 2.2 for an additional period of not more than 60
days following the anticipated filing of such registration statement,
PROVIDED that at all times the Company is in good faith using all reasonable
efforts to cause such registration statement to become effective.
(b) REGISTRATION STATEMENT FORM. Each registration requested
pursuant to this section 2.2 shall be effected by the filing of a
registration statement on any form which the Company is eligible to use, such
form (which form shall be suitable for a Shelf Registration, if applicable)
to be selected by the Company after consultation with counsel and notice of
such selection of such form to be delivered to the holders of all Registrable
Securities eligible to participate in such registration. Such selection
shall be final unless the use of such form has been objected to in writing by
the Required Holders.
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(c) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this section 2.2 shall not be deemed to be effected unless it has
been declared effective by the Commission or otherwise becomes effective,
PROVIDED that a registration which does not become effective after the
Company has filed a registration statement with respect thereto solely by
reason of the refusal to proceed of all of the Initiating Holders (other than
any refusal to proceed based upon (i) the advice of their counsel that the
registration statement, or the prospectus contained therein, contains an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing or (ii) the discovery
of a material adverse change in the condition, business or prospects of the
Company from that known to the Initiating Holders at the time of their
request that makes the proposed offering unreasonable in the good faith
judgment of such Holders) shall be deemed to have been effected by the
Company at the request of such holders. Notwithstanding the foregoing, a
registration requested pursuant to this section 2.2 shall not be deemed to
have been effected for purposes of this section 2.2 if
(i) the registration does not remain effective for a period of at
least 120 days (or one year, in the case of a Shelf Registration) or, if
earlier, until all the Registrable Securities requested to be registered in
connection therewith were sold, or
(ii) after it has become effective, such registration is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason prior to
the sale of at least 85% of the securities to be sold pursuant to such
registration statement, or
(iii) the conditions to closing specified in the purchase agreement
or underwriting agreement entered into in connection with such registration
are not satisfied, other than by reason of some act or omission by the
holders of the Registrable Securities that were to have been registered.
(d) REGISTRATION RIGHTS EXCLUSIVE. The Company will not register
securities for sale for the account of any Person other than holders of
Registrable Securities, and will not register any securities other than
Registrable Securities in any registration of Registrable Securities requested
by one or more holders pursuant to this section 2.2, unless permitted to do so
by the written
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consent of the Required Holders. The Company will not grant to any Person
the right to request a registration of securities not permitted by this
subdivision (d).
(e) OTHER REQUESTS. Upon the written request of one or more
holders of Registrable Securities (other than Initiating Holders), requesting
that the Company effect the registration under the Securities Act of all or
part of such holders' Registrable Securities and specifying the intended
method or methods of disposition thereof, the Company will promptly, but in
any event within 20 days, give written notice of such requested registration,
including the names and addresses of such requesting holders, to all holders
of Registrable Securities but shall not have any obligation to effect any
registration pursuant to such request until it has received a request of
Initiating Holders pursuant to section 2.2(a).
2.3 INCIDENTAL REGISTRATION. (a) At any time after the
Effectiveness Date, If the Company at any time proposes to register any of
its equity securities under the Securities Act (other than pursuant to
section 2.2 or on Form S-8, Form S-4 or any successor forms thereto), whether
or not for sale for its own account, it will each such time give prompt
written notice to all holders of Registrable Securities of its intention to
do so, which notice shall be given to all such holders at least 30 days prior
to the date such registration is proposed to be consummated, and, upon the
written request of any such holder made within 15 days after the receipt of
any such notice (which request shall specify the Registrable Securities
intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use all reasonable efforts to effect
the registration under the Securities Act of all Registrable Securities which
the Company has been so requested to register by the holders thereof, on the
same terms and conditions as the equity securities of the Company or, if such
offering is for the account of other shareholders, the equity securities
included therein, to the extent required to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, PROVIDED that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, shall
be relieved of its obligation to register any Registrable Securities in
connection with such registration, without prejudice, however, to the rights
of any holder or holders of Registrable Securities to request that such
registration be effected as a registration upon request under section 2.2.
Notwithstanding the foregoing, if the Initial Shelf
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Registration or any Subsequent Shelf Registration is then in effect, the
Company shall have no obligation to effect the registration of Registrable
Securities under this section 2.3 unless the securities proposed to be
registered by the Company are to be disposed of in an underwritten public
offering.
(b) If the securities proposed to be registered by the Company are
to be disposed of in an underwritten public offering, such notice of the
Company's intention to register such securities shall designate the proposed
underwriters of such offering (which shall be one or more underwriting firms
of recognized national standing) and shall contain the Company's agreement to
use all reasonable efforts, if requested to do so, to arrange for such
underwriters to include in such underwriting the Registrable Securities which
the Company has been so requested to register pursuant to this section 2.3,
it being understood that the holders of such Registrable Securities shall
have no right to select different underwriters for the disposition of their
Registrable Securities.
(c) No registration effected under this section 2.3 shall relieve
the Company from its obligation to effect registrations upon request under
section 2.2 or to effect the Initial Shelf Registration or any Subsequent
Shelf Registration pursuant to section 2.1.
(d) If a requested registration pursuant to this section 2.3
involves an underwritten offering, and the managing underwriter shall advise
the Company in writing (with a copy to each holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering within a commercially reasonable price range (such
writing to state the basis of such opinion and the approximate number of
shares of securities which may be included in such offering without such
effect), the Company will include in such registration, to the extent of the
number of securities which the Company is so advised can be sold in such
offering, (i) first, securities that the Company proposes to issue and sell
for its own account, (ii) second, Registrable Securities requested to be
registered by the holders thereof pursuant to this section 2.3, pro rata
among such holders on the basis of the number of shares of Common Stock
proposed to be registered by such holders, and (iii) third, all other
securities proposed to be registered.
2.4 REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable
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Securities under the Securities Act as provided in section 2, the Company
will promptly:
(a) prepare and file with the Commission as promptly as
practicable, but in any event not later than 90 days (or such longer period
as may be required in order for the Company to comply with the applicable
provisions under the Securities Act) after receipt of a request to file a
registration statement with respect to Registrable Securities, a
registration statement with respect to such Registrable Securities and use
all reasonable efforts to cause such registration statement to become
effective; PROVIDED, HOWEVER, that if the Company shall furnish to the
Initiating Holders making such a request a certificate signed by a
President or Executive Vice President of the Company stating that in the
good faith judgment of the Board it would be significantly disadvantageous
to the Company and its shareholders for such registration statement to be
filed on or before the date such filing would be required, the Company
shall have an additional period of not more than 60 days within which to
file such registration statement; and PROVIDED, FURTHER, that before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall provide each holder of Registrable
Securities being registered in such registration and any attorney retained
by such holder with an adequate and appropriate opportunity to participate
in the preparation of such registration statement and each prospectus
included therein (and each amendment or supplement thereto) to be filed
with the Commission;
(b) prepare and file with the Commission such amendments, post-
effective amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective (or, in the case of a Shelf Registration,
continuously effective) and to comply with the rules, regulations or
instructions of the registration form utilized by the Company, the
Securities Act and the rules and regulations thereunder with respect to the
disposition of all Registrable Securities and other securities covered by
such registration statement until the earlier of such time as all of such
Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth
in such registration statement or the expiration of six months (nine
months, in the case of a Shelf Registration) after such registration
statement becomes effective or, in the case of the Initial Shelf
Registration or any
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Subsequent Shelf Registration, for the remainder of the Effectiveness
Period (but not before the expiration of the 90-day period referred to
in Section 4(3) of the Securities Act and Rule 174 thereunder, if
applicable); and will furnish to each such seller prior to the filing
thereof a copy of any amendment, post-effective amendment or supplement to
such registration statement or prospectus and shall not file any such
amendment, post-effective amendment or supplement to which any such seller
or holder shall have reasonably objected on the grounds that such amendment
or supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder;
(c) furnish to each seller of such Registrable Securities such
number of conformed copies of such registration statement and of each such
amendment, post-effective amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included
in such registration statement (including each preliminary prospectus and
any summary prospectus), in conformity with the requirements of the
Securities Act, such documents, if any, incorporated by reference in such
registration statement or prospectus, and such other documents, as such
seller may reasonably request;
(d) promptly prior to the filing of any document which is to be
incorporated by reference into the registration statement or the prospectus
(after initial filing of the registration statement), provide copies of
such document to counsel to each seller of Registrable Securities, make the
Company's representatives available for discussion of such document and
make such changes in such document prior to the filing thereof as counsel
for such selling holders may reasonably request;
(e) use all reasonable efforts to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions as each seller of such Registrable Securities shall
reasonably request, to keep such registration or qualification in effect
for so long as such registration statement remains in effect, and do any
and all other acts and things which may be necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of its
Registrable Securities covered by such registration statement, except that
the Company shall not for any such purpose be required to (i) qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but
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for the requirements of this subdivision (e) be obligated to be so
qualified, (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction;
(f) cooperate with the sellers of such Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and enable such Registrable Securities to
be registered in such names as such sellers may request at least two
Business Days prior to any sale of Registrable Securities;
(g) use all reasonable efforts to cause such Registrable
Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable each seller thereof
to consummate the disposition of such Registrable Securities;
(h) furnish to each seller of such Registrable Securities a
signed counterpart, addressed to such seller, of (i) an opinion of counsel
for the Company, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement) and (ii) a
"comfort" letter, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement), signed by the
independent public accountants who have certified the Company's financial
statements included in such registration statement, covering substantially
the same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten public
offerings of securities and, in the case of the accountants' letter, such
other financial matters, as such seller may reasonably request;
(i) immediately notify each seller of such Registrable
Securities and (if requested by any such seller) confirm such advice in
writing, (i) when or if the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the
registration statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional
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information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose and (v) of
the existence of any fact which makes any statement made in the
registration statement, the prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
registration statement, the prospectus or any document incorporated therein
by reference in order to make the statements therein not misleading;
(j) if any fact contemplated by clause (i)(v) above shall
exist, prepare a supplement or post-effective amendment to the registration
statement or the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities the prospectus
will not contain an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading;
(k) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration statement at
the earliest possible moment;
(l) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
securities holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month of the first fiscal quarter
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of section 11(a) of the Securities
Act;
(m) provide and cause to be maintained transfer agents and
registrars for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(n) cause all Registrable Securities issuable upon exercise
thereof, covered by the registration statement to be listed on each
securities
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exchange on which similar securities issued by the Company are then listed
if requested by the Required Holders;
(o) enter into and perform any other customary agreements and
take such other actions as are reasonably required in order to expedite
or facilitate the disposition of such Registrable Securities;
(p) make available for inspection by each holder of Registrable
Securities included in such registration statement, any managing
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
holder or any managing underwriter, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the Company's and its subsidiaries' officers,
directors and employees, and the independent public accountants of the
Company, to supply all information reasonably requested by any such person
in connection with such registration statement;
(q) cooperate and cause the executive officers of the Company
to cooperate in connection with such registration, to the extent reasonably
requested by each seller of Registrable Securities or by the underwriters,
if any, including, in the case of any underwritten registration upon
request under Section 2.1 or 2.2, by making executive officers of the
Company available for road show presentations and other investor meetings
to the extent customary in similar underwritten offerings; and
(r) use all reasonable efforts to take all other steps necessary
to effect the registration of the Registrable Securities contemplated
hereby and cooperate with the holders thereof to facilitate the
disposition of such Registrable Securities pursuant thereto.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing and as shall be required by law or by the
Commission in connection therewith.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
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existence of any fact of the kind described in clause (i)(v) of this
section 2.4, such holder will forthwith discontinue disposition of Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by paragraph (j) of this section 2.4, or until
it is advised in writing (the "Advice") by the Company that the use of the
prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the prospectus, and,
if so directed by the Company, such holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time periods regarding the effectiveness of
registration statements set forth in paragraph (b) of this section 2.4 shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to clause (i)(v) of this section 2.4 to and
including the date when each seller of Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by paragraph (j) of this section 2.4 or the
Advice.
2.5 UNDERWRITTEN OFFERINGS. (a) UNDERWRITTEN OFFERINGS EXCLUSIVE.
Whenever a registration requested by one or more holders pursuant to section 2.1
or 2.2 is for an underwritten offering, only Registrable Securities which are to
be distributed by the underwriters designated by such holders may be included in
such registration, unless such holders shall have permitted other securities to
be included in such registration and such underwritten offering as provided in
subdivision 2.2(e). If such holders shall determine that the number of
Registrable Securities to be sold in any such underwritten offering should be
limited due to market conditions or otherwise, the Company will include in such
registration to the extent of the number which the Company is so advised can be
sold in such offering (i) first, Registrable Securities requested to be included
in such registration, PRO RATA among the holders thereof on the basis of the
number of shares of Common Stock proposed to be registered by such holders,
(ii) second, securities that the Company proposes to issue and sell for its own
account and (iii) third, all other securities proposed to be registered.
(b) UNDERWRITING AGREEMENT. If requested by the underwriters for any
underwritten offering of Registrable Securities on behalf of a holder or holders
of Registrable Securities pursuant to a registration effected pursuant to
section 2.1 or requested under section 2.2, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agree-
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ment to contain such representations and warranties by the Company and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, indemnities to the effect and to the extent provided in section 2.7.
The holders of Registrable Securities on whose behalf Registrable Securities
are to be distributed by such underwriters shall be parties to any such
underwriting agreement and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters, shall also be made to and for the benefit of such holders of
Registrable Securities. Such holders of Registrable Securities shall not be
required by the Company to make any representations or warranties to or
agreements with the Company or the underwriters other than reasonable
representations, warranties or agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method or methods of
disposition and any other representation required by law.
(c) SELECTION OF UNDERWRITERS. Whenever a registration requested
pursuant to section 2.2 is for an underwritten offering, the holders of a
majority of the Registrable Securities included in such registration shall have
the right to select the managing underwriter(s) to administer the offering,
subject to the approval of the Company, such approval not to be unreasonably
withheld. Whenever a holder of Registrable Securities desires to distribute its
securities under a registration effected pursuant to section 2.1 in an
underwritten offering, such holder shall have the right to select the managing
underwriter(s) to administer the offering, subject to the approval of the
Company, such approval not to be unreasonably withheld.
2.6 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of
Registrable Securities on whose behalf such Registrable Securities are to be so
registered and their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders and such underwriters or their respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
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2.7 INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. The
Company will, and hereby does, indemnify and hold harmless, to the full extent
permitted by law, in the case of any registration statement filed pursuant to
Section 2.1, 2.2 or 2.3, each holder of any Registrable Securities covered by
such registration statement, and each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person, if
any, who controls such holder or any such underwriter within the meaning of
Section 15 of the Securities Act, and their respective directors, officers,
partners, investment advisors, agents and affiliates, against any losses,
claims, damages or liabilities, joint or several, to which such holder or
underwriter or any such director, officer, partner, investment advisor, agent,
affiliate or controlling person may become subject under the Securities Act or
common law or otherwise, including, without limitation, reasonable costs of
investigation and subject to Section 3 hereof, reasonable fees and expenses of
legal counsel, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement filed by the Company under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company will reimburse such holder or underwriter and each such
director, officer, partner, investment advisor, employee, agent, affiliate and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; PROVIDED, HOWEVER, that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such holder, underwriter, director, officer, partner, investment
advisor, employee, agent, affiliate or controlling Person, as the case may be,
expressly for use in the preparation thereof; PROVIDED further, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement of any material fact contained in any such
registration statement, preliminary prospectus, final prospectus or summary
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prospectus contained therein or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading in a
prospectus or prospectus supplement, if (i) such untrue statement or omission is
completely corrected in an amendment or supplement to such prospectus or
prospectus supplement, the seller of the Registrable Securities has an
obligation under the Securities Act to deliver a prospectus or prospectus
supplement in connection with such sale of Registrable Securities and the seller
of Registrable Securities thereafter fails to deliver such prospectus or
prospectus supplement as so amended or supplemented prior to or concurrently
with the sale of Registrable Securities to the person asserting such loss,
claim, damage or liability after the Company has furnished such seller with a
sufficient number of copies of the same or (ii) if the seller received written
notice from the Company of the existence of such an untrue statement or such an
omission and the seller continued to dispose of Registrable Securities prior to
the time of the receipt of either (a) an amended or supplemented prospectus or
prospectus supplement that completely corrected the untrue statement or the
omission or (b) a notice from the Company that the use of the existing
prospectus or prospectus supplement may be resumed. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such seller or any such director, officer, partner, investment advisor,
employee, agent, affiliate or controlling person and shall survive the transfer
of such securities by such seller.
(b) INDEMNIFICATION BY THE SELLERS. As a condition to including any
Registrable Securities in any registration statement, the Company shall have
received an undertaking satisfactory to it from the prospective seller of such
Registrable Securities, to indemnify and hold harmless (in the same manner and
to the same extent as set forth in Section 2.7(a)) the Company, and each
director of the Company, each officer of the Company and each other Person, if
any, who participates as an underwriter in the offering or sale of such
securities and each other Person who controls the Company or any such
underwriter within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such seller expressly for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement; PROVIDED, HOWEVER, that (A) the indemnifying party
shall not be liable in any such
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case to the extent that any such statement or omission is completely corrected
(x) in the final prospectus, in the case of a preliminary prospectus, or (y)
in an amendment or supplement to a prospectus or prospectus supplement
(PROVIDED, HOWEVER, that nothing in this clause (y) shall limit the indemnifying
party's liability with respect to sales made prior to the receipt by the Company
from the indemnifying party of written notice of such an untrue statement or
such an omission) and (B) the liability of such indemnifying party under this
Section 2.7(b) shall be limited to the amount of proceeds received by such
indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such holder.
(c) NOTICE OF CLAIMS, ETC. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Section 2.7(a) or (b), such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; PROVIDED,
HOWEVER, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 2.7, except to the extent that the
indemnifying party is materially prejudiced by such failure to give notice. In
case any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; PROVIDED, HOWEVER, that (i) if the indemnified party
reasonably believes that it is advisable for it to be represented by separate
counsel because there exists or may exist a conflict of interest between its
interests and those of the indemnifying party with respect to such claim, or
there exist defenses available to such indemnified party that may not be
available to the indemnifying party, or (ii) if the indemnifying party shall
fail to assume responsibility for such defense, the indemnified party may retain
counsel satisfactory to it and, in the case of clause (i), reasonably
satisfactory to the indemnifying party, and the indemnifying party shall pay all
fees and expenses of such counsel; PROVIDED FURTHER, that the indemnifying party
shall not be deemed to have failed to assume responsibility for such defense if
the indemnifying party has not received notice of such claim pursuant to this
Section 2.7(c). In the event an indemnifying party elects not to assume, or
shall not be entitled to assume because of a conflict of interest between its
interests and those of the indemnified party, the defense of a claim, such
indemnifying party
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shall not be obligated to pay the fees and expenses of more than one counsel or
firm of counsel in any jurisdiction in any one legal action or group of related
legal actions for all parties indemnified by such indemnifying party in respect
of such claim, unless in the reasonable judgment of any such indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties in respect of such claim. No indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld or delayed.
No indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation or that requires action other than the payment of money by
the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 2.7 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.7(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.7(a) or (b), the indemnified party
and the indemnifying party under Section 2.7(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the prospective sellers of Registrable Securities covered by the
registration statement that resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement; PROVIDED, HOWEVER, that for purposes of this clause (ii), the
relative benefits received by the prospective sellers shall be deemed not to
exceed the amount of proceeds received by such prospective sellers. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this Section 2.7(d) are several in
proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no
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Person shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
(e) OTHER INDEMNIFICATION. Indemnification and contribution similar
to that specified in the preceding subdivisions of this Section 2.7 (with
appropriate modifications) shall be given by the Company and each holder of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act.
(f) INDEMNIFICATION PAYMENTS. The indemnification and contribution
required by this Section 2.7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
3. EXPENSES. The Company will pay all Registration Expenses in
connection with the Initial Shelf Registration, any Subsequent Shelf
Registration and any registration effected pursuant to Section 2.3. The Company
will pay all Registration Expenses in connection with three registrations of
Registrable Securities requested pursuant to section 2.2 by the Initiating
Holders, PROVIDED that the Company will pay all Registration Expenses in
connection with registrations requested pursuant to section 2.2 which are not
deemed to be effected within the meaning of subdivision (c) of section 2.2. All
Registration Expenses in connection with each subsequent registration of
Registrable Securities requested by one or more holders pursuant to section 2.2
shall be apportioned among the holders of all Registrable Securities and other
securities requesting or joining in such registration, on the basis of the
respective amounts of securities then being registered by such holders or on
their behalf.
4. RULES 144 AND 144A. The Company will file the reports required to
be filed by it under the Securities Act and the rules and regulations adopted by
the Commission thereunder (or, if the Company is not required to file such
reports, will, upon the request of any holder of Registrable Securities, make
publicly available other information), and will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (A) Rule 144 under the Securities Act, as such
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Rule may be amended from time to time, (b) Rule 144A under the Securities Act,
as such Rule may be amended from time to time or (c) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
5. HOLDBACK AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES.
Each holder of Registrable Securities agrees not to effect any public sale or
distribution (including sales pursuant to Rule 144, Rule 144A and Regulation S)
of any equity securities of the Company or of any securities convertible into or
exchangeable or exercisable for such equity securities, during the period
beginning on the later of (i) the effective date of any registration statement
relating to a registration pursuant to section 2.2 or 2.3 of this Agreement
involving an underwritten offering or involving an underwritten offering by the
Company of equity securities and (ii) the date on which such holder shall have
received notice of such effective date of any such registration statement and
ending on the date 90 following the effective date of such registration
statement (except as part of such underwritten offering), unless the
underwriters managing such underwritten offering otherwise agree.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The Company agrees
(A) not to effect any public sale or distribution (including sales pursuant to
Rule 144A and Regulation S) of any of its equity securities, or any securities
convertible into or exchangeable or exercisable for such equity securities
(except pursuant to registrations on Form S-4 or Form S-8 or any successor
forms), during the 90 day period beginning on the effective date of any
registration statement relating to a registration pursuant to section 2.2 or 2.3
of this Agreement involving an underwritten offering in which Registrable
Securities are included (except as part of such underwritten offering), unless
the underwriters managing such offering otherwise agree, and (ii) to cause each
holder of its Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, purchased from the Company at any time after the
date of this Agreement (other than in a registered public offering) to agree not
to effect any public sale or distribution (including sales pursuant to Rule 144,
Rule 144A and Regulation S) of any such securities during such period (except as
part of such underwritten offering, if otherwise permitted), unless the
underwriters managing such offering otherwise agree.
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6. Amendment and Modification. This Agreement may be amended,
modified or supplemented by the Company with the written consent of the
Initiating Holders and a majority (by number of shares, including Registrable
Securities issuable upon conversion or exchange of other securities) of any
other holder of Registrable Securities whose interests would be adversely
affected by such amendment. Each holder of any Registrable Securities at the
time shall be bound by any consent authorized by this section 6, whether or not
such Registrable Securities shall have been marked to indicate such consent.
7. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of Registrable Securities held by any
holder or holders of Registrable Securities contemplated by this Agreement. If
the beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities.
8. NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally,
mailed, certified or registered mail with postage prepaid, sent by next-day or
overnight mail or delivery or sent by telecopy or telegram, as follows:
(a) If to the Company, to it at:
11601 Wilshire Boulevard
12th Floor
Los Angeles, California 90025
Telephone: (310) 478-4456
Facsimile: (310) 478-1267
Attention: Robert P. Bermingham,
General Counsel and Secretary
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With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Attention: Barry Mills, Esq.
(b) If to Westfield Holdings, to it at:
Level 24 Westfield Towers
100 William Street
Sydney NSW
Telephone: (612) 9358-7000
Facsimile: (612) 9358-7077
Attention: Timothy Walsh, Esq.
General Counsel
With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Attention: Barry Mills, Esq.
(c) if to any other holder of Registrable Securities, at its address as it
appears on the transfer books of the Company.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; and when receipt
is acknowledged, if telecopied.
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9. REMEDIES. The holders of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, shall be entitled to specific performance of their rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
10. NO INCONSISTENT AGREEMENTS. The Company will not, on or after
the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.
11. MISCELLANEOUS.
(a) SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, the provisions of this
Agreement which are for the benefit of a holder of Registrable Securities shall
be for the benefit of and enforceable by any subsequent holder of any
Registrable Securities, PROVIDED that such subsequent holder shall agree to be
bound by the provisions of this Agreement. Notwithstanding any transfer of such
rights, all of the obligations of the Company hereunder shall survive any such
transfer and shall continue to inure to the benefit of all transferees.
(b) GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereunder and the persons subject hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York,
without giving effect to the choice of law principles of such State.
(c) INVALIDITY OF PROVISION; SEVERABILITY. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, it being
intended that all of the rights and privileges of
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the holders of Registrable Securities shall be enforceable to the fullest extent
permitted by law.
(d) HEADINGS; EXECUTION IN COUNTERPART. The headings and captions
contained herein are for convenience and shall not control or affect the meaning
or construction of any provision hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same agreement.
(e) ENTIRE AGREEMENT. This Agreement is intended by the parties
hereto as a final expression of their agreement and intended to be a complete
and exclusive statement of their agreement and understanding in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
WESTFIELD AMERICA, INC.
By: /s/ Mark Stefanek
---------------------------------
Name: Mark Stefanek
Title: Chief Financial Officer &
Treasurer
WESTFIELD HOLDINGS LIMITED
By: /s/ Peter S. Lowy
---------------------------------
Name: Peter S. Lowy
Title: Director
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EXHIBIT 10.22
INVESTORS AGREEMENT
INVESTORS AGREEMENT (hereinafter called the "Agreement"), dated as of
May 21, 1997, among WESTFIELD AMERICA, INC., a Missouri corporation (the
"Company"), WESTFIELD AMERICA MANAGEMENT LIMITED, an Australian corporation (the
"WAT Manager"), in its capacity as manager of the Westfield America Trust
("WAT"), a public trust constituted by the Westfield America Trust Deed, dated
March 28, 1996, as amended, PERPETUAL TRUSTEE COMPANY LIMITED, in its capacity
as trustee of WAT (the "WAT Trustee"), WESTFIELD CORPORATION, INC., a Delaware
corporation ("Westfield Corporation"), WESTFIELD AMERICAN INVESTMENTS PTY.
LIMITED, an Australian corporation ("Annatar"), and WESTFIELD HOLDINGS LIMITED,
an Australian corporation ("WHL", and collectively with WHL, Westfield
Corporation and Annatar and any other subsidiary of WHL, the "Westfield Group").
RECITALS
WHEREAS, the Company is authorized to issue 200,000,000 shares of
common stock, par value $.01 per share (the "Common Stock"), 200 shares of
non-voting senior preferred stock, par value $1.00 per share (the "Senior
Preferred Stock"), 940,000 shares of Series A cumulative redeemable preferred
stock, par value $1.00 per share (the "Series A Preferred Stock"), and 400,000
shares of Series B cumulative redeemable preferred stock, par value $1.00 per
share (the "Series B Preferred Stock", and collectively with the Common Stock,
the Senior Preferred Stock and the Series A Preferred Stock, the "Capital
Stock");
WHEREAS, the WAT Trustee is the record and beneficial owner of
39,494,125 shares and the Westfield Group is the record and beneficial owner of
10,930,762 shares of Common Stock;
WHEREAS, the Company is in the business of owning, operating, leasing,
developing, redeveloping and acquiring shopping centers and powers centers
(collectively, the Centers") in the United States;
WHEREAS, the parties hereto are parties to a Stockholders Agreement,
dated as of July 1, 1996 (the "Existing Agreement"), that contains
<PAGE>
provisions relating to the composition of the Board of Directors of the Company
(the "Board") and certain other matters;
WHEREAS, the Company plans to commence an initial public offering (the
"Public Offering") of shares of Common Stock and the WAT Trustee and the
Westfield Group intend to remain shareholders of the Company after the Public
Offering and wish to enter into this Agreement with the Company in order to
terminate the Existing Agreement and to establish and define their respective
rights and obligations with respect to the matters hereinafter set forth after
the Public Offering;
WHEREAS, pursuant to the Third Restated Articles of Incorporation
of the Company (the "Articles"), the Second Amended and Restated By-Laws of
the Company (the "By-Laws") and certain actions taken by the Board, following
the closing of the Public Offering, the Board will be comprised of 9
directors (the "Directors") and will be divided into three classes, as nearly
equal in number as possible, with the term of office of the first class
expiring at the Annual Meeting of Shareholders in 1998, the second class
expiring at the Annual Meeting of Shareholders in 1999, and the third class
expiring at the Annual Meeting of Stockholders in 2000, with the successors
to any expired class to be elected for three-year terms;
WHEREAS, it is expected that following the Public Offering, a majority
of the Directors will be Independent Directors (as defined below); and
WHEREAS, the WAT Manager and the WAT Trustee have advised the Company
that under Australian law the unitholders of WAT must approve the exercise by
the WAT Trustee of its voting rights with respect to the election of the
Directors (the "Australian Voting Requirement").
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. EFFECTIVENESS. The parties hereto hereby covenant and agree that
immediately upon the closing of the Public Offering the Existing Agreement shall
terminate and this Agreement shall become effective.
2. ELECTION OF DIRECTORS. (a) MEETING OF WAT UNITHOLDERS. For so
long as the Australian Voting Requirement is applicable, the WAT Trustee
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hereby covenants and agrees to (i) call a meeting of WAT unitholders to obtain
the approval for the WAT Trustee to exercise voting rights in respect of the
election of Directors and (ii) attend, in person or by proxy, any shareholders
meeting at which the shareholders of the Company are to vote for the election of
Directors and to vote or cause to be voted all of their shares of Common Stock
at each such meeting. The timing of the election of directors will be
coordinated with the requirements for unitholders meetings as required by
Australian corporate law so that sufficient time is permitted for the WAT
Trustee to obtain unitholder approval.
(b) INDEPENDENT DIRECTOR. For purposes of this Agreement,
"Independent Director" shall mean a director of the Company who (i) is not, and
has not for the last 12 months been, an officer, director or employee of any of
the Westfield Group or the WAT Trustee, (ii) is not an Affiliate of any of the
Westfield Group or the WAT Trustee or an officer or employee of such an
Affiliate, (iii) is not a member of the immediate family of any natural person
described in clauses (i) and (ii) above, and (iv) is free from any relationship
that would interfere with the exercise of independent judgment as a Director.
For purposes of this definition of Independent Director only, an "Affiliate"
shall mean any person directly or indirectly Controlling, Controlled by, or
under Control with, such other person; "Control" shall mean the power to
exercise a controlling influence over the management or policies of a company,
unless such power is solely the result of an official position with any of the
Westfield Group or the WAT Trustee; and "member of the immediate family" shall
mean any parent, spouse of a parent, child, spouse of a child, spouse, brother
or sister and includes step and adoptive relationships.
3. RIGHT OF FIRST REFUSAL. (a) Whenever and as often as the WAT
Trustee or its successors or assigns (each, a "Seller") shall desire to sell all
or any of the Warrants granted to the WAT Trustee pursuant to the Subscription
Agreement and Plan of Reorganization Relating to CenterMark Properties, Inc.,
dated as of May 13, 1996, and in connection with the Public Offering (together,
the "Company Warrants"), pursuant to a bona fide offer for the purchase thereof,
the Seller shall give notice (the "Notice") to WHL (the "Offeree") in writing to
such effect, enclosing a copy of such bona fide offer (it being agreed that the
Seller shall cause any such offer to be reduced to writing) and specifying the
portion of the Company Warrants which the Seller desires to sell (the "Seller's
Warrant"), the name of the person or persons to whom the Seller desires to make
such sale and the dollar value of the consideration which has been offered in
connection therewith. Upon receipt of the Notice, the Offeree initially shall
have the first
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right and option to purchase up to all of the Seller's Warrant, for cash at a
purchase price equal to the dollar value of such consideration, exercisable for
a period of 30 days from the date of receipt of the Notice (the "Expiration
Date"). Failure of the Offeree to respond to the Notice within the 30-day
period shall be deemed to constitute a notification to the Seller of the
Offeree's decision not to exercise the first right and option to purchase the
Seller's Warrant under this Section 3.
(b) The Offeree may exercise the right and option provided in this
Section 3 by giving written notice to the Seller not later than the close of
business on the date of expiration of such right and option (or if such date is
not a business day, then on or before the close of business on the next
succeeding business day), advising of the election to exercise the same and the
date (not later than 30 days from the date of such notice) upon which payment of
the purchase price for the Seller's Warrant shall be made. The Seller shall
cause to be delivered to the Offeree notice, on the payment date specified in
such notice, the certificate or certificates representing the Seller's Warrant
being purchased by the Offeree, properly endorsed for transfer, against payment
of the purchase price therefor.
(c) If all the Seller's Warrant is not purchased by the Offeree in
accordance with this Section, the Seller (i) shall not be required to sell any
of the Seller's Warrant to the Offeree and (ii) may, during the 90-day period
commencing on the expiration of the rights and options provided for in this
Section, sell all (but not less than all) of the Seller's Warrant to the
transferee named in the Notice for a consideration the dollar value of which is
equal to or greater than the dollar value of the consideration specified in the
Notice, subject in each case to the restrictions contained in this Section 3 of
this Agreement.
(d) WHL may designate or assign its rights to purchase the Company
Warrants pursuant to this Section 3 to any person or entity with the prior
written consent of the Seller, such consent not be unreasonably withheld or
delayed.
4. NON-COMPETITION. WHL shall not, and shall not permit any of its
subsidiaries, for so long as it or any of its subsidiaries is the Advisor (as
defined in the Advisory Agreement, dated July 1, 1996, as amended, between the
Company and the Advisor) and the Manager (as defined in the Management
Agreements, dated July 1, 1996, as amended, between the Company, the Manager and
the Centers) of the Centers, directly or indirectly, to acquire any
4
<PAGE>
ownership interest in shopping center properties or power centers in the United
States (a "Competitive Business") or own an interest in, as a partner, member,
stockholder, co-venturer or otherwise, any corporation, company, partnership,
firm, association, enterprise or other entity that owns any ownership interest
in a Competitive Business, PROVIDED that nothing contained in this Section 4
shall prohibit or restrain WHL or any of its subsidiaries or Affiliates from (a)
owning the interests it currently holds in Garden State Plaza, (b) acquiring
shares of capital stock or other equity interests in any entity where such
shares or interests represent a minority interest of 5% or less of such entity's
outstanding capital stock or equity interests, PROVIDED that such entity is not
controlled by WHL or any such subsidiary and employees of the Westfield Group do
not serve as an executive officer, director, manager or advisor to such entity,
(c) acquiring indebtedness of any person, (d) acquiring by asset purchase, stock
purchase, merger, consolidation or otherwise of any corporation, partnership or
other business entity partially engaged in the Competitive Business, PROVIDED
that such activities relating to the Competitive Business do not exceed 5% of
the revenues or net equity of such entity or such entity disposes of such
Competitive Business within one year of such acquisition, or (e) acquiring any
interest in airport projects or the retail portions thereof.
6. NOTICES. All notices, requests, demands and other communications
made in connection with this Agreement shall, except as otherwise expressly
herein provided, be in writing and shall be (a) mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
(b) transmitted by hand delivery or telecopy, addressed as follows:
(i) if to the Company, to:
Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Telecopy: (310) 444-9071
Telephone: (310) 445-2406
Attention: Co- President
5
<PAGE>
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
(ii) if to WAM, to:
Westfield America Management Limited
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612 9358-7077
Telephone: 011-612 9358-7154
Attention: Company Secretary
with a copy to:
The National Manager
Property Trusts
Perpetual Trustees Australia Limited
Level 7
1 Castlereagh Street
Sydney
Australia
Telecopy: 011-612 9233-8582
Telephone: 011-612 9229-9975
Attention: Mr. Allan Cowper
6
<PAGE>
(iii) if to the WAT Trustee, to:
The National Manager
Property Trusts
Perpetual Trustees Australia Limited
Level 7
1 Castlereagh Street
Sydney
Australia
Telecopy: 011-612 9233-7688
Telephone: 011-612 9229-9975
Attention: Mr. Allan Cowper
with a copy to:
Westfield America Management Limited
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612 9358-7077
Telephone: 011-612 9358-7154
Attention: Company Secretary
(iv) if to Westfield Corporation, to:
c/o Westfield Corporation, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025-3348
Telecopy: (310) 444-9071
Telephone: (310) 478-4456
Attention: President
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
7
<PAGE>
(v) if to Annatar, to:
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612 9358-7165
Telephone: 011-612 9358-7154
Attention: Company Secretary
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
(iv) if to WHL, to:
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612 9358-7165
Telephone: 011-612 9358-7154
Attention: Company Secretary
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
8
<PAGE>
7. REMEDIES. The parties hereto agree that in the event of any
violation by WHL or any of its subsidiaries of the provisions of Section 4 of
this Agreement, the Company will be irreparably damaged. Accordingly, the
Company shall be entitled to an injunction (either preliminary, permanent or
both) restraining any violation of the provisions of Section 4 of this Agreement
by WHL or any of its subsidiaries or to any other appropriate decree of specific
performance.
8. SEVERABILITY. If any provision of this Agreement is inoperative
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable, unless to give effect to any
such remaining provision or provisions would frustrate the purpose and intention
of the parties hereunder. The invalidity of any one or more phrases, sentences,
clauses, sections or subsections of this Agreement shall not affect the
remaining portions of this Agreement.
9. HEADINGS. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
10. ENTIRE AGREEMENT. This Agreement, together with all exhibits
hereto, constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
11. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and both of which shall
together constitute one and the same instrument.
12. GOVERNING LAW. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of Missouri.
13. ASSIGNMENT. This Agreement shall not be assignable by any of the
parties hereto,without the prior written consent of the other parties hereto,
9
<PAGE>
except that members of the Westfield Group shall be permitted to assign any of
their rights hereunder to any subsidiary of WHL.
14. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, executors, administrators, successors and permitted
assigns.
15. AMENDMENT; WAIVERS. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought.
16. LIMITATION OF LIABILITY. As the WAT Trustee enters into this
Agreement only in its capacity as trustee of WAT, the WAT Trustee is liable
under this Agreement only up to the extent to which it is indemnified out of the
assets of WAT. The WAT Trustee is only personally liable to the extent that it
is fraudulent, negligent, or in breach of trust. If the WAT Trustee is not
personally liable, the parties other than the WAT Trustee must not sue the WAT
Trustee personally or seek to wind it up to recover any outstanding money, and
the WAT Trustee is entitled to plead this clause as a bar to the taking of any
such proceedings.
17. WAT TRUST DEED. Each of the parties to this Agreement, other
than the WAT Trustee, acknowledges that it has received a copy of the WAT Trust
Deed (as amended) establishing WAT and that it understands the rights and
obligations of the WAT Trustee and the Manager therein.
[Intentionally Left Blank]
10
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
WESTFIELD AMERICA, INC.
By: /s/ Richard Green
-----------------------------------------
Name: Richard Green
Title: Co-President
PERPETUAL TRUSTEE COMPANY LIMITED,
in its capacity as trustee of
Westfield America Trust
By: /s/ Allan Cowper
-----------------------------------------
Name: Allan Cowper
Title: Attorney
WESTFIELD AMERICA MANAGEMENT LIMITED,
in its capacity as manager of
Westfield America Trust
By: /s/ Peter S. Lowy
-----------------------------------------
Name: Peter S. Lowy
Title: Director
WESTFIELD CORPORATION, INC.
By: /s/ Peter S. Lowy
-----------------------------------------
Name: Peter S. Lowy
Title: Vice President
11
<PAGE>
WESTFIELD AMERICAN INVESTMENTS PTY. LIMITED
By: /s/ Peter S. Lowy
-----------------------------------------
Name: Peter S. Lowy
Title: Director
WESTFIELD HOLDINGS LIMITED
By: /s/ Peter S. Lowy
-----------------------------------------
Name: Peter S. Lowy
Title: Director
12
<PAGE>
EXHIBIT 10.23
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT(hereinafter called the "Agreement"), dated
as of May 21, 1997, among WESTFIELD AMERICA, INC., a Missouri corporation (the
"Company"), FRANK P. LOWY, DAVID H. LOWY, PETER S. LOWY and STEVEN M. LOWY
(collectively, the "Lowy Family").
RECITALS
WHEREAS, the Company is in the business of owning, operating, leasing,
developing, redeveloping and acquiring shopping centers and powers centers
(collectively, the "Centers") in the United States;
WHEREAS, the Lowy Family and interests associated with the Lowy Family
currently have significant ownership interests and significant management
involvement in the operations of Westfield Holdings Limited, an Australian
corporation ("WHL", and together with its subsidiaries, the "Westfield Group"),
and WHL is a shareholder of the Company; and
WHEREAS, the Company plans to undertake an initial public offering
(the "Public Offering") of shares of common stock, par value $.01 per share (the
"Common Stock"), and, in connection therewith, the Lowy Family has agreed to
enter into certain restrictive covenants on the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. NON-COMPETITION. Each member of the Lowy Family shall not,
directly or indirectly, acquire any ownership interest in shopping center
properties or power centers in the United States (a "Competitive Business") or
own an interest in, as a partner, member, stockholder, co-venturer or otherwise,
any corporation, company, partnership, firm, association, enterprise or other
entity that owns any ownership interest in a Competitive Business, PROVIDED that
nothing contained in this Section 1 shall prohibit or restrain any member of the
Lowy Family from (a) owning any interest in WHL (which is the owner of Garden
State Plaza Shopping Center in Paramus, New Jersey) or Westfield America
Trust, an Australian public property trust organized under the laws of New
South Wales, (b) acquiring shares of
<PAGE>
capital stock or other equity interests in any entity where such shares or
interests represent a minority interest of 5% or less of such entity's
outstanding capital stock or equity interests, PROVIDED that such entity is not
controlled by members of the Lowy Family or WHL or any of its subsidiaries and
employees of the Westfield Group do not serve as an executive officer, director,
manager or advisor to such entity, (c) acquiring indebtedness of any person, (d)
acquiring by asset purchase, stock purchase, merger, consolidation or otherwise
of any corporation, partnership or other business entity partially engaged in
the Competitive Business, PROVIDED that such activities relating to the
Competitive Business do not exceed 5% of the revenues or net equity of such
entity or such entity disposes of such Competitive Business within one year of
such acquisition, or (e) acquiring any interest in airport projects or the
retail portions thereof. The non-compete covenants contained in this Agreement
shall only apply to the members of the Lowy Family for so long as (i) any member
of the Westfield Group is the Advisor (as defined in the Advisory Agreement,
dated as of July 1, 1996, as amended, between the Company and the Advisor) and
the Manager (as defined in the Management Agreements, dated as of July 1, 1996,
as amended, between the Company and/or its affiliates and the Manager) of the
Centers, and (ii) interests associated with the Lowy Family have significant
ownership interests and significant management involvement in the operations of
WHL.
2. NOTICES. All notices, requests, demands and other communications
made in connection with this Agreement shall, except as otherwise expressly
herein provided, be in writing and shall be (a) mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
(b) transmitted by hand delivery or telecopy, addressed as follows:
(i) if to the Company, to:
Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Telecopy: (310) 444-9071
Telephone: (310) 445-2406
Attention: Co-President
2
<PAGE>
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
(ii) if to any member of the Lowy Family, to such member at:
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612-9358-7165
Telephone: 011-612-9358-7154
with a copy to:
David Gonski
Wentworth Associates
Level 23
MLC Center
Martin Place, Sydney
NSW 2000 Australia
Telecopy: (61-2) 9358-7015
Telephone: (61-2) 9358-7312
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
3. REMEDIES. The parties hereto agree that in the event of any
violation by any member of the Lowy Family of the provisions of Section 1 of
this Agreement, the Company will be irreparably damaged. Accordingly, the
Company shall be entitled to an injunction (either preliminary, permanent or
both) restraining any violation of the provisions of Section 1 of this Agreement
by any member of the Lowy Family or to any other appropriate decree of specific
performance.
3
<PAGE>
4. SEVERABILITY. If any provision of this Agreement is inoperative
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable, unless to give effect to any
such remaining provision or provisions would frustrate the purpose and intention
of the parties hereunder. The invalidity of any one or more phrases, sentences,
clauses, sections or subsections of this Agreement shall not affect the
remaining portions of this Agreement.
5. HEADINGS. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
6. ENTIRE AGREEMENT. This Agreement, together with all exhibits
hereto, constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
7. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and both of which shall
together constitute one and the same instrument.
8. GOVERNING LAW. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of New York.
9. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, executors, administrators and successors.
10. AMENDMENT; WAIVERS. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought.
[Intentionally Left Blank]
4
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
--------------------------------
Name: Peter S. Lowy
Title: Co-President
/s/ Frank P. Lowy
------------------------------------
Frank P. Lowy
/s/ David H. Lowy
------------------------------------
David H. Lowy
/s/ Peter S. Lowy
------------------------------------
Peter S. Lowy
/s/ Steven M. Lowy
------------------------------------
Steven M. Lowy
5
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
EXHIBIT 10.24
WESTFIELD AMERICA, INC.,
WESTFIELD AMERICA MANAGEMENT LIMITED,
PERPETUAL TRUSTEE COMPANY LIMITED
AND
STICHTING PENSIOENFONDS ABP
SERIES B PREFERRED SHARES
AND
OPTIONS COVERING ORDINARY UNITS
OF WESTFIELD AMERICA TRUST
-------------------------------------------
SUBSCRIPTION AGREEMENT
-------------------------------------------
Dated as of April 24, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBSCRIPTION AGREEMENT
TABLE OF CONTENTS
Page
Section 1. Sale and Purchase...............................................2
1.1. Sale and Purchase of the Shares.................................2
1.2. Sale and Purchase of the Options................................2
Section 2. Closing.........................................................2
2.1. Place and Date..................................................2
2.2. Purchase of Securities..........................................3
2.3. Payment of Purchase Price.......................................3
2.4. Failure of Conditions...........................................4
lSection 3. Conditions to the Obligations of the Purchaser..................4
3.1. Representations and Warranties..................................4
3.2. Performance.....................................................4
3.3. IPO.............................................................4
3.4. Proceedings and Documents.......................................4
3.5. Opinions of Counsel.............................................5
3.6. Material Adverse Change.........................................5
3.7. Consents........................................................5
3.8. No Violation....................................................5
3.9. Option Deed.....................................................6
3.10. Obligations of Manager under Option Deed........................6
Section 4. Conditions to the Obligations of the Company and WAT............6
4.1. Representations and Warranties..................................6
4.2. IPO.............................................................7
4.3. Amendment to Articles...........................................7
Section 5. Representations and Warranties of the Company...................7
5.1. Status; Power and Authority.....................................7
5.2. No Violation or Conflict........................................7
5.3. Securities......................................................7
5.4. Obligations Binding.............................................8
5.5. Federal Securities Law Matters..................................8
<PAGE>
5.6. Disclosure......................................................8
5.7. Legal Proceedings...............................................8
5.8. Investment Company..............................................9
5.9. REIT Status.....................................................9
Section 6. Representations and Warranties of the Purchaser.................9
6.1. Organization and Standing.......................................9
6.2. Agreement.......................................................9
6.3. Governmental and Other Consents.................................9
6.4. ERISA Matters...................................................9
6.5. Investment Representation; Transfer Restrictions...............10
6.6. Ownership......................................................10
6.7. Investigation, Etc.............................................10
6.8. No Violation...................................................10
6.9. Amendment to Articles..........................................10
Section 7. Restrictions on Transfer.......................................11
Section 8. Survival of Representations and Warranties.....................13
Section 9. Notices........................................................13
Section 10. Termination....................................................15
Section 11. Reconstructions................................................15
Section 12. Entire Agreement...............................................15
Section 13. Successors and Assigns.........................................15
Section 14. Headings.......................................................15
Section 15. Governing Law..................................................15
Section 16. Counterparts...................................................15
Section 17. Issuance and Other Taxes.......................................15
Section 18. No Delay; Waiver...............................................16
ii
<PAGE>
Section 19. Severability...................................................16
Section 20. Financial Statements and Other Information.....................16
Section 21. Inspection.....................................................17
Section 22. Lost, etc., Certificates.......................................17
Section 23. Limitation of Liability........................................17
Section 24. WAT Trust Deed.................................................17
iii
<PAGE>
SUBSCRIPTION AGREEMENT
----------------------
SUBSCRIPTION AGREEMENT (the "AGREEMENT"), dated as of April 24,
1997, between WESTFIELD AMERICA, INC., a Missouri corporation (formerly known
as CenterMark Properties, Inc.) (the "COMPANY"), WESTFIELD AMERICA MANAGEMENT
LIMITED ("WAM"), a company organized under the laws of New South Wales,
Australia, as manager (in such capacity, the "MANAGER") of Westfield America
Trust ("WAT"), a public trust constituted by the Westfield America Trust Deed,
dated March 28, 1996, as amended (the "WAT TRUST DEED"), PERPETUAL TRUSTEE
COMPANY LIMITED, a company organized under the laws of New South Wales,
Australia, as trustee of WAT (in such capacity, the "WAT TRUSTEE"), and
STICHTING PENSIOENFONDS ABP, an entity established under the laws of The Kingdom
of the Netherlands, whose principal business is investing in funds held on
behalf of public sector employees of The Kingdom of the Netherlands (the
"PURCHASER"). References herein to obligations of WAT shall be deemed to refer
to obligations of either the Manager or the WAT Trustee, as applicable under the
WAT Trust Deed.
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, the Company desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Company, 400,000 shares of Series B
Preferred Shares, par value $1.00 per share, of the Company (the "SHARES")
having the terms described in Section 1.1;
WHEREAS, WAT desires to sell to the Purchaser, and the Purchaser
desires to purchase from WAT, 400,000 options (the "OPTIONS", the Shares and the
Options collectively referred to herein as the "SECURITIES") issued by WAM, the
Options being options to be issued pursuant to a Special Option Deed having the
terms described in Section 3.9 (the "OPTION DEED"), and each Option shall
provide the right to purchase, on the terms and conditions set forth in the
Option Deed, such number of ordinary units of WAT (subject to recalculation as
provided therein) as shall equal the Special Option Number (as defined in the
Option Deed);
NOW, THEREFORE, in consideration of the representations, warranties
and agreements herein contained, the parties hereto agree as follows:
<PAGE>
Section 1. SALE AND PURCHASE. 1.1. SALE AND PURCHASE OF THE
SHARES. In reliance upon the representations and warranties contained herein
and subject to the terms and conditions hereof, the Company agrees to sell to
the Purchaser, and the Purchaser agrees to purchase, on the Closing Date (as
defined in Section 2), the Shares. The Shares shall have, MUTATIS MUTANDIS,
substantially the same terms and conditions as the Company's Series A Preferred
Shares, par value $1.00 per share (the "SERIES A SHARES") (with such changes
therefrom as shall not adversely affect the rights, preferences or powers of the
Shares), except that (a) the dividend rate on the Shares will be the greater of
(i) $8.50 per annum, or an 8.5% yield, if the FFO Multiple (as defined below)
for the IPO is 11.7 or less or, if the FFO Multiple is 11.8 or more, the minimum
dividend yield will be reduced to an amount equal to one divided by the FFO
Multiple (such event, a "Yield Reduction Event"), with quarterly amounts
adjusted accordingly, including with respect to fractional dividends payable
upon redemption and liquidation, and (ii) the dividend rate on shares of Common
Stock issued in the IPO (as such terms are defined in Section 2), which shall be
based on a "Common Equivalent Amount" equal to (x) 100 divided by (x) the Price
to Public of shares of Common Stock sold by the Company in the IPO (as such
terms are defined in Section 2), (b) the earliest date for redemption shall be
the seventh anniversary of the date of issuance of the Shares, and (c) the
holders of the Series A Shares and the Shares shall vote together as a class on
all matters requiring a vote of such shares, including but not limited to the
election of one director upon the failure to declare dividends, and that, where
the vote of a majority of the Series A Shares is currently provided, the vote
required shall be a vote of a majority of the Series A Shares and the Shares,
voting together as a class. The "FFO Multiple" shall be determined by Merrill
Lynch & Co. and shall equal the multiple of the projected per share Funds from
Operations (as such term in defined in the Registration Statement defined in
Section 2.1 below) of the Company for the 1997 fiscal year available for Common
Stock distributions used for determining the Price to Public for shares of
Common Stock sold in the IPO. If a Yield Reduction Event occurs, neither the
Purchaser nor the Company shall have any obligation to purchase or sell the
Shares.
1.2. SALE AND PURCHASE OF THE OPTIONS. In reliance upon the
representations and warranties contained herein and subject to the terms and
conditions hereof, WAT agrees to sell to the Purchaser, and the Purchaser agrees
to purchase, on the Closing Date (as defined in Section 2), the Options having
the terms described in the Option Deed as set forth in Section 3.9.
Section 2. CLOSING. 2.1. PLACE AND DATE. The closing of the sale
and purchase of the Securities (the "CLOSING") shall take place at the offices
of Debevoise & Plimpton, 1 Creed Court, 5 Ludgate Hill, London EC4M 7 AA, at
9:00 a.m. New
2
<PAGE>
York time on the date of the closing of the company's initial public offering of
common stock, par value $.01 per share (the "COMMON STOCK"), of the Company (the
"IPO") pursuant to its Registration Statement on Form S-11 (No. 333-22731) (as
amended from time to time prior to the Closing Date, the "REGISTRATION
STATEMENT"), or at such other time and place as the parties to this Agreement
shall agree (the "CLOSING DATE"). The Closing Date shall not be later than June
15, 1997.
2.2. PURCHASE OF SECURITIES. Subject to all of the terms and
conditions of this Agreement, the Purchaser hereby subscribes for and shall
purchase, and the Company shall sell to the Purchaser at the Closing referred
to in Section 2.1 hereof, 400,000 Shares at a purchase price of
US[$100 less the amount of Option Purchase Price] per Share (the "SHARE
PURCHASE PRICE") and the Purchaser hereby subscribes for and shall purchase,
and WAT shall sell to the Purchaser at the Closing referred to in Section 2.1
hereof, 400,000 Options at a purchase price of US[$ ] per Option (the
"OPTION PURCHASE PRICE" and together with the Share Purchase Price, the
"PURCHASE PRICE"). The total number of each of the Shares and the Options
may be adjusted up or down if the total Price to Public of the shares of
Common Stock sold pursuant to the Registration Statement (other than shares
of Common Stock, if any, sold upon the exercise of the underwriters'
over-allotment option) [(the "IPO Gross Proceeds") is greater or less than
US$400 million so that the total number of each of the Shares and the Options
purchased at the Closing shall equal the IPO Gross Proceeds divided by 1,000;
PROVIDED, HOWEVER, that the Purchaser shall have no obligation to purchase more
than the lesser of (a) Shares and Options having a Purchase Price of 10% of the
IPO Gross Proceeds, (b) Shares and Options which, if such Shares were
convertible into Common Stock by multiplying the number of Shares by the Common
Equivalent Amount set forth in Section 1, would not exceed 10% of the Common
Stock issued in the IPO and (b) 400,000 Shares and 400,000 Options, at the
Purchase Price; and PROVIDED FURTHER, that the number of Shares and the number
of Options purchased by the Purchaser shall be the same. Prior to the Closing,
the Purchaser, the Company and WAT shall agree upon the allocation of the
Purchase Price between the Shares and the Options.
2.3. PAYMENT OF PURCHASE PRICE. Subject to all of the terms and
conditions of this Agreement, the Purchaser shall deliver at the Closing cash in
an amount equal to (i) the Share Purchase Price for all Shares purchased and
(ii) the Option Purchase Price for all Options purchased, in each case by bank
transfer or transfer in immediately available funds to such account of the
Company or WAT, as the case may be, as shall be specified by written notice from
the Company or WAT, as the case may be, to the Purchaser, such notice given not
less than two business days prior to the Closing Date, in full payment for the
Securities.
2.4. FAILURE OF CONDITIONS. If any of the conditions specified in
Section 3 or 4 hereof shall not have been fulfilled when and as required by this
Agreement
3
<PAGE>
to be fulfilled, the Agreement may be terminated by the party for whom such
condition relates by notice to the other parties without liability to any other
parties.
Section 3. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser under this Agreement are subject to the fulfillment
prior to or on (a) the date (the "PRICING DATE") an underwriting agreement
relating to the sale of shares of Common Stock in the IPO is executed and
delivered by the Company and the underwriters named in the Registration
Statement or, (b) in the case of the conditions set forth in Sections 3.3, 3.5,
3.7 and 3.9, prior to or at the Closing, of the following conditions:
3.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth herein and in any written statement,
certificate or other instrument delivered to the Purchaser pursuant hereto, and
the representations and warranties of WAT set forth in the Option Deed shall be
true and correct in all material respects on the Pricing Date, and the Purchaser
shall have received a certificate of the chief financial officer of the Company,
dated as of the Pricing Date, to such effect.
3.2. PERFORMANCE. The Company, WAT, the WAT Trustee and the Manager
shall have performed and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or on the Pricing Date or the Closing Date, as the case may
be, including without limitation, the execution of, and compliance with, an
agreement between the parties hereto with respect to the allocation of the
Purchase Price in accordance with Section 2.2 hereof.
3.3. IPO. The closing of the sale of Common Stock as contemplated by
the Registration Statement shall have occurred.
3.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with
the transactions contemplated hereby and all documents and instruments
incidental thereto shall be reasonably satisfactory in substance and form to the
Purchaser, and the Purchaser shall have received all such originals or certified
or other copies of such documents as the Purchaser may reasonably request.
Since March 4, 1997, there shall have been no amendment of or supplement to the
Registration Statement reflecting changes in the transaction and documents
described in the Registration Statement which might reasonably be expected to
materially and adversely affect the holders of the Securities.
3.5. OPINIONS OF COUNSEL. The Purchaser shall have received (a) an
opinion of Debevoise & Plimpton, New York counsel to the Company, dated a date
not
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earlier than the Pricing Date and not later than the Closing Date; (b) an
opinion of Bryan Cave or other counsel reasonably satisfactory to the Purchaser,
as special Missouri counsel for the Company, dated a date not earlier than the
Pricing Date and not later than the Closing Date, (c) an opinion of Skadden,
Arps, Slate, Meagher & Flom, special U.S. tax counsel to the Company, dated a
date not earlier than the Pricing Date and not later than the Closing Date; and
(c) an opinion of Minter Ellison, Australian counsel to WAT, dated a date not
earlier than the Pricing Date and not later than the Closing Date, in each case
covering, MUTATIS MUTANDIS, the matters covered in the opinions delivered to the
Purchaser by such firms pursuant to the Subscription Agreement, dated as of June
14, 1996, between the Company and the Purchaser.
3.6. MATERIAL ADVERSE CHANGE. There shall not have occurred at any
time at or prior to the Pricing Date since the respective dates as of which
information is given in the Registration Statement, any material adverse change,
or any act, omission or thing which could reasonably be expected to result in a
material adverse change, in the business, operations or condition (financial or
otherwise) of either the Company, the Manager, the WAT Trustee or WAT and/or its
respective subsidiaries, in each case taken as a whole, whether or not arising
in the ordinary course of business.
3.7. CONSENTS. All authorizations and consents necessary for the
execution and delivery by the Company, the Manager or the WAT Trustee, as the
case may be, or on behalf of the Company, the Manager or the WAT Trustee, as the
case may be, of this Agreement and the Option Deed and the sale and delivery of
the Securities as contemplated herein and thereby will, at or prior to the
Closing, have been given and will be in full force and effect at the time of the
Closing. The form of the certificate representing the Options and the form of
transfer certificate attached to the Option Deed will comply with all applicable
requirements, including The Listing Rules of the Australian Stock Exchange
Limited.
3.8. NO VIOLATION. From the date of this Agreement to the Pricing
Date, (i) no law, rule or regulation to which the Purchaser is subject shall
have been enacted, (ii) no judicial or administrative order or decree to which
the Purchaser is subject shall have been entered and (iii) no standard,
fiduciary duty or policy established by applicable law which governs the
management and/or investment criteria of the Purchaser shall have been
established, which in any such event would prevent either (a) the ownership by
the Purchaser of a Share at a time when the Purchaser owns no Options or (b) the
ownership by the Purchaser of an Option at a time when the Purchaser owns no
Shares. On the Pricing Date, the purchase of and payment for the Securities to
be purchased by the Purchaser on the Closing Date shall not be prohibited by any
applicable law or governmental regulation (other than any such law or regul
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ation of the jurisdiction in which the Purchaser is organized which was in
effect on the date hereof).
3.9. OPTION DEED. The Option Deed, in substantially the form attached
hereto as Exhibit A, among the WAT Trustee, the Manager and the Company, shall
have been duly authorized, executed and delivered by each of the parties
thereto. The Company shall be responsible for any costs relating to the
preparation of the Option Deed, as well as all stamp duty, transfer taxes,
license fees and any other taxes on or relating to the Option Deed and the
exercise of the Options. The grant of the Options and the issue of ordinary
units of WAT as a consequence of the exercise of the Options shall have been
approved by the requisite vote of the unit holders of WAT. Upon the request of
any holder of the Options in connection with the transfer thereof, the Company
will promptly provide to such holder information regarding the stock ownership
(including by attribution) of the Company as determined under the Code (as
hereinafter defined) and the effect of the ownership limitation contained in the
Company's charter with respect to such transfer. The agreements of the Company
set forth in this Section 3.9 will survive the Closing hereunder.
3.10. OBLIGATIONS OF MANAGER UNDER OPTION DEED. Westfield Holdings
Limited or another entity designated by the Company reasonably satisfactory to
the Purchaser shall have indemnified the holders of the Option for damages or
losses (including legal fees and expenses) incurred or suffered by the Purchaser
due to the failure or inability of the Manager to perform its obligations under
the Option Deed.
Section 4. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND WAT. The
obligations of the Company under this Agreement are subject to the fulfillment
prior to or at the Pricing Date or the time of the Closing, as applicable, of
the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser set forth herein and in any written statement,
certificate or other instrument delivered to the Company pursuant hereto shall
be true and correct in all material respects at the Closing Date. The Purchaser
shall have performed and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or at the Pricing Date or the of time of the Closing, as the
case may be, including without limitation, the execution of, and compliance
with, an agreement between the parties hereto with respect to the allocation of
the Purchase Price in accordance with Section 2.2 hereof.
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4.2. IPO. The Closing of the sale of Common Stock as contemplated by
the Registration Statement shall have occurred.
4.3. AMENDMENT TO ARTICLES. The Purchaser shall have voted its Series
A Shares to amend the Articles (as defined in Section 6.9) as provided in
Section 6.9.
Section 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents, warrants and covenants to the Purchaser as follows:
5.1. STATUS; POWER AND AUTHORITY. The Company is a company duly
organized, validly existing and in good standing under the laws of the State of
Missouri and has all requisite power and authority to enter into and perform its
obligations under this Agreement and the Shares. WAT is a validly subsisting
public trust established under the WAT Trust Deed which has not been terminated.
The Manager is a company duly organized and validly existing under the laws of
New South Wales, Australia, and has all requisite power and authority to enter
into and perform its obligations under the Option Deed and the Options. The WAT
Trustee is a company duly organized and validly existing under the laws of New
South Wales, Australia, and has the power and authority under the WAT Trust Deed
to enter into and perform its obligations under the Option Deed and the Options.
5.2. NO VIOLATION OR CONFLICT. The execution and delivery of this
Agreement by the Company and, upon the approval of the execution and delivery of
the Option Deed and the exercise thereof by the unit holders of WAT, the Option
Deed by each of the Manager and the WAT Trustee and the consummation of the
transactions contemplated herein and thereby (including the sale and delivery of
the Securities) will not result in a breach by the Company, the Manager or the
WAT Trustee, as the case may be, of, or constitute a default by the Company,
the Manager or the WAT Trustee, as the case may be, under, (i) the charter or
by-laws (or other governing document) or any contract, agreement or instrument
to which the Company, the Manager or the WAT Trustee is a party or by which the
Company, the Manager or the WAT Trustee is bound or their respective properties
may be subject or (ii) any existing applicable law, rule, published regulation,
judgment, order or decree of any government, governmental instrumentality or
court having jurisdiction over the Company, the Manager or the WAT Trustee or
any of their respective properties.
5.3. SECURITIES. Each of the Company and, upon the approval of the
execution and delivery of the Option Deed by the unit holders of WAT, and the
Manager has full right, power and authority to sell, transfer and deliver the
Securities as contemplated by this Agreement and the Option Deed, as the case
may be; and upon
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delivery of the Securities and payment of the Purchase Price therefor as
contemplated by this Agreement, the Purchaser will receive good and valid title
to the Securities purchased by it, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind and such Securities
will be fully paid and non-assessable, except that there are certain
restrictions on ownership and transfer of the Securities described herein, in
the Company's Articles and in the Option Deed.
5.4. OBLIGATIONS BINDING. This Agreement has been duly authorized by
all necessary action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against it in accordance with the terms hereof,
except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
rights of creditors generally.
5.5. FEDERAL SECURITIES LAW MATTERS. (i) None of the Company, the
Manager or the WAT Trustee nor any persons acting on its or their behalf has
engaged or will engage in any directed selling efforts in the United States
within the meaning of Regulation S ("REGULATION S") under the United States
Securities Act of 1933, as amended (the "SECURITIES ACT") with respect to the
Securities, (ii) it and they have complied with the offering restriction
requirements of Regulation S, (iii) none of the Company, the Manager, the WAT
Trustee or any person acting on its or their behalf has offered or will offer to
sell any of the Securities by means of any general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (iv) none of WAT, the Manager or the WAT Trustee, as
the case may be, is a "foreign issuer" within the meaning of Regulation S and
the Company reasonably believes that there is no "substantial U.S. market
interest" (as such term is defined in Regulation S) in the Securities.
5.6. DISCLOSURE. At the Pricing Date, the Registration Statement will
not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
5.7. LEGAL PROCEEDINGS. No legal or governmental proceedings are
pending to which the Company, the Manager or the WAT Trustee or to which the
property of the Company, the Manager or the WAT Trustee is subject which might
reasonably be expected to have a material adverse effect on the business,
operations or condition (financial or otherwise) of either the Company, the
Manager or the WAT
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Trustee and/or its respective subsidiaries, in each case taken as a whole,
whether or not arising in the ordinary course of business.
5.8. INVESTMENT COMPANY. Each of the Company, the Manager and the WAT
Trustee is not an "investment company", and is not directly or indirectly
controlled by any person which is required to register as an "investment
company", within the meaning of and under the U.S. Investment Company Act of
1940, as amended, and the transactions contemplated by this Agreement will not
cause the Company to become an "investment company" subject to registration
under such Act.
5.9. REIT STATUS. The Company is organized in conformity with the
requirements for qualification as a real estate investment trust ("REIT") under
Sections 856 through 860 of the U.S. Internal Revenue Code of 1986, as amended
(the "CODE"), and the present and contemplated method of operation of the
Company does and will enable the Company to meet the requirements for taxation
as a REIT under the Code.
Section 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents, warrants and covenants to the Company as follows:
6.1. ORGANIZATION AND STANDING. The Purchaser has all requisite power
and authority to enter into and perform its obligations under this Agreement.
6.2. AGREEMENT. This Agreement has been duly authorized by all
necessary action on the part of the Purchaser, has been duly executed and
delivered by the Purchaser and constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting the rights of creditors generally.
6.3. GOVERNMENTAL AND OTHER CONSENTS. No consent, approval or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority or any other person is required to be
obtained by the Purchaser in connection with the execution, delivery or
performance of this Agreement by the Purchaser or of any of the transactions
contemplated hereby.
6.4. ERISA MATTERS. None of the funds proposed to be used by you to
purchase any Securities constitutes assets of an employee benefit plan within
the meaning of The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to ERISA.
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6.5. INVESTMENT REPRESENTATION; TRANSFER RESTRICTIONS. The Purchaser
is acquiring the Securities (and, upon exercise of any Option, the WAT ordinary
units issued pursuant thereto) for its own account and not with a view to, or
for sale in connection with, any distribution thereof. The Purchaser
understands that the Securities (and such WAT ordinary units) are being offered
in a transaction not involving any public offering in the United States within
the meaning of the Securities Act, that the Securities (and such WAT ordinary
units) have not been and will not be registered under the Securities Act and
that (i) if it decides to resell, pledge or otherwise transfer such Securities
(and such WAT ordinary units), such Securities (and such WAT ordinary units) may
be offered, resold, pledged or otherwise transferred only (A) pursuant to an
effective registration statement under the Securities Act, (B) outside the
United States to a non-U.S. person in a transaction meeting the requirements of
Rules 903 and 904 of Regulation S and in accordance with any applicable
securities laws of any applicable jurisdiction, (C) to the Company and its
affiliates or WAT and its affiliates, or (D) in each case subject to the
restrictions on ownership and transfer set forth below in Section 7; and (ii)
the Purchaser will, and each subsequent holder is required to, notify any
subsequent purchaser from it of the resale restrictions set forth below in
Section 7.
6.6. OWNERSHIP. No individual owns, directly or indirectly, more than
five percent of the beneficial interests of the Purchaser.
6.7. INVESTIGATION, ETC. The Purchaser confirms that it is not
entitled to rely on any investigation that any other person may have conducted
with respect to the Company, WAT and the ordinary units of WAT.
6.8. NO VIOLATION. As of the date of this Agreement, neither (i) the
ownership by the Purchaser of a Share at a time when the Purchaser owns no
Options nor (ii) the ownership by the Purchaser of an Option at a time when the
Purchaser owns no Shares would contravene, violate or constitute a default under
(A) any document pursuant to which the Purchaser was organized and operates, (B)
any law, rule or regulation to which the Purchaser is subject (other than laws
of the United States, the District of Columbia or any State), (C) any judicial
or administrative order or decree to which the Purchaser is subject or (D) any
standard, fiduciary duty or policy which governs the management and/or
investment criteria of the Purchaser. As of the date of this Agreement, the
purchase of and payment for the Securities to be purchased by the Purchaser on
the Closing Date is not prohibited by any applicable law or governmental
regulation of the jurisdiction in which the Purchaser is organized.
6.9. AMENDMENT TO ARTICLES. The Purchaser covenants and agrees to
vote or cause to be voted all shares of Series A Shares owned or controlled by
it in
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favor of, and to otherwise use its or his best efforts to cause, an amendment
(the "Amendment") to the Company's articles of incorporation, as amended (the
"Articles") (i) to amend Section 4.2A(e) of Article Fourth of the Articles to
provide that the holders of the Series A Shares (as defined in the Articles) and
the Shares (as defined in this Agreement) shall vote together as a class on all
matters requiring a vote of such shares, including but not limited to the
election of one director upon the failure to declare dividends, and that, where
the vote of a majority of the Series A Shares is currently provided, the vote
required shall be a vote of a majority of the Series A Shares and the Shares,
voting together as a class, and (ii) to make such other changes to the Articles
as shall not adversely affect the rights, preferences or powers of the Shares or
the Series A Shares as the Company may reasonably request. The Purchaser
covenants agrees to attend, in person or by proxy, any shareholders meeting at
which the shareholders of the Company are to vote for such amendments to the
Articles and to vote or cause to be voted all of its Series A Shares at each
such meeting as set forth herein.
Section 7. RESTRICTIONS ON TRANSFER. (i) The Purchaser understands
and agrees that any certificates evidencing the Shares purchased pursuant to
this Agreement shall be stamped or endorsed with legends in substantially the
following form and the Purchaser shall be subject to the provisions of such
legends:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT
BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM AND AS SET FORTH HEREIN.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (2) INSIDE THE UNITED STATES TO A PERSON WHO IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a))(1),(2), (3) AND (7) UNDER THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR") IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO (i) THE RECEIPT BY THE
ISSUER OF A LETTER IN SUBSTAN-
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TIALLY THE FORM ATTACHED TO THE SUBSCRIPTION AGREEMENT PURSUANT TO WHICH
THIS SECURITY WAS ISSUED, (ii) UNLESS THE TRANSFER IS OF SECURITIES WITH A
PURCHASE PRICE OF NOT LESS THAN US$ 250,000, THE RECEIPT BY THE ISSUER OF
AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, AND
(iii) THE RECEIPT BY THE ISSUER OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE
ISSUER THAT SUCH REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, (3) OUTSIDE THE UNITED
STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULES 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) TO THE
ISSUER OR ITS AFFILIATES, OR (5) IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
(ii) The Purchaser understands and agrees that, as of the Closing
Date, the Shares shall bear the following additional legend and that the
Purchaser shall be subject to the provisions of such legend:
THIS SECURITY IS ISSUED PURSUANT TO AND IS SUBJECT TO THE TERMS AND
CONDITIONS OF THE ISSUER'S ARTICLES OF INCORPORATION, AS AMENDED.
(iii) The Purchaser understands and agrees that, as of the Closing
Date, the Options will be subject to the transfer restrictions under the Option
Deed and shall be stamped or endorsed with legends in the forms set forth in the
Option Deed and that the Purchaser shall be subject to the provisions of such
legends.
(iv) The Purchaser understands that the WAT ordinary units issuable
upon exercise of the Options will be subject to the transfer restrictions under
the WAT Trust Deed and the Option Deed and that the Trustee of WAT will not
recognize or effect transfers of ownership of the WAT ordinary units unless such
transfer restrictions
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are complied with and fully satisfied (so long as such transfer restrictions
shall apply to such WAT ordinary units).
Section 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties hereto contained in this Agreement
or otherwise made in writing in connection with the transactions contemplated
herein shall survive the making of this Agreement and transfer of the
Securities.
Section 9. NOTICES. All notices and other communications hereunder
shall be in writing and shall be delivered by hand or sent by first-class mail,
postage prepaid, as follows:
If to the Purchaser, at:
P.O. Box 2889
6401 DJ Heerien
The Netherlands
with a copy to:
U.S. Alpha Incorporated
450 Lexington Avenue, Suite 1800
New York, New York 10017
Attention: Jean Klijnen, Portfolio Manager
If to the Company, at:
11601 Wilshire Blvd., 12th Floor
Los Angeles, California 90025
Attention: Co-President
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Barry Mills
If to WAM, at
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Westfield America Management Limited
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Attention: Company Secretary
with a copy to:
The National Manager
Property Trusts
Perpetual Trustees Australia Limited
Level 7
1 Castlereagh Street
Sydney
Australia
Attention: Mr. Allan Cowper
If to the WAT Trustee, at
The National Manager
Property Trusts
Perpetual Trustees Australia Limited
Level 7
1 Castlereagh Street
Sydney
Australia
Attention: Mr. Allan Cowper
with a copy to:
Westfield America Management Limited
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Attention: Company Secretary
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or, in each case, at such address and to the attention of such person as either
party shall have furnished to the other by notice.
Section 10. TERMINATION. In the event the Closing does not occur on
or before June 15, 1997, the Company or the Purchaser may terminate this
Agreement by written notice to the other parties, after which time the Company,
WAT and the Purchaser shall have no further liability or obligation to each
other under this Agreement, unless such date is extended by the consent of the
parties hereto.
Section 11. RECONSTRUCTIONS. The Company agrees that until the
expiration of the Special Option Period (as defined in the Option Deed), prior
to any Reconstruction (as defined in the Option Deed) of the Company, it will
provide not less than 30 days prior written notice of such transaction to the
Purchaser and to WAT.
Section 12. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties hereto. This Agreement may be modified or
terminated only by an instrument in writing signed by the parties hereto.
Section 13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
on and shall inure to the benefit of the successors and assigns of the parties
hereto.
Section 14. HEADINGS. The headings of the sections of this Agreement
are solely for convenience of reference and shall not affect the meaning of any
of the provisions hereof.
Section 15. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of New York as applied to contracts made and fully performed
in New York.
Section 16. COUNTERPARTS. This Agreement may be executed in one or
more separate counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
Section 17. ISSUANCE AND OTHER TAXES. The Company shall pay or cause
to be paid all stamp, stamp duty, stamp duty reserve, documentary, registration,
transfer or similar taxes required to be paid in connection with the issuance to
the Purchaser of the Options, the exercise of the Options and the issuance of
ordinary units of WAT pursuant thereto and the issuance and sale to the
Purchaser of the Securities, and shall have caused all appropriate stock
transfer tax stamps to be affixed to the certificates representing the
Securities so sold and delivered. The Company shall file, indepen-
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dently or jointly with the Purchaser, as the law requires, all transfer tax
filings required to be filed by it in connection with the sale and delivery to
Purchaser of the Securities.
Section 18. NO DELAY; WAIVER. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
Section 19. SEVERABILITY. If any provision of this Agreement, or the
application of any such provision to any person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those as to which it is held invalid, shall not be affected thereby.
Section 20. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company
will deliver (in duplicate) to the Purchaser, so long as the Purchaser shall
hold any of the Securities:
(a) as soon as reasonably practicable after the end of each quarterly
fiscal period, a consolidated balance sheet of the Company and its
subsidiaries as at the end of such period, and a consolidated statement of
income and of retained earnings of the Company and its subsidiaries for
such period, setting forth in each case, in comparative form, figures for
the corresponding period of the previous fiscal year, all in reasonable
detail and certified as true and correct by a principal financial officer
of the Company, subject to year-end adjustments;
(b) as soon as practicable after the end of each fiscal year, a
consolidated balance sheet of the Company and its subsidiaries and a
consolidated statement of income and of retained earnings of the Company
and its subsidiaries for such year, setting forth in each case, in
comparative form, figures for the previous fiscal year, all in reasonable
detail and certified by independent certified public accountants; and
(c) promptly upon transmission thereof, copies of all financial
statements, proxy statements, reports and returns sent by the Company to
any class of its stockholders and of all registration statements and
regular and periodic reports, if any, filed by it with the United States
Securities and Exchange Com-
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mission or any governmental authority succeeding to the functions of such
Commission.
Section 21. INSPECTION. The Company will permit any authorized
representatives designated by the Purchaser (so long as the Purchaser shall hold
any of the Securities) at the Purchaser's expense, to visit and inspect any of
the properties of the Company or any of its subsidiaries, and to discuss its and
their affairs, finances and accounts with its and their officers, all at such
reasonable times and as often as may be reasonably requested.
Section 22. LOST, ETC., CERTIFICATES. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificate representing any of the Shares and, in case of any such loss, theft
or destruction, upon delivery of indemnity satisfactory to the Company, or in
case of any such mutilation, upon surrender and cancellation of such
certificate, the Company will at its expense make and deliver a new certificate,
of like tenor, in lieu of such lost, stolen, destroyed or mutilated certificate.
Upon surrender of any certificate representing any of the Shares to the Company
at its principal office, the Company at its expense will issue in exchange
therefor and deliver to the holder of the surrendered certificate a new
certificate or certificates, in such denomination or denominations as may be
requested by such holder.
Section 23. LIMITATION OF LIABILITY. As the WAT Trustee enters into
this Agreement only in its capacity as trustee of WAT, the WAT Trustee is liable
under this Agreement only up to the extent to which it is indemnified out of the
assets of WAT. The WAT Trustee is only personally liable to the extent that it
is fraudulent, negligent or in breach of trust. If the WAT Trustee is not
personally liable, the parties other than the WAT Trustee must not sue the WAT
Trustee personally or seek to wind it up to recover any outstanding money, and
the WAT Trustee is entitled to plead this clause as a bar to the taking of any
such proceedings.
Section 24. WAT TRUST DEED. Each of the parties to this Agreement,
other than the WAT Trustee, acknowledges that it has received a copy of the WAT
Trust Deed (as amended) establishing WAT and that it understands the rights and
obligations of the WAT Trustee and the Manager therein.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the date first above-written.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
----------------------------------------------------
Name: Peter S. Lowy
Title: Director & Co-President
WESTFIELD AMERICA MANAGEMENT
LIMITED, in its capacity as manager of
Westfield America Trust
By: /s/ Peter S. Lowy
----------------------------------------------------
Name: Peter S. Lowy
Title: Director
PERPETUAL TRUSTEE COMPANY LIMITED,
in its capacity as trustee of Westfield America
Trust
By: /s/ Gal Marie McGrath
----------------------------------------------------
Name: Gal Marie McGrath
Title: Attorney
STICHTING PENSIOENFONDS, ABP
By: /s/ W. Borgdorff
----------------------------------------------------
Name: W. Borgdorff
Title: Managing Director Real Estate
By: /s/ J. Mensonides
----------------------------------------------------
Name: J. Mensonides
Title: Managing Director Equities
18
<PAGE>
WESTFIELD HOLDINGS LIMITED
Level 24, 100 William Street
Sydney NSW 2011
May 21, 1997
To the U.S. Underwriters and International
Managers listed on Schedule A hereto and
to the holders of the Common Stock of Westfield
America, Inc. issued under Registration
Statement on Form S-11 (No. 333-22731)
Ladies and Gentlemen:
Reference is made to (i) that certain Promissory Note, dated the date
hereof, from Westland Management, Inc. and Westfield Partners, Inc. in the
original principal amount of $145 million, and (ii) that certain Pledge and
Security Agreement, dated as of the date hereof, from Westland Realty, Inc.,
Westland Management, Inc. and Westfield Partners, Inc., securing such Promissory
Note. Westland Realty, Inc., Westland Management, Inc. and Westfield Partners,
Inc. are indirect wholly-owned subsidiaries of Westfield Holdings Limited.
This letter will confirm that the Board of Directors of Westfield
Holdings Limited has authorized the following representation to each of the
addressees of this letter:
That (i) Westland Management, Inc. and Westfield Partners, Inc. will
not prepay the Promissory Note prior to May 20, 2004 except in
connection with a sale of the Garden State Plaza shopping center (or
Westfield Holdings' indirect interest therein) to an unaffiliated
third party, and (ii) if the Promissory Note shall be prepaid prior to
May 20, 2004 for any reason the Make-Whole Amount payable under the
Note shall be payable for the period through May 20, 2004.
This letter will further confirm that the undersigned acknowledges
that each of the addressees is relying on the foregoing representation in
connection with the issue and sale of Common Stock under the Registration
Statement on Form S-11 (No. 333-22731) referred to above.
Very truly yours,
WESTFIELD HOLDINGS LIMITED
By: /s/ Peter S. Lowy
------------------------
Name: Peter S. Lowy
<PAGE>
EXHIBIT 10.28
STOCK SUBSCRIPTION AGREEMENT
STOCK SUBSCRIPTION AGREEMENT, dated as of May 29, 1998, between
Westfield America, Inc., a Missouri corporation (the "COMPANY"), Perpetual
Trustee Company Limited, an Australian company (the "TRUSTEE"), and Westfield
America Management Limited, an Australian company (the "MANAGER"). Defined terms
used herein without definition shall have the respective meanings set forth in
Section 6 hereof.
W I T N E S S E T H:
WHEREAS, pursuant to the Trust Deed, dated March 28, 1996, as
amended (the "TRUST DEED"), between the Trustee and the Manager, Westfield
America Trust, an Australian public property trust ("WAT"), was created, and the
Trustee and the Manager have authority to act on behalf of WAT under the Trust
Deed;
WHEREAS, it is expected that the Manager will issue to eligible
investors in Australia 3,100,000 Series A Class Units (the "SERIES A UNITS"),
3,100,000 Series B Class Units (the "SERIES B UNITS") and 3,100,000 Series C
Class Units (the "SERIES C UNITS" and, together with the Series A Units and the
Series B Units, the "UNITS"), pursuant to the Deed of Variation No. 4, dated May
29, 1998 (the "DEED OF VARIATION"), to the Trust Deed;
WHEREAS, each Unit will have an application price of Aus.$50.20
per Unit, of which Aus.$0.20 per Unit will be paid at the time of original
issuance of the Units;
WHEREAS, the balance of the application price of Aus.$50.00 for
each of the Series A Units, the Series B Units and the Series C Units will be
payable by the holder thereof twenty-three business days prior to June 29, 2001,
June 28, 2002 and June 30, 2003, respectively;
<PAGE>
WHEREAS, the Manager has directed the Trustee on behalf of WAT to
subscribe for and purchase, and the Company desires to sell to the Trustee on
behalf of WAT, the number of shares of the Company's common stock, par value
$.01 per share (the "COMMON STOCK"), set forth herein on each Closing Date (as
defined herein), subject to the terms and conditions contained herein.
NOW, THEREFORE, to implement the foregoing and in consideration of
the mutual agreements contained herein, the parties hereto hereby agree as
follows:
1. PURCHASE AND SALE OF COMMON STOCK.
(a) PURCHASE OF COMMON STOCK. Subject to all of the terms and
conditions of this Agreement, the Trustee on behalf of WAT shall subscribe for
and purchase, and the Company shall sell to the Trustee on behalf of WAT, the
number of shares of Common Stock calculated as provided in Section 1(b) (the
"SUBSCRIPTION SHARES"), for an aggregate purchase price in U.S. dollars
calculated as provided in Section 1(c) (the "PURCHASE PRICE"), at the First
Closing, the Second Closing and the Third Closing, as the case may be, provided
for in Section 2(a) hereof.
(b) SUBSCRIPTION SHARES. The number of shares of Common Stock
to be subscribed for and purchased by the Trustee on behalf of WAT at each
Closing shall be calculated by dividing the applicable Subscription Amount by
the applicable Adjusted Average Share Price, rounded to the nearest whole share,
PROVIDED that, for purposes of this calculation and the definition of the term
"Subscription Shares", the number of Subscription Shares shall in no event
exceed the NYSE Maximum Permitted Number of Shares.
(c) PURCHASE PRICE. The Purchase Price payable at each Closing
shall equal the product of (x) the number of Subscription Shares to be purchased
at such Closing, times (y) the Adjusted Average Share Price.
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<PAGE>
(d) NYSE CASH ADJUSTMENT AMOUNT. Unless the Company has made a
Cash Election or a Share Election pursuant to Section 1(e), if the NYSE Maximum
Permitted Number of Shares is less than the Unadjusted Share Number in respect
of such Closing, (i) the Trustee on behalf of WAT shall subscribe for a number
of Subscription Shares equal to the NYSE Maximum Permitted Number of Shares and
(ii) the Company shall pay in cash to the Trustee on behalf of WAT as liquidated
damages an amount in U.S. dollars (the "CASH ADJUSTMENT AMOUNT") equal to the
product of (x) such Unadjusted Share Number less the NYSE Maximum Permitted
Number of Shares in respect of such Closing, times (y) the Average Share Price,
times (z) 0.05. Any Cash Adjustment Amount shall be payable at the Closing to
which it relates, as provided in Section 2(b).
(e) CASH OR SHARE ELECTION. Notwithstanding any other provision
of this Agreement, the Company may, in its sole and absolute discretion, by
notice to the Trustee and the Manager at any time prior to or on May 25, 2001 in
respect of the First Closing, May 23, 2002 in respect of the Second Closing and
May 23, 2003 in respect of the Third Closing (or, in any case, if such day is
not a Business Day, the immediately preceding Business Day), (A) elect (a "CASH
ELECTION") to pay in cash to the Trustee on behalf of WAT, in lieu of delivering
Subscription Shares at such Closing, an amount in U.S. dollars (the "CASH
ELECTION AMOUNT") equal to the product of (x) the Unadjusted Share Number, times
(y) the Average Share Price, times (x) 0.05, or (B) elect (a "SHARE ELECTION")
to deliver to the Trustee on behalf of WAT, in lieu of delivering Subscription
Shares at such Closing, a number of shares of Common Stock ("ELECTION SHARES")
calculated by dividing the applicable Cash Election Amount (as calculated
pursuant to the foregoing clause (A)) by the applicable Average Share Price,
rounded to the nearest whole share. Any Cash Election or Share Election shall
relate to all of the Subscription Shares otherwise required to be delivered at
the applicable Closing, and in no event shall the Company be entitled to make a
partial Cash Election or Share Election.
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<PAGE>
Any Cash Election Amount shall be payable prior to or at the
Closing to which the relevant Cash Election relates, as provided in Section
2(b). Any Election Shares shall be deliverable prior to or at the Closing to
which the relevant Share Election relates, as provided in Section 2(b). The
Company shall be entitled to make either a Cash Election or a Share Election in
respect of any or all Closings and in its sole and absolute discretion. A Cash
Election or a Share Election made in respect of any Closing shall not affect the
parties' respective rights and obligations under this Agreement in respect of
any subsequent Closing, subject to all of the terms and conditions hereof.
(f) UNIT REDEMPTION TO HAVE NO EFFECT. The obligations of the
Trustee and the Manager under this Agreement, including, without limitation, the
obligation to subscribe for and purchase shares of Common Stock at each Closing,
shall continue in full force and effect notwithstanding any election by the
Manager to cause the Trustee to redeem the Series A Units, the Series B Units or
the Series C Units pursuant to the Deed of Variation.
(g) NOTICE BY MANAGER AND TRUSTEE. The Manager and the Trustee
hereby agree to provide written notice to the Company at least four Business
Days prior to each Closing Date of the aggregate of the Remaining Instalment
Amounts paid or deemed to be paid to the Trustee or the Manager on behalf of WAT
in respect of Series A Units, Series B Units and Series C Units, respectively,
pursuant to the Deed of Variation.
(h) ASX MAXIMUM PERMITTED NUMBER OF SHARES. In no event shall
the Trustee be required to subscribe for and purchase, or the Company be
required to sell to the Trustee, shares of Common Stock in excess of the number
of shares of Common Stock for which the Trustee on behalf of WAT is permitted to
subscribe in accordance with the terms of clause 1.3 of the letter, dated March
27, 1998, from the Australian Stock Exchange (the "ASX") to the Manager, as and
4
<PAGE>
to the extent that such terms may be waived from time to time by the ASX
(such number of shares being referred to herein as the "ASX MAXIMUM PERMITTED
NUMBER OF SHARES"). If the NYSE Maximum Permitted Number of Shares exceeds
the ASX Maximum Permitted Number of Shares in respect of any Closing, then
for purposes of the relevant provisions of this Agreement in respect of such
Closing all references to the term "NYSE Maximum Permitted Number of Shares"
shall be deemed to be "ASX Maximum Permitted Number of Shares".
2. CLOSINGS.
(a) TIME AND PLACE. Subject to the satisfaction of the
conditions contained herein, (i) the first closing of the sale and the purchase
of Subscription Shares and, if applicable, the payment of any Cash Adjustment
Amount or Cash Election Amount or the delivery of any Election Shares (the
"FIRST CLOSING") shall be held at 9:00 a.m. (New York time) on June 29, 2001 or
such other date pursuant to clause (x) or (y) below (the "FIRST CLOSING DATE"),
(ii) the second closing of the sale and the purchase of Subscription Shares and,
if applicable, the payment of any Cash Adjustment Amount or Cash Election Amount
or the delivery of any Election Shares (the "SECOND CLOSING") shall be held
at 9:00 a.m. (New York time) on June 28, 2003 or such other date pursuant to
clause (x) or (y) below (the "SECOND CLOSING DATE") and (iii) the third
closing of the sale and the purchase of Subscription Shares and, if
applicable, the payment of any Cash Adjustment Amount or Cash Election Amount
or the delivery of any Election Shares (the "THIRD CLOSING" and, together
with the First Closing and the Second Closing, the "CLOSINGS") shall be held
at 9:00 a.m. (New York time) on June 30, 2003 or such other date pursuant to
clause (x) or (y) below (the "THIRD CLOSING DATE" and, together with the
First Closing Date and the Second Closing Date, the "CLOSING DATES"), or, in
each case, (x) at such other time and date as the parties may agree in
writing or (y) in the case of payment of any Cash Election Amount or delivery
of any Election Shares at such earlier date as the Company may elect in its
sole and absolute discretion by
5
<PAGE>
notice in writing to the Trustee and the Manager. Each Closing shall be held at
the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New York.
(b) DELIVERY BY THE COMPANY. At each Closing, subject to
Section 1(e)(A), the Company shall deliver to the Trustee on behalf of WAT a
stock certificate registered in the Trustee's name and representing the
Subscription Shares to be delivered at such Closing pursuant to Section 1(a)
or the Election Shares to be delivered at such Closing pursuant to Section
1(e), as the case may be. If the Company is required to pay a Cash
Adjustment Amount pursuant to Section 1(d) at any Closing, the Company shall
pay to the Trustee on behalf of WAT, by wire transfer of immediately
available funds to the account of the Trustee with a bank in New York City
designated at least two Business Days prior to the relevant Closing Date,
such Cash Adjustment Amount. If the Company has made a Cash Election
pursuant to Section 1(e)(A) in respect of any Closing, the Company shall pay
to the Trustee on behalf of WAT, by wire transfer of immediately available
funds to the account of the Trustee with a bank in New York City designated
at least two Business Days prior to the relevant Closing Date, the applicable
Cash Election Amount.
(c) DELIVERY BY THE TRUSTEE AND MANAGER. At each Closing,
subject to Section 1(e), the Trustee and the Manager shall pay or cause to be
paid to the Company, by wire transfer of immediately available funds to the
account of the Company with a bank in New York City designated at least two
Business Days prior to the relevant Closing Date, the Purchase Price payable
pursuant to Section 1(c) hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Trustee as follows:
(a) AUTHORIZATION. The Company has full power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in
6
<PAGE>
accordance with the terms hereof. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Company.
(b) COMMON STOCK. The Subscription Shares or the Election
Shares, as applicable, to be delivered by the Company at each Closing, as of the
relevant Closing Date, will have been duly authorized for issuance and, when
delivered in accordance with this Agreement, will be validly issued, fully paid
and non-assessable.
4. REPRESENTATIONS AND WARRANTIES OF TRUSTEE AND MANAGER. The
Manager and the Trustee hereby represent and warrant to the Company as follows:
(a) AUTHORIZATION. Each of the Trustee and the Manager has full
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof and on
behalf of WAT. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by or on
behalf of each of WAT, the Trustee and the Manager.
(b) SECURITIES LAW MATTERS. The Manager and the Trustee
acknowledge receipt of advice from the Company that (i) neither the Subscription
Shares nor the Election Shares, as the case may be, will be registered under the
Securities Act or qualified under any state securities or "blue sky" laws and
(ii) a restrictive legend stating that such shares of Common Stock have not been
registered under the U.S. Securities Act of 1933, as amended, and setting forth
or referring to the restrictions on transferability and sale thereof shall be
placed on the certificates representing such shares.
7
<PAGE>
5. CONDITIONS.
(a) CONDITIONS TO THE OBLIGATIONS OF THE TRUSTEE. The
obligation of the Trustee to purchase the Subscription Shares at each Closing is
subject to the satisfaction or waiver at or prior to the applicable Closing Date
of the following conditions:
(i) The representations and warranties of the Company contained
in this Agreement shall be true and correct in all material respects at
and as of the date hereof, and true and correct in all material respects
at and as of the applicable Closing Date as if made at and as of such
time; and
(ii) The Company shall have performed in all material respects
its obligations under this Agreement required to be performed by it at or
prior to the applicable Closing Date pursuant to the terms hereof.
(iii) No Bankruptcy Event or Acceleration Event with respect to
the Company shall have occurred and be continuing, and the Trustee shall
have received a certificate of the president or a co-president, chief
financial officer or a vice president of the Company, dated as of the
applicable Closing Date, to the effect that no such Bankruptcy Event or
Acceleration Event has occurred and is continuing (in each case, subject
to clause (y) of the definition of "Acceleration Event").
A "BANKRUPTCY EVENT" shall occur with respect to the Company if
(x) a court of appropriate jurisdiction enters an order or decree under
any Bankruptcy Law that (A) is for relief against the Company in an
involuntary case, (B) appoints a Receiver of the Company or for all or
substantially all of its property or (C) orders the liquidation of the
Company, or (y) the Company pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry
of an order for relief in an involuntary case, (C)
8
<PAGE>
consents to the appointment of a Receiver of it or for all or
substantially all of its property, or (D) makes a general assignment for
the benefit of its creditors.
An "ACCELERATION EVENT" shall occur with respect to the Company if
the Company defaults under the terms of any agreement or instrument
evidencing or under which the Company has at the date of this Agreement
or hereafter outstanding any Senior Indebtedness that is full recourse to
the Company and such Senior Indebtedness shall be accelerated so that the
same shall be or become due and payable prior to the date on which the
same would otherwise become due and payable and the aggregate principal
amount thereof so accelerated exceeds U.S.$150,000,000 and such
acceleration is not rescinded or annulled within 90 Business Days,
PROVIDED, HOWEVER, that (x) if such default under such agreement or
instrument is remedied or cured by the Company or waived by the holders
of such Senior Indebtedness, then the Acceleration Event hereunder by
reason thereof shall be deemed likewise to have been thereupon remedied,
cured or waived or (y) if the Company provides to the Trustee a
certificate of the president or a co-president, chief financial officer
or a vice president of the Company to the effect that the Company holds
sufficient funds, or has sufficient availability under its credit
facilities, to discharge such Senior Indebtedness, then for all purposes
of this Agreement the Acceleration Event shall be deemed not to have
occurred.
(b) CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to sell the Subscription Shares or to deliver the
Election Shares, as the case may be, at each Closing, or to pay any amount to
the Trustee as provided herein, is subject to the satisfaction or waiver at
or prior to the applicable Closing Date of the following conditions:
9
<PAGE>
(i) The representations and warranties of the Manager and the
Trustee contained in this Agreement shall be true and correct in all
material respects at and as of the date hereof, and true and correct in
all material respects at and as of the applicable Closing Date as if made
at and as of such time; and
(ii) Each of the Trustee and the Manager shall have performed in
all material respects its obligations under this Agreement required to be
performed by it at or prior to the applicable Closing Date pursuant to
the terms hereof.
6. DEFINITIONS. For the purposes of this Agreement, the
following terms shall have the following respective meanings:
"ADJUSTED AVERAGE SHARE PRICE" means the product of (x) the
Average Share Price, times (y) 0.95.
"AVERAGE SHARE PRICE" means the average price per share of Common
Stock weighted by volume traded on the relevant Determination Date (as reported
by Bloomberg L.P., or, if not so reported, another authoritative source).
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a
day on which banking institutions in New York are authorized or obligated by law
or executive order to close.
"DETERMINATION DATE" means the Trading Day immediately prior to
the First Closing Date, the Second Closing Date or the Third Closing Date, as
the case may be.
"EXCHANGE RATE" means (x) the spot rate for the exchange of
Australian dollars to U.S. dollars on the relevant Determination Date as quoted
on the Reuters Screen
10
<PAGE>
"HSRA" or any equivalent replacement reference page at 4:00 p.m. in New York
City on such date or (y) if no such rate is available on such date, the average
of the mid-rates for the exchange of Australian dollars to U.S. dollars as
quoted by any two of National Australia Bank, Commonwealth Bank of Australia,
Westpac Banking Corporation, and Australia and New Zealand Banking Group Limited
at 4:00 p.m. in New York City on the relevant Determination Date; in each case
as determined by the Company, whose determination shall be conclusive.
"INDEBTEDNESS" means (i) the principal obligations of the Company
for borrowed money (other than (x) the deferred purchase price of property or
services and (y) indebtedness to trade creditors and service providers incurred
in the ordinary course of business) and (ii) the principal obligations of the
Company evidenced by bonds, notes, debentures or other similar instruments.
"NYSE" means the New York Stock Exchange.
"NYSE MAXIMUM PERMITTED NUMBER OF SHARES", in respect of any
Closing, means (except as provided in Section 1(h) hereof) the aggregate number
of shares of Common Stock that the Company is permitted to issue at such Closing
without stockholder approval, whether such Closing is considered as one
transaction or as part of a series of related transactions, in accordance with
the rules of the NYSE (or, if the Company has obtained requisite stockholder
approval to issue shares in excess of such number, the aggregate number of
shares of Common Stock that the Company is permitted to issue at such Closing in
accordance with such approval), all as determined conclusively by the Company.
"RECEIVER" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"REMAINING INSTALMENT AMOUNT", in respect of any Unit, means the
balance of the application price of
11
<PAGE>
Aus.$50.00 payable by the holder of such Unit pursuant to the Deed of Variation.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Company
that is not subordinated in right of payment to any other Indebtedness of the
Company.
"SUBSCRIPTION AMOUNT" means the amount obtained by the Trustee
or the Manager on behalf of WAT as of the relevant Closing Date by converting
into U.S. dollars an amount equal to the aggregate remaining Instalment
Amounts paid or deemed to be paid to the Trustee or the Manager in respect of
Series A Units, Series B Units or Series C Units, as the case may be,
pursuant to the Deed of Variation and the Underwriting Agreement, PROVIDED
that (x) if the Company has made a Cash Election or a Share Election pursuant
to Section 1(e) or (y) if the Manager has elected to cause the Trustee to
redeem the Series A Units, the Series B Units or the Series C Units, as the
case may be, pursuant to the Deed of Variation, "Subscription Amount" in
respect of any Closing means the U.S. dollar equivalent, calculated at the
applicable Exchange Rate, of the aggregate Remaining Instalment Amounts that
would have been payable to the Trustee or the Manager in respect of Series A
Units, Series B Units or Series C Units, as the case may be, pursuant to the
Deed of Variation.
"TRADING DAY" means a day on which the NYSE is open for the
transaction of business.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement,
dated May 4, 1998, between the Manager and SEC Warburg Dillon Read Australia
Limited, relating to the Units.
"UNADJUSTED SHARE NUMBER", in respect of any Closing, means the
number of shares of Common Stock calculated by dividing the applicable
Subscription Amount by the applicable Adjusted Average Share Price, rounded
to the nearest whole share, without regard to the NYSE Maximum
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<PAGE>
Permitted Number of Shares.
7. WITHHOLDING TAXES. If the Company is required under U.S.
federal, state or local tax law to withhold any taxes from or in respect of a
payment of the Cash Adjustment Amount, the Cash Election Amount or the Election
Shares, then the amount payable shall be increased as necessary so that, after
all applicable withholding (including withholding applicable to additional sums
payable under this Section 7), the Trustee on behalf of WAT receives a sum (in
cash or shares) that would have been received had no withholding been required.
8. TERMINATION. If the Units are not issued prior to or on
June 19, 1998, this Agreement shall terminate and be of no further force or
effect.
9. TRUSTEE'S LIMITATION OF LIABILITY.
(a) The Trustee enters into this Agreement only in its capacity
as trustee of WAT and in no other capacity. Any liability arising under or in
connection with this Agreement will be limited to, and can be enforced against
the Trustee only to the extent to which such liability can be satisfied out of,
the property or assets of WAT from which the Trustee is actually indemnified for
such liability. This limitation of the Trustee's liability under this Agreement
will apply despite any other provision of this Agreement and extends to all
liabilities and obligations of the Trustee in any way related to any
representation, warranty, conduct, omission, agreement or transaction related to
this Agreement, subject to paragraph (c) (i) of this Section 9.
(b) Neither the Company nor the Manager may sue the Trustee in
any capacity other than as trustee of WAT, including to seek the appointment
of a receiver (except in relation to the property or assets of WAT), a
liquidator, an administrator or any similar person with respect to the Trustee
or to prove in any liquidation, administration or
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<PAGE>
arrangement of or affecting the Trustee (except in relation to the property or
assets of WAT), subject to paragraph (c)(i) of this Section 9.
(c) Notwithstanding the foregoing paragraphs (a) and (b), the
provisions of this Section 9 shall not: (i) apply to any obligation or
liability of the Trustee to the extent that it is not satisfied because under
the Trust Deed establishing WAT or by operation of law there is a reduction in
the extent of the Trustee's indemnification out of the property or assets of WAT
as a result of the Trustee's fraud, negligence or breach of trust; or (ii) in
any way limit the right of the Company to bring any action or proceeding for the
performance by the Trustee (in its capacity as trustee of WAT) or the Manager of
any of their respective obligations under this Agreement or the Company's right
to recover damages from the property or assets of WAT.
10. MISCELLANEOUS.
(a) NOTICES. All notices and other communications made in
connection with this Agreement shall be in writing and shall be (a) sent by
facsimile, with a copy mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or (b) transmitted by hand delivery,
addressed as follows (or at such other address as may be specified in writing to
the other party hereto):
(i) if to the Company, to:
Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Telecopy: 310-478-8776
Attention: Irv Hepner, Secretary
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(ii) if to the Manager, to:
Westfield America Management Limited
Level 24 Westfield Towers
100 William Street
Sydney NSW 2011 Australia
Telecopy: 011 612 93587077
Attention: Craig Van der Laan, Secretary
(iii) if to the Trustee, to:
Perpetual Trustee Company Limited
39 Hunter Street
Sydney NSW 2000 Australia
Telecopy: 011 612 92315606
Attention: Allan Cowper, National Manager - Property Trusts
All such notices and communications shall be deemed to have been
received on the date of delivery.
(b) BINDING EFFECT; BENEFITS, ETC. This Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors or assigns any benefit
or any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained herein.
(c) WAIVER; AMENDMENT. (i) WAIVER. The Company on the one
hand and the Trustee and the Manager (considered as one party for purposes of
this paragraph (c)) on the other hand may by written notice to the other party
hereto (A) extend the time for the performance of any of the obligations or
other actions of the other party under this Agreement, (B) waive compliance with
any of the conditions or covenants of the other party contained in this
Agreement and (C) waive or modify performance of any of the
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obligations of the other party under this Agreement. Except as provided in
the preceding sentence, no action taken pursuant to this Agreement shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representations, warranties, conditions or agreements contained
herein. The waiver by either party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any preceding
or succeeding breach and no failure by either party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
(ii) AMENDMENT. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Company, the
Trustee and the Manager.
(d) ASSIGNABILITY. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall
be assignable by the Company, the Manager or the Trustee without the prior
written consent of the other parties.
(e) SEPARABILITY. In case any provision in this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
(f) GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF, OTHER THAN ANY MANDATING THE APPLICATION OF SUCH LAWS).
The Company, the Trustee and the Manager each irrevocably
submits to the non-exclusive jurisdiction of any New York State or United
States Federal court sitting in the City of New York over any suit, action or
proceeding arising
16
<PAGE>
out of or relating to this Agreement. The Company, the Trustee and the
Manager each irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in any such court and any claim that any such
proceeding brought in such court has been brought in an inconvenient forum.
The Company, the Trustee and the Manager each agree that final judgment in
any such suit, action or proceeding brought in such a court shall be
conclusive and binding on it and may be enforced in any court to the
jurisdiction of which it is subject by a suit upon such judgment. The
Company, the Trustee and the Manager each hereby irrevocably consent to
service of copies of the summonses and complaints and any other process.
Such service may be made by mailing or delivering a copy of such process to
their respective addresses set forth above or by any other means provided for
by applicable law.
(g) SECTION AND OTHER HEADINGS, ETC. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
17
<PAGE>
IN WITNESS WHEREOF, the Company, the Manager and the Trustee have
duly executed this Agreement by their authorized representatives as of the date
first above written.
WESTFIELD AMERICA, INC.
By: /s/ Craig Van Der Laan De Vries
--------------------------------
Name: CRAIG VAN DER LAAN DE VRIES
Title: ATTORNEY APPOINTED PURSUANT TO A
POWER OF ATTORNEY DATED
26 MAY 1998
WESTFIELD AMERICA MANAGEMENT
LIMITED, As Manager of Westfield
America Trust
By: /s/ Victor Woog Antink
-------------------------------
Name: VICTOR WOOG ANTINK
Title: ATTORNEY APPOINTED PURSUANT TO A
POWER OF ATTORNEY DATED 27 MAY
1998
PERPETUAL TRUSTEE COMPANY LIMITED,
As Trustee of Westfield America Trust
By: /s/ Gal Marie McGrath
--------------------------------
Name: Gal Marie McGrath
Title: ATTORNEY under power of
attorney dated 28 May 1998
18
<PAGE>
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT (the "AGREEMENT") is made as of the 8th day of
April, 1986, between MISSION VALLEY PARTNERSHIP ("OWNER"), a California limited
partnership, and MAY CENTERS, INC. ("MANAGER"), a Missouri corporation.
RECITALS
A. Owner is the owner of certain lands situated in the City of San
Diego, County of San Diego and State of California (the "SHOPPING CENTER
PARCEL"), more particularly described in Exhibit "A", attached hereto and made a
part hereof, which have been developed as a regional shopping center (the
"SHOPPING CENTER") presently operating under the name "Mission Valley Center".
B. Owner is a California limited partnership composed of Endowment and
Foundation Realty, Ltd. -- JMB-III, a Delaware corporation ("ENDOWMENT"), May
Centers, Inc., a Missouri corporation, Somerset Ltd., a California limited
partnership ("SOMERSET"), Sterling Hutcheson, an individual ("HUTCHESON"), and
Barbara G. Archer, as Trustee of the Barbara G. Archer Trust ("ARCHER TRUST").
C. Manager is experienced in the operation and management of shopping
centers.
D. Owner and Manager are entering into this Agreement to establish the
terms and conditions under which Manager shall operate and manage the Shopping
Center on behalf of Owner.
AGREEMENTS
In consideration of the mutual promises contained herein, Owner and Manager
covenant and agree as follows:
ARTICLE I
EMPLOYMENT OF MANAGER; DEFINITIONS
SECTION 1.1 Owner employs Manager as its sole and exclusive agent to
perform the services described in this Agreement. Manager accepts such
employment and agrees to perform such services as an independent contractor.
Owner authorizes Manager to exercise all powers with respect to the Shopping
Center as may be reasonably necessary or proper for the performance of Manager's
duties under the terms of this Agreement.
SECTION 1.2 As used in this Agreement, the following capitalized terms
shall have the meanings indicated below:
(a) "AFFILIATE" shall have the meaning set forth in Section 7.1 hereof.
(b) "AGREEMENT" shall have the meaning set forth in the Preamble hereto;
(c) "ANNUAL PERIOD" shall have the meaning set forth in Section 5.1
hereof.
(d) "APPROVED BUDGET" shall have the meaning set forth in Section 2.1(c)
hereof.
(e) "APPROVED LEASING PLAN" shall have the meaning set forth in Section
2.1(c) hereof.
(f) "CO-PARTNER" shall have the meaning set forth in Section 1.1E of the
General Partners Agreement.
(g) "DIRECT PAYROLL COSTS" shall have the meaning set forth in Section
17.1(a) hereof.
1.
<PAGE>
(h) "ENDOWMENT" shall have the meaning set forth in Recital Paragraph B.
(i) "EXCESS MANAGEMENT EXPENSES" shall have the meaning set forth in
Section 17.1 hereof.
(j) "EXISTING NOTE" shall have the meaning set forth in Section 1.1F of
the General Partners Agreement.
(k) "GENERAL PARTNERS" shall have the meaning set forth in Section 1.1G of
the General Partners Agreement.
(l) "GENERAL PARTNERS AGREEMENT" shall have the meaning set forth in
Section 1.1H of the General Partners Agreement.
(m) "INDIRECT PAYROLL COSTS" shall have the meaning set forth in Section
17.1(b) hereof.
(n) "INVESTOR" shall have the meaning set forth in Section 1.1I of the
General Partners Agreement.
(o) "MANAGEMENT EXPENSES" shall have the meaning set forth in Section 17.1
hereof.
(p) "MANAGER" shall have the meaning set forth in the Preamble hereto.
(q) "MAY AFFILIATE" shall have the meaning set forth in Section 1.1M of
the General Partners Agreement.
(r) "NON-DISCRETIONARY EXPENDITURE" shall have the meaning set forth in
Section 5.5A(4)(2) of the General Partners Agreement.
(s) "NON-REQUESTING PARTY" shall have the meaning set forth in Section
16.3 hereof.
(t) "NOTICE" shall have the meaning set forth in Section 8.1 hereof.
(u) "OWNER" shall have the meaning set forth in the Preamble.
(v) "OWNER'S ALLOCABLE SHARE" shall have the meaning set forth in Section
17.1(b) hereof.
(w) "OWNER'S OVERHEAD SHARE" shall have the meaning set forth in Section
17.1(c) hereof.
(x) "REQUESTING PARTY" shall have the meaning set forth in Section 16.3
hereof.
(y) "SHOPPING CENTER" shall have the meaning set forth in Recital
Paragraph A.
(z) "SHOPPING CENTER BUDGET" shall have the meaning set forth in Section
2.1 hereof.
(aa) "SHOPPING CENTER PARCEL" shall have the meaning set forth in Recital
Paragraph A.
(bb) "TERM" shall have the meaning set forth in Section 3.1 hereof.
ARTICLE II
MANAGER'S OBLIGATIONS
SECTION 2.1 Manager shall perform the following services with respect to
the Shopping Center:
(a) Manager shall maintain liaison with the design, engineering,
construction staffs and other special consultants engaged by Owner.
(b) Manager shall submit to Owner from time to time and, when required
under the terms of this Agreement, request Owner's approval of
2.
<PAGE>
Manager's recommendations for the operation of the Shopping Center, including,
but not limited to:
(i) the number and type of employees to be employed;
(ii) procedures for the collection of rents and other charges;
(iii) maintenance, repair and expansion of the Shopping Center;
(iv) an insurance program for the Shopping Center; and
(v) marketing and promotion of the Shopping Center and the
establishment of such merchants' association or promotion and marketing funds as
Manager shall deem appropriate.
(c) The following provisions shall apply to the budget and leasing plan
for the Shopping Center:
(i) Not later than November 30th of each year, Manager shall prepare
and submit for Owner's approval, which approval shall not be unreasonably
withheld or delayed, a shopping center budget ("SHOPPING CENTER BUDGET") for the
next calendar year provided, however, for the 1986 calendar year, the Shopping
Center Budget in the form of Exhibit "E" attached hereto and made a part hereof
is approved and in addition, up to $75,000 may be spent during 1986 for
predevelopment expenses of the type contemplated by Section 5.4E(2) of the
General Partners Agreement. The Shopping Center Budget shall set forth in
reasonable detail the estimated operating receipts and expenditures of Owner on
a month-to-month basis for the period covered by the Shopping Center Budget, and
shall show amounts reserved for on-going expenses, any anticipated extraordinary
expenses, contingencies and capital expenditures and source of funds with
respect thereto (including the amount and the approximate date funds will be
needed for such expenses). The Shopping Center Budget shall also contain, as a
separate line item for informational purposes only, an estimate of the
"Management Expenses" (as defined in Section 5.1 hereof) that will be payable to
Manager during the period covered by the Shopping Center Budget. Owner may not
disapprove the Shopping Center Budget on the basis of the estimate of Management
Expenses contained in the Shopping Center Budget, nor shall the amount of
Management Expenses payable during the period covered by the Shopping Center
Budget be limited by the estimate of such expenses contained in the Shopping
Center Budget. The Shopping Center Budget shall be substantially in the form of
budget attached hereto as Exhibit "B". If Owner does not approve the most
recently submitted Shopping Center Budget or proposed revision thereof, then
Manager shall continue to operate under the most-current "Approved Budget",
modified as necessary to (a) authorize "Non-Discretionary Expenditures" and (b)
to take into account expenditures which have already been made. The Shopping
Center Budget and amendments thereto as approved by Owner in accordance with the
terms hereof shall be herein called the "APPROVED BUDGET".
(ii) In connection with the budgeting process, but not later than
November 30th of each year, Manager shall submit for the reasonable approval of
Owner a comprehensive leasing plan and rent schedule, which shall include a
statement of the space Manager expects to be leased during such year, the
proposed tenant (if known) and the use proposed for the space to be leased, the
fixed or minimum rent and the method of calculation of percentage rent it
expects to obtain for such space, any tenant allowances and leasing
3.
<PAGE>
commissions and all other material financial provisions of a tenant lease. The
leasing plan and rent schedule thereto, as approved by Owner in accordance with
the terms hereof, shall be herein called the "APPROVED LEASING PLAN".
(iii) Manager shall have the right and authority to implement the
Approved Budget and Approved Leasing Plan, provided that Manager operates within
the parameters of the same. Manager shall be required to obtain the Owner's
prior written approval for actions to be taken by Manager which deviate from the
terms of the Approved Budget or Approved Leasing Plan, provided, however, if a
given action is of such a nature that Co-Partner (as a May Affiliate) is
authorized to take such action pursuant to Section 5.5A(3) or Section 5.5B(3),
respectively, but subject to Section 5.6 of the General Partners Agreement
without the prior approval of Investor, such approval may be given by Co-Partner
on behalf of Owner, and such approval may be oral.
(d) Manager shall negotiate all leases with tenants for space within
the Shopping Center and all extensions, renewals, modifications, amendments or
terminations thereof and shall submit all such agreements to Owner for
execution. All such leases, unless otherwise approved by Owner, shall be
negotiated substantially in accordance with:
(i) the Approved Leasing Plan as amended from time to time;
(ii) the standard form of lease approved by Owner and its counsel, from
time to time, subject to reasonable negotiation; and
(iii) administrative procedures established or approved by Owner for
securing Owner's approval of the business and legal terms of each lease,
processing lease data forms, and processing the final draft for tenant's and
Owner's approval, execution and delivery.
(e) Manager shall maintain a central control file of all leases
relating to the Shopping Center and shall, upon request, furnish copies of such
leases to Owner. Manager shall: (i) review plans and specifications for tenant
improvements; (ii) consult with tenants and their respective architects,
engineers, contractors and other representatives regarding tenants' plans and
specifications; and (iii) coordinate, to the extent necessary, the construction
of tenant improvements.
(f) Manager shall bill tenants and other occupants in the Shopping
Center for, and shall use diligent efforts to collect, all fixed rents,
percentage rents and other sums, whether payable as additional rent or
otherwise, payable by such tenants and occupants under their respective leases
and other agreements, or by other parties under license, service or other
agreements. Manager shall obtain and review statements of sales furnished by
tenants to support their payment of percentage rentals or other sums and
deductions, and shall furnish a summary of such statements to Owner on a
quarterly basis. Manager may not institute, prosecute or settle on behalf of
Owner any legal or arbitration proceedings in connection with the tenant leases
without the prior written approval by Owner, provided, however, if Co-Partner
(as a May Affiliate) is authorized to take any such action pursuant to Section
5.5B(3) of the General Partners Agreement without the prior approval of
Investor, Co-Partner may give such consent on behalf of Owner, and such consent
may be oral. Manager shall keep Owner advised of Manager's
4.
<PAGE>
collection activities from time to time and shall notify Owner of any claims
which Manager deems to be uncollectable.
(g) Manager shall use diligent efforts to enforce the performance by
tenants of all requirements of their respective leases.
(h) Manager shall cause the Shopping Center to be maintained in good
sanitary, orderly and safe operating condition and repair at Owner's cost,
subject to the terms of the Approved Budget, and shall supervise the maintenance
thereof. Manager shall, subject to the terms of the Approved Budget, (i) hire
such persons, firms or corporations and purchase or lease such equipment and
supplies at reasonable rates and costs as may be necessary or desirable to
accomplish such purposes, and (ii) negotiate and administer contracts with third
parties for electricity, gas, fuel supply, water, telephone, window washing,
exterminating, equipment maintenance, trash handling and other contracts
relating to the operation or maintenance of the Shopping Center to the extent
that such services are not provided by Manager; however, Manager shall not enter
into any agreement with an "Affiliate" of Manager or of Investor or
Co-Partner without the prior written consent of Owner, provided, however,
that if Co-Partner (as a May Affiliate) is authorized to do so pursuant to
Section 5.6B(2) of the General Partners Agreement without the prior consent
of Investor, then Co-Partner may give such approval and such approval may be
oral.
(i) Manager shall maintain the books, records and accounts of Owner and
shall prepare and submit to Owner, within 45 days after the end of the
just-concluded quarter, financial reports on the operation of the Shopping
Center relating to such quarter. Such reports shall include, without
limitation: income and expense statements, containing monthly and year-to-date
information; statements listing rent delinquencies; leasing status report;
statements reconciling material variances between the actual receipts and
expenditures and the amount projected for such items as set forth in the
applicable Approved Budget; and such other statements and reports as may be
reasonably requested by Owner. Such financial reports shall be substantially in
the form attached hereto as Exhibit "C". In addition, Manager shall assist
Owner and Owner's accountants in preparing such annual financial reports and tax
returns as may be required by Owner. Owner shall have the right to examine such
books and records at any time during normal business hours at Manager's place of
business and make copies thereof.
(j) Manager shall advise Owner as to insurance coverage and shall
procure insurance coverage for the Shopping Center in accordance with Article 15
hereof.
(k) Manager shall organize and administer periodic meetings with Owner
in order to review the status of the Shopping Center and establish direction as
necessary.
(l) If directed by Owner, Manager shall explore, from time to time, the
feasibility of expanding the Shopping Center or of developing additional
improvements on the Shopping Center Parcel, and shall make such proposals to
Owner as Manager shall deem appropriate in connection therewith. Co-Partner (as
a May Affiliate) shall be entitled to give such authorization to Manager without
the consent of Investor to the extent permitted in Section 5.4E(2) but
5.
<PAGE>
subject to Section 5.6 of the General Partners Agreement. Manager shall
implement all decisions of Owner in connection with the exploration of the
expansion of the Shopping Center.
(m) Manager shall assist, if requested by Owner in a writing signed by
both General Partners, in any application by Owner for a zoning change or other
application made by Owner to any governmental authority relating to the Shopping
Center.
(n) Manager shall establish, supervise and assist the advertising and
promotional program for the Shopping Center, subject to the then-Approved Budget
and Owner's recommendations in connection therewith.
(o) Manager shall establish, supervise and assist in the formation of
such merchants' associations or promotion and marketing funds, as deemed
appropriate by Manager, and shall assist in the administration thereof, subject
to the then-Approved Budget and Owner's recommendations in connection therewith.
(p) Manager shall review, from time to time, the tax assessments levied
upon the Shopping Center and shall recommend to Owner, when deemed appropriate
by Manager in the exercise of Manager's reasonable business judgment, that
proceedings be instituted by Owner to contest or appeal such assessments.
(q) Manager shall deposit all funds received by Manager for Owner
pursuant to this Agreement in the central bank account maintained by Co-Partner
(as a May Affiliate) pursuant to Section 4.4B of the General Partners Agreement.
Manager shall keep Owner informed at all times with respect to the bank in which
such account is maintained, the name in which such account is kept, the number
of such account and the names and titles of officers or employees of Manager who
may draw upon such account. Officers or employees of Manager approved by Owner
shall disburse from such account funds necessary for the operation and
maintenance of the Shopping Center, including all Management Expenses in
accordance with the terms of the then-Approved Budget and Section 2.1(c) hereof.
Employees of Manager who handle or are responsible for the handling of Owner's
funds shall be bonded by a fidelity bond acceptable both to Manager and Owner,
provided, however, Manager may elect, in lieu of such bond, to indemnify Owner
and the General Partners thereof against loss, theft, embezzlement or other
fraudulent acts on the part of Manager's employees, subject to Owner's prior
written approval of the form and substance of the indemnity agreement.
(r) Manager shall use its reasonable efforts which it believes
necessary in the exercise of its reasonable business judgement to comply with
and perform all covenants, obligations and limitations, and to make the
payment of all amounts, subject to the terms of the then-Approved Budget,
imposed by law or by any contract, instrument or encumbrance to which the
Shopping Center or Owner and Manager shall be subject during the "Term",
including, but not limited to, the tenant leases executed in compliance with
the then-Approved Leasing Plan or Section 2.1(c)(iii) or (d) hereof or as
otherwise approved in writing by Owner and all mortgages and deeds of trust
(including, but not limited to, the Existing Note and other loan documents
related thereto).
6.
<PAGE>
(s) Manager shall pay and discharge to the extent permitted by the
then-Approved Budget or pursuant to Section 2.1(c)(iii) hereof, out of the
funds relating to the Shopping Center which are deposited in the account
referred to in Section 2.1(q) hereof, all costs, expenses, liabilities and
obligations of or relating to the Shopping Center or any part thereof at or
before the time or times the same shall be due, including, but not limited
to, the following:
(i) The payment of all business taxes, and all state and local
taxes based in whole or in part on gross income or adjusted gross income, and
all real and personal property taxes and assessments of every kind or
description whatsoever, whether general, special, ordinary or extraordinary,
which are assessed or levied against the Shopping Center or any part thereof,
or which become payable, during or with respect to the Term or any part
thereof.
(ii) The payment of all charges for or related to utilities.
(t) Manager shall perform such other services as may be necessary
or proper to operate the Shopping Center in the manner contemplated by this
Agreement.
ARTICLE 3
TERM
SECTION 3.1 The term ("TERM") of this Agreement shall begin as of
the date hereof and shall continue through October 8, 1997, and if the
Partnership has not terminated, thereafter shall continue on a year-to-year
basis, unless terminated by the parties in the manner provided in Article 4.
ARTICLE 4
TERMINATION
SECTION 4.1 This Agreement may be terminated, at the option of
Manager, by delivering to Owner written notice of such termination not less
than 45 days prior to the effective date of such termination. This Agreement
may also be terminated, at the sole option of Owner, and exercised by
Investor on behalf of Owner, giving Manager written notice of such
termination upon the occurrence of any of the following:
(a) Manager commits a material default hereunder, if such default
is not cured within 30 days after receipt by Manager of a written notice
setting forth and describing such default, or, if such default cannot be
cured within 30 days, the curing of such default is not commenced within said
30 days and thereafter diligently prosecuted to the curing thereof. If, after
receipt of such written notice of default, Manager shall dispute that it is
in material default of this Agreement, Manager may initiate arbitration
proceedings, in the manner set forth in Section 16.3 hereof, to resolve the
dispute. The time available to Manager to cure the default claimed in such
notice shall not begin to run until a final determination has been made in
such proceedings.
(b) Manager shall make an assignment for the benefit of creditors,
apply for the appointment of a trustee, liquidator or receiver of any
substantial part of its assets, or commence any proceeding relating to itself
under any bankruptcy, reorganization, arrangement or similar law; or any such
application is filed or proceeding is commenced against Manager and Manager
indicates its consent thereto, or an order is entered appointing any such
trustee, liquidator or receiver or approving a petition in any such
7.
<PAGE>
proceedings and such order remains in effect for more than 90 days; or
Manager shall admit in writing its inability to pay its debts as they become
due.
(c) Co-Partner ceases to be a May Affiliate.
(d) Upon the sale of the Shopping Center by Owner.
(e) In the event that Manager has willfully and intentionally
overcharged Owner for Management Expenses during any fiscal year during the
Term.
(f) In the event Manager fails to cooperate with Owner as set
forth in Section 4.3 if such failure is not cured within 30-days after
receipt by Manager of a written notice stating such failure.
SECTION 4.2 Within 45 days following the termination of this
Agreement, Owner shall pay to Manager all compensation that may be due and
payable as of the effective date of such termination. Manager shall deliver
to Owner or Owner's designee, within 45 days after the effective date of such
termination:
(a) all property of Owner which Manager has in its possession;
(b) a final accounting showing the balances of income and expenses
as of the date of termination; and
(c) all other information reasonably necessary to terminate
Manager's duties under this Agreement in an orderly and systematic manner.
SECTION 4.3 If Endowment, on behalf of Owner, delivers a notice
("REIT CONCERN NOTICE") to Manager stating that, based on the sole opinion of
Endowment or its counsel, there is a risk that Manager may reasonably no
longer be an "independent contractor" from whom neither Endowment nor Owner
derives or receives income within the meaning of Section 856(d)(2)(c) of the
Internal Revenue Code, as amended, together with an opinion of competent tax
counsel that such may be the case, then and in such event, Manager shall,
promptly following its receipt of the REIT Concern Notice, cooperate with
Endowment (acting on behalf of Owner) to take such actions as may reasonably
be requested by Endowment in order to comply with the independent contractor
requirement, provided that (a) Endowment reimburses Manager for all costs and
expenses related to such actions, (b) there will be no material adverse
impact to Manager as a result of any change proposed by Endowment (on behalf
of Owner), and (c) the payments required under Article 5 and Article 17 would
not be decreased.
ARTICLE 5
COMPENSATION
SECTION 5.1 As compensation for the services provided by Manager
under this Agreement, Owner shall pay to Manager an amount equal to four
percent (4%) of the "Cash Income" of Owner during each "Annual Period" of the
term hereof. As used herein, "CASH INCOME" for the applicable annual period
means the gross cash revenues and funds received by the Owner for such
period, other than funds received as capital contributions, loans or proceeds
of casualty insurance (other than rental income insurance) or of any
refinancings or sales of assets of the Owner or from any condemnation award
or conveyance in lieu thereof (prepaid rents, prepaid payments and security
deposits being included in Cash Income as earned, applied or forfeited). As
used herein, "ANNUAL PERIOD" shall refer to each calendar year which occurs
during the term
8.
<PAGE>
hereof except that such term shall also refer to (a) the period commencing on
the date hereof and ending on December 31, 1986 and (b) the partial calendar
year in which the term hereof ends if such term ends on a date other than
December 31 of the applicable year.
ARTICLE 6
MANAGER'S STAFF
SECTION 6.1 In order to perform the services required by this
Agreement, it will be necessary for Manager to employ certain key personnel.
Manager shall, at all times, employ a sufficient number of appropriately
trained, experienced and otherwise qualified personnel to enable it to
efficiently and effectively carry out its obligations pursuant to this
Agreement. Manager shall use sufficient time and effort of such personnel to
enable Manager to perform its obligations under this Agreement.
SECTION 6.2 With the prior consent of Owner, Manager shall have
the right from time to time to contract with such third parties as Manager
shall deem appropriate in performing its obligations under this Agreement,
and such consent may be given by Co-Partner without the consent of Investor
to the extent permitted by the General Partners Agreement. Whenever services
of third parties are used to perform any of the services described herein,
all costs and expenses for such services shall be paid by Owner, provided
that the incurrence of such costs and expenses is in accordance with the
Approved Budget and Section 2.1(c) hereof.
ARTICLE 7
ASSIGNMENT
SECTION 7.1 Manager shall not assign, all or any part of its
interest in or obligations arising out of this Agreement except to an
Affiliate. For purposes of this Agreement, the term "AFFILIATE" shall mean
any of the following: (a) The May Department Stores Company, a New York
corporation ("MDS"); (b) any wholly owned subsidiary of MDS or Manager; or
(c) any entity in which either MDS or Manager or their respective wholly
owned subsidiaries own at least 25% of the voting control thereof and over
which MDS or Manager or their subsidiaries, as the case may be, have
effective control. Any transfer of stock or of a partnership interest in an
Affiliate which reduces the interest of MDS, Manager or their respective
subsidiaries to less than 25% shall be deemed an assignment for purposes of
this Section 7.1.
ARTICLE 8
NOTICES
SECTION 8.1 Every notice, demand, direction, consent, approval,
request and other communication required or permitted hereunder ("NOTICE")
shall be in writing, and shall be personally delivered or sent by overnight
courier, registered or certified United States Mail, postage prepaid, return
receipt requested, to whomever the Notice is required or permitted to be
sent, and addressed as stated below:
TO MANAGER: May Centers, Inc.
611 Olive Street
St. Louis, Missouri 63101
Attn: Chairman
9.
<PAGE>
TO OWNER: Mission Valley Partnership
c/o May Centers, Inc.
611 Olive Street
St. Louis, Missouri 63101
Attn: Chairman
with a copy to:
Endowment and Foundation Realty, Ltd. -- JMB-III
c/o JMB Realty Corporation
875 N. Michigan Avenue
Suite 3900
Chicago, Illinois 60611
Attn: Mr. Robert J. Chapman
and
Pircher, Nichols & Meeks
10100 Santa Monica Boulevard
Los Angeles, California 90067
Attn: Real Estate Notices
SECTION 8.2 Any party may change the address to which Notices served
upon it are to be sent by 10 days' prior Notice informing the other parties
of the change in address. All Notices given by United States mail as a
registered or certified matter or by overnight courier service shall be
deemed to have been given on the day the return receipt is signed and
received by the sending party, or, in the event that the addressee refuses
receipt, then on the third day after the same is either (1) deposited in the
United States mail as registered or certified matter, addressed as above
provided, with postage thereon fully prepaid or (2) delivered to a courier
service with instructions for prompt delivery of the same, provided a signed
receipt evidencing delivery is obtained by such courier service within such
three-day period. Any notice not given by registered or certified mail as
aforesaid shall be deemed to be given upon receipt of the same by the party
to whom the same is to be given.
ARTICLE 9
AMENDMENT
SECTION 9.1 This Agreement shall be subject to amendment only by a
writing signed by both General Partners and Manager.
ARTICLE 10
SEVERABILITY
SECTION 10.1 If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be
held invalid or unenforceable by a court of competent jurisdiction, such
result shall not affect the other terms and provisions of this Agreement or
applications thereof which can be given effect without the relevant term,
provision or application. To this end, the parties agree that the provisions
of this Agreement are and shall be severable.
ARTICLE 11
REMEDIES CUMULATIVE
SECTION 11.1 Except as otherwise provided herein, all rights,
privileges and remedies afforded the parties by this Agreement shall be
deemed cumulative, and in addition to all rights and remedies available at
law or in equity.
10.
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ARTICLE 12
SUCCESSORS AND ASSIGNS
SECTION 12.1 This Agreement shall be binding upon and inure to the
benefit of the parties and their permitted successors and assigns.
ARTICLE 13
LAW APPLICABLE
SECTION 13.1 The laws of the State of California shall govern the
enforcement and construction of this Agreement.
ARTICLE 14
CONSENT OR WAIVER
SECTION 14.1 No consent or waiver, express or implied, by either party
to this Agreement to, of or for any breach or default by the other party in
performance of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or for any other breach or default in performance by
such other party of the same or any other obligation of such party hereunder.
Failure on the part of either party to complain of any act or failure of the
other party to this Agreement or to declare the other party in default,
irrespective of how long such failure continues, shall not constitute a
waiver by such party of its rights hereunder.
ARTICLE 15
INDEMNIFICATION AND INSURANCE
SECTION 15.1 Manager shall indemnify and save Owner harmless from and
against all damages, claims, losses, liabilities, costs and expenses
(including reasonable legal fees) arising out of (a) the gross negligence,
willful misconduct or intentional torts of Manager or Manager's agents,
servants, employees or subcontractors or (b) acts which are in breach of
Manager's duties under this Agreement or which are outside of the scope of
Manager's authority under this Agreement.
SECTION 15.2 Owner shall indemnify, defend and hold Manager harmless
from and against all damages, claims, losses, liabilities, costs and expenses
(including reasonable legal fees) incurred by Manager in connection with its
services under this Agreement, excepting only those matters within the scope
of indemnification made by Manager in Section 15.1 hereof.
SECTION 15.3
A. Manager shall procure and maintain, at Owner's expense, extended
coverage insurance as set forth in this Section. In the event that Manager is
unable to procure insurance which complies in all respects with this Section,
Manager shall promptly notify Owner of such failure, but in no event shall
Manager let the Shopping Center be uninsured. Owner shall be the primary
named insured under such policies. Manager and lenders providing financing
for the Shopping Center and certain tenants designated by Owner shall be
named as additional insureds under such policies. All such insurance shall be
coordinated with the insurance required to be carried by tenants and, where
economically feasible, shall be obtained under blanket policies covering
other properties in which Owner or Manager has an interest. The amounts of
coverage and the risks insured against in the policies obtained by Manager
shall be subject to the approval of Owner, but, without limiting the
foregoing, such policies shall, at a minimum, include the following:
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(a) PROPERTY INSURANCE. "All-risk" property damage insurance, covering
the Shopping Center in an amount equal to 100% of replacement value, with a
stipulated amount or agreed valuation endorsement, such insurance to include
fire and extended coverage with vandalism, malicious mischief and other
appropriate endorsements on the buildings, equipment and other improvements
on the Shopping Center, and protection against damage caused by earthquake
and flood, if available, in amounts directed by Owner;
(b) PUBLIC LIABILITY INSURANCE. Broad form general public liability
insurance and automobile liability insurance with combined single-limit
liability limits of not less than $10,000,000 for bodily and personal injury
and property damage;
(c) CONTRACTUAL LIABILITY INSURANCE. Insurance for the contractual
liabilities assumed by Owner;
(d) RENTAL INCOME INSURANCE. Rental income insurance in an amount not
less than 100% of the projected rental income from the Shopping Center for
one year when fully leased; and
(e) MANDATORY INSURANCE. Workers' compensation and all other insurance
required by any ordinance, law or governmental regulation. The policies shall
not be canceled nor shall the coverages thereunder be reduced without at
least 30 days' prior notice to each of the General Partners of Owner and
Manager; and, in any event, all parties insured thereunder shall receive
notice not less than 15 days prior to the expiration of such policies.
SECTION 15.4 The insurance policies required under Section 15.3 hereof
shall contain a provision, to the extent obtainable, to the effect that such
insurance shall not be invalidated or limited if any one or more of the
insureds thereunder waives any or all claims for recovery against the other
insureds thereunder; and so long as such provision is in effect, each of
Manager and Owner hereby waives all claims for recovery from the other for
any loss or damage insured under such policies. The foregoing, however, shall
not relieve Manager from its obligation to maintain the insurance required
hereunder.
ARTICLE 16
APPROVALS
SECTION 16.1 Manager shall be authorized to take all actions on behalf
of Owner as set forth in this Agreement; provided, however, that certain
actions shall require the prior written approval of both Co-Partner and
Endowment, in accordance with the terms of the General Partners Agreement,
including, but not limited to, Sections 5.4 and 5.6 thereof.
SECTION 16.2 Except as provided in Section 16.1 above or Section 16.3
below, any time a provision of this Agreement requires the approval of Owner
or any constituent partner of Owner, such approval shall not be unreasonably
withheld or delayed. Except in the case of an emergency, any such approval
shall be in writing. Such approval shall be deemed to have been given if no
response shall have been given within 30 days after receipt of a written
request therefor. Any denial of approval shall state with reasonable certainty
the reason or reasons for such denial, and, if reasonably practicable, shall
state the criteria for such approval.
12.
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SECTION 16.3
A. REQUEST. In connection with an "Arbitrable Decision" (as
hereinafter defined) but no other decision or action hereunder, the party
("REQUESTING PARTY") who desires to make a particular decision (or any
related series thereof) which is an Arbitrable Decision, shall request in
writing for the approval of the other party ("NON-REQUESTING PARTY") of such
matter. (Whenever (a) a controversy has arisen between the parties with
respect to any claim by any party that consent or approval has been
unreasonably withheld or delayed and then only in those instances where this
Agreement or applicable law provides that consent or approval shall not be
unreasonably withheld or delayed, or (b) this Agreement expressly provides
that a particular decision may be subjected to arbitration, such decision
shall be herein referred to as an "ARBITRABLE DECISION".)
B. REPLY.
(1) NO RESPONSE. If Non-Requesting Party fails to respond (by request
for more information or otherwise) to Requesting Party's written request for
Non-Requesting Party's consent to a given Arbitrable Decision within 30 days
after delivery of such request, then Non-Requesting Party shall be deemed to
have approved or agreed with the matter set forth in such request.
(2) If Non-Requesting Party fails to approve such decision (or be
deemed to have approved it pursuant to subparagraph (1) above) within 30 days
after delivery of such request, then within seven days after the expiration
of the 30-day period, Requesting Party may request arbitration by notifying
Non-Requesting Party in writing of the following: (i) Requesting Party's
desire to arbitrate, (ii) the basis on which Requesting Party claims that the
arbitration should be decided in its favor, and (iii) Requesting Party's
arguments in support thereof briefly stated (Requesting Party will not be
foreclosed from advancing other and additional arguments at the time of the
arbitration hearing). Such notice shall be hereinafter referred to as the
"ARBITRATION NOTICE". Thereafter, the following provisions shall apply:
(1) Within seven days after receipt of the Arbitration Notice,
Non-Requesting Party shall deliver a notice ("REPLY NOTICE") to Requesting
Party stating Non-Requesting Party's position on the matters set forth in the
Arbitration Notice (but Non-Requesting Party will not be foreclosed from
advancing other and additional arguments at the arbitration hearing).
(2) If there is any difference between the parties concerning the issue
or issues, and if they are unable to resolve this difference within seven
days after Requesting Party receives the Reply Notice from Non-Requesting
Party, the dispute concerning the issue or issues shall be determined by the
arbitrator(s) who shall be selected as set forth in paragraph C below.
C. SELECTION OF ARBITRATOR; EXPENSES; LOCATION. The arbitrator shall
be a person selected from among a list obtained from the chief executive
officer of the International Council of Shopping Centers or any successor
body of comparable function, or if no such body is in existence, from the
Chief Executive Officer of the American Arbitration Association (California
Chapter) or any successor body of comparable function at the request of
either General Partner. Such list shall be obtained by Requesting Party and
shall contain
13.
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the names of 10 persons who, in the opinion of said officer, are experienced
and qualified in the operation, management and leasing of space in large
Southern California shopping malls. The arbitrator shall be chosen from such
list by the Requesting Party and Non-Requesting Party, in the exercise of
each Party's sole discretion. If the Parties do not agree on a single
arbitrator, then the arbitration shall be conducted with a panel of three
arbitrators. The panel shall be chosen by Requesting Party's selecting one
arbitrator and Non-Requesting Party's selecting an arbitrator, each of whom
shall be experienced in the operation and management of regional shopping
centers; thereafter such arbitrators shall choose the third arbitrator, who
shall be a neutral arbitrator chosen from the list obtained by the Requesting
Party. If within 10 days after receipt of such list by the parties, a party
does not exercise its right to choose any arbitrator from such list, then the
arbitrator chosen from the list by the other party shall arbitrate the
dispute in question. If the two arbitrators are unable to select a neutral
arbitrator with 10 days from the day on which the second arbitrator was
selected by a party, either party may apply to the presiding judge of the Los
Angeles County Superior Court for designation of the neutral arbitrator.
The costs of arbitration, including, but not limited to, the fees and
expenses of the arbitrator(s) and the reasonable attorneys' fees and costs of
the prevailing party in the arbitration, shall be paid by the nonprevailing
party in the arbitration. The location of arbitration shall be Los Angeles,
California unless the parties select in writing another mutually satisfactory
location. The arbitrator(s) shall notify the parties as promptly as feasible,
but in no event later than five days after the selection of the final
arbitrator, as to the date, time, place of hearing, and any other matters
which the arbitrator(s) deems necessary.
D. RULES; PROCEDURE. The commercial rules of the American Arbitration
Association shall be applied in any arbitration under this Agreement, to the
extent such rules and procedures are not inconsistent with this Section 6.10.
E. AWARD. The arbitration award shall be rendered in writing as soon
after the conclusion of the arbitration hearing as may be feasible, and in no
event later than 10 days thereafter. The arbitrator shall not have the right
to add to, subtract from, change, or otherwise alter this Agreement or any
term thereof, and, particularly, the arbitrator shall not have the right to
include damages as part of the award, provided, however, that the arbitrator
shall award the prevailing party reasonable attorneys' fees and costs. The
sole effect of a finding by the arbitrator (1) of the question whether an
approval was unreasonably withheld shall be that such approval shall be
deemed to have been granted, or (2) as to any other matter in favor of a
particular General Partner shall be that the disagreement shall be deemed
resolved in favor of such General Partner as provided in this Agreement.
F. GENERAL. Whenever in this Agreement it is provided that a matter
shall be or may be subjected to arbitration, arbitration shall be the sole
method to be used in determining the matter so subjected to arbitration.
Subject to Section 1286.2 of the California Code of Civil Procedure, the
determination of the arbitrator(s) shall be final, conclusive and binding upon
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the parties hereto, and judgment in favor of a party in accordance with such
determination may be entered in any court having jurisdiction thereof. If an
Arbitrable Decision is arbitrated pursuant to the terms of the Agreement
Among General Partners, such Arbitrable Decision shall not be subject to
arbitration hereunder.
ARTICLE 17
COSTS
SECTION 17.1 If the compensation paid to Manager by Owner pursuant to
Article 5 hereof for a particular Annual Period is less than the "Management
Expenses" of Manager, incurred during such Annual Period, Owner shall
reimburse Manager, pursuant to this Article 17 but subject to the terms of
Section 17.4 hereof, for an amount ("EXCESS MANAGEMENT EXPENSES") equal to
the excess of the Management Expenses of Manager for the particular Annual
Period over the compensation payable to Manager pursuant to Article 5 hereof
for such Annual Period but in no event shall the Excess Management Expenses
exceed two percent of the Cash Income of Owner for such Annual Period. As
used herein, "MANAGEMENT EXPENSES" shall mean, for a particular Annual
Period, all "Direct Payroll Costs" (as defined in Section 17.1(a) hereof),
plus all "Indirect Payroll Costs" (as defined in section 17.1(b) hereof),
plus the "Owner's Share" (as defined in Section 17.1(c) hereof) of the
general overhead expenses of Manager and its Affiliates incurred by Manager
or its Affiliates in performing Manager's obligations under this Agreement,
including, but not limited to, the cost of "Extraordinary Services", the
costs and expenses incurred by MCI in collection of cash on the "RECEIVABLES"
(as such term is defined in the Escrow and Distribution Agreement dated as of
the date hereof, by and among Bond Ranch, Paula Bond, Endowment and Manager).
Manager shall only be entitled to compensation as and to the extent set forth
in Article 5 and Sections 17.1, 17.2, and 17.4 hereof. Manager shall not
enter into a general brokerage or leasing agreement with respect to the
leasing of the Shopping Center. As used herein the following terms have the
following meanings:
(a) "DIRECT PAYROLL COSTS" shall mean the wages or salaries (including
taxes and employee benefits, but excluding therefrom expenses of the computer
information service group and expenses of other support groups, if and to the
extent such expenses are included as general overhead expenses pursuant to
subparagraph (c) below) paid by Manager or its Affiliates to their off-site
personnel computed on the basis of the hours of service provided by such
personnel in performing Manager's obligations under this Agreement as
indicated by written records of such time kept on a regular and consistent
basis.
(b) "INDIRECT PAYROLL COSTS" shall mean the "Owner's Allocable Share"
of the wages or salaries (including taxes and employee benefits) paid by
Manager or its Affiliates to personnel for services which are not allocated
by Manager or its Affiliates to any specific projects or properties as set
forth in subparagraph (a) above (excluding therefrom expenses of the computer
information service group and expenses of other support groups, if and to the
extent such expenses are included as general overhead expenses pursuant to
subparagraph (c) below). The "OWNER'S ALLOCABLE SHARE" of such costs for a
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particular Annual Period shall be calculated by multiplying the amount of
such costs by a fraction, the numerator of which shall be the Direct Payroll
Costs charged by Manager or its Affiliates during such Annual Period, and the
denominator of which shall be the total of all direct payroll costs which
were incurred by Manager and its Affiliates during such Annual Period with
respect to all shopping centers and properties which are managed by Manager.
(c) The "OWNER'S OVERHEAD SHARE" of general overhead expenses (including
therein expenses of the computer information service group and other support
groups [except to the extent included as Direct Payroll Costs or Indirect
Payroll Costs], which shall be calculated in accordance with the accounting
procedures uniformly used by Manager in connection with all the shopping centers
and properties owned and managed by Manager) shall be determined in compliance
with the applicable terms of this Section 17.1(c). Owner acknowledges that
Manager owns and manages other properties and shopping centers in addition to
the Shopping Center and that Manager will allocate various general overhead
expenses between the Shopping Center and such other properties and to any
other businesses engaged in by Manager. So long as Manager manages at least
10 shopping centers, the Owner's Overhead Share of such general overhead
expenses shall be computed on the basis of an overhead factor, expressed as a
multiple of Direct Payroll Costs and Indirect Payroll Costs, which is
reasonably determined by Manager to uniformly and equitably distribute 100%
(but not more than 100%) of such general overhead expenses to all shopping
centers and other properties managed by Manager and to any other businesses
engaged in by Manager. If, at any time during the term of this Agreement,
Manager shall no longer mange at least 10 shopping centers, the Owner's
Overhead Share of such general overhead expenses for the applicable Annual
Period shall not exceed, in any event, an amount which is reasonably
necessary for the operation of the Shopping Center in the manner contemplated
by this Agreement for such Annual Period.
(d) Owner acknowledges and agrees that Manager may use the corporate
legal staff of Manager or its Affiliates to provide services on behalf of
the Owner. Notwithstanding the provisions to the contrary set forth in this
Section 17.1, Owner shall pay to Manager for such legal services the billing
rate which is uniformly charged by Manager for such services (which rate, as
of the date hereof, is $50.00 per hour).
(e) Manager acknowledges that the provisions of this Section 17.1
reflect the method of computing management fees used by Manager in managing
the Shopping Center during 1985. Manager shall have the right, from time to
time, to modify the methods of allocating and determining Management Expenses,
provided that the method of allocation, as modified, shall uniformly and
equitably allocate its total costs, expenses and overhead attributable to the
various properties managed by Manager and the other businesses engaged in by
Manager; but before making any such modification, Manager shall submit the
same to Investor for approval, but Investor shall not have the right to
object to such modification unless the same results in a disproportionate
allocation of costs, expenses and overhead to the Shopping Center.
(f) Manager shall furnish Owner with an accounting of all reimbursable
costs and expenses no later than 90 days after the end of the
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fiscal year of Owner. Such an accounting shall be made in compliance with
Manager's standard practices for calculating the costs of its management
services and shall otherwise be reasonably satisfactory in form and substance
to Owner.
SECTION 17.2 REIMBURSEMENT OF OUT-OF-POCKET COSTS. Except to the extent
separately paid to Manager pursuant to Section 17.1 or 17.4, if Manager pays
any amounts to third parties on behalf of the Partnership or pays the salary
and benefits of other payroll costs of on-site personnel in the performance
of its duties hereunder, from its own funds rather than from the Owner's
funds, Manager shall be entitled to reimbursement from the income of the
Shopping Center for the amount so advanced. If on-site personnel devote time
to more than one center or property managed by Manager, Owner shall not be
required to reimburse Manager for more than Owner's fair and equitable share
of such costs and expenses, fairly determined. In no event shall Manager be
entitled to reimbursement under this Section 17.2 for any Management Expenses
for which Manager is paid.
SECTION 17.3 It is expressly understood and agreed that the manner in
which the Management Expenses are calculated is designed solely to equal the
expenses Manager incurs in managing and operating the Shopping Center in
accordance with the terms of this Agreement and, accordingly, if Manager were
to be paid an amount equal to the aggregate Management Expenses, Manager
would not receive any profit or incur any loss in the performance of its
obligations hereunder. Manager shall act in good faith in fairly allocating
its total costs among the Shopping Center, and other properties and shopping
centers managed by Manager and the other businesses (if any) of Manager.
Management Expenses shall not be increased or otherwise affected by reason
of Manager's failure to be reimbursed for direct payroll costs, indirect
payroll costs or general overhead expenses associated with any other
shopping centers and other properties managed by or other businesses engaged
in by Manager.
SECTION 17.4 If the Management Expenses for a particular Annual Period
are greater than 6% of the Cash Income for such Annual Period, then Owner
shall reimburse Manager in an amount equal to the lesser of (a) such excess
or (b) the costs and expenses incurred by Manager in connection with the
performance of "Extraordinary Services" as that term is defined in Exhibit
"D" attached hereto and made a part hereof for such Annual Period.
SECTION 17.5 If Owner reimburses Manager for Excess Management Expenses
or Extraordinary Costs for a particular Annual Period, Endowment, acting on
behalf of Owner, shall have the right to cause an audit to be made of the
Management Expenses and Extraordinary Costs for such Annual Period. No such
audit shall be conducted more frequently than one time in any single calendar
year. Such an audit shall be conducted not later than one year following the
end of the year during which such Excess Management Expenses or Extraordinary
Costs were incurred. The audit shall be conducted by Peat, Marwick, Mitchell
& Co. or another independent, certified public accounting firm selected by
Endowment on behalf of Owner and reasonably approved by Manager. Manager
shall provide the accountant with such supporting data concerning the
Management Expenses or Extraordinary Costs under audit as may be reasonably
requested by such accountant within 30 days after receipt of
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written request therefor. If, as a result of such an audit, Endowment claims
that the Excess Management Expenses or Extraordinary Costs paid to Manager
were greater than those permitted hereunder, Endowment shall deliver written
notice thereof to Manager, setting forth in reasonable detail the basis of the
dispute. Manager shall then have a period of 30 days following receipt of such
notice in which to either reimburse Owner for the portion of Excess
Management Expenses or Extraordinary Costs in dispute or submit the dispute
to arbitration pursuant to Section 16.3. If the arbitrator finds that any of
the Excess Management Expenses or Extraordinary Costs in dispute were paid in
violation of the terms hereof, then Manager shall refund to Owner, within 30
days following receipt by Manager of the arbitrator's decision, the amount of
Excess Management Expenses or Extraordinary Costs which were found by the
arbitrator to be improper, plus interest thereon at the rate of 10% per annum
from the date such Excess Management Expenses or Extraordinary Costs were
improperly paid to Manager until the date of such refund. If the amount of any
refund required under this Section 17.5 exceeds the total amount of the sum
(the "SUM") of (a) the compensation paid to Manager pursuant to Section 5.1,
(b) Excess Management Expenses, and (c) Extraordinary Costs paid during the
particular Annual Period under audit by more than 5% of the total amount of
the Sum for such Annual Period, then Manager shall reimburse to Endowment all
of Endowment's reasonable costs and expenses incurred in such audit; such
reimbursement shall be made concurrently with the refund of the applicable
Excess Management Expenses or Extraordinary Costs.
ARTICLE 18
MISCELLANEOUS
SECTION 18.1 All services performed by Manager at the Shopping Center
site under the provisions of this Agreement shall be deemed to be performed
for Owner and all reasonable expenses properly incurred in connection with the
performance of such services shall be the obligation of Owner.
SECTION 18.2 The following exhibits are attached to and made a part of this
Agreement:
Exhibit A - Legal Description of Shopping Center Parcel
Exhibit B - Form of Budget
Exhibit C - Form of Monthly Reports
Exhibit D - Description of Extraordinary Costs
Exhibit E - 1986 Budget
SECTION 18.3 No present or future partner of Owner or of any partnership
which is now or hereafter a partner of Owner nor any present or future
advisor, trustee, director, officer, partner, employee, beneficiary,
shareholder, participant or agent of or in Endowment (including, but not
limited to, JMB Endowment Advisors and JMB Institutional Realty Corporation),
JMB Endowment Advisors, or JMB Institutional Realty Corporation shall have
any personal liability for or by reason of any matter or thing whatsoever,
under or in connection with this Agreement, and Manager hereby waives any and
all such personal liability of such general partners, provided, however, that
the foregoing shall not limit the recourse of Manager against Owner's
interest in the Shopping Center for claims under this Agreement. The
limitations of liability provided in this paragraph are in addition to, and
not limitation
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of, any limitation on liability applicable to Owner provided by law or in
this Agreement or by any other contract, agreement or instrument relating to
Owner.
IN WITNESS WHEREOF, the parties hereto have duly signed this Agreement
as of the day and year first above written.
OWNER:
MISSION VALLEY PARTNERSHIP,
a California limited partnership
By MAY CENTERS, INC.,
a Missouri corporation,
General Partner
By /s/ Authorized Officer
----------------------------------
Executive Vice President
By ENDOWMENT AND FOUNDATION
REALTY, LTD. -- JMB-III,
a Delaware corporation,
General Partner
By JMB ENDOWMENT ADVISORS,
an Illinois general partnership,
Its Investment Advisor
By JMB INSTITUTIONAL REALTY CORPORATION,
an Illinois corporation,
Managing General Partner
By /s/ Authorized Officer
----------------------------
Authorized Signatory
MANAGER:
MAY CENTERS, INC.,
a Missouri corporation
By /s/ Authorized Officer
----------------------------------
Executive Vice President
19.
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FIRST AMENDMENT TO MANAGEMENT AGREEMENT
(MISSION VALLEY CENTER)
THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT (this "Amendment") is
made as of the 1st day of February, 1994, between CENTERMARK PROPERTIES, INC.,
formerly known as May Centers, Inc. ("Manager"), and MISSION VALLEY PARTNERSHIP
("Owner").
RECITALS
A. Manager and Owner entered into a Management Agreement (the "Management
Agreement"), dated as of April 8, 1986.
B. The Management Agreement sets forth the various rights and obligations of
Owner and Manager respecting the management, leasing and operation of that
certain regional shopping center known as Mission Valley Center located in
the County of San Diego, State of California (the "Shopping Center").
C. Owner and Manager desire to amend the Management Agreement as set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the terms and
provisions hereinafter set forth and other good and valuable consideration, the
mutual receipt and legal sufficiency of which are hereby acknowledged, Manager
and Owner agree as follows:
1. AMENDMENT TO SECTION 2.1. Section 2.1 of the Management
Agreement is hereby amended by adding the following new subparagraphs (u) and
(v):
"(u) In the event Owner or a partner acting on behalf of Owner should
enter into negotiations for the sale of the Shopping Center or a partner of
Owner should enter into negotiations for the sale of its partnership
interest or portion thereof in Owner, Manager agrees to reasonably assist
Owner or such partner in such transaction including, but not limited to, by
using its reasonable efforts to deliver or make available to Owner or such
partner of Owner, at Owner's sole cost and expense, the following items:
<PAGE>
(1) Copies of any written notice(s) received by Manager (A) from any
government agency or any employee or official thereof alleging that
the construction, operation or use of the Shopping Center violates any
law, ordinance, regulation or order or that any investigation has been
commenced or is contemplated respecting any such violation, or (B)
alleging any material default by Manager or Owner under any current
tenant lease, mortgage loan, insurance policy, service contract or
equipment lease;
(2) Copies of (A) the most recent financial reports prepared by Manager
pursuant to Section 2.1(1), (B) all insurance policies and material
service contracts in Manager's possession respecting the Shopping
Center, and (C) current tenant lease files.
(3) Copies of any written correspondence, documents and/or notices
received by Manager respecting any actions, suits or proceedings,
pending or threatened, before or by any judicial, administrative or
union body, any arbiter or any governmental authority and against or
affecting or relating to the Shopping Center, including eminent domain
or similar proceedings; and
(4) an updated rent roll, supplemented with the following information:
the date of each lease as well as the date(s) for all amendments
and/or supplements thereto; any tenant improvements required to be
completed by Owner which have not been completed; whether a tenant(s)
has received an outstanding and unsatisfied (or otherwise unresolved)
notice of default from Manager; and a list of all potential brokerage
commissions that may become due and payable by Owner with respect to
any lease pursuant to any existing agreement binding upon Manager or
Owner with respect to such lease or any renewal thereof. Manager
shall attach to such rent roll an executed certification reasonably
acceptable to Manager and Owner confirming that, to the best of its
actual knowledge, Manager is not aware of any items of a nature
described in (1), (2), (3) or (4) of this Section 2.1(u).
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(v) Manager shall deliver annually updated rent rolls and lease summaries
for the Shopping Center which will contain the following information with
respect to each of the tenant leases shown thereon: parties to the
original lease and a list of all scheduled rebates, rental concessions,
tenant allowances, free-rent periods, credits, setoffs or rent reductions
under such leases and which, as appropriate, have either not yet been
funded by the Owner or which relate to any period after the date of said
rent roll."
2. AMENDMENT OF SECTION 7.1. Section 7.1 of the Management
Agreement is amended by deleting such section in its entirety and substituting
the following therefor:
"Manager shall not assign all or any part of its interest in or
obligations arising out of this Agreement except in accordance with this
Section 7.1. Manager may assign all or any part of its interest in or
obligations arising out of this Agreement to (i) a partnership or other
entity owned by GGP Limited Partnership and a wholly-owned (direct or
indirect) subsidiary of Westfield Holdings Limited, (ii) any of (a)
Westfield Holdings Limited, (b) General Growth Management, Inc., (c)
General Growth Properties, Inc., (d) GGP Limited Partnership, or (e) any
entity wholly-owned by one or more of the foregoing entities, PROVIDED that
(1) an assignment under this clause (ii) shall be permitted on one occasion
only and (2) Owner may terminate this Agreement at any time following an
assignment under this subparagraph (ii) if a direct or indirect owner of
the Manager hereunder is not a direct or indirect owner of a substantial
interest in Co-Partner or (iii) any "PERMITTED TRANSFEREE." For purposes of
this Agreement, the term "PERMITTED TRANSFEREE" shall mean any entity in
which at least 50% of the voting rights and economic interests are owned
(directly or indirectly) by a person or entity which owns (directly or
indirectly) at least 50% or more of the voting rights and economic
interests of Co-Partner. Any transfer of stock or of a partnership
interest in a Permitted Transferee which reduces the interest of the
entities referenced in clause (ii) to less than 50%, collectively, shall be
deemed not to constitute a Permitted Transferee."
3. REINCORPORATION OF MANAGER. In connection with the sale of the
stock of Manager to GGP Limited
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Partnership, Westfield U.S. Investment Pty. Limited and Whitehall Street Real
Estate Limited Partnership III (collectively, the "Purchasers"), it is currently
intended to merge Manager into a newly-formed Delaware corporation owned by the
Purchasers ("New CenterMark"). Such merger may occur concurrently or shortly
after the closing of the acquisition. To the extent the consent of Owner may be
required for such merger, Owner hereby consents to such merger and agrees that
such merger shall not be deemed an assignment under Section 7.1. Upon any such
merger, all references in the Agreement to May Centers, Inc. or CenterMark
Properties, Inc. shall be deemed to refer to New CenterMark.
4. SUCCESSORS. This Amendment shall inure to the benefit of and be
binding upon Manager and Owner and their respective successors and assigns.
5. GOVERNING LAW. This Amendment shall be construed and enforced in
accordance with the laws of the State of California.
6. COUNTERPARTS. This Amendment may be executed in several
counterparts, each of which may be deemed an original, but all of which together
shall constitute one and the same instrument.
7. RATIFICATION. Except as modified herein, the Management
Agreement shall continue in full force and effect in accordance with its terms.
In the event of any conflict between the terms and provisions contained in the
Management Agreement and this Amendment, the terms and provisions of this
Amendment shall prevail.
[SIGNATURE BLOCKS TO FOLLOW ON THE NEXT PAGE]
4
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed as of the date
and year first above written.
MANAGER
CENTERMARK PROPERTIES, INC.
a Missouri corporation
By: /s/ Thomas E. Frost
-------------------------------------
Name: Thomas E. Frost
-----------------------------------
Title: Senior Vice President
----------------------------------
OWNER
MISSION VALLEY PARTNERSHIP, a California
limited partnership
By: CENTERMARK PROPERTIES, INC.,
a Missouri corporation, as
general partner
By: /s/ Thomas E. Frost
--------------------------------
Name: Thomas E. Frost
------------------------------
Title: Senior Vice President
-----------------------------
By: ENDOWMENT AND FOUNDATION
REALTY, LTD. - JMB-III, a
Delaware corporation, as general
partner
By: JMB ENDOWMENT ADVISORS,
an Illinois general
partnership, Its Investment
Advisor
By: JMB INSTITUTIONAL REALTY
CORPORATION, an Illinois
corporation, managing
general partner
By: /s/ Lynn D. Bednar
--------------------------------
Name: Lynn D. Bednar
------------------------------
Title: Vice President
-----------------------------
5
<PAGE>
PROPERTY MANAGEMENT AGREEMENT
by and between
HAHN PROPERTY MANAGEMENT CORPORATION
and
ANITA ASSOCIATES
for
SANTA ANITA FASHION PARK
in
Arcadia, California
<PAGE>
PROPERTY MANAGEMENT AGREEMENT
(Santa Anita Fashion Park)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
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<S> <C> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recital A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recital B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recital C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I APPOINTMENT OF MANAGER AND GENERAL DUTIES
AND STANDARDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 General Duties. . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Status of the Parties . . . . . . . . . . . . . . . . . . . . 2
1.4 Continuing Standards. . . . . . . . . . . . . . . . . . . . . 2
II SPECIFIC DUTIES AND RIGHTS . . . . . . . . . . . . . . . . . . . . . 2
2.1 Action Authorized with Respect to Leases. . . . . . . . . . . 2
2.2 Leasing Services. . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Legal Services. . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Marketing Services. . . . . . . . . . . . . . . . . . . . . . 4
2.5 Special Services with Respect to
Major Department Stores . . . . . . . . . . . . . . . . . . . 4
2.6 Special Services with Respect to Condemnation . . . . . . . . 4
2.7 Conflict with Partnership Agreement . . . . . . . . . . . . . 4
2.8 Approval of Limited Partner . . . . . . . . . . . . . . . . . 4
2.9 Annual Plan . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.10 REA and Ground Lease Obligations. . . . . . . . . . . . . . . 5
III OPERATION AND MAINTENANCE. . . . . . . . . . . . . . . . . . . . . . 5
3.1 Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Utilities and Equipment . . . . . . . . . . . . . . . . . . . 6
3.3 Approval of Contracts and Other Agreements. . . . . . . . . . 6
3.4 Compliance with Governmental Orders . . . . . . . . . . . . . 6
3.5 Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Other Services. . . . . . . . . . . . . . . . . . . . . . . . 6
IV PROCEDURES FOR THE DEPOSIT AND DISBURSEMENT
OF REVENUES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Deposit of Collections. . . . . . . . . . . . . . . . . . . . 7
4.2 Authorized Expenditures . . . . . . . . . . . . . . . . . . . 7
4.3 Fidelity Insurance. . . . . . . . . . . . . . . . . . . . . . 8
4.4 Insufficient Gross Income . . . . . . . . . . . . . . . . . . 8
V FINANCIAL RECORDS AND REPORTS. . . . . . . . . . . . . . . . . . . . 8
5.1 Inspection and Audit of Records . . . . . . . . . . . . . . . 8
5.2 Monthly and Annual Reports. . . . . . . . . . . . . . . . . . 8
5.3 Annual Operating Budget . . . . . . . . . . . . . . . . . . . 9
5.4 Returns Required By Law . . . . . . . . . . . . . . . . . . . 9
VI EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Expenses of Owner . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Reimbursement By Tenants And Parties To REA . . . . . . . . . 9
6.3 Estimate of Expense . . . . . . . . . . . . . . . . . . . . .10
VII COMPENSATION OF MANAGER. . . . . . . . . . . . . . . . . . . . . . .10
7.1 Management Fee. . . . . . . . . . . . . . . . . . . . . . . .10
7.2 Leasing Commission. . . . . . . . . . . . . . . . . . . . . .10
7.3 Extraordinary Services Fee. . . . . . . . . . . . . . . . . .11
7.4 Condemnation Fee. . . . . . . . . . . . . . . . . . . . . . .11
7.5 Documentation Fees. . . . . . . . . . . . . . . . . . . . . .11
VIII INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.1 Owner's Insurance Requirements. . . . . . . . . . . . . . . .11
8.2 Manager's Insurance Requirements. . . . . . . . . . . . . . .12
8.3 Compliance with Insurance Requirements. . . . . . . . . . . .12
8.4 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . .12
</TABLE>
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<PAGE>
PROPERTY MANAGEMENT AGREEMENT
(Santa Anita Fashion Park)
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
ARTICLE PAGE
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<S> <C> <C>
IX TERMS, RENEWALS AND CANCELLATIONS. . . . . . . . . . . . . . . . . .12
9.1 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
9.2 Renewals. . . . . . . . . . . . . . . . . . . . . . . . . . .12
9.3 Cancellation. . . . . . . . . . . . . . . . . . . . . . . . .13
9.4 Termination Due to Bankruptcy . . . . . . . . . . . . . . . .13
9.5 Procedures Upon Cancellation or Termination . . . . . . . . .13
X GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . .14
10.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . .14
10.2 Assignability . . . . . . . . . . . . . . . . . . . . . . . .14
10.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . .14
10.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . .14
10.5 Governing Jurisdiction/Partial Invalidity . . . . . . . . . .14
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . .15
10.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .15
10.8 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . .15
10.9 Estoppel Certificate. . . . . . . . . . . . . . . . . . . . .15
10.10 Interpretation. . . . . . . . . . . . . . . . . . . . . . . .16
10.11 Cumulative Remedies . . . . . . . . . . . . . . . . . . . . .16
10.12 Gender; Singular/Plural . . . . . . . . . . . . . . . . . . .16
10.13 Competitive Business. . . . . . . . . . . . . . . . . . . . .16
10.14 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
</TABLE>
LIST OF EXHIBITS
EXHIBIT A - Illustration of Project
EXHIBIT B - Description of Project
EXHIBIT C - Articles 8, 9 and 28 of the Partnership Agreement
EXHIBIT D - Documentation Fees
-ii-
<PAGE>
PROPERTY MANAGEMENT AGREEMENT
(Santa Anita Fashion Park)
-----------------------------------------------------------------------
THIS PROPERTY MANAGEMENT AGREEMENT ("Agreement"), which shall be effective
as of the first day of January, 1989 (hereinafter referred to as the "Effective
Date"), is made by and between ANITA ASSOCIATES, a California limited
partnership (hereinafter referred to as "Owner"), and HAHN PROPERTY MANAGEMENT
CORPORATION, a California corporation, (hereinafter referred to as "Manager").
RECITALS
A. Owner is the Lessee under that certain Ground Lease, dated April 6,
1972, as amended and restated by Ground Lease I, dated January 14, 1974, and as
further amended by Amendment to Ground Lease I, dated April 1, 1977 (the "Ground
Lease"), of certain land and improvements thereon consisting of a regional
shopping center commonly known as "Santa Anita Fashion Park," located in the
City of Arcadia, County of Los Angeles, State of California, and more
particularly described and illustrated in Exhibits A and B attached hereto and
made a part hereof, hereinafter called the "Project."
B. The Project, together with the parcels of land and improvements
thereon owned by or leased to certain major departments stores, is subject to
a Construction, Operation and Reciprocal Easement Agreement, dated January
19, 1978, recorded in Book 78, at Page 71491, in the officials records of Los
Angeles County (hereinafter referred to as the "REA"), by and among Owner,
J.C. Penney Properties, Inc., and Broadway-Hale Stores, Inc. (the "Majors").
The Majors and any other major department stores which lease buildings or
parts thereof from Owner, are hereinafter referred to as "Major Department
Stores." The Major Department Store parcels subject to the REA shall
hereinafter be considered a part of the above-referenced Project.
Capitalized terms used in this Agreement which are not defined herein, shall
have the same meaning in this Agreement as the same are defined in the REA.
C. Owner desires that Manager manage the Project as Owner's sole and
exclusive managing agent, with the responsibility for marketing, management,
operations, maintenance, leasing and servicing the Project and for the
performance on behalf of Owner of certain obligations of Owner as lessor under
all leases of space in the Project and under the REA. Manager desires to accept
such employment, subject to the terms and conditions hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the mutual agreements of the parties
hereinafter set forth, and other good and valuable consideration, it is hereby
agreed as follows:
ARTICLE I
APPOINTMENT OF MANAGER
AND GENERAL DUTIES AND STANDARDS
1.1 APPOINTMENT. As specified more particularly below, Owner hereby
hires and designates Manager as its sole authorized manager and exclusive
leasing agent for the Project. Manager, by its execution hereof, does hereby
accept such appointment upon and in accordance with the terms hereof.
1.2 GENERAL DUTIES. Manager shall establish an on-site property
management team and shall perform its duties hereunder in a diligent, careful
and vigilant manner so as to manage, operate, lease, maintain and service the
Project as a shopping center in the State in which the Project is located. The
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<PAGE>
services of Manager hereunder shall be of scope and quality not less than those
generally performed by professional property managers of other shopping centers
in the area in which the Project is located. Manager shall provide to Owner the
full benefit of the judgment, experience and advice of the members of Manager's
organization and staff and will perform services as may be reasonably
requested by Owner in marketing, operating, maintaining, servicing and leasing
the Project. Manager shall use due care in the selection and supervision of all
employees and independent contractors who shall operate and maintain the
Project. Manager shall oversee the activities and performance of all of its
employees and independent contractors retained to carry out this Agreement.
1.3 STATUS OF THE PARTIES. In the performance of its services under
this Agreement, Manager shall act as an independent contractor. However, where
Manager contracts on behalf of Owner with third-party vendors, contractors or
service agents, Manager shall do so as an agent of Owner and shall represent the
same to any such third-party vendor, contractor or service agent. Nothing in
this Agreement, or in the relationship between Owner and Manager, shall be
deemed to constitute a partnership or joint venture.
1.4 CONTINUING STANDARDS. Manager agrees, notwithstanding the authority
granted herein, to confer fully and freely with Owner in the performance of its
duties, and to continue to remain informed regarding the Project.
Notwithstanding the authority granted herein, Manager further agrees to abide by
those standards and instructions which Owner may issue from time to time
regarding the operating of the Project.
ARTICLE II
SPECIFIC DUTIES AND RIGHTS
Without limiting the general duties and standards described in ARTICLE 1,
above, or arising under any other provisions of this Agreement, Manager shall
perform the following services.
2.1 ACTION AUTHORIZED WITH RESPECT TO LEASES.
(a) Commencing on the Effective Date, as that term is defined in
ARTICLE IX, Manager shall perform all duties of Owner as lessor under the leases
with Project tenants and Major Department Stores leasing space in the Project
(collectively referred to as "Tenants") so that said leases shall remain in full
force and effect.
(b) Commencing on the Effective Date, Manager shall collect all
rent and other monies due from Tenants and any sums otherwise due Owner with
respect to the Project in the ordinary course of business (hereinafter
referred to as "Rent"). Owner authorizes Manager, as appropriate, to request
or demand (either orally or in writing) that Tenants pay Rent and to receive
and collect all Rent on behalf of Owner. Subsequent to the specific
authorization of Owner, Manager shall institute legal proceedings in the name
of Owner or Manager for the collection of delinquent Rents and other charges
and for the dispossession of Tenants and other persons from the Project as an
extraordinary legal service pursuant to SECTION 2.3, below. Manager shall
deposit promptly all monies so collected on behalf of Owner in a separate
bank account or accounts of Owner established pursuant to ARTICLE IV, below.
Except as specifically provided for in SECTION 4.1, Manager shall not
commingle funds in such account or accounts with any funds of Manager.
(c) Commencing on the date Manager's right to lease becomes
effective as described in SECTION 2.2, Manager is authorized to negotiate all
new leases, lease renewals and any assignments, amendments or terminations
thereof. However, Manager shall not hold itself out as having the authority to
-2-
<PAGE>
execute or approve any leases, assignments, amendments or terminations thereof
without the prior written approval of Owner.
(d) Should Manager, during the term of this Agreement, provide to
a Tenant any services in addition to the above, which are not provided for under
the leases and for which a separate charge is made (hereinafter called
"Additional Services"), then the charge made to the Tenant for Additional
Services shall be paid to and retained by Manager for its own account. Manager
shall notify Owner of its intention to provide Additional Services to a Tenant
or Tenants where such services will be substantial in nature and will directly
affect the operation of the Project. Owner shall have the right to prohibit
Manager from undertaking such services if, in its reasonable business judgment,
the performance by Manager of the Additional Services would adversely affect the
professional relationship and corresponding rights and duties created by this
Agreement. Manager shall pay all costs and expenses associated with the
Additional Services.
2.2 LEASING SERVICES. Commencing on the Effective Date, Manager shall
have the exclusive right to lease space in the Project. Manager shall use its
best efforts to negotiate and procure new leases and lease renewals for Owner on
terms and conditions most favorable to Owner. All leases shall be negotiated on
terms and conditions and in a form acceptable to Owner. Upon execution of this
Agreement, Owner shall provide Manager with a copy of the standard lease which
Owner requires to be used, subject to negotiated modifications, for any vacant
space in the Project. Manager shall prepare all documentation for any lease
transaction, including without limitation, new leases, lease renewals,
assignments and terminations.
Manager reserves the right to delegate the leasing of space in the
Project, or a portion thereof, to third-party leasing agents or brokers, who are
not parties to this Agreement, if, in Manager's professional opinion, such
delegation is in the best interests of Owner. However, prior to such delegation
by Manager, Manager will procure the approval of Owner to that delegation. In
the event a delegation is made to a third-party agent or broker, or if a
third-party agent or broker secures a Tenant for the Project, Manager shall be
entitled to receive its commission in accordance with ARTICLE 7, SECTION 7.2(v).
Manager shall, at all times, exercise good faith and act with the best interests
of the Owner in mind when dealing with third-party agents and brokers. Leasing
commissions will be paid from the Account as defined in ARTICLE 4, SECTION 4.1
hereof.
If within one hundred and eighty (180) days after the expiration or
termination of this Agreement, or any extension thereof, any lease is entered
into by Owner in the Project with a person or entity (i) with whom Manager had
been negotiating, actively within one hundred and eighty (180) days prior to
said expiration or termination and whose name Manager had provided to Owner upon
said expiration or termination with a list of all other persons or entities with
whom Manager had been negotiating, or (ii) whose proposed lease had been
submitted to Owner within one hundred and eighty (180) days prior to said
expiration or termination, then the leasing commission for such Lease(s) shall
be due and payable to Manager by Owner.
2.3 LEGAL SERVICES. Manager shall retain attorneys to provide legal
counseling to the extent Manager, in its reasonable business judgment, deems
such to be necessary or advisable to the efficient and prudent operation and
management of the Project. Said counseling shall include advice on the
interpretation of legal rights and duties, the proper procedure for the
enforcement of lease terms and the preliminary protection of Owner's rights.
Manager shall be entitled to bill Owner, independently of this Agreement, for
any legal services provided by Manager's in-house attorneys on behalf of
Owner and said services shall be considered extraordinary legal services
outside the scope of normal management services.
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<PAGE>
Before any lawsuit, in excess of Twenty-Five Thousand and No/100
Dollars, is commenced in Owner's name, Manager shall notify Owner of the need
for such action, and Owner shall promptly direct Manager as to the course of
action Owner desires Manager to take. Manager may recommend, but Owner shall
select, those attorneys who are to carry out and supervise the legal action.
Manager shall advise Owner promptly, with confirmation in writing, of the
service on Manager or Owner of any summons, notice to appear, subpoena or other
legal process, including any notices, letters, or other communication asserting
an actual or alleged liability of the Owner of the Project.
2.4 MARKETING SERVICES. In the event Owner requires the Tenants to
establish a Merchants' Association or, in the alternative, to contribute to a
Marketing or Advertising Fund, Manager shall perform Owner's administrative
duties in connection therewith. In this regard, Manager shall retain the
services of a Marketing Director, who together with Manager's entire
organization, shall provide specialized marketing services to the Project
through the use of multimedia advertising campaigns, general programs and
special events designed to create an identifiable image for the Project within
its trade area. The compensation (gross salary and wages, payroll taxes,
workers' compensation and other salary and wage benefits) of the Marketing
Director and all other personnel hired to perform secretarial and clerical
functions is an expense of Manager and shall be paid as an expense of the
Merchants' Association, or in the alternative, an expense of the Marketing or
Advertising Fund if said fund is established. The amount of compensation as well
as any other expenses of the Marking Director and all other personnel hired to
perform secretarial and clerical functions is as set forth in the approved
marketing plan as defined in the governing documents of the Merchants'
Association and the budget for the Marketing or Advertising Fund as approved by
Owner.
2.5 SPECIAL SERVICES WITH RESPECT TO MAJOR DEPARTMENT STORES. Owner
shall provide Manager with copies of the REA and other agreements existing
between Owner and the Major Department Stores if Owner intends that Manager
perform Owner's obligations set forth in said agreements. Manager shall review
and familiarize itself with Owner's obligations under said agreements and
consult with Owner to determine those obligations which Manager shall perform on
behalf of Owner. In addition, Manager shall enforce Owner's rights under said
agreements which shall include, if requested by Owner, billing each Major
Department Store for its share of the costs incurred in the operation and
maintenance of the common areas and enclosed mall. In the event any Major
Department Store shall fail to perform any of its obligations as set forth in
said agreements, Manager shall promptly notify Owner of such event and consult
with Owner as to the appropriate course of action to be taken by Manager.
2.6 SPECIAL SERVICES WITH RESPECT TO CONDEMNATION. Upon request by
Owner, Manager shall act on behalf of Owner in eminent domain proceedings for
the condemnation of the Project or any portion thereof, and in consultation with
Owner, employ independent real estate experts for appraisal and testimony in
connection with such proceedings. Manager shall make recommendations as to the
advisability of compromise or settlement of any such proceedings.
2.7 CONFLICT WITH PARTNERSHIP AGREEMENT. In the event any term, covenant
or condition contained in this Agreement conflicts with any term, covenant or
condition contained in the Anita Associates Articles of Limited Partnership
(dated April 6, 1972), as amended, hereinafter referred to as "Partnership
Agreement," by and between Hahn-UPI, a California limited partnership, as
general partner, and Santa Anita Realty Enterprises, Inc., as limited partner,
the Partnership Agreement shall prevail.
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<PAGE>
2.8 APPROVAL OF LIMITED PARTNER. Notwithstanding anything to the
contrary in this Agreement, Manager shall take no action which, pursuant to the
Partnership Agreement, requires approval of Owner's limited partner, Santa Anita
Realty Enterprises, Inc., hereinafter referred to as "Company," without first
obtaining said approval. Actions requiring approval of the Company are described
in Articles 8, 9 and 28 of the Partnership Agreement. A copy of said Articles is
attached hereto, marked "EXHIBIT C," and incorporated by reference herein.
2.9 ANNUAL PLAN. Prior to the commencement of each calendar year during
the term of this Agreement, Manager shall prepare an annual plan, hereinafter
referred to as "Annual Plan," indicating development and operation activities
reasonably anticipated to occur in the said calendar year based upon Manager's
projection of such activities. The Annual Plan shall be submitted to the Owner
and Company for their approval (which will not be unreasonably withheld or
delayed, and in the event the Owner and/or Company disapproves the Annual Plan,
Manager shall revise it to meet the objections of the Owner and/or Company. The
Annual Plan shall include, but not be limited to, the following:
(a) A statement of proposed sources of funds for development
during said calendar year and the uses of said funds, said statement to provide
a quarterly breakdown;
(b) A description of all leases expected to be entered into during
said calendar year, and a general schedule of proposed leasing terms and
arrangements together with the standard form of lease to be used for mall
Tenants;
(c) A description of all construction contracts expected to be
entered into during said calendar year;
(d) A description of all maintenance and operation costs expected
to be incurred during said calendar year; and
(e) The annual operating budget described in SECTION 5.3 hereof.
Manager shall not take any action which materially deviates from the terms of
the Annual Plan without obtaining the prior written consent of Company and
Owner. Manager shall secure Owner's and Company's approval of all Project
Tenants and of the terms of any new or renegotiated leases with new or current
Project Tenants.
2.10 REA AND GROUND LEASE OBLIGATIONS.
(a) REA OBLIGATIONS. Manager shall perform all duties of Owner as
Developer and Operator under the REA for operation, maintenance and day-to-day
management of the Project, so that no default or event of default on the part of
the Developer or Operator shall occur thereunder and the REA shall remain in
full force and effect. Without limiting the generality of the foregoing, Manager
shall arrange for and supervise the performance of all duties of Operator as set
forth in the REA for operation, maintenance, servicing, repair and replacement
of the Project including, but not limited to, the Common Areas and Enclosed
Mall.
(b) GROUND LEASE OBLIGATIONS. Manager shall perform all duties of
Owner as lessee under any ground lease(s) with respect to the repair and
maintenance of the Project.
ARTICLE III
OPERATION AND MAINTENANCE
3.1 MAINTENANCE. Manager shall maintain the Project in such a manner as
similar projects are maintained and in such a manner as is reasonably requested
by Owner. Subject to the terms
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of this Agreement and the Tenant leases, said maintenance shall include, but not
be limited to, cleaning of areas used in common by Tenants, roof and parking lot
repairs, plumbing, janitorial, carpentry and decorating. Owner shall have the
right to approve any item of repair or replacement in excess of Five Thousand
and No/100 Dollars ($5,000.00), not included in the Annual Operating Budget
previously approved by Owner pursuant to SECTION 5.3 and which is not
reimbursable by Tenants; provided, however, that if Manager, in its reasonable
business judgment, believes emergency repairs or replacements are necessary for
the preservation or safety of the Project or persons, and Manager is unable to
consult with Owner prior to performing such emergency repairs, Manager may carry
out said repairs with the prior approval of Owner if, under the circumstances,
Manager is unable to consult with Owner. Owner shall be deemed to have approved
any such item of repair or replacement if Owner fails to notify Manager of
Owner's disapproval within ten (10) days after receipt of Manager's proposal to
repair or replace equipment.
3.2 UTILITIES AND EQUIPMENT. On behalf of Owner, Manager shall, as
Manager shall deem prudent or appropriate, enter into or renew contracts to
provide for the following services to the Project: electricity, gas, steam,
landscaping, gardening, telephone, fuel, oil, security, elevators and
escalators, music, answering and paging services, maintenance, cleaning,
painting, vermin extermination and other services as are usually or customarily
furnished or rendered in connection with the ownership, operation and rental of
similar projects; provided, however, that: (i) Manager may contract for
maintenance, cleaning, painting, vermin extermination, landscaping and gardening
as, in its reasonable business judgment, it deems prudent so long as Manager
complies with the requirements of the REA and under any ground leases affecting
the Project to which Owner is a party; and (ii) Manager shall submit all
contracts for items of expense which are not entirely reimbursable by Project
Tenants to Owner for its review and approval. Manager shall, at Owner's expense,
also purchase all supplies and equipment which Manager shall deem necessary to
maintain and operate the Project. Owner shall approve Manager's purchase or
lease of any single piece of equipment or order of supplies for the Project in
excess of Five Thousand and No/100 Dollars ($5,000.00) which is not to be
reimbursed by the Tenants and is not included in the budget approved by Owner
pursuant to SECTION 5.3, below. Owner shall be deemed to have approved any such
purchase or lease if Owner fails to notify Manager of its disapproval thereof
within ten (10) days after Owner's receipt of a notice from Manager requesting
approval for such purchase or lease.
3.3 APPROVAL OF CONTRACTS AND OTHER AGREEMENTS. Manager shall not enter
into any agreement on behalf of Owner without the prior consent of Owner.
Notwithstanding the foregoing, Manager may enter into such agreements (excluding
leases) on behalf of Owner without such consent as are (a) routinely required
for the continuance of the management, operation, maintenance or servicing of
the Project or (b) made necessary by a sudden breakdown of machinery or other
similar emergency, as prescribed in SECTION 3.1. In the event Manager takes such
action, Manager shall promptly notify Owner verbally or in writing as quickly as
possible after such action.
3.4 COMPLIANCE WITH GOVERNMENTAL ORDERS. Manager shall comply with any
and all orders or regulations affecting the Project promulgated by any federal,
state or municipal authority, including orders of any board of fire underwriters
or other similar body.
3.5 SIGNS. Manager shall place and remove, or cause to be placed and
removed, such signs on the Project as Manager in the exercise of its reasonable
business judgment deems appropriate, subject to the terms of the Tenant leases
and any other agreements entered into by Owner or Manager.
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3.6 OTHER SERVICES. Manager shall recommend periodically to Owner such
procedures as Manager deems advisable for the more efficient and economical
management of the Project and shall perform all other services which are
customarily performed by commercial property managers in connection with the
operation of similar projects.
ARTICLE IV
PROCEDURES FOR THE DEPOSIT AND
DISBURSEMENT OF REVENUES
4.1 DEPOSIT OF COLLECTIONS. Manager shall establish and maintain an
account (the "Account") at a bank selected by Manager and approved by Owner for
the deposit of all money collected by Manager from the operation of the Project.
Upon collection, Manager shall immediately deposit all such money into the
Account; only those representatives authorized in writing by Owner shall draw
funds from the Account. Owner shall, from time to time, on the request and
advice of Manager, deposit and maintain funds in the Account sufficient to cover
known and anticipated expenses of the Project. Owner agrees that Manager may
transfer Owner's funds, as needed for disbursements, along with funds from other
clients of Manager to a centralized general disbursement account(s) maintained
in Manager's name. Due to the large number of Manager's clients and the
resulting aggregate cash balances in Manager's account(s), Manager will derive
direct benefits which are hereby deemed permissible compensation to Manager in
addition to that provided elsewhere in this Agreement.
4.2 AUTHORIZED EXPENDITURES. Manager shall scrutinize all bills for
goods and services received by Manager in connection with the operation of the
Project. Manager shall pay in a timely manner all expenses authorized in the
Annual Operating Budget or that are in conformance with the terms of this
Agreement from the funds collected and deposited into the Account. Specifically,
Manager shall pay in a timely manner, so that late charges are not incurred or
default notices issued, all expenses of the Project including, without
limitation:
(a) All amounts of principal and interest due on loans
secured by or owed in connection with the Project;
(b) Real estate and other taxes; insurance premiums;
utilities; water and sewer charges; assessments of every nature; license fees;
(c) Any expense to correct any violation of federal, state
and municipal laws, ordinances, regulations and orders relative to the
leasing, use, repair and maintenance of the Project, or relative to the
rules, regulations or orders of the local board of fire underwriters or other
similar body, provided such expenses are not the result of Manager's
negligence;
(d) Actual and reasonable expense of making all repairs,
decorations and alterations provided such expense is not the result of
Manager's negligence;
(e) Expenses incurred by Manager in connection with all
service agreements approved of by Owner;
(f) Expenses of collection of delinquent Rentals collected
through a collection agent which has been approved in writing in advance by
Owner;
(g) Legal fees of attorneys provided such attorneys have been
approved of (or designated as provided in SECTION 2.3) by Owner in writing in
advance of retention and a specific amount of such attorney's fees have been
approved by Owner in writing in advance of payment;
(h) Expenses of approved capital expenditures;
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(i) Expenses of printed checks for each bank account required
by Owner;
(j) Expenses of cash register, adding machines, electronic
data processing equipment, computers and other equipment of such type and use
located at the Project and owned or leased by Owner;
(k) Approved leasing commissions payable to third parties;
(l) Expenses of service contracts approved by Owner and costs
of utilities;
(m) Expenses of Owner approved advertising;
(n) Expenses of printed forms and supplies required for use
at the Project; and
(o) Other expenses with respect to the Project, including the
Management Fee set forth in ARTICLE VII.
4.3 FIDELITY INSURANCE. At Manager's sole expense, Manager shall procure
employee fidelity insurance for the joint protection of Manager and Owner to
indemnify both from any loss, theft or embezzlement of Owner's property or funds
caused by any officers, employees or agents of Manager.
4.4 INSUFFICIENT GROSS INCOME. If at any time the gross income from the
Project shall not be sufficient to pay the bills and charges which may occur
with respect to the Project, or if such gross income is insufficient to pay the
combined sum of both bills and charges, items will be paid out of the Account in
the following order of priority:
(a) First, bills and charges to third parties; and
(b) Second, bills and charges, if any, incurred by Manager for
Manager's service provided to Owner.
After Manager has paid, to the extent of available gross
income, all bills and charges based upon the order of priority set forth in
this paragraph, Manager shall submit to Owner a statement of remaining unpaid
bills. Owner shall provide sufficient monies to pay any unpaid expenses.
ARTICLE V
FINANCIAL RECORDS AND REPORTS
5.1 INSPECTION AND AUDIT OF RECORDS. Manager shall maintain accurate,
complete, and separate books and records for the Project in accordance with
generally accepted accounting principles. On ten (10) days' written notice to
Manager, Owner shall have the right at any reasonable time to inspect said books
and records. On thirty (30) days' prior written notice to Manager and at Owner's
expense, Owner and Company shall have the right at any reasonable time to audit
said books and records. Said audit shall be performed by a certified public
accountant or a firm of certified public accounts of recognized national
standing selected by Owner. Said right of audit shall be limited to those books
and records of the Project pertaining to any calendar or fiscal year which ended
within 36 months of the date Owner notifies Manager that it is exercising its
right to audit. If such audit discloses an overpayment of Manager's fees of more
than five percent (5%) in any year, Manager shall pay for the cost of the audit.
5.2 MONTHLY AND ANNUAL REPORTS. On or before the fifteenth (15th) day of
each month during the term of this Agreement, Manager shall prepare and forward
to Owner monthly and
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annual profit and loss statements for the Project prepared as of the last day of
the prior calendar month and reporting the prior month's and the prior twelve
(12) months' results; a Project balance sheet, prepared as of the last day of
the prior calendar month; a monthly Tenant sales summary, prepared as of the
last day of the calendar month; a monthly litigation report prepared as of the
last day of the calendar month; and a quarterly Owner's report summarizing all
activity of the major areas of operation, prepared on a quarterly basis. All
notices from any mortgagee claiming any default in any mortgage affecting the
Property or from any mortgagee or any official entity not of a routine nature,
shall be forthwith delivered to Owner if received by Manager. Annual financial
statements shall be prepared by a nationally recognized firm of independent
certified public accountants.
5.3 ANNUAL OPERATING BUDGET. Within forty-five (45) days following the
Effective Date and thereafter at least forty-five (45) days prior to the
commencement of each calendar year during the term of this Agreement, Manager
shall prepare and submit to Owner and Company, for their approval (which will
not be reasonably withheld or delayed) an operating budget in preliminary draft
form ("Operating Budget"), itemizing the estimated receipts and disbursements
for each year. The Operating Budget shall include, without limitation, the
on-site management office expenses, salaries of the on-site management personnel
and related expenses, the Project's rent roll and shall take into account the
Project's general condition, the rate of completion of any contemplated repairs,
the existing Tenant occupancy level, lease expirations and leasing activity.
Within thirty (30) days following their receipt of the Operating
Budget, Owner and Company shall notify Manager, in writing, of their approval or
disapproval of the same. If Owner or Company does not so notify Manager, of if
Owner and Company notify Manager of their approval, the Operating Budget shall
be deemed approved. If Owner and/or Company does not approve the Operating
Budget, Manager, Owner and Company shall immediately consult with one another
and modify the Operating Budget to the extent that is necessary to make it
reasonably acceptable to Owner and Company. The Operating Budget approved by
Owner and Company shall hereinafter be referred to as the "Annual Operating
Budget."
5.4 RETURNS REQUIRED BY LAW. Manager shall prepare and timely file all
forms, reports and returns required by law relating to the operation of Manager
as an entity. Manager will prepare and timely file all forms, reports and
returns required by law relating to Owner and the Project where Owner in writing
specifically requests Manager to do so. Manager shall prepare and maintain all
forms, ledgers and reports which are necessary to prepare and file or are
required by law in connection with the preparation and filing, of all forms,
reports and returns relating to Owner and the Project.
ARTICLE VI
EXPENSES
6.1 EXPENSES OF OWNER. Owner shall be responsible for all direct
operating expenses of the Project as set forth in the Annual Operating Budget
prepared pursuant to SECTION 5.3 hereof, and for the Management Fee as provided
in SECTION 7.1 hereof. It is further understood that everything done by Manager
under the provisions of this Agreement shall be done for the benefit of Owner
and the Project, and that all expenses incurred which inure to the benefit of
Owner or the Project shall be incurred on behalf of and at the expense of Owner.
6.2 REIMBURSEMENT BY TENANTS AND PARTIES TO REA. All sums for
maintaining or repairing the Project which become due under the Tenant leases
and/or the REA shall be collected by the
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Manager and used for such purposes. To the extent the sums so payable in
maintaining and repairing the Project are less than the expenses properly
incurred by the Manager in performing such maintenance and repair, Owner shall
reimburse Manager for such deficiency. To the extent that the sums so payable
for maintaining and repairing the Project are more than such expenses, Manager
shall refund to Owner the portion of such payments as are in excess of such
expenses but such excess amount refunded to Owner shall not be considered as
part of the Gross Rental Receipts as that term is defined in SECTION 7.1(a). Any
other payments made by Manager in the performance of its duties and obligations
under this Agreement shall be made out of such funds as Manager may from time to
time hold for the account of Owner, which may be provided by Owner. If Manager
shall advance voluntarily on Owner's behalf any amount for the payment of any
necessary expenses hereunder, Owner shall, upon notice from Manager, promptly
reimburse Manager therefor, without interest. Owner, however, shall attempt to
maintain in the Account sufficient amounts to enable Manager to perform its
duties hereunder.
6.3 ESTIMATE OF EXPENSE. Owner and Manager acknowledge that the Annual
Operating Budget is but an estimate of the cost and expenses and Owner agrees to
pay the actual costs and expenses of the items referred to in this Agreement and
the Annual Operating Budget. Owner authorizes Manager to pay such actual costs
and expenses as in the procedure provided for in ARTICLE 4. In the event that
there is insufficient gross income to pay for the actual costs and expenses,
Owner agrees to pay the same in accordance with ARTICLE 4, SECTION 4.4.
ARTICLE VII
COMPENSATION OF MANAGER
7.1 MANAGEMENT FEE. Each month, Owner shall pay Manager renumeration for
its services in managing ("Management Fee") and leasing the Project in
accordance with terms of this Agreement as follows:
(a) A Management Fee based on income equal to the sum of all
expenses incurred in the operation of the on-site management office including,
but not limited to, the expenses set forth in the Annual Operating Budget such
as auto expenses, dues, subscriptions, office equipment, office supplies,
outside services, postage, telephone, travel, entertainment and similar
expenses, gross salaries and wages, payroll taxes, workers' compensation and
other benefits of the Project manager, the Project manager's assistant and all
other personnel, including all persons hired to perform secretarial, clerical
and maintenance or custodial labor and security personnel at the Project,
whether full or part time; PLUS four percent (4%) of the Gross Rental Receipts
payable to Owner, or Manager on behalf of Owner, by Tenants during each calendar
year or any partial calendar year occurring during the term of this Agreement,
whether collected or not. For purposes of this SECTION 7.1(a), Gross Rental
Receipts is defined to include all those sums paid by Tenants, including Tenants
leasing pushcarts in the Project, to Owner or Manager on behalf of Owner
pursuant to the governing lease documents as "minimum annual rental," and
"percentage rental".
Said fee is payable in twelve (12) equal monthly installments, in
advance, by the fifth (5th) day of each calendar month. Each monthly installment
shall be based upon the estimated Gross Rental Receipts, which shall be adjusted
to actual Gross Rental Receipts on an annual basis.
7.2 LEASING COMMISSION. A leasing commission shall be earned and payable
on execution of a lease by Owner and a Tenant.
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(i) Whenever Manager leases space to a new Tenant, the commission
("Full Commission") shall be calculated as follows: four percent (4%) of the
total minimum annual rental for the first five (5) years, plus three percent
(3%) of the total minimum annual rental for the next five (5) years, plus two
percent (2%) of the total minimum annual rental for the remainder of the term,
if any.
(ii) Whenever Manager renegotiates an unexpired or expired lease,
or replaces an unexpired or expired lease with a new lease with the same Tenant,
whether or not the renegotiated or new lease affects the same space as
previously leased with the same Tenant, so that the Tenant becomes obligated to
pay Owner more average minimum annual rental for the term of the renegotiated or
new lease than the average minimum annual rental over the term of the prior
lease or a greater term is achieved, the commission ("Half Commission") shall be
calculated as follows: two percent (2%) of the total minimum annual rental for
the first five (5) years; plus one point five percent (1.5%) of the total
minimum annual rental for the next five (5) years; plus one percent (1%) of the
total minimum annual rental for the remainder of the term, if any.
(iii) Notwithstanding anything to the contrary contained in (i) and
(ii) above, in the event the term of the negotiated or new lease commences
during the term of a prior lease, Manager shall be entitled to a Full Commission
for a new Tenant and to a Half Commission for the same Tenant (a) on the
increase of the total prior minimum annual rent for the remaining prior term of
the existing lease and (b) on the total minimum annual rental for the remainder
of the new term.
(iv) Manager shall not be entitled to a commission for a Tenant's
exercise of an option to lease or if a Tenant's tenancy is terminated by a
purchase of the tenancy by Owner. However, in the event of a purchase of the
tenancy by Owner, if Manager participates in the negotiation Manager shall be
entitled to an extraordinary service fee to be negotiated by Manager and Owner.
(v) In the event Manager shall work with an outside broker, then
the above fees are to be increased by twenty-five percent (25%). Said
twenty-five percent (25%) is payable to Manager with the balance payable to the
outside broker.
7.3 EXTRAORDINARY SERVICES FEE. An extraordinary services fee,
independent of income, payable in advance for work requested by Owner beyond
that normally required of commercial property managers including, but not
limited to, supervising minor rehabilitation or modernization of the Project;
obtaining income tax advice; presenting testimony, proposals or petitions to
planning or zoning committees or other public bodies; advising Owner on proposed
new construction or expansion of the Project; and providing other business
advice or legal counseling concerning proposals for substantial changes to the
operation of the Project. The amount of such fee will be agreed upon in writing
between the parties prior to the rendering of any such services.
7.4 CONDEMNATION FEE. A condemnation fee, independent of income, payable
in advance. The amount of such fee will be agreed upon in writing between the
parties prior to the rendering of such services pursuant to ARTICLE II, SECTION
2.6.
7.5 DOCUMENTATION FEES. Documentation fees, as set forth on EXHIBIT D,
attached hereto and incorporated herein by this reference. Manager shall use its
best efforts to require Tenants to pay documentation fees in the amounts
specified on Exhibit D; provided, however, such fees are due to Manager whether
or not Owner is reimbursed by a Tenant.
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ARTICLE VIII
INSURANCE
8.1 OWNER'S INSURANCE REQUIREMENTS. Subject to the requirements of law
or those set by Tenant leases, agreements with Major Department Stores, or any
other agreements affecting the Project, Owner shall select, obtain and maintain
insurance for the Project with such limits of coverage as Owner shall deem
necessary and appropriate to adequately protect the respective interests of
Owner and Manager. Notwithstanding the foregoing, such insurance shall include
public liability and property damage insurance with limits of not less than Five
Million and No/100 Dollars ($5,000,000.00) per occurrence and in the aggregate,
boiler and machinery insurance, fire and extended coverage insurance, and
burglary and theft insurance. Manager shall be named as an "Additional Insured"
as it respects Manager's operation, maintenance, marketing, leasing and overall
services for the Project (collectively "Duties"). Said insurance shall recognize
and insure Manager for Manager's active or passive negligence with respect to
Manager's Duties. Further, each such policy of insurance shall be issued as a
primary policy and not as one contributing with or providing coverage only in
excess of coverage of any insurance which Manager may carry. Each such policy
shall contain an endorsement requiring thirty (30) days' written notice from the
insurance company to the Manager before cancellation or a change in coverage,
scope or amount of any such policy. Within ten (10) days of the Effective Date,
Owner shall provide Manager with "Certificates of Insurance" evidencing the
types and amounts of coverage in force and the names of all insureds under each
policy. Manager shall (i) promptly investigate and make a written report
concerning all accidents or claims for damage relating to the ownership,
operation or maintenance of the Project, including any occurrences of personal
injury or property damage at the Project, (ii) obtain estimates for the cost of
any necessary repairs, and (iii) cooperate with and make reports to all insurers
in connection with such accidents and claims.
8.2 MANAGER'S INSURANCE REQUIREMENTS. At Manager's sole expense, Manager
shall maintain such insurance as it deems necessary to protect the interests
of Manager and Owner, which shall include, but not be limited to, workers'
compensation insurance and employee fidelity insurance, as required in SECTION
4.3. Manager shall provide Owner, on request, with Certificates of Insurance
evidencing the types and amounts of insurance in force and the names of all
insureds under each policy.
8.3 COMPLIANCE WITH INSURANCE REQUIREMENTS. Manager shall comply with
the terms of any insurance policies of Owner or Manager affecting the Project,
shall not use the Project or permit the same to be used for any purpose that
would violate the terms of any such insurance policies, and shall not keep or
allow to be kept on the Project any material, machinery, equipment, substance or
other thing that would violate the terms of any such insurance policies.
8.4 WAIVER OF SUBROGATION. Owner and Manager hereby release each other,
and their respective authorized representatives and agents, from any claims for
damage or loss to any person or to the Project that are caused by or result from
risks insured under any insurance policies carried by said parties and in force
at the time any such damage occurs. Each party shall cause each insurance policy
obtained by it to provide that the insurer waives all right of recovery by way
of subrogation against either party in connection with any damage covered by
said insurance policy.
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ARTICLE IX
TERMS, RENEWALS AND CANCELLATIONS
9.1 TERM. This Agreement shall become effective on January 1, 1989
("Effective Date"), and shall continue to and through December 31, 1993.
9.2 RENEWALS. This Agreement shall continue in force for the term
specified in SECTION 9.1 and shall terminate automatically at the end of such
term unless renewed in writing at least sixty (60) days prior to such
expiration. If the parties fail to renew the Agreement as provided herein, and
the conduct of the parties evidences an intention to continue the contractual
relationship created hereby, then the term of this Agreement shall continue
until such time as this Agreement is cancelled by either party upon sixty (60)
days' written notice to the other party.
9.3 CANCELLATION. Owner shall have the right to cancel this Agreement (a)
at any time, without cause, on thirty (30) days' written notice to Manager or
(b) at any other time for cause if: (i) Owner has given Manager written notice
of its intention to cancel this Agreement for a material breach by Manager of
this Agreement; and (ii) Manager has failed to cure said breach within thirty
(30) days of said notice or, in the event said breach cannot reasonably be cured
within said 30-day period and Manager is acting diligently to cure such breach,
within a reasonable period of time. In the event the Project is totally
destroyed by an act of God or a risk normally covered by fire and extended
coverage insurance, Owner shall have the right to immediately cancel this
Agreement. Manager shall have the right to cancel this Agreement at any time
upon giving Owner at least ninety (90) days' written notice of its intention to
exercise its right of cancellation.
9.4 TERMINATION DUE TO BANKRUPTCY. In the event a bankruptcy petition is
filed by or against either party and not settled within ninety (90) days, or in
the event that either party shall make an assignment for the benefit of
creditors or seek protection under any insolvency law, either party hereto may
terminate this Agreement, effective as of the date of notice.
9.5 PROCEDURES UPON CANCELLATION OR TERMINATION. On the expiration or
earlier termination of this Agreement as provided above, Manager shall:
(a) Deliver to Owner, or such other person or persons designated by
Owner, all books and records of the Project and all funds in its possession
belonging to Owner or received by Manager on behalf of Owner; and
(b) Assign, transfer or convey to Owner, or such other person or
persons designated by Owner, Manager's rights pursuant to any service, operation
and maintenance agreements pertaining to the Project between Manager and another
party and all personal property relating to or used in the operation and
maintenance of the Project, except any personal property which was paid for and
is owned by Manager. Manager shall, at its cost and expense, remove all signs
that it may have placed at the Project indicating that it is the Manager of the
same and replace and restore any damages resulting therefrom.
Upon cancellation or expiration of this Agreement, the obligations of
the parties shall cease except that Manager and Owner shall comply with the
applicable provisions of this SECTION 9.5, and any cancellation for cause by
Owner shall not release Manager from liability resulting from Manager's default,
and Manager shall be liable to Owner for all loss, cost, damage and expense
suffered by Owner on account of Manager's default and resulting termination.
Manager shall be entitled to receive any and all compensation which may be due
Manager hereunder at the
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time of such cancellation or expiration subject to Owner's right to set off any
claim Owner may have for damages. Upon the expiration or termination of this
Agreement, Manager shall render a full account to Owner and shall deliver to
Owner a statement outlining in detail all Management Fees due to Manager
hereunder, and shall cause all funds held by Manager relating to the Project to
be delivered to Owner. In the event Owner concurs with Manager's statement
regarding the Management Fee and other monies due to Manager, Owner shall
promptly pay Manager such fee, which payment shall be made not later than
fifteen (15) days after receipt by Owner of Manager's Statement; however, if
Owner does not concur with Manager's Statement, Owner shall promptly pay Manager
the amount Owner does not dispute and shall deposit into an escrow at Ticor
Title Insurance Company, 925 "B" Street, San Diego, California 92101, the amount
claimed by Manager and disputed by Owner with instructions that said escrow
holder deposit and hold said amount in an interest-bearing account until
instructed jointly by Owner and Manager in writing or until ordered by a court
of competent jurisdiction to disburse such funds.
(c) Manager agrees to consult with Owner for a period of one hundred
and twenty (120) days after expiration or cancellation of this Agreement. The
fee for such consultation shall be agreed upon by Manager and Owner at the time
of such expiration or cancellation.
ARTICLE X
GENERAL PROVISIONS
10.1 INDEMNIFICATION. Owner shall indemnify, defend and hold Manager and
its officers, employees and agents harmless from all claims, loss, damage,
liability, expense and costs, including actual attorney's fees (hereinafter
referred to collectively as "Claims"), arising: from Owner's violation of any
rule, order, ordinance or law of any federal, state or municipal authority; from
the condition or operation of the Project; from Manager's performance of its
obligations under this Agreement or performance of any collateral duties
undertaken at the express or implied direction of Owner in connection with the
Project or this Agreement--provided, however, Owner's duty of indemnity
hereunder shall not extend to Claims caused solely by Manager's negligence or
willful misconduct. Owner shall reimburse Manager upon demand for any monies
which Manager is required to pay out on behalf of Owner under this Agreement or
in asserting Owner's rights, or in defending or representing Owner or Manager
with respect to Claims asserted against Owner, or against Manager as Owner's
agent, in connection with the condition or operation of the Project.
Manager shall indemnify, protect, defend and hold Owner and its
partners, directors, shareholders, contractors, officers, employees and agents
harmless from all Claims resulting from injury to or death of persons or from
injury to or destruction of tangible property, which arise from or are caused by
Manager's negligent or willful misconduct in its failure to perform the
obligations of Owner under any Tenant lease or agreement with a Major Department
Store at the Project which Manager has agreed to perform under this Agreement,
or any duties Owner has expressly or impliedly directed Manager to assume in
connection with the Project; provided, however, Manager's duty of indemnity
hereunder shall not extend to Claims caused solely by Owner's negligence or
willful misconduct.
10.2 ASSIGNABILITY. Neither Owner or Manager shall sell, assign, delegate,
transfer, convey, or encumber its rights or duties under this Agreement or
permit any of the same to occur by operation of law without the prior written
consent of the other, except that Manager may transfer its interest in this
Agreement to any entity controlling, controlled by, or under common control with
Ernest W. Hahn, Inc., a California corporation, dba "The Hahn Company," or
Manager or to any corporation into which or
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with which Manager may merge or consolidate. In the event one party consents to
such a sale, assignment, delegation, transfer, conveyance or encumbrance by the
other party, the transferee shall agree in writing to assume the obligations of
the transferor.
10.3 AMENDMENT. This Agreement shall not be amended or modified in any
respect except with the written consent of Manager and Owner.
10.4 ENTIRE AGREEMENT. This Agreement is a personal services contract and,
together with the exhibits attached hereto, constitutes the entire agreement
between Owner and Manager relating to the Project. No prior agreement or
understanding pertaining to the same shall be valid or of any force or effect.
10.5 GOVERNING JURISDICTION/PARTIAL INVALIDITY. This Agreement shall be
governed by and construed under the laws of the State of California. If any
provision or portion of any provision is held by a court to be invalid, void or
unenforceable, the remaining provisions and portions thereof shall nevertheless
continue in full force and effect.
10.6 ATTORNEYS' FEES. If at any time after the Effective Date, either party
institutes any action or proceeding against the other relating to the provisions
of this Agreement or any default hereunder, the nonprevailing party in such
action or proceeding shall reimburse the prevailing party for the reasonable
expenses of attorneys' fees and all costs and disbursements incurred therein by
the prevailing party including, without limitation, any such fees, costs or
disbursements incurred on any appeal from such action or proceeding. Subject to
the provisions of local law, the prevailing party shall recover all such fees,
costs or disbursements as costs taxable by the court or arbiter in the action or
proceeding itself without the necessity for a cross-action by the prevailing
party.
10.7 NOTICES. Any notice to be given hereunder by either party to the other
shall be by personal delivery to any officer of the party served or by certified
mail, postage prepaid, return receipt requested, as specified below. In the
event a notice is mailed, it shall be deemed received forty-eight (48) hours
after it is mailed. Mailed notices shall be addressed as set forth below, but
each party may change its address by written notice to the other in accordance
with this paragraph.
Manager: Hahn Property Management Corporation
4350 La Jolla Village Drive, Suite 700
San Diego, CA 92122-1233
Attn: LEGAL DEPARTMENT
Owner: Anita Associates
4350 La Jolla Village Drive, Suite 700
San Diego, CA 92122-1233
Attn: LEGAL DEPARTMENT
with a copy to: Santa Anita Realty Enterprises, Inc.
Suite 950
600 Santa Ana Blvd
Santa Ana, Calif 92701
Attn: MR. GLENN CARPENTER
10.8 NO WAIVER. The failure of Owner to seek redress for violation, or to
insist upon strict performance of any covenant, agreement, provision or
condition of this Agreement shall not constitute a waiver thereof, and Owner
shall have all remedies provided herein and by applicable law with respect to
any subsequent act which would have originally constituted a violation.
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10.9 ESTOPPEL CERTIFICATE. Each party hereby covenants that upon at least
twenty (20) days' prior written request of the other party, it will issue to
such other party, or to any prospective mortgagee, assignee or purchaser of such
party's interest in this Agreement (or if Owner is making the request, of the
Project) an estoppel certificate stating: (i) whether the party to whom the
request has been directed knows of any default under this Agreement, and if
there are known defaults, specifying the nature thereof; (ii) whether to its
knowledge this Agreement has been assigned, modified or amended in any way (and
if it has, then stating the nature thereof); and (iii) that to such party's
knowledge, this Agreement is as of that date in full force and effect. Such
certificate shall act as a waiver of any claim by the party furnishing such
certificate to the extent such claim is based upon facts which are contrary to
those asserted in the certificate but only to the extent the claim is asserted
against a bona fide encumbrancer or purchaser for value without knowledge of
facts to the contrary of those contained in the certificate and who has acted in
reasonable reliance upon the certificate. Such certificate shall in no event
subject the party furnishing it to any liability whatsoever, notwithstanding the
negligence or inadvertent failure of such party to disclose correct or relevant
information.
10.10 INTERPRETATION. Although the provisions of this Agreement were drawn
by Manager, the parties hereto agree that this circumstance alone shall not
create any presumption, canon of construction or implication favoring the
position of either Owner or Manager.
10.11 CUMULATIVE REMEDIES. All rights, privileges and remedies afforded by
the parties in this Agreement shall be cumulative and not exclusive, and the
exercise of any one of such remedies shall not be deemed to be a waiver of any
other right, remedy or privilege provided for herein or available at law or
equity.
10.12 GENDER; SINGULAR/PLURAL. The use herein of the (i) singular number
shall be deemed to include the plural, (ii) masculine gender shall be deemed to
include the feminine or neuter, and (iii) neuter gender shall be deemed to
include the masculine or feminine whenever the sense of this Agreement so
requires.
10.13 COMPETITIVE BUSINESS. Owner hereby acknowledges and agrees that
Manager may engage in any business whether or not the same is competitive with
the Project and Owner shall have no right to participate in any such business
activity.
10.14 COUNTERPARTS. This Agreement may be signed in several counterparts,
each of which shall be deemed an original, and all counterparts shall constitute
one and the same instrument. The signature of a party to any counterpart may be
removed and attached to any other counterpart. Any counterpart to which is
attached the signatures of all parties shall constitute an original of this
Agreement.
-16-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
MANAGER
HAHN PROPERTY MANAGEMENT CORPORATION,
a California corporation
By: /s/ James R. Harris
-----------------------------------------
Title: Vice President
--------------------------------------
By: /s/ Authorized Officer
-----------------------------------------
Title: Senior Vice President, Operations
---------------------------------------
OWNER
ANITA ASSOCIATES,
a California limited partnership
By: Hahn-UPI,
a California limited partnership,
as general partner
By: Ernest W. Hahn, Inc.,
a California corporation
dba "The Hahn Company,"
as general partner
By: /s/ Authorized Officer
-------------------------------
Title: Senior Vice President,
Operations
----------------------------
By: /s/ James R. Harris
-------------------------------
Title: Vice President
----------------------------
By: Santa Anita Realty Enterprises,
Inc., a Delaware corporation,
as limited partner
By: /s/ Authorized Officer
-------------------------------
Title: President
----------------------------
By: /s/ Authorized Officer
-------------------------------
Title: Executive Vice Pres.
----------------------------
-17-
<PAGE>
[MAP]
<PAGE>
[LETTERHEAD]
January 22, 1976 SANTA ANITA FASHION PARK
BROADWAY TRACT W.O. 37501
In the City of Arcadia, County of Los Angeles, State of California:
That Portion of Parcels 1 and 3 of Parcel Map No. 4626 as per plat filed in Book
51, of Parcel Maps, page 50, Records of said Los Angeles County, described as
follows:
Beginning at the Southwesterly corner of said Parcel 3, being also the
intersection of the Easterly line of Baldwin Avenue with the Northerly line of
Huntington Drive, as said corner is shown by said plat;
Thence North 3DEG. 54' 55" East, along the Easterly line of said Baldwin
Avenue, 225.00 feet to the Southwest corner of that certain parcel of land
shown on said plat as "NOT A PART";
Thence North 86DEG. 05' 00" East, along the Southerly line of said "NOT A
PART", 129.81 feet to the Southeast corner thereof;
Thence North 3DEG. 54' 55" East, along the East line thereof, 104.00 feet
to the Northeast corner of said "NOT A PART";
Thence South 78DEG. 34' 00" East, 315.84 feet;
Thence North 11DEG. 26' 00" East, 402.87 feet;
Thence South 78DEG. 34' 00" East, 548.40 feet:
Thence North 11DEG. 26' 00" East, 7.07 feet;
Thence South 78DEG. 34' 00" East, 358.71 feet;
Thence South 3DEG. 53' 00" West, 367.02 feet to the Northeast corner of
Parcel 4 of said Parcel Map No. 4626;
Thence North 86DEG. 08' 00" West, along the North line of said Parcel 4,
610.63 feet to an angle point therein;
Thence South 48DEG. 52' 00" West, 215.74 feet to a point in the North line
of the aforesaid Huntington Drive, said point being in a curve therein,
concave Southerly and having a Radius of 2,974.82 feet;
EXHIBIT B
<PAGE>
page 2 SANTA ANITA FASHION PARK
BROADWAY TRACT W.O. 37501
Thence Westerly along said curve, from a tangent bearing North 88DEG. 24'
53" West, through a central angle of 4DEG. 36' 07", a distance of 238.93 to
the beginning of a tangent curve, concave Southerly and having a Radius of
3,929.75 feet;
Thence Westerly along said curve, through a central angel of 0DEG. 27' 00",
a distance of 30.86 feet to the beginning of a tangent curve, concave
Southerly and having a Radius of 5,839.60 feet:
Thence Westerly along said curve, through a central angle of 0DEG. 18' 00",
a distance of 30.58 feet to the beginning of a tangent curve, concave
Southerly and having a Radius of 11,569.17 feet;
Thence Westerly along said curve, through a central angle of 0DEG. 09' 00",
a distance of 30.29 feet;
Thence South 86DEG. 05' 00" West, 305.65 feet to the Point of Beginning.
Containing 12.756 Acres, more or less.
NOTE:
THE FOREGOING PARCEL OF LAND IS ALSO DESIGNATED AS PARCEL 2 ON THAT CERTAIN
TENTATIVE PARCEL MAP NO. 6374 FILED WITH THE CITY OF ARCADIA ON NOVEMBER 10,
1975.
EXHIBIT B (cont.)
<PAGE>
[LETTERHEAD]
January 22, 1976 SANTA ANITA FASHION PARK
DEVELOPERS TRACT - W.O. 37501
In the City of Arcadia, County of Los Angeles, State of California:
That portion of Parcel 1 of Parcel Map No. 4626 as per plat filed in Book 51, of
Parcel Maps, page 50, Records of said Los Angeles County, described as follows:
Beginning at the most Northerly corner of said Parcel 1, as shown by said plat;
Thence South 33DEG. 39' 25" West, along the Westerly line of said Parcel 1,
being also along the Easterly line of Baldwin Avenue as shown by said plat,
261.90 feet to the beginning of a tangent curve in said Westerly line,
concave Easterly and have a Radius of 940.00 feet;
Thence Southerly along said curve, through a central angle of 29DEG. 44'
30", a distance of 487.94 feet;
Thence South 3DEG. 54' 55" West, along said Westerly line, 1491.21 feet to
the Northwest corner of that certain parcel of land shown by said plat as
"NOT A PART";
Thence North 86DEG. 05' 00" East, along the Northerly line of said "NOT A
PART", 129.81 feet to the Northeasterly corner thereof;
Thence South 78DEG. 34' 00" East, along a line common to Parcels 1 and 3 of
said Parcel Map No. 4626, 315.84 feet;
Thence North 11DEG. 26' 00" East, 402.87 feet;
Thence South 78DEG. 34' 00" East, 548.40 feet;
Thence North 11DEG. 26' 00" East, 292.01 feet;
Thence North 47DEG. 37' 05" West, 38.09 feet;
Thence North 11DEG. 26' 00" East, 27.37 feet;
Thence North 78DEG. 34' 00" West, 19.50 feet;
Thence South 11DEG. 26' 00" West, 19.59 feet;
EXHIBIT B (cont.)
<PAGE>
page 2 SANTA ANITA FASHION PARK
DEVELOPERS TRACT - W.O. 37501
Thence North 78DEG. 34' 00" West, 55.71 feet;
Thence North 11DEG. 26' 00" East, 220.08 feet;
Thence South 78DEG. 34' 00" East, 67.97 feet;
Thence North 11DEG. 26' 00" East, 54.55 feet;
Thence South 78DEG. 34' 00" East, 145.66 feet to a corner common to Parcels
1 and 2 of said Parcel Map No. 4626 and shown on the plat thereof as the
Westerly terminus of that certain common line between said Parcels 1 and 2
"South 78DEG. 34' 00" East, 370.27 feet";
Thence along a line common to said Parcels 1 and 2, North 11DEG. 26' 00"
East, 312.64 feet to a common corner of said Parcels 1 and 2;
Thence along a line common to said Parcels 1 and 2 and its' Westerly
prolongation, North 78DEG. 34' 00" West, 820.98 feet;
Thence North 11DEG. 26' 00" East, 700.99 feet to a point bearing South
51DEG. 58' 00" East, 345.01 feet from the Point of Beginning;
Thence North 51DEG. 58' 00" West, 345.01 feet to the Point of Beginning.
Containing 35.535 Acres, more or less.
NOTE:
THE FOREGOING PARCEL OF LAND IS ALSO DESIGNATED AS PARCEL 1 ON THAT CERTAIN
TENTATIVE PARCEL MAP NO. 6374 FILED WITH THE CITY OF ARCADIA ON NOVEMBER 10,
1975.
EXHIBIT B (cont.)
<PAGE>
[LETTERHEAD]
January 22, 1976 SANTA ANITA FASHION PARK
PENNEY TRACT W.O. 37501
In the City of Arcadia, County of Los Angeles, State of California:
That portion of Parcels 1 and 2 of Parcel Map No. 4626 as per plat filed in Book
51 of Parcel Maps, page 50, Records of said Los Angeles County, described as
follows:
Beginning at the most Northerly corner of said Parcel 2:
Thence South 51DEG 58' 00" East, along the Northerly line of said Parcel
2,437.83 feet;
Thence continuing along said Northerly line, South 66DEG 58'00" East,
154.55 feet;
Thence continuing along said Northerly line, South 51DEG 58' 00" East,
873.36 feet to the beginning of a tangent curve therein, concave
Southwesterly and having a Radius of 350.00 feet;
Thence Southeasterly along said curve, through a central angle of 71DEG 22'
48", a distance of 436.03 feet;
Thence South 19DEG 24' 48" West, 90.95 feet;
Thence North 78DEG 34' 00" West, 390.56 feet;
Thence North 11DEG 26' 00" East, 167.89 feet, to a corner common to said
Parcels 1 and 2 of said Parcel Map No. 4626 and shown on the plat thereof
as the Easterly terminus of that certain common line between said Parcels 1
and 2, "South 78DEG 34' 00" East, 772.21 feet";
Thence North 78DEG 34' 00" West, along said common line and its' Westerly
prolongation 820.98 feet;
Thence North 11DEG 26' 00" East, 700.99 feet;
Thence North 51DEG 58' 00" West 345.01 feet, to a point in the
Northwesterly line of said Parcel 2, being also the Southeasterly line of
Baldwin Avenue, as shown on said plat;
Thence North 33DEG 39' 25" East, along said Northwesterly line of said
Parcel 2, 50.15 feet to the point of beginning.
<PAGE>
Page 2 SANTA ANITA FASHION PARK
PENNEY TRACT W.O. 37501
Containing 15.496 Acres, more of less.
N O T E :
THE FOREGOING PARCEL OF LAND IS ALSO DESCRIBED AS FOLLOWS:
All that certain tract or parcel of land and premises, situated in the
City of Arcadia, County of Los Angeles, State of California, more
particularly described as Parcel 3 of Parcel Map No. 6374, recording on
January 18, 1978 in Book [ILLEGIBLE], Page [ILLEGIBLE] of Parcel Maps in
Official Records, Office of the County Recorder, Los Angeles County,
California.
<PAGE>
[LETTERHEAD]
SANTA ANITA FASHION PARK
ROBINSONS TRACT -- W.O. 37501
November 20, 1975
In the City of Arcadia, County of Los Angeles, State of California:
That portion of Parcels 1, 2, and 3 of Parcel Map No. 4626 as per plat filed in
Book 51, of Parcel Maps, Page 50, Records of said Los Angeles County, described
as follows:
Beginning at the most Southeasterly corner of said Parcel 1, as shown by said
plat;
Thence North 86DEG 08' 00" West, along the Southerly line of said Parcel 1,
being also along the Northerly line of Huntington Drive as shown by said
plat, 70.00 feet to the Southeast corner of Parcel 4 of said plat;
Thence North 3DEG 53' 00" East, along the Easterly lines of Parcels 4 and 3
of said plat, 517.02 feet;
Thence North 78DEG 34' 00" West, 358.71 feet;
Thence North 11DEG 26' 00" East, 284.94 feet;
Thence North 47DEG 37' 05" West, 38.09 feet;
Thence North 11DEG 26' 00" East, 27.37 feet;
Thence North 78DEG 34' 00" West, 19.50 feet;
Thence South 11DEG 26' 00" West, 19.59 feet;
Thence North 78DEG 34' 00" West, 55.71 feet;
Thence North 11DEG 26' 00" East, 220.08 feet;
Thence South 78DEG 34' 00" East, 67.97 feet;
Thence North 11DEG 26' 00" East, 54.55 feet;
Thence South 78DEG 34; 00" East, 145.XX feet;
Thence North 11DEG 26' 00" East, 144.75 feet;
<PAGE>
Page 2 SANTA ANITA FASHION PARK
ROBINSONS TRACT -- W.O. 37501
Thence South 78DEG 34' 00" East, 390.56 feet to the East line of said
Parcel 2, as shown by said plat;
Thence Southerly along the Easterly lines of Parcels 2 and 1 of said plat
the following courses:
South 19DEG 24' 48" West, 443.48 feet to the beginning of a tangent curve,
concave Easterly and having a Radius of 1200.00 feet;
Southerly along said curve, through a central angle of 15DEG 31' 48" a
distance of 325.26 feet;
South 3DEG 53' 00" West, 475.68 feet to the Point of Beginning.
Containing 8.627 Acres, more or less.
N O T E :
THE FOREGOING PARCEL OF LAND IS ALSO DESIGNATED AS PARCEL 4 ON THAT CERTAIN
TENTATIVE PARCEL MAP NO. 6374 FILED WITH THE CITY OF ARCADIA ON NOVEMBER 10,
1975.
<PAGE>
EASEMENT NO. 3 JOB NUMBER 5164
JANUARY 24, 1974
18'00", AN ARC DISTANCE OF 30.58 FEET TO A CURVE, CONCAVE SOUTHEASTERLY, SAID
CURVE BEING THE AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE AND BEING
COMPOUND TO THE AFOREMENTIONED CURVE; THENCE NORTHEASTERLY ALONG SAID CURVE,
HAVING A RADIUS OF 3,929.75 FEET, THROUGH A CENTRAL ANGLE OF 00DEG.27'00", AN
ARC DISTANCE OF 30.86 FEET TO A CURVE, CONCAVE SOUTHEASTERLY, SAID CURVE BEING
THE AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE; THENCE NORTHEASTERLY
ALONG SAID CURVE HAVING A RADIUS OF 2,974.82 FEET, THROUGH A CENTRAL ANGLE OF
04DEG.36'07"; AN ARC DISTANCE OF 238.93 FEET TO THE TRUE POINT OF BEGINNING;
THENCE LEAVING SAID CURVE AND NORTHERLY LINE OF HUNTINGTON DRIVE NORTH
48DEG.52'00" EAST 215.74 FEET; THENCE SOUTH 86DEG.08'00" EAST 102.00 FEET TO
A POINT, SAID POINT BEING NORTH 03DEG.53'00" EAST 150.00 FEET TO SAID NORTHERLY
LINE OF HUNTINGTON DRIVE WHEN MEASURED AT RIGHT ANGLES; THENCE SOUTHWESTERLY
ALONG A LINE SOUTH 29DEG.56'00" WEST 166.99 FEET MORE OR LESS, TO THE NORTHERLY
LINE OF HUNTINGTON DRIVE; THENCE WESTERLY ALONG SAID NORTHERLY LINE NORTH
36DEG.08'00" WEST 17.76 FEET TO THE BEGINNING OF A TANGENT CURVE, SAID CURVE
BEING THE AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE; THENCE WESTERLY
ALONG SAID CURVE HAVING A RADIUS OF 11,569.17 FEET, THROUGH A CENTRAL ANGLE OF
00DEG.09'00", AN ARC DISTANCE OF 30.29 FEET TO A CURVE, CONCAVE SOUTHWESTERLY,
SAID CURVE BEING THE AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE AND BEING
COMPOUND TO THE AFOREMENTIONED CURVE; THENCE WESTERLY ALONG SAID CURVE HAVING A
RADIUS OF 5839.60 FEET, THROUGH A CENTRAL ANGLE OF 00DEG.18'00", AN ARC
DISTANCE OF 30.58 FEET TO A CURVE, CONCAVE SOUTHWESTERLY, SAID CURVE BEING THE
AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE AND BEING COMPOUND TO THE
AFOREMENTIONED CURVE, THENCE WESTERLY ALONG SAID CURVE HAVING A RADIUS OF
3929.73 FEET,
EXHIBIT B (cont.)
<PAGE>
JOB NUMBER 5164
DECEMBER 31, 1973
EXHIBIT "A" - Part V
ACCESS ROAD EASEMENT #3
FROM SANTA ANITA CONSOLIDATED, INC.
TO DEVELOPER
THAT PORTION OF LOT 5, TRACT NO. 949, IN THE CITY OF ARCADIA, COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA AS SHOWN ON MAP RECORDED IN BOOK 17, PAGE 13 OF
MAPS, RECORDS OF SAID COUNTY; AND OF HUNTINGTON DRIVE, VACATED AS DESCRIBED IN
ORDINANCE NO. 233, OF THE CITY OF ARCADIA, RECORDED IN BOOK 9568, PAGE 282,
OFFICIAL RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EASTERLY LINE OF BALDWIN AVENUE DESCRIBED
AS PARCEL "A" IN DEED TO THE COUNTY OF LOS ANGELES RECORDED IN BOX 37737, PAGE
127, OFFICIAL RECORDS OF SAID COUNTY AND AS SHOWN ON COUNTY SURVEYORS MAP NO.
3-2181 WITH THE NORTHERLY LINE OF HUNTINGTON DRIVE DESCRIBED AS PARCEL NO. 2 IN
DEED TO THE CITY OF ARCADIA, RECORDED IN BOOK 9396, PAGE 145 OFFICIAL RECORDS OF
SAID LOS ANGELES COUNTY; THENCE EASTERLY ALONG SAID NORTHERLY LINE OF HUNTINGTON
DRIVE NORTH 86DEG.05'00" EAST 20.19 FEET MORE OR LESS TO A POINT IN A LINE
PARALLEL WITH AND DISTANT 20.00 FEET EASTERLY MEASURED AT RIGHT ANGLES TO SAID
EASTERLY LINE OF BALDWIN AVENUE; SAID POINT ALSO BEING THE NORTHERLY LINE OF
HUNTINGTON DRIVE, THENCE ALONG SAID NORTHERLY LINE OF HUNTINGTON DRIVE NORTH
36DEG.05'00" EAST 305.65 FEET TO THE BEGINNING OF A TANGENT CURVE, SAID CURVE
BEING THE AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE, THENCE
NORTHEASTERLY ALONG SAID CURVE, HAVING A RADIUS OF 11,569.17 FEET, THROUGH A
CENTRAL ANGLE OF 00DEG.09'00", AN ARC DISTANCE OF 30.29 FEET TO A CURVE
CONCAVE SOUTHEASTERLY, SAID CURVE BEING THE AFOREMENTIONED NORTHERLY LINE OF
HUNTINGTON DRIVE AND BEING COMPOUND TO THE AFOREMENTIONED CURVE; THENCE
NORTHEASTERLY ALONG SAID CURVE HAVING A RADIUS OF 5,839.60 FEET, THROUGH A
CENTRAL ANGLE OF 00DEG.
EXHIBIT B (cont.)
<PAGE>
EASEMENT NO. 3
THROUGH A CENTRAL ANGLE OF 00DEG.27'00", AN ARC DISTANCE OF 30.86 FEET TO A
CURVE, CONCAVE SOUTHWESTERLY, SAID CURVE BEING THE AFOREMENTIONED NORTHERLY LINE
OF HUNTINGTON DRIVE AND BEING COMPOUND TO THE AFOREMENTIONED CURVE; THENCE
WESTERLY ALONG SAID CURVE HAVING A RADIUS OF 2974.82 FEET, THROUGH A CENTRAL
ANGLE OF 1DEG.22'53", AN ARC DISTANCE OF 71.73 FEET TO THE TRUE POINT OF
BEGINNING, CONTAINING 0.486 ACRES, MORE OR LESS.
EXHIBIT B (cont.)
<PAGE>
JOB NUMBER 5164
DECEMBER 31, 1973
EXHIBIT "A" - PART VI
ACCESS ROAD EASEMENT #4
FROM SANTA ANITA CONSOLIDATED, INC.
TO DEVELOPER
THAT PORTION OF LOT 5, TRACT NO. 949, IN THE CITY OF ARCADIA, COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA AS SHOWN ON MAP RECORDED IN BOOK 17, PAGE 13 OF
MAPS, RECORDS OF SAID COUNTY; AND OF HUNTINGTON DRIVE, VACATED AS DESCRIBED IN
ORDINANCE NO. 233, OF THE CITY OF ARCADIA, RECORDED IN BOOK 9568, PAGE 282,
OFFICIAL RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EASTERLY LINE OF BALDWIN AVENUE DESCRIBED
AS PARCEL "A" IN DEED TO THE COUNTY OF LOS ANGELES RECORDED IN BOOK 37737, PAGE
127, OFFICIAL RECORDS OF SAID COUNTY AND AS SHOWN ON COUNTY SURVEYORS MAP NO.
B-2181 WITH THE NORTHERLY LINE OF HUNTINGTON DRIVE DESCRIBED AS PARCEL NO. 2 IN
DEED TO THE CITY OF ARCADIA, RECORDED IN BOOK 9396, PAGE 145 OFFICIAL RECORDS OF
SAID LOS ANGELES COUNTY; THENCE EASTERLY ALONG SAID NORTHERLY LINE OF HUNTINGTON
DRIVE NORTH 86DEG. 05'00" EAST 20.19 FEET MORE OR LESS TO A POINT IN A LINE
PARALLEL WITH AND DISTANT 20.00 FEET EASTERLY MEASURED AT RIGHT ANGLES TO SAID
EASTERLY LINE OF BALDWIN AVENUE; SAID POINT ALSO BEING THE NORTHERLY LINE OF
HUNTINGTON DRIVE, THENCE ALONG SAID NORTHERLY LINE OF HUNTINGTON DRIVE NORTH
86DEG. 05'00" EAST 305.65 FEET TO THE BEGINNING OF A TANGENT CURVE, SAID CURVE
BEING THE AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE, THENCE
NORTHEASTERLY ALONG SAID CURVE, HAVING A RADIUS OF 11,569.17 FEET, THROUGH A
CENTRAL ANGLE OF 00DEG. 09'00", AN ARC DISTANCE OF 30.29 FEET TO A CURVE
CONCAVE SOUTHEASTERLY, SAID CURVE BEING THE AFOREMENTIONED NORTHERLY LINE OF
HUNTINGTON DRIVE AND BEING COMPOUND TO THE AFOREMENTIONED CURVE; THENCE
NORTHEASTERLY ALONG SAID CURVE,
EXHIBIT B (cont.)
<PAGE>
JOB NUMBER 5164
JANUARY 24, 1974
PAGE 2
HAVING A RADIUS OF 5,839.60 FEET THROUGH A CENTRAL ANGLE OF 00DEG. 18'00",
AN ARC DISTANCE OF 30.58 FEET TO A CURVE, CONCAVE SOUTHEASTERLY, SAID CURVE
BEING THE AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE AND BEING
COMPOUND TO THE AFOREMENTIONED CURVE; THENCE NORTHEASTERLY ALONG SAID CURVE,
HAVING A RADIUS OF 3,929.75 FEET, THROUGH A CENTRAL ANGLE OF 00DEG. 27'00",
AN ARC DISTANCE OF 30.86 FEET TO A CURVE, CONCAVE SOUTHEASTERLY, SAID CURVE
BEING THE AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE AND BEING
COMPOUND TO THE AFOREMENTIONED CURVE; THENCE NORTHEASTERLY ALONG SAID CURVE,
HAVING A RADIUS OF 2,974.32 FEET, THROUGH A CENTRAL ANGLE OF 04DEG. 36'07",
AN ARC DISTANCE OF 238.93 FEET TO A CURVE CONCAVE SOUTHEASTERLY, SAID CURVE
BEING THE AFOREMENTIONED NORTHERLY LINE OF HUNTINGTON DRIVE; THENCE
SOUTHEASTERLY ALONG SAID CURVE, HAVING A RADIUS OF 2,974.82 FEET, THROUGH A
CENTRAL ANGLE OF 01DEG. 22'53", AN ARC DISTANCE OF 71.73 FEET TO A CURVE
CONCAVE SOUTHWESTERLY, SAID CURVE BEING THE AFOREMENTIONED NORTHERLY LINE OF
HUNTINGTON DRIVE, AND BEING COMPOUND TO THE AFOREMENTIONED CURVE, THENCE
SOUTHEASTERLY ALONG SAID CURVE, HAVING A RADIUS OF 3,929.75 FEET, THROUGH A
CENTRAL ANGLE OF 00DEG. 27'00", AN ARC DISTANCE OF 30.86 FEET TO A CURVE,
CONCAVE SOUTHWESTERLY, SAID CURVE BEING THE AFOREMENTIONED NORTHERLY LINE OF
HUNTINGTON DRIVE AND BEING COMPOUND TO THE AFOREMENTIONED CURVE; THENCE
SOUTHEASTERLY ALONG SAID CURVE, HAVING A RADIUS OF 5,839.60 FEET, THROUGH A
CENTRAL ANGLE OF 00DEG. 18'00", AN ARC DISTANCE OF 30.58 FEET TO A CURVE
CONCAVE SOUTHWESTERLY, SAID CURVE BEING THE AFOREMENTIONED NORTHERLY LINE OF
HUNTINGTON DRIVE AND BEING COMPOUND TO THE AFOREMENTIONED CURVE; THENCE
SOUTHEASTERLY ALONG SAID CURVE HAVING A RADIUS OF 11,569.17 FEET, THROUGH A
CENTRAL ANGLE OF 00DEG. 09'00", AN ARC DISTANCE OF 30.29 FEET TO A LINE, SAID
LINE BEING THE AFOREMENTIONED
EXHIBIT B (cont.)
<PAGE>
NORTHERLY LINE OF HUNTINGTON DRIVE AND BEING TANGENT TO THE AFOREMENTIONED
CURVE; THENCE ALONG SAID NORTHERLY LINE SOUTH 86DEG. 08'00" EAST 574.72 FEET TO
A POINT; SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG
SAID NORTHERLY LINE SOUTH 86DEG. 08'00" WEST 25.00 FEET; THENCE LEAVING SAID
NORTHERLY LINE OF HUNTINGTON DRIVE NORTH 03DEG. 53'00" EAST 150.00 FEET; THENCE
NORTH 86DEG. 08'00" WEST 25.00 FEET; THENCE SOUTH 03DEG. 53'00" WEST 150.00 FEET
TO A POINT IN THE AFOREMENTIONED NORTHERLY LINE; SAID POINT ALSO BEING THE POINT
OF BEGINNING, CONTAINING 0.086 ACRES, MORE OR LESS.
EXHIBIT B (cont.)
<PAGE>
Exhibit C to Property Management Agreement
D. To sell, convey, transfer, lease, sublease or otherwise dispose
of all or portions of the Partnership's interest in the Real Property or
other assets of the Partnership, and to execute and deliver as agent for
Company and agent for the Partnership, any and all instruments necessary to
effectuate such transactions.
ARTICLE 8.
8.01. HAHN'S DUTIES OF MANAGEMENT. Hahn, at its sole expense,
agrees to provide or cause to be provided to the Partnership: (1) a Development
Coordinator approved by Company in writing and acceptable to Company on a
continuing basis, to supervise and manage the development of the Real Property,
such supervision and management to be full time after the commencement of
construction and so long thereafter as the partners determine may be reasonably
necessary for the project; (2) the services of such other administrative,
supervisory, or management personnel as may be necessary to supervise the
planning, design, engineering and construction of a regional shopping center on
the Real Property, including personnel for supervision of development and
leasing of portions of the Real Property and administration of architectural,
engineering, and construction contracts, and (3) any equipment, supplies and
facilities needed by the Development Coordinator or any other personnel employed
by Hahn for the performance of the aforementioned duties.
6. Exhibit C Page 1
<PAGE>
8.02. COSTS OF DEVELOPMENT. Except for services and equipment
to be provided by Hahn under Section 8.01 hereof, all work and services
performed upon or adjacent to the Real Property and all services and expenses
directly related thereto are costs of the Partnership. Such work, services,
supplies and expenses shall include but not be limited to: (1) the services
of engineers, geologists, architects, planners, workmen, contractors and
suppliers of materials used in construction; (2) fees paid to public agencies
for permits, bonds, or applications to obtain approvals necessary for
development of the Real Property, including zoning and subdivision approvals,
and other expenses related to the obtaining of such approvals; (3) costs of
leasing buildings and/or space within buildings on the Real Property to
commercial and other tenants, including leasing commissions; (4) attorneys
fees for the Partnership as may be approved by Company pursuant to Section
9.01(N) hereof; and (5) other expenses for the preparation of the
architectural and engineering plans for development of the Real Property, the
work upon and adjacent to the Real Property in accordance with the plans of
development.
8.03. SPECIAL COSTS. If any special or unusual services are
recommended by Hahn to be required to effectuate the development of the Real
Property, the costs of such services shall be costs of the Partnership only
when prior written approval of expenditures for such services has been
obtained from Company. In the event that such approval is not obtained from
Company, and Hahn elects to order the
7. Exhibit C Page 2
<PAGE>
performance of such services, the costs of any such services shall be the sole
responsibility of Hahn. Such services shall include any services not ordinarily
incurred in the course of developing a regional shopping center in Southern
California.
8.04. SPECIFIC DUTIES.
A. MASTER PLAN. Hahn shall prepare or cause to be prepared for the
Partnership a Master Plan for development of the Real Property and submit
such Master Plan to Company for its approval. In the event Company
disapproves such Master Plan, Hahn shall revise it to meet the objections
of Company. The Master Plan shall include but not be limited to the
following component plans:
(1) A site plan indicating the placement of all buildings on the
Real Property, the location of all parking spaces, the areas of
ingress and egress and traffic flow within the regional shopping
center, including the locations of traffic lights, if any, relating to
the shopping center development;
(2) A site improvement plan indicating the location, type, and
estimated cost of all on-site and off-site improvements;
(3) An architectural design plan including,
8. Exhibit C Page 3
<PAGE>
but not limited to, a complete interior floor plan, interior
and exterior details and elevations with colors and materials,
interior and exterior signing for all buildings to be
constructed on the Real Property and the location and nature
of all landscaping proposed for the Real Property;
(4) A leasing plan indicating the location of all
tenants by name or proposed use together with a summary of the
projected terms and conditions of the leases with such tenants;
(5) A construction budget indicating the estimated cost
of all improvements to be constructed on the Real Property,
the proposed contractors therefor, and the timing of
construction.
(6) A financing plan indicating the proposed source of
financing for the development of the Real Property together
with the terms and conditions of all financing commitments
provided that all borrowing shall be done in the name of the
Partnership without recourse to any of the partners.
(7) A fine arts plan indicating the nature and location
of all works of fine arts including, but not limited to,
graphic arts, sculptures, paintings, fountains, decorative
grillwork and scrolls, and monuments.
9.
<PAGE>
The parties understand that the component plans may be developed
and submitted to Company separately and that such plans will be
subject to revisions and changes as the Master Plan is developed
in conjunction with leasing activities. Hahn shall not apply for
building permits for construction work to carry out the approved
Master Plan, which include material deviations from such Master
Plan without the prior written consent of Company.
After approval of the Master Plan by Company, Hahn shall
endeavor in consultation with Company to obtain the approval
of the City of Arcadia of such elements of the Master Plan as
may require city approval in order to construct the contemplated
buildings and improvements to the Real Property.
B. ANNUAL PLAN. Hahn shall prepare prior to the
commencement of each calendar year during the term of the
Partnership an annual plan for the Partnership indicating
development and operation activities reasonably anticipated to
occur in the said calendar year based upon Hahn's projection
of such activities. Said annual plan shall be submitted to
Company for its approval, and in the event Company disapproves
such annual plan Hahn shall revise it to meet the objections
of Company. The annual plan shall include but not be limited
to:
(1) A statement of proposed sources of funds for
development during said year and the
10.
<PAGE>
uses of said funds, said statement to provide a quarterly
breakdown;
(2) A description of all leases expected to be entered
into during said year, and a general schedule of proposed
leasing terms and arrangements together with the standard
form of lease to be used for mall tenants;
(3) A description of all construction contracts
expected to be entered into during said year;
(4) A description of all maintenance and operational
costs expected to be incurred during such year.
Each annual plan when approved shall not be materially deviated
from without the prior written consent of Company.
C. FINANCING. It shall be the responsibility of Hahn to
arrange interim and permanent financing for the development of
the Real Property. Company shall have no obligation whatsoever
to obtain such financing, but shall have the right of prior
written approval of any and all financing arrangements or
commitments. In the event such financing is not obtainable or
the terms of financing would render the project uneconomic (as
hereinafter described), and a firm financing commitment is
therefore not obtained prior to April 30, 1973, this Partnership
shall be terminated in accordance with
11.
<PAGE>
Article 16 hereof, and Hahn shall not be deemed to be in default hereof
as a result of the failure to obtain such financing. For purposes of this
Section, the project shall be deemed to be uneconomic if the cost of the
financing would not permit the Partnership to realize a rate of return on
the assets owned by the Partnership at least equal to a reasonable return
on similar properties used for shopping centers in Southern California at
that time.
D. CONSTRUCTION, OPERATION AND RECIPROCAL EASEMENT AGREEMENT. It
shall be the responsibility of Hahn to prepare and record a Construction,
Operation and Reciprocal Easement Agreement setting forth reciprocal
easement rights and development standards for the regional shopping
center. Company shall have the right of prior written approval of said
Agreement. Hahn shall use its best efforts to secure the consent of the
Major Department Stores to the Agreement or to have such parties join in
the Agreement.
E. MAJOR DEPARTMENT STORES. Hahn and Company understand that two
Major Department Stores have indicated an intention to enter into
Subgroundleases of portions of the Real Property for the purpose of
constructing Major Department Stores. The Lease of the Real Property is
contingent upon the construction of the shopping center, as described
herein in Paragraph 1 of the Recitals, which requires a third Major
Department Store to enter into a Subgroundlease of a portion
12.
<PAGE>
of the Real Property. In the event that Hahn is unable to secure such a
written commitment from a third Major Department Store in accordance with
the terms of the ground lease of the Real Property, this Agreement will
automatically terminate, unless the requirement for inclusion of a third
Major Department Store is expressly waived by the Landlord as provided in
the ground lease of the Real Property.
8.05. SHOPPING CENTER MANAGEMENT.
Hahn shall employ a Shopping Center Manager, approved by Company in
writing, to administer and direct the operation, including promotional
activities, of the shopping center on the Real Property. The direct costs of
such Manager and personnel employed for the operation of the center shall be
costs of the Partnership.
ARTICLE 9.
9.01. COMPANY'S APPROVAL OF MANAGEMENT DECISIONS. Notwithstanding
the provisions of Articles 7 and 8, Hahn shall take none of the following
actions without the express written approval of Company:
A. Sell, mortgage or hypothecate any Partnership property.
B. Release, assign or transfer any Partnership property,
claims, securities, commodities or any
13.
<PAGE>
other assets belonging to the Partnership.
C. Make unsecured loans or become a surety, guarantor,
endorser or accommodation endorser in the name of the Partnership for any
other person or firm in amounts in excess of the fair market value of
Hahn's equity interest in the Partnership.
D. Borrow money in the firm name or utilize collateral owned by
the Partnership as security for non-Partnership loans.
E. Sell, mortgage, hypothecate, pledge or assign as security its
interest in the Partnership (subject to the provisions of Article 13
hereof).
F. Lend any funds of the Partnership.
G. Submit either a Partnership claim or a claim against the
Partnership for liability to arbitration or reference.
H. Do any act in contravention of the Partnership's Certificate of
Limited Partnership.
I. Do any act which would make it impossible to carry on the
ordinary business of the Partnership.
J. Confess a judgment against the Partnership.
14.
<PAGE>
K. Possess Partnership property or assign rights in specific
Partnership property for other than a Partnership purpose or as is set
forth in this Agreement.
L. File any tentative or final tract map on all or any portion of
the Real Property or accept any conditions relating thereto.
M. Record the Construction, Operation and Reciprocal Easement
Agreement referred to in Article 8 or any amendment or waiver thereof.
N. Execute any contract for or employ the services of any architect,
engineer, leasing agent, attorney, or other consultant.
O. Select any contractor for construction of improvements on the
Real Property or execute any contract with such contractor.
P. Execute any financing commitment on behalf of the Partnership.
Q. Execute any contract or agreement or undertaking in which the
obligations of Company, as limited partner, are not expressly limited to
the Partnership interest of Company.
R. Substantially change accounting principles
Exhibit C Page 10
<PAGE>
and procedures employed in keeping the books of account or in preparing
financial statements.
S. Adopt, implement or amend the Master Plan referred to in Article
8 or any annual plan referred to in Article 8 except as provided in Article
8.
T. Execute any lease (i) the terms of which do not conform in all
material respects to the then approved Annual Plan, or (ii) with a tenant
not previously approved by Company.
U. Amend this Agreement.
V. Terminate the Partnership.
W. Submit any application to the City of Arcadia for approvals under
any zoning, subdivision or building and safety ordinance, resolution, or
regulation except for building permits for interior construction of mall
tenant stores.
ARTICLE 10.
10.01. ARCHITECT. The architect for development of the Real
Property shall be Gruen Associates, and the employment of any other architect
shall require the consent of Company.
10.02. LEASING AGENT. The leasing agent for the regional shopping
center shall be Coldwell, Banker & Com--
Exhibit C Page 11
<PAGE>
effected and alternations shall be permitted either on the face of this
instrument, by way of addendum, or in an entirely new document, providing only,
that such alteration shall be dated and the signatures of each of the partners
shall appear in reasonable proximity to such alteration.
ARTICLE 28.
28.01. REQUIRED APPROVALS. Wherever in this Agreement the consent
or approval of Hahn or Company is required, it is agreed that such consent or
approval will be promptly considered and acted upon and shall not be
unreasonably withheld, except the following matters with regard to which the
consent or approval of Company shall be at the sole discretion of Company
without limitation:
1. The architectural design plan specified in Section 8.04.A(3)
hereof;
2. The location and areas of ingress to and egress from and traffic
circulation within the Shopping Center as shown on the site plan specified
in Section 8.04.A(1) hereof;
3. The financing plan specified in Section 8.04.A(6) hereof and any
sale, mortgage or hypothecation of partnership property;
4. The fine arts plan specified in Section 8.04.A(7) hereof.
Exhibit C Page 12
<PAGE>
Company agrees to give Hahn its written approval or disapproval of such matters
within 30 business days after Company's receipt of such plans.
28.02. HAHN APPROVAL. Hahn represents and warrants that only
Ernest W. Hahn, Inc. has and, for the life of this Agreement, will have the
rights of approval or consent to all matters or actions to be taken by Hahn
under this Agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of
the day and year first above written.
HAHN/UPI, a limited partnership, as General Partner
By Ernest W. Hahn, Inc., a corporation,
as general partner in Hahn/UPI
By /s/ Ernest W. Hahn
--------------------------------------------------------------
Ernest W. Hahn, Chief Executive Officer
By /s/ Authorized Officer
--------------------------------------------------------------
Assistant, Secretary
SANTA ANITA ENTERPRISES, INC., Limited Partner
By /s/ Authorized Officer
--------------------------------------------------------------
President
By /s/ Authorized Officer
--------------------------------------------------------------
Secretary
The undersigned in its individual capacity hereby consents to
Sections 13.01 and 13.06.
ERNEST W. HAHN, INC.
By /s/ Ernest W. Hahn
----------------------------------------
Ernest W. Hahn, Chief Executive Officer
By /s/ Authorized Officer
----------------------------------------
Assistant Secretary
Exhibit C Page 13
<PAGE>
EXHIBIT D
DOCUMENTATION FEES*
A. GROUND LEASE - $3,000.00
Three Thousand and No/100 Dollars for a new or renewal leases payable to
Manager when the document is forwarded to the Tenant. Excluding May Co.
and Nordstrom.
B. NEW OR RENEWAL LEASES - $750.00
Seven Hundred and Fifty Dollars ($750.00) for new or renewal leases
payable to Manager when the document is forwarded to the Tenant.
C. LEASE AMENDMENTS - $300.00
Three Hundred and No/100 Dollars ($300.00) for lease amendments payable to
Manager when the document is forwarded to the Tenant.
D. LEASE ASSIGNMENTS - $500.00
Five Hundred Dollars ($500.00) for lease assignments payable to Manager
at the time the documentation is forwarded to Tenant.
E. TERMINATION/SUBORDINATIONS/WAIVERS - $250.00
Two Hundred Fifty and No/100 Dollars ($250.00) for lease terminations,
subordinations or waivers payable to Manager at the time the documentation
is forwarded to the Tenant.
F. CONSENT TO SUBLEASE - $500.00
Five Hundred and No/100 Dollars ($500.00) for a consent to sublease payable
to Manager at the time the documentation is forwarded to the Tenant.
G. WAIVER/SUBORDINATION OF LIEN/TEMPORARY LEASES - $300.00
Three Hundred and No/100 Dollars ($300.00) for a lease waiver,
subordination of lien or temporary lease (i.e., a lease for no more than
six (6) months) payable to Manager at the time the documentation is
forwarded to the Tenant.
H. ACKNOWLEDGEMENT OF CHANGE IN OWNERSHIP/PUBLIC STOCK OFFERING - $250.00
Two Hundred Fifty and No/100 Dollars ($250.00) for an acknowledgement of
change in ownership/public stock offering payable to Manager at the time
the documentation is forwarded to the Tenant.
I. TRADE NAME CHANGE - $50.00
Fifty and No/100 Dollars ($50.00) for a trade name change payable to
Manager at the time the document is forwarded to the Tenant.
- --------------------------------------------------------------------------------
* MANAGER MAY CHANGE THE DOCUMENTATION FEES SET FORTH HEREIN PROVIDED (i)
MANAGER SHALL NOTIFY OWNER IN WRITING THIRTY (30) DAYS PRIOR TO ANY SUCH
CHANGE(S) AND (ii) THE REVISED FEES ARE SIMILAR TO MANAGER'S OTHER MANAGED
PROJECTS.
<PAGE>
FIRST AMENDMENT TO PROPERTY MANAGEMENT AGREEMENT
(SANTA ANITA FASHION PARK)
----------------------------------
THIS FIRST AMENDMENT TO PROPERTY MANAGEMENT AGREEMENT ("Amendment"), is
entered into as of this 1st day of July, 1993, by and between ANITA
ASSOCIATES, a California limited partnership ("Owner"), and HAHN PROPERTY
MANAGEMENT CORPORATION, a California corporation, dba "HPMC" ("Manager").
RECITALS
--------
A. WHEREAS, Manager and Owner executed that certain document entitled
Property Management Agreement dated January 1, 1989 ("Agreement"),
respecting Manager's retention by Owner to manage, lease and operate that
certain regional shopping center commonly known as "Santa Anita Fashion
Park" located in Arcadia, California.
B. WHEREAS, Manager and Owner desire to amend the Agreement, subject to
the terms, covenants and conditions set forth below.
TERMS
-----
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, Manager and Owner hereby agree as follows:
1. Except to the extent modified or redefined herein, all initial
capitalized terms used herein which are used in the Agreement shall have
the same respective meaning when used in this Amendment.
2. SECTION 7.2, Page 10, is hereby deleted in its entirety and in lieu
thereof insert the following:
"7.2 LEASING COMMISSION. A leasing commission shall be earned
and payable on execution of a lease by Owner and a Tenant.
(i) Commencing on December 1, 1992, and terminating on
August 26, 1994, Owner will pay Manager a leasing commission of Three and
No/100 Dollars ($3.00) per square foot of leasable space for the following
Tenant spaces ("Expansion Spaces") the location of which are depicted on
Exhibit A attached hereto and incorporated herein by this reference:
1. J1, J3, J5, J7, J9;
2. K1, K3, K5, K7, K9;
3. M1, M3, M5;
4. N1, N3, N5; and
5. L1, L3, L5, L7, L9.
(ii) For all Tenant spaces, other than the Expansion
Spaces, commencing on December 1, 1992, and terminating on August 26,
1994, whenever Manager leases space to a new Tenant, the commission
("Full Commission") shall be calculated as follows: three percent (3%) of
the total minimum annual rental for the first five (5) years, plus two
percent (2%) of the total minimum annual rental for the next five (5)
years, plus one percent (1%) of the total minimum annual rental for the
remainder of the term, if any. Whenever Manager renegotiates an unexpired
or expired lease, or replaces an unexpired lease with a new lease with
the same Tenant, whether or not the renegotiated or new lease affects the
same space as previously leased with the same Tenant, so that the Tenant
becomes obligated to pay Owner more average minimum annual rental for the
term of the renegotiated or new lease than the average minimum annual
rental over the term of the prior lease or a greater term is achieved,
the commission ("Half Commission") shall be calculated as follows: one
point five percent (1.5%) of the total minimum annual rental for the
first five (5) years; plus one percent (1%) of the total minimum annual
rental for the next five (5) years; plus one-half percent (.5%) of the
total minimum annual rental for the remainder of the term, if any.
Notwithstanding anything to the contrary contained in this SECTION
7.2(ii), in the event the term of the negotiated or new lease commences
during the term of a prior lease, Manager shall be entitled to a Full
Commission for a new Tenant and to a Half Commission for the same Tenant
(a) on the increase of the total prior minimum annual rent for
- 1 -
<PAGE>
the remaining prior term of the existing lease and (b) on the total
minimum annual rental for the remainder of the new term.
(iii) Commencing on December 1, 1992, and terminating on
August 26, 1994, Manager will assign one (1) full time leasing agent
("Agent") which Agent will work exclusively on the leasing for the Project.
Owner agrees to reimburse Manager up to One Hundred Thirty Thousand and
No/100 Dollars ($130,000.00) per twelve (12) month period for the Agent,
which amount will cover the Agent's salary (I.E., including commissions),
burden and travel expenses associated with leasing the Project. Manager shall
be reimbursed for the foregoing Agent costs on a monthly basis premised on
the submittal of monthly statements to Owner. Notwithstanding anything to the
contrary, Owner and Manager hereby acknowledge that as of October 1, 1993,
there has been no Agent, however, Manager has assigned multiple leasing
agents to work on the Project.
(iv) Commencing on August 27, 1994, whenever Manager
leases space to a new Tenant, the commission ("Full Commission") shall be
calculated as follows: four percent (4%) of the total minimum annual rental
for the first five (5) years, plus three percent (3%) of the total minimum
annual rental for the next five (5) years, plus two percent (2%) of the total
minimum annual rental for the remainder of the term, if any. Whenever Manager
renegotiates an unexpired or expired lease, or replaces an unexpired or
expired lease with a new lease with the same Tenant, whether or not the
renegotiated or new lease affects the same space as previously leased with
the same Tenant, so that the Tenant becomes obligated to pay Owner more
average minimum annual rental for the term of the renegotiated or new lease
than the average minimum annual rental over the term of the prior lease or a
greater term is achieved, the commission ("Half Commission") shall be
calculated as follows: two percent (2%) of the total minimum annual rental
for the first five (5) years; plus one point five percent (1.5%) of the total
minimum annual rental for the next five (5) years; plus one percent (1%) of
the total minimum annual rental for the remainder of the term, if any.
Notwithstanding anything to the contrary contained in this SECTION 7.2(iv),
in the event the term of the negotiated or new lease commences during the
term of a prior lease, Manager shall be entitled to a Full Commission for a
new Tenant and to a Half Commission for the same Tenant (a) on the increase
of the total prior minimum annual rent for the remaining prior term of the
existing lease and (b) on the total minimum annual rental for the remainder
of the new term.
(v) Notwithstanding anything to the contrary, Manager
shall not be entitled to a commission for a Tenant's exercise of an option to
lease or if a Tenant's tenancy is terminated by a purchase of the tenancy by
Owner. However, in the event of a purchase of the tenancy by Owner, if
Manager participates in the negotiation Manager shall be entitled to an
extraordinary service fee to be negotiated by Manager and Owner.
(vi) Notwithstanding anything to the contrary, in the
event Manager shall work with an outside broker, then the above fees are to
be increased by twenty-five percent (25%). Said twenty-five percent (25%) is
payable to Manager with the balance payable to the outside broker."
3. EFFECTIVE DATE. This Amendment shall be effective as of December 1, 1992.
4. EFFECTIVENESS OF AMENDMENT. Except as expressly modified herein, all of the
provisions of the Agreement continue to be and are in full force and
effect. In the event of any conflict between the Agreement and this
Amendment, this Amendment shall prevail.
5. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and inure to
the benefit of the heirs, executors, administrators, successors and assigns
of the respective parties hereto.
6. COUNTERPARTS. This Amendment may be executed in several counterparts,
each of which may be deemed an original, but all of which together shall
constitute one and the same document.
- 2 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
MANAGER
HAHN PROPERTY MANAGEMENT CORPORATION,
a California corporation
By: /s/ William H.W. Doyle
--------------------------------------
Name: William H.W. Doyle
Title: Senior Vice President, Operations
By: /s/ Keith W. Browning
--------------------------------------
Name: Keith W. Browning
Title: Senior Vice President, Director of Leasing
OWNER
ANITA ASSOCIATES,
a California limited partnership
By: Hahn-UPI,
a California limited partnership,
as general partner
By: Ernest W. Hahn, Inc.,
a California corporation,
as general partner
By: /s/ Albert A. Corti
--------------------------
Name: Albert A. Corti
Title: Executive Vice President
Director of Real Estate
By: /s/ Douglas L. Hageman
--------------------------
Name: Douglas L. Hageman
Title: Assistant Secretary
By: Santa Anita Realty Enterprises, Inc.,
a Delaware corporation,
as limited partner
By: /s/ Authorized Officer
--------------------------
Name:
Title:
By: /s/ John E. Goodwin
--------------------------
Name: John E. Goodwin
Title: Assistant Secretary
- 3 -
<PAGE>
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement"), is made and entered into as of
February 11, 1994, by and between PLAZA CAMINO REAL ("Owner"), a California
limited partnership with offices at c/o CenterMark Properties, Inc., 611 Olive
Street, Suite 1555, St. Louis, Missouri 63101, and CENTERMARK PROPERTIES, INC.
("Agent"), a Missouri corporation with offices at 611 Olive Street, Suite 1555,
St. Louis, Missouri 63101.
R E C I T A L S:
A. Owner owns certain property located in Carlsbad, California, legally
described on EXHIBIT A attached hereto and made a part hereof (the "Property"),
on which there is located a regional shopping center commonly known as "Plaza
Camino Real Mall" (the "Project");
B. Agent is experienced in the management, operation and maintenance of
shopping centers, and Owner desires to engage Agent to manage, operate, maintain
and lease the Project;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties, intending to be legally bound, covenant and agree with each other
as follows:
1. CERTAIN DEFINITIONS.
"AFFILIATE" means any Person directly or indirectly controlling,
controlled by or under common control with another Person. As used in the
preceding definition, "control" includes, as to any Person, the ownership of
fifty percent (50%) or more of the legal or beneficial interest in such Person
or the power to direct the management and policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise. For all
purposes hereunder, the following entities shall be considered Affiliates of
Agent: (a) General Growth Properties, Inc. ("General Growth"); (b) Westfield
Holdings Limited ("Westfield"); (c) Westfield Corporation, Inc. ("WCI"); (d)
General Growth Management, Inc. ("GG Management"), (e) GGP Limited Partnership
("GGP"); and (f) any entity which is at least fifty percent (50%) owned directly
or indirectly by one or more of Agent, General Growth, GGP, WCI, GG Management,
WCI and Westfield or a Person that owns directly or indirectly at least fifty
percent (50%) of the voting power of Agent, General Growth, GGP, WCI, GG
Management, WCI and Westfield.
"GENERAL PARTNER" means CenterMark Properties, Inc., a Missouri
corporation, or any permitted assignee thereof under the Partnership Agreement.
"INDEX" with respect to any applicable calculation that is provided for
herein, for each particular year or period in
<PAGE>
question, means the "All Items" portion of the Consumer Price Index for All
Urban Consumers: All Cities (1982-84 = 100), issued and published by the Bureau
of Labor Statistics of the United States Department of Labor. If the Index
ceases to use the 1982-84 average equaling 100 as the basis of calculation, or
if a change is made in the terms or number of items contained in the Index, of
if the Index is altered, modified, converted or revised in any way, then the
Index shall be determined by reference to the index designated as the successor
to the prior Index or other substitute index published by the government of the
United States and new index numbers shall be substituted for the old index
numbers in making the calculations, as may be appropriate. If at any time the
Bureau of Labor Statistics shall no longer publish such Index, then any
successor or substitute index to the Index published by said Bureau or other
governmental agency of the United States, and similarly adjusted as foresaid,
shall be used. If such a successor or substitute index is not available or may
not lawfully be used for the purposes herein stated, a reliable governmental or
other non-partisan publication selected by Owner and reasonably acceptable to
Agent shall be used in evaluating the information theretofore used in
determining the Index.
"LEASE" means any lease, sublease, license to occupy or other right
of occupancy, use or possession of the Project or any part thereof, entered into
or granted by or on behalf of Owner, whether temporarily or for a fixed or
periodic term, whether or not recorded, whether oral or written, including,
without limitation, any storage license, cart or kiosk license or lease.
"LEASES" means each and every Lease in effect at the applicable time,
collectively.
"LIMITED PARTNERS" means BARTFAM, a California limited partnership,
Cecile C. Bartman, an individual, Cecile C. Bartman, Executor of the Estate of
Fred A. Bartman, Jr., Cecile C. Bartman, Trustee of The Bernard Citron Trust,
Harry J.L. Frank, Jr. and James H. Frank, Trustees of the Harry J.L. Frank, Jr.
and Margaret S. Frank Family Trust, and their permitted assignees under the
Partnership Agreement.
"NET WORTH" means, as to any Person, as of a particular date, such
Person's equity (determined in accordance with generally accepted accounting
principles) minus all assets customarily considered intangible under generally
accepted accounting principles (including, for example, but not by way of
limitation, goodwill), all assets located anywhere other than in the United
States of America, all debt and any value ascribed to such Person's interest in
this Agreement or in the Owner, and provided that all assets shall be valued
based on current fair market value.
"PARTNER" means any General Partner or any Limited Partner of the
Partnership.
2
<PAGE>
"PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnershp of Plaza Camino Real L.P., dated as of January 1, 1994, among
the General Partner and the Limited Partners.
"PERSON" means any individual, partnership, firm, association,
corporation or any other form of business entity.
"TENANT" means all Persons using or in possession or occupation of
any portion of the Project from time to time under any Lease.
2. ENGAGEMENT. Subject to the terms and conditions set forth herein,
Owner hereby (i) engages and authorizes Agent, as an independent contractor on
Owner's behalf and as Owner's sole and exclusive agent, to manage, operate, and
maintain the Project; and (ii) appoints Agent as its sole and exclusive leasing
agent and representative for the Project, all for the period of time and upon
the terms and conditions hereinafter set forth. Agent hereby accepts such
engagement and appointment and shall make available to Owner the full benefit of
the judgment, expertise, and advice of the members of Agent's organization and
staff with respect to the foregoing appointment.
3. AGENT'S OBLIGATIONS. Subject to the terms and conditions set forth
herein, Agent shall immediately commence and with due diligence and in good
faith perform all services necessary, proper, or appropriate for the management
of the Project as a regional shopping center. In furtherance thereof, Agent
shall, subject to the terms and conditions set forth herein (including without
limitation, the obligation to obtain the consent of the Limited Partners under
certain circumstances), promptly, fully, faithfully and in compliance with all
applicable statutes, laws, ordinances, rules and regulations of all governmental
authorities having jurisdiction over the Property (collectively, "Legal
Requirements"), perform, among other things, the following:
(a) Throughout the continuation of this Agreement, furnish Owner with
the following statements concerning the operation of the Project within thirty
(30) days after the end of each month:
(i) An operating statement (an "Operating Statement"), showing
monthly and year-to-date comparisons of actual income and expenses to the
corresponding line items of the annual Operating Budget (as defined below)
for such year;
(ii) a trial balance;
(iii) a statement of the balance of each Partner's Capital Account
(as such term is defined in the Partnership Agreement);
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(iv) a cash flow schedule;
(v) a Tenant sales report showing sales by each Tenant on a per
rentable square foot basis; and
(vi) a report of aged accounts receivable.
(b) Throughout the continuation of this Agreement, furnish Owner,
within forty-five (45) days after the end of each quarter, an updated leasing
plan (a "Leasing Plan") showing the following: (a) a current rent roll;
(b) the status of leasing efforts, including negotiations with prospective
tenants; (c) vacated and/or bankrupt Tenants noted as such; (d) calculations
of reserves for bad debts; (e) a schedule identifying the spaces within the
Project for which Leases are expected to expire or otherwise become vacant
during the succeeding twelve month period and whether Agent recommends
renewal of expiring tenancies; (f) for space for which Agent recommends
renewal, the range of proposed rents, the range of lengths of the term of
occupancy, the range of tenant allowances for improvements and such other
economic terms for Lease renewals as Agent deems appropriate; (g) for space
for which Agent does not recommend renewal of an existing Tenant's Lease or
expects the space to otherwise become vacant, Agent's proposed list, in order
of preference, of specific potential uses which might be most appropriate to
obtain the best tenant mix for the Project as well as the range of economic
terms for each such use. Agent is authorized to enter into any Lease renewals
or new Leases which conform to the most recently delivered Leasing Plan.
Owner shall make its personnel available to discuss on a regular basis
changes in the Leasing Plan.
(c) Not less than forty five (45) days before the beginning of each
calendar year, prepare and submit to Owner for approval, with a copy to each
Limited Partner, an operating budget (as and when approved, the "Operating
Budget") setting forth an itemized statement of all anticipated revenues and
expenditures relating to the operation and maintenance of the Project for the
next calendar year (including, without limitation, all items set forth in
Section 7.2 of the Partnership Agreement), the guidelines for the adoption
and use of which shall be as follows:
(i) Owner shall have thirty (30) days following actual receipt of
such proposed Operating Budget in which to notify Agent of any objections
it may have thereto and Owner agrees not to unreasonably object to the
contents of the proposed Operating Budget and to specify the reason for
any objections. If no such notice is given to Agent within such thirty
(30) day period, such proposed Operating Budget shall be deemed approved
for such calendar year. If, within such period, Owner objects as provided
above to any item in the proposed Operating Budget or to such Operating
Budget as a whole, until such time as there is agreement on the Operating
Budget for the subsequent year, Agent shall manage the
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Project in accordance with the objected-to line item as contained in the
Operating Budget for the current year or if the entire proposed Budget
is objected to, in accordance with each line item as contained in the
Operating Budget for the current year; PROVIDED that, the amount of each
such line item shall be increased by multiplying the amount specified
therein by a fraction, the numerator of which shall be the Index as of
January 1 of the year for which the disputed Operating Budget has been
submitted, and the denominator of which shall be the Index as of January 1
of the immediately preceding calendar year. The Operating Budget shall
take into account, among other things, the general condition of the
Project and shall provide for Working Capital Retentions (as defined in
the Partnership Agreement) in at least the minimum amounts for the time
periods set forth in Section 10.4 of the Partnership Agreement.
(ii) Agent shall use its reasonable, diligent efforts to operate
the Project within the Operating Budget. Other than in the event of an
Emergency (as defined below), Agent shall not, without the prior written
consent of Owner (which shall not be unreasonably withheld or delayed),
make any expenditures or commitments for the account of Owner in
connection with the operation or management of the Project which would
cause the actual, aggregate annual expenses for the Project to be more
than one hundred ten percent (110%) of the aggregate annual expenses
approved in the Operating Budget. As used herein, "EMERGENCY" means an
event in which Agent, in its reasonable judgment, must act immediately
to (w) preserve and keep safe the Project; (x) avoid the suspension of
any necessary service to or required by the Project, the Tenants,
customers or invitees of the Project; (y) preserve the safety of
employees, Tenants, customers or invitees of the Project or avoid danger
to life or property at the Project; or (z) otherwise comply with Legal
Requirements (as defined below), Insurance Requirements (as defined
below) or the provisions of any Leases. Agent shall notify Owner of any
disbursements made for any Emergency that in the aggregate exceed
$50,000 (net of any such disbursements recoverable from Tenants) within
forty-eight (48) hours after such disbursements are made.
(d) Throughout the continuation of this Agreement, furnish Owner with
the following statements concerning the operation of the Project:
(i) Within one hundred twenty (120) days after the end of each
calendar year, audited financial statements of the Partnership and the
Project which shall contain a balance sheet as of the end of such
calendar year, a statement of profit and loss, and a statement of cash
flow for such calendar year, reported on by an independent certified
public accountant reasonably acceptable to Owner; and
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(ii) Within seventy five (75) days after the end of each calendar
year, a copy of the tax return of the Partnership for such calendar year.
(e) Keep and maintain, at Agent's sole cost and expense, the books and
records relating to the Project at Agent's principal office, unless Owner
designates otherwise, which books and records shall be deemed to be the
property of Owner. Owner or its duly authorized agents shall have the right
to examine and copy such books and records at any time during normal business
hours.
(f) Secure prospective Tenants for the Project, lease or cause to be
leased the Project in accordance with the most recently delivered Leasing
Plan then in effect and any amendments thereto, and maintain good tenant
relations with Tenants of the Project in a reasonable manner.
(g) Bill Tenants of the Project for, and collect and deposit in the
Bank Account (as defined below), all amounts due under the Leases, including,
without limitation, all fixed rents, percentage rents and other sums, whether
payable as additional rent or otherwise payable by such Tenants under their
respective Leases or other parties under license, service or other
agreements. Agent shall use its commercially reasonable efforts and methods
to collect such amounts due under the Leases; provided, however, that Agent
shall obtain the written consent of Owner prior to instituting any legal
proceedings or arbitrations with respect to collection activities against
Tenants. Agent's use of independent collection services or agencies to
collect amounts due, including attorneys experienced in the field of
landlord-tenant relations to prosecute defaults, under any of the Leases
shall be at Owner's sole expense. All judicial proceedings shall be brought
in Owner's name, and Owner shall reasonably cooperate with Agent in all such
proceedings, which shall be at Owner's sole expense.
(h) Use its diligent efforts to enforce the performance by Tenants of
all requirements under their respective Leases and the observance by such
Tenants of all rules and regulations of the Project, by all commercially
reasonable means; provided, however, that Agent shall obtain the written
consent of Owner prior to commencing legal proceedings to enforce any Lease.
(i) Use its commercially reasonable efforts to maintain and repair the
buildings and improvements comprising the Project so as to keep the same in a
safe, sound, attractive and rentable condition, and to cause the Project to
be maintained and operated in compliance with all applicable Legal Requirements,
and hire such Persons and purchase or lease such equipment and supplies at
reasonable rates and costs as may be necessary or desirable to accomplish the
foregoing, all within the limits of the Operating Budget. Agent shall negotiate
and administer contracts for
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electricity, gas, fuel supply, water, telephone, janitorial services, window
washing, exterminating, equipment maintenance, trash handling and other
contracts relating to the operation or maintenance of the Project.
(j) Hire, discharge and supervise all temporary and permanent employees
reasonably necessary for the on-site management, operation, maintenance and
repair of the Project. All such personnel shall be independent contractors or
employees of Agent.
(k) Take all commercially reasonable steps to enforce all maintenance,
service and supply contracts, guarantees, warranties, bonds and other
contractual undertakings, if any, affecting the Project; provided, however, that
Agent shall obtain the written consent of Owner prior to commencing legal
proceedings with respect to such enforcement.
(l) Take all commercially reasonable steps to avoid knowingly
permitting the use of the Project for any purpose which might void or
increase the premiums or reduce the coverage on any policies of insurance
maintained by Owner or which might render any loss insured thereunder
uncollectible (collectively, the "Insurance Requirements") or which would be
in violation of any Legal Requirement; provided, however, that Agent shall
obtain the written consent of Owner prior to commencing legal proceedings to
enforce the use provisions of any Lease.
(m) Take all commercially reasonable efforts to duly and punctually
perform and comply with all of the obligations, terms and conditions required to
be performed or complied with by Owner under (i) the Leases, (ii) any mortgages
encumbering the Project, (iii) operating agreements, service agreements and
other contractual agreements affecting the Project, (iv) the Legal Requirements
and (v) the Insurance Requirements.
(n) Promptly deliver to Owner copies of all notices from any insurance
company, mortgagee, Tenant, anchor tenant at the Project or other party to the
REA (as defined in the Partnership Agreement), or any other party given pursuant
to a contractual agreement or otherwise relating to claimed breaches of
contractual provisions or terminations, and from any governmental authority
relating to a claimed violation of any Legal Requirement.
(o) Organize and administer meetings with Owner, periodically or at the
request of Owner, in person or telephonically, in order to review the status of
the Project, Operating Budgets, other financial information and the Leasing
Plan. The foregoing shall not be deemed to require Agent to deliver any such
documents or information prior to the dates otherwise specifically set forth in
this Agreement.
(p) Establish, implement, execute and supervise an advertising and
promotional program for the Project.
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(q) Review annually the tax assessments upon the Project and recommend to
Owner when deemed reasonably appropriate by Agent that proceedings be instituted
by Owner to contest or appeal such assessments.
(r) Perform such other related normal management functions as shall
pertain to the Project as contemplated by this Agreement.
All services performed by Agent under the provisions of this Agreement
shall be deemed to be performed for the benefit of Owner and all reasonable
expenses properly incurred in connection with the performance of such services
shall be the obligation of Owner, except as provided in Section 7(d) below.
Notwithstanding any other provision hereof, Agent shall have no power or
authority to take, and shall not take, any action in respect of the Project for
which the consent of the Limited Partners is required pursuant to Section 7.1 of
the Partnership Agreement without first having obtained such consent.
4. BANK ACCOUNT; HANDLING OF FUNDS.
(a) For the benefit of Owner, Agent shall promptly deposit all revenues
received by Agent from the Project and the Leases and other funds of every kind
and nature received by Agent in respect of the Project or for the benefit of
Owner pursuant to this Agreement in a deposit account (the "Bank Account") to be
established by March 1, 1994 and maintained by Agent with a federally insured
depositary institution acceptable to Owner. Agent shall have no right to
commingle such funds. Agent shall keep Owner informed at all times with respect
to the bank in which the Bank Account is maintained, the name under which the
Bank Account is kept, the number of the Bank Account and the names and titles of
officers or employees of Agent who may draw upon the Bank Account. Agent shall
have the right to withdraw or cause to be disbursed from the Bank Account
sufficient funds necessary for the performance of its obligations hereunder;
provided that the item or purpose for which any such withdrawal or disbursement
is to be made (i) has previously been approved by Owner as part of the approved
Operating Budget or otherwise in writing, (ii) does not result in the actual,
aggregate annual expenses for the Project exceeding one hundred ten percent
(110%) of the aggregate annual expenses approved in the Operating Budget or
(iii) in respect of an Emergency. Except for disbursements permitted by clauses
(i), (ii) and (iii) above and as otherwise specifically provided for in this
Agreement, Agent shall not have any authority to disburse funds of Owner or any
other revenues or other funds in respect of the Project from the Bank Account
without the prior written consent of Owner.
(b) In the event that the revenues received by Agent from the Project for
any month, together with any balance in the Bank Account, are insufficient to
meet the expenses of operation of
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the Project for such month ("Operating Losses"), Agent shall immediately send
notice thereof to Owner specifying the nature and amount of such Operating
Losses and Owner shall deposit to the Bank Account sufficient funds to pay
any past due accounts plus Agent's projected Operating Losses for the current
month. Agent's obligation to pay the obligations of the Project and Owner
under this Agreement or to perform any of its other obligations hereunder is
conditioned upon the availability of sufficient funds (from a Person other
than Agent) to perform such obligations, and Agent shall not be deemed in
default of any provision of this Agreement for its failure to pay or
discharge any operating expenses, taxes or other Property expenses if the
balance of the Bank Account is insufficient to pay the same. Notwithstanding
the foregoing, this limitation shall in no way affect the obligation or
liability of the General Partner under the Partnership Agreement with respect
to such obligations.
(c) Owner hereby agrees to indemnify, defend and protect Agent and to hold
Agent harmless from and against any and all causes of actions, losses, costs,
damages, expenses or liabilities (including reasonable attorneys' fees and
expenses and court costs) suffered or incurred by Agent as a direct result of
Owner's failure to advance funds to cover a deficiency in the Bank Account if:
(i) the expense relates solely to the Project;
(ii) the deficiency in the Bank Account has not been caused by
Agent's gross negligence, willful misconduct or default in the performance
or observance of any term, condition or covenant contained in this
Agreement; and
(iii) Agent promptly notified Owner of the existence and the
amount of the deficiency in accordance with Section 4(b) above.
(d) At least quarterly, after allowing for (i) Working Capital Retentions
consistent with the Operating Budget (in the minimum amounts required by Section
10.4 of the Partnership Agreement) to be held for the payment of operating
expenses, capitalized and deferred expenditures and real estate taxes thereafter
coming due and payable and for other items in the Operating Budget which may not
be operating expenses, and (ii) the maintenance of a contingency reserve of
$75,000 together with a proper accounting, Agent shall remit the net amount due
to Owner.
5. INSURANCE. Agent shall assist Owner in formulating, and, subject to
the Operating Budget, implementing in accordance with commercially reasonable
standards, an insurance program for the Project. Agent shall procure and
maintain all insurance required pursuant to such insurance program, the
applicable Operating Budget and any mortgage or deed of trust encumbering the
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Property. Agent shall have no liability on account of Agent's failure to
procure any particular type of insurance coverage that becomes prohibitively
expensive or generally unavailable.
(a) Agent shall cause all insurance covering the Project to be placed
with an insurance company or companies authorized or licensed to do business
as an insurance company in the State of California. All such insurance shall
be obtained at Owner's expense in accordance with the then current Operating
Budget, provided that Owner shall be charged Agent's actual cost after taking
into account the benefit, if any, of favorable rates or discounts available
to Agent as a result of such insurance being part of a blanket or umbrella
policy covering other real estate projects owned or managed by Agent. Agent
shall cause copies of the insurance policies to be delivered to Owner
promptly upon the issuance or renewal of each policy. Each such insurance
policy shall state that no cancellation or amendment thereof shall be
effected unless and until thirty (30) days prior written notice is provided
to Agent and Owner. All such policies of insurance shall name Owner as named
insured, Agent and the Limited Partners of Owner as additional insureds, as
their respective interests may appear, and shall contain a leader's loss
payable endorsement as required by any mortgage encumbering the Project.
Agent shall deliver all policies, including additional and renewal policies,
together with evidence of payment of premiums thereon, to Owner and, in the
case of insurance about to expire, shall deliver reasonable evidence of
coverage not less than seven (7) days after their respective dates of
expiration.
(b) From time to time, if deemed necessary or prudent by Owner, the
coverage levels and deductible provisions of the insurance policies required
by this Section shall be reevaluated by an appraiser approved by Owner and
Agent, and Agent shall cause appropriate amendments to such policies to be
made; provided, however, that Agent shall effect no material change in the
coverage of such provisions without Owner's prior written approval. Agent
shall notify Owner of such reevaluations, appraisals and amendments to
policies.
(c) Agent shall not obtain, carry or cause to be carried separate
insurance concurrent in form or contributing in the event of loss with that
required by this Section unless Owner is included therein as named insured
and the Limited Partners of Owner are named therein as additional insureds.
Agent shall immediately notify Owner whenever any such separate insurance is
obtained and shall deliver to Owner a copy of such policy or policies.
(d) Agent shall promptly give notice to the appropriate insurance
companies that have issued policies on the Project of all accidents,
incidents, occurrences and claims for damage arising out of or relating to
the use, occupancy, ownership, operations and maintenance of the Project, and
shall prepare a
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full written report thereon, including a report of any injuries, and of any
damage to or destruction of the Project and the estimated cost of repair.
Agent shall promptly and in the manner required by the appropriate policy or
policies of insurance, file all claims and shall use its reasonable efforts
to obtain payment therefor.
6. TAXES. Agent shall promptly advise Owner of all matters coming to
its attention pertaining to real and personal property taxes and assessments
due on the Project. All real and personal property taxes and assessments
respecting the property included within the Project shall be paid by Agent
out of the Bank Account.
7. COMPENSATION OF AGENT.
(a) In consideration of all management services to be performed by
Agent under or pursuant to the terms of this Agreement, Owner shall pay to
Agent a monthly fee (the "Management Fee") in an amount equal to 4% of the
Operating Income from the Project, payable monthly, in arrears. Agent is
hereby authorized to pay itself the Management Fee for each month on or at
any time after the first of the month after the month for which such
Management Fee is due. As used herein, the term "Operating Income", for any
month, means the sum of (i) minimum rent, ground rent and percentage rent
payable under all Leases (including, without limitation, all revenue from
permanent or temporary Leases of kiosks or cart spaces), (ii) all security
deposits that have been applied to rent payable to Owner under the Leases,
(iii) proceeds from any litigation wherein damages equivalent to or based
upon rent payable to Owner from a defaulted Tenant are recovered, net of the
expense of collection thereof, and (iv) revenues payable to Owner resulting
from the provision at the Project of music, vending machines and telephone
service, net of amounts payable to the providers of such services. Operating
Income shall not include any payments by Tenants in respect of common area
maintenance charges, enclosed mall operating expenses, taxes, insurance,
utilities or any other obligation of any Tenant that is in the nature of a
reimbursement of or advance against pass through expenses or capital
improvements, whether or not denominated as "additional rent" under any Lease.
(b) In consideration of all leasing services to be performed by Agent
under or pursuant to the terms of this Agreement, Owner shall pay to Agent a
fee (the "Leasing Fee") aggregating $200,000 for each calendar year, payable
monthly, in arrears. Agent is hereby authorized to pay itself the Leasing Fee
from the Bank Account on or at any time after the first day of the month
after the month for which such Leasing Fee is due. The Leasing Fee shall be
in lieu of any other finder's fee or other compensation to which Agent might
otherwise be entitled in connection with any new Lease or renewal of an
existing Lease, or which Owner might otherwise be required to pay to any
participating or
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cooperating broker or finder, it being understood that Agent shall be solely
responsible for the payment of such other compensation.
(c) In the event that there are insufficient funds in the Bank Account
to pay the Management Fee or the Leasing Fee due for any month during the
term of this Agreement, then if Owner does not pay the amount of such
Management Fee or Leasing Fee within ten (10) business days after receipt of
notice of such insufficiency, such unpaid Management Fee or Leasing Fee shall
bear interest at a rate equal to three percent (3%) over the base reference
or "prime" rate then announced by Boatmen's Bank, N.A., St. Louis, Missouri
(the "Prime Rate"), compounded annually, for the period from the date such
Management Fee or Leasing Fee was due until the date that it is paid in full
by Owner to Agent.
(d) Agent shall be entitled to reimbursement of all costs and expenses
incurred in connection with the performance of its obligations hereunder,
except for (a) salaries and wages paid by Agent or any Affiliate of Agent to
any leasing representative(s), (b) any real estate broker's or agent
commissions or finder's fees, (c) attorneys' fees incurred or expended in
connection with the negotiation and preparation of any Leases and any
amendments or supplements thereto or renewals thereof ("Leasing Legal Fees"),
and (d) costs of accounting services in respect of the preparation of the
statements referred to in Sections 3(a) and 3(e) hereof. Notwithstanding the
foregoing, attorneys' fees incurred or expended for all legal services other
than Leasing Legal Fees, including, without limitation, (x) enforcement of
Leases, (y) defense of Agent or Owner with respect to any Lease and (z)
amendments or supplements to Leases executed in settlement or resolution of
any controversies or disputes arising out of any Lease, shall be deemed
reimbursable operating expenses and may be paid for by Agent from available
funds in the Bank Account.
8. AGENT'S STAFF; COUNSEL. Agent agrees that the staff available to
it for work hereunder shall at all times consist of a sufficient number of
appropriately trained and otherwise qualified personnel to enable it to carry
out its obligations pursuant to this Agreement. Agent further agrees that it
shall use at least so much of the time and effort of such personnel as is
reasonable to insure proper performance of Agent's obligations under this
Agreement. Whenever legal services of outside counsel are required in Agent's
sole discretion in order for Agent to perform properly any of the services
described herein, such services shall be performed by counsel representing
and, except as provided in Section 7(d), paid by Owner or with funds of Owner
available in the Bank Account.
9. TERM. The term of this Agreement shall be for a period commencing
on January 1, 1994 (the "Commencement Date") and,
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unless earlier terminated as provided in this Agreement, shall expire upon
the termination of the Partnership Agreement.
10. TERMINATION BY OWNER. This Agreement may be terminated at the sole
option of Owner, which option may be exercised by Owner giving Agent written
notice of such termination after occurrence of any of the following:
(a) Agent commits a breach hereunder which breach is not cured (i)
within five (5) days with respect to a breach relating to payments of money
to Owner, the payment of premiums for insurance policies required hereunder
or the payment of real or personal property taxes or assessments, or (ii)
within thirty (30) days with respect to a nonmonetary breach, in either case
after receipt by Agent of a written notice setting forth and describing such
breach and requesting the same to be remedied within such time period;
provided, that if the time required to cure and remedy such nonmonetary
breach shall exceed thirty (30) days, such thirty (30) day period shall be
extended for the period reasonably required to cure and remedy such breach
(but in no event longer than 120 days), so long as curative efforts are
commenced by Agent as soon as reasonably practicable in view of all
circumstances and are diligently prosecuted by Agent to completion. With
respect to any such nonmonetary breach, provided that Agent delivers to Owner
prior notice, such curative period shall be extended for such length of time
as curative efforts may not be commenced or prosecuted by Agent due to
strikes, work stoppage, inclement weather, failure of deliveries, or other
causes beyond the reasonable control of Agent, including, without limitation,
any matter set forth in Article XII of the Partnership Agreement, the
provisions of which are incorporated herein.
(b) The General Partner assigns or transfers its interest in Owner to,
or substitutes for itself as general partner of the Owner, any other Person
who is not an Affiliate of General Partner, other than in accordance with the
provisions of the Partnership Agreement or General Partner ceases for any
other reason to be a general partner of Owner.
(c) Agent assigns or transfers its interest hereunder in violation of
Section 14 below.
(d) (i) Agent files a petition for the appointment of a trustee,
liquidator or receiver of all or substantially all of its assets, or
commences any proceeding relating to itself under any bankruptcy,
reorganization, or similar law for the protection of creditors; (ii) any such
application is filed or proceeding is commenced against Agent and Agent fails
to cause such proceeding to be stayed or vacated within thirty (30) days
after the filing or commencement thereof, or an order is entered appointing
any such trustee, liquidator or receiver or approving a petition in any such
proceedings and such order remains unvacated and
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unstayed for more than ninety (90) days, or (iii) there is an attachment,
judgment or levy against the Project or any portion thereof which is not
vacated, dismissed or released within ninety (90) days after the filing
thereof.
11. TERMINATION BY AGENT. This Agreement may be terminated at the sole
option of Agent, which option may be exercised by Agent giving Owner written
notice of such termination after Owner commits a material breach hereunder,
which breach is not cured within thirty (30) days after receipt by Owner of
a written notice setting forth and describing such breach and requesting the
same to be remedied within such thirty day period; provided, that if the time
required to cure and remedy such breach shall exceed thirty (30) days, such
thirty (30) day period shall be extended for the period required to cure and
remedy such breach, so long as curative efforts are commenced by Owner as
soon as reasonably practicable in view of all circumstances and are
diligently prosecuted by Owner to completion. With respect to any such breach
which would not be remedied by mere monetary payment, such curative period
shall be extended for such period of time as curative efforts may not be
commenced or prosecuted by Owner due to strikes, work stoppage, inclement
weather, failure of deliveries or other causes beyond the reasonable control
of Owner, including, without limitation, any matter set forth in Article XII
of the Partnership Agreement, the provisions of which are incorporated herein.
12. POST-TERMINATION OBLIGATIONS OF THE PARTIES. Upon the effective
date of termination of this Agreement (the "Termination Date"):
(a) Owner shall assume any contracts which may have been entered into
by Agent in its own name relating to the management of the Project (provided
that such contracts were entered into in accordance with the terms and
conditions of this Agreement). Owner hereby agrees to indemnify, defend and
hold harmless Agent from and against any and all losses, damages, costs,
expenses and liabilities (including, without limitation, attorneys' fees and
costs) arising out of or as a result of any action (to the extent done in
accordance with the terms and conditions of such contract) or inaction
relating to any such contract by Agent after the effective date of such
termination. Agent shall execute and deliver to Owner such documents of
transfer and assignment as may be reasonably required to vest in Owner all of
Agent's rights under any and all contracts required to be assumed by Owner
hereunder.
(b) Owner shall be responsible for, and shall indemnify, defend and
hold harmless Agent from and against, all unpaid costs, charges, invoices or
claims in respect of services, materials, and supplies, if any, which may
have been ordered by Agent in accordance with the provisions of this
Agreement.
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(c) In the event of any termination of this Agreement pursuant to
Section 11 above, Owner shall pay to Agent the Management Fee, the Leasing
Fee, reimbursable expenses, interest pursuant to any provision hereof, and
all other compensation properly payable to Agent hereunder through the
Termination Date. Agent shall receive no further compensation, except that
Agent shall have the right to receive any payment owed at such time with
respect to matters occurring between the date of the last payment and the
Termination Date.
(d) On or before the Termination Date, (i) Agent and any Affiliate of
Agent holding funds of Owner shall pay over to Owner all monies held by it
for the account of Owner, including without limitation, monies held in the
Bank Account, less the amount of any compensation, advances or other sums due
Agent pursuant to this Agreement accrued to the date of termination, (ii)
Agent shall deliver to Owner all records relating to its management of the
Project and all inventory of supplies, materials and equipment on hand and
(iii) Agent shall assign and transfer over to Owner or Owner's designee the
Bank Account.
(e) Agent shall use its commercially reasonable effort to facilitate
the transition of any succeeding manager of the Project.
(f) Neither party shall be relieved of any of its obligations
theretofore accrued under this Agreement prior to the effective date of such
termination.
(g) If termination shall result from an event described in Section 10
or Section 11, Agent or Owner, as the case may be, shall be liable to the
other party hereto for any damage caused by the events giving rise to such
termination.
(h) All past due amounts payable by either party hereto to the other
party shall bear interest from the date on which such payment becomes due
until paid at the Prime Rate.
(i) The provisions of this Section 12 shall survive the termination of
this Agreement.
13. INDEMNITIES.
(a) Agent hereby agrees to indemnify, defend and protect Owner and each
of Owner's constituent partners and their respective officers, directors,
trustees and executors (such persons collectively called "the indemnified
parties" for the purposes of this Section 13(a), and hold each of the
indemnified parties harmless against all losses, damages, costs, expenses and
liabilities (including, without limitation, reasonable attorneys' fees and
expenses and court costs) incurred by the indemnified parties by reason of
any claim or demand being made upon or any action taken against any of the
indemnified parties arising from Agent's
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gross negligence or willful misconduct or any breach or failure to perform
any of Agent's covenants, obligations, warranties or representations
contained in this Agreement. The indemnified parties shall, in good faith,
endeavor to notify Agent in writing as to every such claim, demand or action
against the indemnified parties within ten (10) business days after the
indemnified parties become aware that such claim or demand has been made or
such action has been taken. A good faith failure to notify Agent shall not
limit Agent's liability under this Section.
(b) Owner hereby agrees to indemnify, defend and protect Agent and each
of Agent's officers and directors (each such person collectively called "the
indemnified parties" for the purposes of this Section 13(b), and hold each of
the indemnified parties harmless against all losses, damages, costs, expenses
and liabilities (including, without limitation, reasonable attorneys' fees
and expenses and court costs) incurred by the indemnified parties by reason
of any claim or demand being made upon or any action taken against any of the
indemnified parties arising from (i) any gross negligence or willful
misconduct of Owner, or any breach or failure to perform any of Owner's
covenants, obligations, warranties or representations contained in this
Agreement, or (ii) any act taken or omission made by Agent in the performance
of its obligations under this Agreement, which act or omission was within
the express or implied scope of authority conferred by this Agreement or
otherwise by Owner, and is not the result of Agent's gross negligence,
willful misconduct or default in the performance or observance of any term,
condition or covenant contained in this Agreement. The indemnified parties
shall, in good faith, endeavor to notify Owner in writing as to every such
claim, demand or action against the indemnified parties within ten (10)
business days after the indemnified parties become aware that such claim or
demand has been made or such action has been taken. A good faith failure to
notify Owner shall not limit Owner's liability under this Section. Owner
shall obtain and maintain as part of any liability insurance covering the
Project pursuant to Section 5 hereof a contractual liability endorsement
specifically referencing this Section 13(b).
(c) No person who shall be engaged as an independent contractor by
either Owner, Agent, or both, shall be considered an employee, servant,
agent, or other person that either Owner or Agent (as the case may be) shall
be obligated to indemnify for the purposes of this Section. The indemnities
contained in this Section 13 shall survive the termination of this Agreement.
14. ASSIGNMENT. Notwithstanding anything to the contrary contained
herein, the sale, transfer or assignment of the stock of Agent or any direct
or indirect shareholder of Agent shall not require the consent of the Owner.
Except as set forth below, Agent shall not, assign, transfer, mortgage,
pledge, sell, hypothecate, or otherwise encumber (or permit any of the forego-
16
<PAGE>
ing) in any manner or by any means whatsoever, whether voluntarily or by
operation of law, all or any part of its interest in or obligations arising
out of this Agreement, other than pursuant to a collateral pledge or security
agreement which provides that, in the event of any enforcement thereof, in no
event would Agent's obligations hereunder be assigned or transferred without
the prior written consent of Owner, which consent may be withheld in Owner's
sole discretion. Notwithstanding anything contained herein to the contrary,
no Owner consent shall be required for the transfer of Agent's interest in or
obligations arising out of this Agreement to (a) an Affiliate of Agent
provided such Affiliate either (i) has a Net Worth (as determined from its
current financial statements for the year of such assignment or the calendar
year immediately preceding the year of assignment in the case where no
financial statements have yet been prepared for the calendar year of such
assignment) of not less than $20,000,000 or (ii) has all of its obligations
guaranteed by a guarantor (a "Guarantor") having a Net Worth of not less than
$20,000,000 determined as set forth above pursuant to a guaranty in form and
substance reasonably satisfactory to the Owner, or (b) the permitted
transferee of the partnership interest of the General Partner in the Owner.
In the event of an assignment to an Affiliate pursuant to clause (a)(i) or
(ii) above, such Affiliate or its Guarantor shall covenant not to voluntarily
reduce its Net Worth, including, without limitation, by means of any
divestiture or disposition of assets, creation of liabilities or creation or
acquiescence to a lien or pledge of assets, or any distribution, dividend or
redemption in connection with stock or another ownership interest to below
$25,000,000. Notwithstanding the foregoing, this Agreement shall be deemed to
have terminated if at any time following such an assignment a direct or
indirect owner of the then Agent hereunder is not a direct or indirect owner
of a substantial economic interest in the General Partner.
15. NOTICES. All notices and other communications which either party
is required or desires to send to the other shall be in writing and shall be
effective if given by personal delivery, commercial messenger service,
telecopy, telex, telegram, cablegram, or registered or certified mail, return
receipt requested. Notices and other communications which are so mailed shall
be deemed to have been given upon receipt. Notices shall be addressed as
follows:
TO AGENT:
CenterMark Properties, Inc.
611 Olive Street, Suite 1555
St. Louis, Missouri 63101
Telecopy No.: (314) 342-6925
Attention: President & Chief Executive Officer
17
<PAGE>
with copy to:
CenterMark Properties, Inc.
611 Olive Street, Suite 1555
St. Louis, Missouri 63101
Telecopy No.: (314) 342-6987
Attention: Legal Department
TO OWNER:
Plaza Camino Real
c/o CenterMark Properties, Inc.
611 Olive Street, Suite 1555
St. Louis, Missouri 63101
Telecopy No.: (314) 342-6925
Attention: President & Chief Executive Officer
or to such other address as shall be specified by either party in a notice
given to the other pursuant to the provisions of this Section.
16. FURTHER ASSURANCES. Each party hereto agrees to execute and
deliver any and all instruments, agreements and other documents reasonably
necessary to effect the acts contemplated hereby.
17. INTERPRETATION. This Agreement, including any exhibits attached
hereto, shall be construed under and in accordance with and governed by the
internal laws of the State of California. Unless otherwise stated, section
references herein refer to the corresponding provisions of this Agreement.
The captions set forth herein are for convenience only and shall not affect
the meaning of any of the terms of this Agreement. The use herein of the
singular or plural number or any gender shall be deemed interchangeable to
give the subject term the broadest and most appropriate meaning wherever the
sense of this Agreement allows. This Agreement (including incorporated
provisions of the Partnership Agreement) sets forth the entire agreement
between the parties, and no amendment or alteration hereof or change hereto
shall be binding unless the same shall be in writing and signed by both of
the parties hereto.
18. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be
held invalid or unenforceable by a court of competent jurisdiction, such
invalidity shall not affect other provisions of this Agreement or the
applications thereof which can be given effect without the invalid provision
or application, and to this end the parties hereto agree that the provisions
of this Agreement are and shall be severable.
19. RIGHTS AND REMEDIES. All rights, privileges and remedies afforded
the parties by this Agreement shall be cumulative
18
<PAGE>
and not exclusive, and the exercise of any one of such remedies shall not be
deemed to be a waiver of any other right, remedy or privilege provided for
herein or available at law or equity.
20. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the permitted successors and assigns of the respective parties
and any person claiming by, through or under any of the respective parties or
their respective permitted successors or assigns.
21. SPECIFIC PERFORMANCE AVAILABLE. The failure or refusal by a party
to comply with any or all of the provisions of this Agreement shall entitle
the other party to specific performance of the terms, covenants and
conditions of this Agreement or any part hereof in addition to any and all
other remedies available to such party at law or in equity.
22. NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer, or
be construed as conferring (directly, contingently or otherwise), any rights
or benefits on any Person that is not a party hereto, including any
third-party beneficiary rights.
23. CONSENT OR WAIVER. No consent or waiver, express or implied, by
either party to this Agreement to, of or for any breach or default by the
other party in performance of its obligations hereunder shall be deemed or
construed to be a consent or waiver to or for any other breach or default in
performance by such other party of the same or any other obligation of such
party hereunder. Failure on the part of either party to complain of any act
or failure of the other party to this Agreement or to declare the other party
in default, irrespective of how long such failure continues, shall not
constitute a waiver by such party of its rights hereunder.
24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original and all of which
will constitute one and the same Agreement.
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
OWNER:
PLAZA CAMINO REAL, a California
limited partnership
By: CENTERMARK PROPERTIES, INC.,
a Missouri corporation
Its: General Partner
By: /s/ Thomas E. Frost
----------------------------------
Name: Thomas E. Frost
Title: Senior Vice President
ATTEST:
- ----------------------------------
AGENT:
CENTERMARK PROPERTIES, INC.,
a Missouri corporation
By: /s/ Thomas E. Frost
----------------------------------
Name: Thomas E. Frost
Title: Senior Vice President
ATTEST:
- ----------------------------------
<PAGE>
EXHIBIT A
PARCEL A
All that real property situated within the City of Carlsbad, the County
of San Diego, State of California, described as follows:
Those portions of Section 32, Township 11 South, Range 4 West, San
Bernardino Meridian, according to official plat thereof and of Lots 40, 41,
42 and portions of Lots 39 and 13 through 17 inclusive and of Eucalyptus
Street all of Hosp. Eucalyptus Forest Company's Tract, according to Map
thereof No. 1135, filed in the office of the County Recorder of said County,
described as follows:
Beginning at the Southeast corner of the North Half of the Northeast
Quarter of Section 31; thence along the South line of said North Half, South
89DEG., 17' 09" West, 1304.78 feet; thence South 810.00 feet; thence
South 75DEG. 30' East, 1265.00 feet; thence East 740.00 feet; thence
North 77DEG. 15' East, 840.55 feet more or less to the Westerly line of
El Camino Real (80 Feet wide) as described in deed to the County of San
Diego, recorded April 10, 1945 as Document No. 28857 of Official Records;
thence Northerly along said Westerly line 952.22 feet, more or less to an
angle point in the Southerly line of California State Highway as described in
deed to the State of California, recorded September 8, 1984 as Document No.
163432 of Official Records; thence along the boundary line of said State
Highway as follows: North 7DEG. 09' 55" West, 110.20 feet; North 56
DEG. 32' 58" West, 121.72 feet to a point in the arc of a 150.00 foot
radius curve concave Southerly, a radial line of said curve bears North 28
DEG. 33' 27" East to said point, Westerly along said curve 81.31 feet
through an angle of 31DEG. 03' 27", nontangent to said curve South 89
DEG. 12' 51" West, 167.13 feet to a point in the arc of a 205.00 foot
radius curve concave Southerly, a radial line of said curve bears North 2
DEG. 30' West to said point, Westerly along said curve 125.78 feet through
an angle of 35DEG. 09' 13" to a point of reversed curvature having a
radius of 95.00 feet, Westerly and Northwesterly along said curve 185.96 feet
through an angle of 112DEG. 09' 13" to the Southeast corner of that
easement for drainage purposes granted to the State of California, recorded
September 8, 1984 as Document No. 163432 of Official Records; thence leaving
said curve and said Southerly line of California State Highway along the
Southerly and Westerly lines of said drainage easement, South 74DEG. 30'
West, 138.88 feet and North 15DEG. 19' 26" West, 35.45 feet, more or less
to a point in the Southerly line of the land described under Parcel 1 in deed
to the City of Oceanside, recorded April 20, 1959 as Document No. 77257 of
Official Records; thence South 89DEG. 30' West along the Southerly line
of said Parcel 1 a distance of 615.07 feet, more or less to the Point of
Beginning.
<PAGE>
Excepting from said portions of Section 32 above all mineral rights and
all oil, gas, petroleum or other hydrocarbon substances within or underlying
said land without right of surface entry as reserved in deeds from Reginaldo
Marron and Caroline Marron, recorded in Book 5699, page 284 of Official
Records and in Book 7712, page 477 of Official Records, and further excepting,
in addition to said reservation in the aforesaid deed, all of the oil, gas
and other minerals and mineral rights in and under said portions of Section
32 lying beneath a depth of 500 feet from the surface of said land, and
reserving the right of entry at any point in such land lying below said depth
for the purpose of exploring, drilling, conveying and removal of any such
substances and installation of equipment and pipelines for such purposes,
provided that any such entry and activity upon said land for such purpose
shall be carried out in such manner as to avoid any interference with the use
of the surface of said land.
<PAGE>
EXHIBIT 10.44
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT (the "AGREEMENT") is made as of the 31st day
of December, 1985, between TOPANGA PLAZA PARTNERSHIP ("OWNER"), a California
general partnership, and MAY CENTERS, INC. ("MANAGER"), a Missouri corporation.
RECITALS
A. Owner is the owner of certain lands situated in the City of Los
Angeles, County of Los Angeles and State of California (the "SHOPPING CENTER
PARCEL"), more particularly described in Exhibit "A", attached hereto and
made a part hereof, which have been developed as an enclosed, regional
shopping center (the "SHOPPING CENTER") presently operating under the name
"Topanga Plaza".
B. Owner is a California general partnership composed of JMB Income
Properties, Ltd.-XII, an Illinois limited partnership ("PROPERTIES"), and
Topanga Center, Inc., a Delaware corporation ("TCI").
C. Manager is experienced in the operation and management of shopping
centers.
D. Owner and Manager are entering into this Agreement to establish the
terms and conditions under which Manager shall operate and manage the
Shopping Center on behalf of Owner.
AGREEMENTS
In consideration of the mutual promises contained herein, Owner and
Manager covenant and agree as follows:
ARTICLE I
EMPLOYMENT OF MANAGER; DEFINITIONS
SECTION 1.1. Owner employs Manager as its sole and exclusive agent to
perform the services described in this Agreement. Manager accepts such
employment and agrees to perform such services as an independent contractor.
Owner authorizes Manager to exercise all powers with respect to the Shopping
Center as may be reasonably necessary or proper for the performance of
Manager's duties under the terms of this Agreement.
SECTION 1.2. As used in this Agreement, the following capitalized terms
shall have the meanings indicated below:
(a) "AFFILIATE" shall have the meaning set forth in Section 7.1 hereof.
(b) "AGREEMENT" shall have the meaning set forth in the Preamble hereto;
(c) "APPROVED BUDGET" shall have the meaning set forth in Section 2.1(c)
hereof.
(d) "APPROVED LEASING PLAN" shall have the meaning set forth in
Section 2.1(c) hereof.
(e) "CPI INDEX" shall have the meaning set forth in Section 16.2 hereof.
(f) "CO-PARTNER" shall have the meaning set forth in Section 1.7E of
the Partnership Agreement.
(g) "DIRECT PAYROLL EXPENSES" shall have the meaning set forth in
Section 5.1(a) hereof.
1.
<PAGE>
(h) "EXISTING NOTE" shall have the meaning set forth in Section 1.7F
of the Partnership Agreement.
(i) "FIRST PARTY" shall have the meaning set forth in Section 16.4.
(j) "INDIRECT PAYROLL COSTS" shall have the meaning set forth in
Section 5.1(b) hereof.
(k) "INVESTOR" shall have the meaning set forth in Section ______ of
the Partnership Agreement.
(l) "LEASING PLAN" shall have the meaning set forth in Section 2.1.
(m) "MAJOR DECISIONS" shall have the meaning set forth in Section 16.2.
(n) "MANAGEMENT EXPENSES" shall have the meaning set forth in Section 5.1
hereof.
(o) "MANAGER" shall have the meaning set forth in the Preamble hereto;
(p) "MAY AFFILIATE" shall have the meaning set forth in Section 1.7M of
the Partnership Agreement.
(q) "NON-DISCRETIONARY EXPENDITURE" shall have the meaning set forth in
Section 6.5A(4) of the Partnership Agreement.
(r) "NOTICE" shall have the meaning set forth in Section 8.1.
(s) "OWNER" shall have the meaning set forth in the Preamble.
(t) "OWNER'S ALLOCABLE SHARE" shall have the meaning set forth in
Section 5.1 hereof.
(u) "OWNER'S OVERHEAD SHARE" shall have the meaning set forth in
Section 5.1(c) hereof.
(v) "PARTNERS" shall have the meaning set forth in Section 1.7P of the
Partnership Agreement.
(w) "PARTNERSHIP AGREEMENT" shall have the meaning set forth in
Section 1.7R of the Partnership Agreement.
(x) "PROPERTIES" shall have the meaning set forth in Recital Paragraph B.
(y) "RENT SCHEDULE" shall have the meaning set forth in Section 2.1.
(z) "SECOND PARTY" shall have the meaning set forth in Section 16.4.
(aa) "SHOPPING CENTER" shall have the meaning set forth in Recital
Paragraph A.
(bb) "SHOPPING CENTER BUDGET" shall have the meaning set forth in
Section 2.1.
(cc) "SHOPPING CENTER PARCEL" shall have the meaning set forth in Recital
Paragraph A.
(dd) "TCI" shall have the meaning set forth in Recital Paragraph B.
(ee) "THRESHOLD AMOUNT" shall have the meaning set forth in Section 16.2.
ARTICLE II
MANAGER'S OBLIGATIONS
SECTION 2.1. Manager shall perform the following services with respect
to the Shopping Center:
(a) Manager shall maintain liaison with the design, engineering,
construction staffs and other special consultants engaged by Owner.
2.
<PAGE>
(b) Manager shall submit to Owner from time to time and, when required
under the terms of this Agreement, request Owner's approval of Manager's
recommendations for the operation of the Shopping Center, including, but not
limited to:
(i) the number and type of employees to be employed;
(ii) procedures for the collection of rents and other charges;
(iii) maintenance, repair and expansion of the Shopping Center;
(iv) an insurance program for the Shopping Center; and
(v) marketing and promotion of the Shopping Center and the
establishment of such merchants' association or promotion and marketing funds
as Manager shall deem appropriate.
(c) The following provisions shall apply to the budget and leasing
plan for the Shopping Center:
(i) Not later than November 30th of each year, Manager shall prepare
and submit for Owner's approval, which approval shall not be unreasonably
withheld or delayed, a shopping center budget ("SHOPPING CENTER BUDGET") for
the next calendar year. The Shopping Center Budget shall set forth in
reasonable detail the estimated operating receipts and expenditures of Owner
on a month-to-month basis for the period covered by the Shopping Center
Budget, and shall show amounts reserved for on-going expenses, any
anticipated extraordinary expenses, contingencies and capital expenditures
and source of funds with respect thereto (including the amount and the
approximate date funds will be needed for such expenses). The Shopping Center
Budget shall also contain, as a separate line item for informational purposes
only, an estimate of the "Management Expenses" (as defined in Section 5.1
hereof) that will be payable to Manager during the period covered by the
Shopping Center Budget. Owner may not disapprove the Shopping Center Budget
on the basis of the estimate of Management Expenses contained in the Shopping
Center Budget, nor shall the amount of Management Expenses payable during the
period covered by the Shopping Center Budget be limited by the estimate of
such expenses contained in the Shopping Center Budget. The Shopping Center
Budget shall be substantially in the form of budget attached hereto as
Exhibit "B". If Owner does not approve the most recently submitted Shopping
Center Budget or proposed revision thereof, then Manager shall continue to
operate under the most-current Approved Budget, modified as necessary to (a)
authorize Non-Discretionary Expenditures and (b) to take into account
expenditures which have already been made. The Shopping Center Budget and
amendments thereto as approved by Owner in accordance with the terms hereof
shall be herein called the "APPROVED BUDGET".
(ii) In connection with the budgeting process, but not later than
November 30th of each year, Manager shall submit for the reasonable approval
of Owner a comprehensive leasing plan and rent schedule, which shall include
a statement of the space Manager expects to be leased during such year, the
proposed tenant (if known) and the use proposed for the space to be leased,
the fixed or minimum rent and the method of calculation of percentage rent it
expects to obtain for such space, any tenant allowances and leasing
commissions and all other material financial provisions of a tenant lease.
3.
<PAGE>
he leasing plan and rent schedule thereto, as approved by Owner in
accordance with the terms hereof, shall be herein called the "APPROVED
LEASING PLAN".
(iii) Manager shall have the right and authority to implement the
Approved Budget and Approved Leasing Plan, provided that Manager operates
within the parameters of the same. Manager shall be required to obtain the
Owner's prior written approval for actions to be taken by Manager which
deviate from the terms of the Approved Budget or Approved Leasing Plan,
provided, however, if a given action is of such a nature that Co-Partner (as
a May Affiliate) is authorized to take such action pursuant to Section
6.5A(3) or Section 6.5B(3), respectively, of the Partnership Agreement
without the prior approval of Investor, such approval may be given by
Co-Partner on behalf of Owner, and such approval may be oral.
(d) Manager shall negotiate all leases with tenants for space within
the Shopping Center and all extensions, renewals, modifications, amendments
or terminations thereof and shall submit all such agreements to Owner for
execution. All such leases, unless otherwise approved by Owner, shall be
negotiated substantially in accordance with:
(i) the Approved Leasing Plan as amended from time to time;
(ii) the standard form of lease approved by Owner and its counsel, from
time to time, subject to reasonable negotiation; and
(iii) administrative procedures established or approved by Owner for
securing Owner's approval of the business and legal terms of each lease,
processing lease data forms, and processing the final draft for tenant's and
Owner's approval, execution and delivery.
(e) Manager shall maintain a central control file of all leases
relating to the Shopping Center and shall, upon request, furnish copies of
such leases to Owner. Manager shall: (i) review plans and specifications for
tenant improvements; (ii) consult with tenants and their respective
architects, engineers, contractors and other representatives regarding
tenants' plans and specifications; and (iii) coordinate, to the extent
necessary, the construction of tenant improvements.
(f) Manager shall bill tenants and other occupants in the Shopping
Center for, and shall use diligent efforts to collect, all fixed rents,
percentage rents and other sums, whether payable as additional rent or
otherwise, payable by such tenants and occupants under their respective
leases and other agreements, or by other parties under license, service or
other agreements. Manager shall obtain and review statements of sales
furnished by tenants to support their payment of percentage rentals or other
sums and deductions, and shall furnish a summary of such statements to Owner
on a quarterly basis. Manager may not institute, prosecute or settle on
behalf of Owner any legal or arbitration proceedings in connection with the
tenant leases without the prior written approval by Owner, provided, however,
if Co-Partner (as a May Affiliate) is authorized to take any such action
pursuant to Sections 6.5B(3) and 6.7B(4) of the Partnership Agreement without
the prior approval of Investor, Co-Partner may give such consent on behalf of
Owner, and such consent may be oral. Manager shall keep Owner advised of
Manager's collection activities from time to time and shall notify Owner of
any claims which Manager deems to be uncollectable.
4.
<PAGE>
(g) Manager shall use diligent efforts to enforce the performance by
tenants of all requirements of their respective leases.
(h) Manager shall cause the Shopping Center to be maintained in good
sanitary, orderly and safe operating condition and repair at Owner's cost,
subject to the terms of the Approved Budget, and shall supervise the
maintenance thereof. Manager shall, subject to the terms of the Approved
Budget, (i) hire such persons, firms or corporations and purchase or lease
such equipment and supplies at reasonable rates and costs as may be necessary
or desirable to accomplish such purposes, and (ii) negotiate and administer
contracts with third parties for electricity, gas, fuel supply, water,
telephone, window washing, exterminating, equipment maintenance, trash
handling and other contracts relating to the operation or maintenance of the
Shopping Center to the extent that such services are not provided by Manager;
however, Manager shall not enter into any agreement with an Affiliate of
Manager or of Investor or Co-Partner without the prior written consent of
Owner, provided, however, that if Co-Partner (as a May Affiliate) is
authorized to do so pursuant to Section 6.6B(2) of the Partnership Agreement
without the prior consent of Investor, then Co-Partner may give such approval
and such approval may be oral.
(i) Manager shall maintain the books, records and accounts of Owner and
shall prepare and submit to Owner, within 45 days after the end of the
just-concluded quarter, financial reports on the operation of the Shopping
Center relating to such quarter. Such reports shall include, without
limitation: income and expense statements, containing monthly and
year-to-date information; statements listing rent delinquencies; leasing
status report; statements reconciling material variances between the actual
receipts and expenditures and the amount projected for such items as set
forth in the applicable Approved Budget; and such other statements and
reports as may be reasonably requested by Owner. Such financial reports shall
be substantially in the form attached hereto as Exhibit "C". In addition,
Manager shall assist Owner and Owner's accountants in preparing such annual
financial reports and tax returns as may be required by Owner. Owner shall
have the right to examine such books and records at any time during normal
business hours at Manager's place of business and make copies thereof.
(j) Manager shall advise Owner as to insurance coverage and shall
procure insurance coverage for the Shopping Center in accordance
with Article 15 hereof.
(k) Manager shall organize and administer periodic meetings with Owner
in order to review the status of the Shopping Center and establish direction
as necessary.
(l) If directed by Owner, Manager shall explore, from time to time, the
feasibility of expanding the Shopping Center or of developing additional
improvements on the Shopping Center Parcel, and shall make such proposals to
Owner as Manager shall deem appropriate in connection therewith. Co-Partner
(as a May Affiliate) shall be entitled to give such authorization to Manager
without the consent of Investor to the extent permitted in Section 6.4E(3) of
the Partnership Agreement. Manager shall implement all decisions of Owner in
connection with the exploration of the expansion of the Shopping Center.
5.
<PAGE>
(m) Manager shall assist, if requested by Owner in a writing signed by
both Partners, in any application by Owner for a zoning change or other
application made by Owner to any governmental authority relating to the
Shopping Center.
(n) Manager shall establish, supervise and assist the advertising and
promotional program for the Shopping Center, subject to the then-Approved
Budget and Owner's recommendations in connection therewith.
(o) Manager shall establish, supervise and assist in the formation of
such merchants' associations or promotion and marketing funds, as deemed
appropriate by Manager, and shall assist in the administration thereof,
subject to the then-Approved Budget and Owner's recommendations in connection
therewith.
(p) Manager shall review, from time to time, the tax assessments levied
upon the Shopping Center and shall recommend to Owner, when deemed
appropriate by Manager in the exercise of Manager's reasonable business
judgment, that proceedings be instituted by Owner to contest or appeal such
assessments.
(q) Manager shall deposit all funds received by Manager for Owner
pursuant to this Agreement in the central bank account maintained by
Co-Partner (as a May Affiliate) pursuant to Section 5.4B of the Partnership
Agreement. Manager shall keep Owner informed at all times with respect to the
bank in which such account is maintained, the name in which such account is
kept, the number of such account and the names and titles of officers or
employees of Manager who may draw upon such account. Officers or employees of
Manager approved by Owner shall disburse from such account funds necessary
for the operation and maintenance of the Shopping Center, including all
Management Expenses in accordance with the terms of the then-Approved Budget
and Section 2.1(c) hereof. Employees of Manager who handle or are responsible
for the handling of Owner's funds shall be bonded by a fidelity bond
acceptable both to Manager and Owner, provided, however, Manager may elect,
in lieu of such bond, to indemnify Owner and the Partners thereof against
loss, theft, embezzlement or other fraudulent acts on the part of Manager's
employees, subject to Owner's prior written approval of the form and
substance of the indemnity agreement.
(r) Manager shall use its reasonable efforts which it believes necessary
in the exercise of its reasonable business judgment to comply with and
perform all covenants, obligations and limitations, and to make the payment
of all amounts, subject to the terms of the then-Approved Budget, imposed by
law or by any contract, instrument or encumbrance to which the Shopping
Center or Owner and Manager shall be subject during the Term, including, but
not limited to, the tenant leases executed in compliance with the
then-Approved Leasing Plan or Section 2.1(c)(iii) or (d) hereof or as
otherwise approved in writing by Owner and all mortgages and deeds of trust
(including, but not limited to, the Existing Notes and other loan documents
related thereto).
(s) Manager shall pay and discharge to the extent permitted by the
then-Approved Budget or pursuant to Section 2.1(c)(iii), out of the funds
relating to the Shopping Center which are deposited in the account referred to
6.
<PAGE>
in Section 2.1(q) hereof, all costs, expenses, liabilities and obligations of
or relating to the Shopping Center or any part thereof at or before the time
or times the same shall be due, including, but not limited to, the following:
(i) The payment of all business taxes, and all state and local taxes
based in whole or in part on gross income or adjusted gross income, and all
real and personal property taxes and assessments of every kind or description
whatsoever, whether general, special, ordinary or extraordinary, which are
assessed or levied against the Shopping Center or any part thereof, or which
become payable, during or with respect to the Term or any part thereof.
(ii) The payment of all charges for or related to utilities.
(t) Manager shall perform such other services as may be necessary or
proper to operate the Shopping Center in the manner contemplated by this
Agreement.
ARTICLE 3
TERM
SECTION 3.1 The term of this Agreement shall begin as of the date
hereof and shall continue through December 31, 2000, and thereafter shall
continue on a year-to-year basis, unless terminated by the parties in the
manner provided in Article 4.
ARTICLE 4
TERMINATION
SECTION 4.1 This Agreement may be terminated, at the option of
Manager, by delivering to Owner written notice of such termination not less
than 45 days prior to the effective date of such termination. This Agreement
may also be terminated, at the sole option of Owner, and exercised by Investor
on behalf of Owner, giving Manager written notice of such termination upon
the occurrence of any of the following:
(a) Manager commits a material default hereunder, if such default is
not cured within thirty days after receipt by Manager of a written notice
setting forth and describing such default, or, if such default cannot be
cured within 30 days, the curing of such default is not commenced within said
30 days and thereafter diligently prosecuted to the curing thereof. If, after
receipt of such written notice of default, Manager shall dispute that it is
in material default of this Agreement, Manager may initiate arbitration
proceedings, in the manner set forth in Section 16.3 hereof, to resolve the
dispute. The time available to Manager to cure the default claimed in such
notice shall not begin to run until a final determination has been made in
such proceedings.
(b) Manager shall make an assignment for the benefit of creditors,
apply for the appointment of a trustee, liquidator or receiver of any
substantial part of its assets, or commence any proceeding relating to
itself under any bankruptcy, reorganization, arrangement or similar law; or
any such application is filed or proceeding is commenced against Manager and
Manager indicates its consent thereto, or an order is entered appointing any
such trustee, liquidator or receiver or approving a petition in any such
proceedings and such order remains in effect for more than 90 days; or
Manager shall admit in writing its inability to pay its debts as they become
due.
(c) Co-Partner ceases to be a May Affiliate.
7.
<PAGE>
(d) Upon the sale of the Shopping Center by Owner.
(e) In the event that Manager has willfully and intentionally
overcharged Owner for Management Expenses during any fiscal year during the
Term.
SECTION 4.2. Within 45 days following the termination of this
Agreement, Owner shall pay to Manager all compensation that may be due and
payable as of the effective date of such termination. Manager shall deliver
to Owner or Owner's designee, within 45 days after the effective date of such
termination:
(a) all property of Owner which Manager has in its possession;
(b) a final accounting showing the balances of income and expenses as
of the date of termination; and
(c) all other information reasonably necessary to terminate Manager's
duties under this Agreement in an orderly and systematic manner.
ARTICLE 5
COMPENSATION
SECTION 5.1 Subject to the terms of Sections 5.2 and 5.3 hereof, Owner
shall reimburse Manager, as compensation for the services provided by Manager
under this Agreement, for the following costs and expenses (the "MANAGEMENT
EXPENSES") incurred by Manager or its Affiliates in performing Manager's
obligations under this Agreement: all "Direct Payroll Costs" (as defined in
Section 5.1(a) hereof), plus all "Indirect Payroll Costs" (as defined in
Section 5.1(b) hereof), plus the "Owner's Share" (as defined in Section
5.1(c) hereof) of the general overhead expenses of Manager and its
Affiliates. Manager shall only be entitled to compensation as and to the
extent set forth in this Section 5.1 and Section 5.2 hereof. Without
limitation on the generality of the foregoing, neither Manager nor any
Affiliate of Manager shall be entitled to any leasing commissions in
connection with the Shopping Center, but Manager shall be entitled to recover
the Management Expenses relating to the leasing of space in the Shopping
Center. Manager shall not enter into a general brokerage or leasing agreement
with respect to the leasing of the Shopping Center. Such reimbursements shall
be made pursuant to the following terms and conditions:
(a) "DIRECT PAYROLL COSTS" shall mean the wages or salaries (including
taxes and employee benefits, but excluding therefrom expenses of the computer
information service group and expenses of other support groups, if and to the
extent such expenses are included as general overhead expenses pursuant to
subparagraph (c) below) paid by Manager or its Affiliates to their off-site
personnel computed on the basis of the hours of service provided by such
personnel in performing Manager's obligations under this Agreement as
indicated by written records of such time kept on a regular and consistent
basis.
(b) "INDIRECT PAYROLL COSTS" shall mean the "Owner's Allocable Share"
of the wages or salaries (including taxes and employee benefits) paid by
Manager or its Affiliates to personnel for services which are not allocated
by Manager or its Affiliates to any specific projects or properties as set
forth in subparagraph (a) above (excluding therefrom expenses of the computer
information services group and expenses of other support groups, if and to the
8.
<PAGE>
extent such expenses are included as general overhead expenses pursuant to
subparagraph (c) below). The "OWNER'S ALLOCABLE SHARE" of such costs for a
given period shall be calculated by multiplying the amount of such costs by a
fraction, the numerator of which shall be the Direct Payroll Costs charged by
Manager or its Affiliates during such period, and the denominator of which
shall be the total of all direct payroll costs which were incurred by Manager
and its Affiliates during such period with respect to all shopping centers
and properties which are managed by Manager.
(c) The "OWNER'S OVERHEAD SHARE" of general overhead expenses
(including therein expenses of the computer information service group and
other support groups [except to the extent included as Direct Payroll Costs
or Indirect Payroll Costs], which shall be calculated in accordance with the
accounting procedures uniformly used by Manager in connection with all the
shopping centers and properties owned and managed by Manager) shall be
determined in compliance with the applicable terms of this Section 5.1(c).
Owner acknowledges that Manager owns and manages other properties and shopping
centers in addition to the Shopping Center and that Manager will allocate
various general overhead expenses between the Shopping Center and such other
properties and to any other businesses engaged in by Manager. So long as
Manager manages at least 10 shopping centers, the Owner's Share of such
general overhead expenses shall be computed on the basis of an overhead
factor, expressed as a multiple of Direct Payroll Costs and Indirect Payroll
Costs, which is reasonably determined by Manager to uniformly and equitably
distribute 100% (but not more than 100%) of such general overhead expenses to
all shopping centers and other properties managed by Manager and to any
other businesses engaged in by Manager. If, at any time during the term of
this Agreement, Manager shall no longer manage at least 10 shopping centers,
the Owner's Share of such general overhead expenses shall not exceed, in any
event, an amount which is reasonably necessary for the operation of the
Shopping Center in the manner contemplated by this Agreement.
(d) Owner acknowledges and agrees that Manager may use the corporate
legal staff of Manager or its Affiliates to provide services on behalf of the
Owner. Notwithstanding the provisions to the contrary set forth in this
Section 5.1, Owner shall pay to Manager for such legal services the billing
rate which is uniformly charged by Manager for such services (which rate, as
of the date hereof, is $50.00 per hour).
(e) Manager acknowledges that the provisions of this Section 5.1 reflect
the method of computing management fees used by Manager in managing the
Shopping Center during 1985. Manager shall have the right, from time to time,
to modify the methods of allocating and determining Management Expenses,
provided that the method of allocation, as modified, shall uniformly and
equitably allocate its total costs, expenses and overhead attributable to the
various properties managed by Manager and the other businesses engaged in by
Manager; but before making any such modification, Manager shall submit the
same to Investor for approval, but Investor shall not have the right to
object to such modification unless the same results in a disproportionate
allocation of costs, expenses and overhead to the Business Property.
9.
<PAGE>
(f) Manager shall furnish Owner with an accounting of all reimbursable
costs and expenses no later than 90 days after the end of the fiscal year of
Owner. Such an accounting shall be made in compliance with Manager's standard
practices for calculating the costs of its management services and shall
otherwise be reasonably satisfactory in form and substance to Owner.
(g) JMB, acting on behalf of Owner, shall have the right to cause an
audit to be made of the Management Expenses reimbursed to Manager under this
Agreement. No such audit shall be conducted more frequently than one time in
any single calendar year. Such an audit shall be conducted not later than one
year following the end of the year during which such Management Expenses were
incurred. The audit shall be conducted by Peat, Marwick, Mitchell & Co. or
another independent, certified public accounting firm selected by JMB on
behalf of Owner and reasonably approved by Manager. Manager shall provide the
accountant with such supporting data concerning the Management Expenses under
audit as may be reasonably requested by such accountant within 30 days after
receipt of written request therefor. If, as a result of such an audit, JMB
claims that Management Expenses paid to Manager were in excess of those
permitted hereunder, JMB shall deliver written notice thereof to Manager,
setting forth in reasonable detail the basis of the dispute. Manager shall
then have a period of 30 days following receipt of such notice in which to
either reimburse Owner for the portion of Management Expenses in dispute or
submit the dispute to arbitration pursuant to Section 16.3. If the arbitrator
finds that any of the Management Expenses in dispute were paid in violation
of the terms hereof, then Manager shall refund to Owner, within 30 days
following receipt by Manager of the arbitrator's decision, the amount of
Management Expenses which were found by the arbitrator to be improper, plus
interest thereon at the rate of 10% per annum from the date such Management
Expenses were improperly paid to Manager until the date of such refund. If
the amount of any refund required under this Section 5.1(g) exceeds the total
amount of Management Expenses paid during the period under audit by more than
5% of the total amount of such Management Expenses, then Manager shall
reimburse to JMB all of JMB's reasonable costs and expenses incurred in such
audit; such reimbursement shall be made concurrently with the refund of the
applicable Management Expenses.
SECTION 5.2 REIMBURSEMENT OF OUT-OF-POCKET COSTS. If Manager advances
its own funds in the performance of its duties hereunder, it shall be
entitled to reimbursement from the income of the Shopping Center for the
amount so advanced. Such out-of-pocket costs shall include, without
limitation, the salary and benefits and other payroll costs of on-site
personnel. If such personnel devote time to more than one center or property
managed by Manager, Owner shall not be required to reimburse Manager for more
than Owner's fair and equitable share of such costs and expenses, fairly
determined.
SECTION 5.3. It is expressly understood and agreed that the manner in
which the Management Expenses are calculated is designed solely to reimburse
Manager for the costs it incurs in managing and operating the Shopping Center
in accordance with the terms of this Agreement and, accordingly, such
10.
<PAGE>
calculation shall not result in Manager's receiving any profit or incurring
any loss in the performance of its obligations hereunder. Manager shall act
in good faith in fairly allocating its total costs among the Shopping Center,
and other properties and shopping centers managed by Manager and the other
businesses (if any) of Manager. Management Expenses shall not be increased or
otherwise affected by reason of Manager's failure to be reimbursed for direct
payroll costs, indirect payroll costs or general overhead expenses associated
with any other shopping centers and other properties managed by or other
businesses engaged in by Manager.
ARTICLE 6
MANAGER'S STAFF
SECTION 6.1 In order to perform the services required by this
Agreement, it will be necessary for Manager to employ certain key personnel.
Manager shall, at all times, employ a sufficient number of appropriately
trained, experienced and otherwise qualified personnel to enable it to
efficiently and effectively carry out its obligations pursuant to this
Agreement. Manager shall use sufficient time and effort of such personnel to
enable Manager to perform its obligations under this Agreement.
SECTION 6.2 With the prior consent of Owner, Manager shall have the
right from time to time to contract with such third parties as Manager shall
deem appropriate in performing its obligations under this Agreement, and such
consent may be given by Co-Partner without the consent of Investor to the
extent permitted by the Partnership Agreement. Whenever services of third
parties are used to perform any of the services described herein, all costs
and expenses for such services shall be paid by Owner provided that the
incurrence of such costs and expenses is in accordance with the Approved
Budget and Section 2.1(c) hereof.
ARTICLE 7
ASSIGNMENT
SECTION 7.1 Manager shall not assign, all or any part of its interest
in or obligations arising out of this Agreement except to an "Affiliate". For
purposes of this Agreement, the term "AFFILIATE" shall mean any of the
following: (a) The May Department Stores Company, a New York corporation
("MDS"); (b) any wholly owned subsidiary of MDS or Manager; or (c) any entity
in which either MDS or Manager or their respective wholly owned subsidiaries
own at least 25% of the voting control thereof and over which MDS or Manager
or their subsidiaries, as the case may be, have effective control. Any
transfer of stock or of a partnership interest in an Affiliate which reduces
the interest of MDS, Manager or their respective subsidiaries to less than
25% shall be deemed an assignment for purposes of this Section 7.1.
ARTICLE 8
NOTICES
SECTION 8.1 Every notice, demand, direction, consent, approval, request
and other communication required or permitted hereunder ("NOTICE") shall be
in writing, and shall be personally delivered or sent by overnight courier,
registered or certified United States Mail, postage prepaid, return receipt
requested, to whomever the Notice is required or permitted to be sent, and
addressed as stated below:
11.
<PAGE>
TO MANAGER: May Centers, Inc.
611 Olive Street
St. Louis, Missouri 63101
Attn: Chairman
TO OWNER: Topanga Plaza Partnership
c/o May Centers, Inc.
611 Olive Street
St. Louis, Missouri 63101
Attn: Chairman
with a copy to:
JMB Income Properties, Ltd. - XII
c/o JMB Realty Corporation
875 N. Michigan Avenue
Suite 3900
Chicago, Illinois 60611
Attn: Mr. Robert J. Chapman
and
Pircher, Nichols & Meeks
10100 Santa Monica Boulevard
Los Angeles, California 90067
Attn: Real Estate Notices
SECTION 8.2 Any party may change the address to which Notices served
upon it are to be sent by 10 days' prior Notice informing the other parties
of the change in address. All Notices given by United States mail as a
registered or certified matter or by overnight courier service shall be
deemed to have been given on the day the return receipt is signed and
received by the sending party, or, in the event that the addressee refuses
receipt, then on the third day after the same is either (1) deposited in the
United States mail as registered or certified matter, addressed as above
provided, with postage thereon fully prepaid or (2) delivered to a courier
service with instructions for prompt delivery of the same provided a signed
receipt evidencing delivery is obtained by such courier service within such
three-day period. Any notice not given by registered or certified mail as
aforesaid shall be deemed to be given upon receipt of the same by the party
to whom the same is to be given.
ARTICLE 9
AMENDMENT
SECTION 9.1 This Agreement shall be subject to amendment only by a
writing signed by both Partners and Manager.
ARTICLE 10
SEVERABILITY
SECTION 10.1 If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be
held invalid or unenforceable by a court of competent jurisdiction, such
result shall not affect the other terms and provisions of this Agreement or
applications thereof which can be given effect without the relevant term,
provision or application. To this end, the parties agree that the provisions
of this Agreement are and shall be severable.
12.
<PAGE>
ARTICLE 11
REMEDIES CUMULATIVE
SECTION 11.1 Except as otherwise provided herein, all rights,
privileges and remedies afforded the parties by this Agreement shall be
deemed cumulative, and in addition to all rights and remedies available at
law or in equity.
ARTICLE 12
SUCCESSORS AND ASSIGNS
SECTION 12.1 This Agreement shall be binding upon and inure to the
benefit of the parties and their permitted successors and assigns.
ARTICLE 13
LAW APPLICABLE
SECTION 13.1 The laws of the State of California shall govern the
enforcement and construction of this Agreement.
ARTICLE 14
CONSENT OR WAIVER
SECTION 14.1 No consent or waiver, express or implied, by either party
to this Agreement to, of or for any breach or default by the other party in
performance of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or for any other breach or default in performance by
such other party of the same or any other obligation of such party hereunder.
Failure on the part of either party to complain of any act or failure of the
other party to this Agreement or to declare the other party in default,
irrespective of how long such failure continues, shall not constitute a
waiver by such party of its rights hereunder.
ARTICLE 15
INDEMNIFICATION AND INSURANCE
SECTION 15.1 Manager shall indemnify and save Owner harmless from and
against all damages, claims, losses, liabilities, costs and expenses
(including reasonable legal fees) arising out of (a) the gross negligence,
willful misconduct or intentional torts of Manager or Manager's agents,
servants, employees or sub-contractors or (b) acts which are in breach of
Manager's duties under this Agreement or which are outside of the scope of
Manager's authority under this Agreement.
SECTION 15.2 Owner shall indemnify, defend and hold Manager harmless
from and against all damages, claims, losses, liabilities, costs and expenses
(including reasonable legal fees) incurred by Manager in connection with its
services under this Agreement, excepting only those matters within the scope
of indemnification made by Manager in Section 15.1 hereof.
SECTION 15.3
A. Manager shall procure and maintain, at Owner's expense, extended
coverage insurance as set forth in this Section. In the event that Manager is
unable to procure insurance which complies in all respects with this Section,
Manager shall promptly notify Owner of such failure, but in no event shall
Manager let the Business Property be uninsured. Owner shall be the primary
named insured under such policies. Manager and lenders providing financing
for the Shopping Center and certain tenants designated by Owner shall be
named as additional insureds under such policies. All such insurance shall be
13.
<PAGE>
coordinated with the insurance required to be carried by tenants and, where
economically feasible, shall be obtained under blanket policies covering
other properties in which Owner or Manager has an interest. The amounts of
coverage and the risks insured against in the policies obtained by Manager
shall be subject to the approval of Owner but, without limiting the
foregoing, such policies shall, at a minimum, include the following:
(a) PROPERTY INSURANCE. "All-risk" property damage insurance, covering
the Business Property in an amount equal to 100% of replacement value, with a
stipulated amount or agreed valuation endorsement, such insurance to include
fire and extended coverage with vandalism, malicious mischief, and other
appropriate endorsements on the buildings, equipment, and other improvements
on the Shopping Center, and protection against damage caused by earthquake
and flood, if available, in amounts directed by Owner.
(b) PUBLIC LIABILITY INSURANCE. Broad form general public liability
insurance and automobile liability insurance with combined single-limit
liability limits of not less than $10,000,000 for bodily and personal injury
and property damage;
(c) CONTRACTUAL LIABILITY INSURANCE. Insurance for the contractual
liabilities assumed by Owner;
(d) RENTAL INCOME INSURANCE. Rental income insurance in an amount not
less than 100% of the projected rental income from the Shopping Center for
one year when fully leased; and
(e) MANDATORY INSURANCE. Workers' compensation and all other insurance
required by any ordinance, law or governmental regulation.
The policies shall not be cancelled nor shall the coverages thereunder be
reduced without at least 30 days' prior notice to each of the partners of
Owner and Manager; and, in any event, all parties insured thereunder shall
receive notice not less than 15 days prior to the expiration of such policies.
SECTION 15.4 The insurance policies required under Section 15.3 shall
contain a provision, to the extent obtainable, to the effect that such
insurance shall not be invalidated or limited if any one or more of the
insureds thereunder waives any or all claims for recovery against the other
insureds thereunder; and so long as such provision is in effect, each of
Manager and Owner hereby waives all claims for recovery from the other for
any loss or damage insured under such policies. The foregoing, however, shall
not relieve Manager from its obligation to maintain the insurance required
hereunder.
ARTICLE 16
APPROVALS
SECTION 16.1 Manager shall be authorized to take all actions on behalf
of Owner as set forth in this Agreement; provided, however, that certain
actions shall require the prior written approval of both Co-Partner and JMB,
in accordance with the terms of the Partnership Agreement, including, but not
limited to, Sections 6.4 and 6.6 hereof.
SECTION 16.2 Except as provided in Section 16.1 above or Section 16.3
below, any time a provision of this Agreement requires the approval of Owner
or any constituent partner of Owner, such approval shall not
14.
<PAGE>
be unreasonably withheld or delayed. Except in the case of an emergency, any
such approval shall be in writing. Such approval shall be deemed to have been
given if no response shall have been given within 30 days after receipt of a
written request therefor. Any denial of approval shall state with reasonable
certainty the reason or reasons for such denial, and, if reasonably
practicable, shall state the criteria for such approval.
SECTION 16.3
A. REQUEST. In connection with an "Arbitrable Decision" (as
hereinafter defined) but no other decision or action hereunder, the Partner
("REQUESTING PARTY" who desires to make a particular decision (or any related
series thereof) which is an Arbitrable Decision, shall request in writing for
the approval of the other Partner ("NON-REQUESTING PARTY") of such matter.
(Whenever (a) a controversy has arisen between the parties with respect to
any claim by any party that consent or approval has been unreasonably
withheld or delayed and then only in those instances where this Agreement or
applicable law provides that consent or approval shall not be unreasonably
withheld or delayed, or (b) this Agreement expressly provides that a
particular decision may be subjected to arbitration such decision shall be
herein referred to as "ARBITRABLE DECISION".)
B. REPLY.
(1) NO RESPONSE. If Non-Requesting Party fails to respond (by request
for more information or otherwise) to Requesting Party's written request for
Non-Requesting Party's consent to a given Arbitrable Decision within 30 days
after delivery of such request, then Non-Requesting Party shall be deemed to
have approved or agreed with the matter set forth in such request.
(2) If Non-Requesting Party fails to approve such decision (or be
deemed to have approved it pursuant to subparagraph (1) above) within 30 days
after delivery of such request, then within seven days after the expiration
of the 30-day period, Requesting Party may request arbitration by notifying
Non-Requesting Party in writing of the following: (i) Requesting Party's
desire to arbitrate, (ii) the basis on which Requesting Party claims that the
arbitration should be decided in its favor and (iii) Requesting Party's
arguments in support thereof briefly stated (Requesting Party will not be
foreclosed from advancing other and additional arguments at the time of the
arbitration hearing). Such notice shall be hereinafter referred to as the
"ARBITRATION NOTICE". Thereafter, the following provisions shall apply:
(1) Within seven days after receipt of the Arbitration Notice,
Non-Requesting Party shall deliver a notice ("REPLY NOTICE") to Requesting
Party stating Non-Requesting Party's position on the matters set forth in the
Arbitration Notice (but Non-Requesting Party will not be foreclosed from
advancing other and additional arguments at the arbitration hearing).
(2) If there is any difference between the parties concerning the
issue or issues, and if they are unable to resolve this difference within
seven days after Requesting Party receives the Reply Notice from
Non-Requesting Party, the dispute concerning the issue or issues shall be
determined by the arbitrator(s) who shall be selected as set forth in
paragraph C below.
14A.
<PAGE>
C. SELECTION OF ARBITRATOR; EXPENSES; LOCATION. The arbitrator shall
be a person selected from among a list obtained from the chief executive
officer of the International Council of Shopping Centers or any successor
body of comparable function, or if no such body is in existence, from the
Chief Executive Officer of the American Arbitration Association (California
Chapter) or any successor body of comparable function at the request of
either Partner. Such list shall be obtained by Requesting Partner and shall
contain the names of 10 persons who, in the opinion of said Officer, are
experienced and qualified in the operation, management and leasing of space
in large Southern California shopping malls. The arbitrator shall be chosen
from such list by the Requesting Party and Non-Requesting Party, in the
exercise of each Party's sole discretion. If the parties do not agree on a
single arbitrator, then the arbitration shall be conducted with a panel of
three arbitrators. The panel shall be chosen by Requesting Party's selecting
one arbitrator and Non-Requesting Party's selecting an arbitrator, each of
whom shall be experienced in the operation and management of regional
shopping centers; thereafter such arbitrators shall choose the third
arbitrator, who shall be a neutral arbitrator chosen from the list obtained
by the Requesting Party. If within 10 days after receipt of such list by the
Parties, a Party does not exercise its right to choose any arbitrator from
such list, then the arbitrator chosen from the list by the other Party shall
arbitrate the dispute in question. If the two arbitrators are unable to
select a neutral arbitrator with 10 days from the day on which the second
arbitrator was selected by a Party, either party may apply to the Presiding
Judge of the Los Angeles County Superior Court for designation of the neutral
arbitrator.
The costs of arbitration including, but not limited to, the fees and
expenses of the arbitrator(s) and the reasonable attorneys' fees and costs of
the prevailing party in the arbitration, shall be paid by the nonprevailing
party in the arbitration. The location of arbitration shall be Los Angeles,
California unless the parties select in writing another mutually satisfactory
location. The arbitrator(s) shall notify the parties as promptly as feasible,
but in no event later than five days after the selection of the final
arbitrator, as to the date, time, place of hearing, and any other matters
which the arbitrator deems necessary.
D. RULES; PROCEDURE. The commercial rules of the American Arbitration
Association shall be applied in any arbitration under this Agreement, to the
extent such Rules and Procedures are not inconsistent with this Section 6.10.
E. AWARD. The arbitration award shall be rendered in writing as soon
after the conclusion of the arbitration hearing as may be feasible, and in no
event later than 10 days thereafter. The arbitrator shall not have the right
to add to, subtract from, change, or otherwise alter this Agreement or any
term thereof, and particularly the arbitrator shall not have the right to
include damages as part of the award, provided, however, that the arbitrator
shall award the prevailing party reasonable attorneys' fees and costs. The
sole effect of a finding by the arbitrator (1) of the question whether an
approval was unreasonably withheld shall be that such approval shall be
deemed to have been granted, or (2) as to any other matter in favor of a
particular
14B.
<PAGE>
Partner shall be that the disagreement shall be deemed resolved in favor of
such Partner as provided in this Agreement.
F. GENERAL. Whenever in this Agreement it is provided that a matter shall
be or may be subjected to arbitration, arbitration shall be the sole method
to be used in determining the matter so subjected to arbitration. Subject to
Section 1286.2 of the California Code of Civil Procedure, the determination
of the arbitrator(s) shall be final, conclusive and binding upon the parties
hereto, and judgment in favor of a party in accordance with such determination
may be entered in any court having jurisdiction thereof.
ARTICLE 17
MISCELLANEOUS
SECTION 17.1 All services performed by Manager at the Shopping Center
site under the provisions of this Agreement shall be deemed to be performed
for Owner and all reasonable expenses properly incurred in connection with
the performance of such services shall be the obligation of Owner.
SECTION 17.2 The following exhibits are attached to and made a part of
this Agreement:
Exhibit A - Legal Description of Shopping Center Parcel
Exhibit B - Form of Budget
Exhibit C - Form of Monthly Reports
SECTION 17.3 No present or future partner of Owner or of any
partnership which is now or hereafter a partner of Owner shall have any
personal liability for or by reason of any matter or thing whatsoever, under
or in connection with this Agreement, and Manager hereby waives and all
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such personal liability of such general partners, provided, however, that the
foregoing shall not limit the recourse of Manager against Owner's interest in
the Shopping Center for claims under this Agreement. The limitations of
liability provided in this paragraph are in addition to, and not limitation
of, any limitation on liability applicable to Owner provided by law or in
this Agreement or by any other contract, agreement or instrument relating to
Owner.
IN WITNESS WHEREOF, the parties hereto have duly signed this Agreement
as of the day and year first above written.
OWNER:
TOPANGA PLAZA PARTNERSHIP,
a California general partnership
By Topanga Center, Inc.,
General Partner
By /s/ Louis J. Garr, Jr.
---------------------------------
Louis J. Garr, Jr., Vice President
By /s/ Thomas E. Frost
---------------------------------
Thomas E. Frost,
Assistant Secretary
By JMB Income Properties, Ltd. - XII,
a limited partnership,
General Partner
By JMB PROPERTIES-XII, INC.,
an Illinois corporation,
General Partner
By /s/ Authorized Officer
-------------------------------
Vice President
MANAGER:
MAY CENTERS, INC.,
a Missouri corporation
By /s/ Louis J. Garr, Jr.
---------------------------------
Louis J. Garr, Jr.,
Vice President
By /s/ Thomas E. Frost
---------------------------------
Thomas E. Frost,
Assistant Secretary
15.
<PAGE>
Exhibit 10.45
FIRST AMENDMENT TO MANAGEMENT AGREEMENT
(TOPANGA PLAZA)
THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT (this "Amendment") is
made as of the 1st day of February, 1994, between CENTERMARK PROPERTIES,
INC., formerly known as May Centers, Inc. ("Manager"), and TOPANGA PLAZA
PARTNERSHIP ("Owner").
RECITALS
A. Manager and Owner entered into a Management Agreement (the "Management
Agreement"), dated as of December 31, 1985.
B. The Management Agreement sets forth the various rights and obligations of
Owner and Manager respecting the management, leasing and operation of that
certain regional shopping center known as Topanga Plaza located in the
County of Los Angeles, State of California (the "Shopping Center").
C. Owner and Manager desire to amend the Management Agreement as set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the terms and
provisions hereinafter set forth and other good and valuable consideration,
the mutual receipt and legal sufficiency of which are hereby acknowledged,
Manager and Owner agree as follows:
1. AMENDMENT TO SECTION 2.1. Section 2.1 of the Management
Agreement is hereby amended by adding the following new subparagraphs (u) and
(v):
"(u) In the event Owner or a partner acting on behalf of Owner should
enter into negotiations for the sale of the Shopping Center or a partner
of Owner should enter into negotiations for the sale of its partnership
interest or portion thereof in Owner, Manager agrees to reasonably
assist Owner or such partner in such transaction including, but not
limited to, by using its reasonable efforts to deliver or make available
to Owner or such partner of Owner, at Owner's sole cost and expense, the
following items:
<PAGE>
(1) Copies of any written notice(s) received by Manager (A) from any
government agency or any employee or official thereof alleging that
the construction, operation or use of the Shopping Center violates
any law, ordinance, regulation or order or that any investigation
has been commenced or is contemplated respecting any such
violation, or (B) alleging any material default by Manager or Owner
under any current tenant lease, mortgage loan, insurance policy,
service contract or equipment lease;
(2) Copies of (A) the most recent financial reports prepared by
Manager pursuant to Section 2.1(l), (B) all insurance policies and
material service contracts in Manager's possession respecting the
Shopping Center, and (C) current tenant lease files.
(3) Copies of any written correspondence, documents and/or notices
received by Manager respecting any actions, suits or proceedings,
pending or threatened, before or by any judicial, administrative or
union body, any arbiter or any governmental authority and against
or affecting or relating to the Shopping Center, including eminent
domain or similar proceedings; and
(4) an updated rent roll, supplemented with the following information:
the date of each lease as well as the date(s) for all amendments
and/or supplements thereto; any tenant improvements required to be
completed by Owner which have not been completed; whether a
tenant(s) has received an outstanding and unsatisfied (or otherwise
unresolved) notice of default from Manager; and a list of all
potential brokerage commissions that may become due and payable by
Owner with respect to any lease pursuant to any existing agreement
binding upon Manager or Owner with respect to such lease or any
renewal thereof. Manager shall attach to such rent roll an executed
certification reasonably acceptable to Manager and Owner confirming
that, to the best of its actual knowledge, Manager is not aware of
any items of a nature described in (1), (2), (3) or (4) of this
Section 2.1(u).
2
<PAGE>
(v) Manager shall deliver annually updated rent rolls and lease
summaries for the Shopping Center which will contain the following
information with respect to each of the tenant leases shown thereon:
parties to the original lease; and a list of all scheduled rebates,
rental concessions, tenant allowances, free-rent periods, credits,
setoffs or rent reductions under such leases and which, as appropriate,
have either not yet been funded by the Owner or which relate to any
period after the date of said rent roll."
2. AMENDMENT OF SECTION 7.1. Section 7.1 of the Management
Agreement is amended by deleting such section in its entirety and
substituting the following therefor:
"Manager shall not assign all or any part of its interest in or
obligations arising out of this Agreement except in accordance with this
Section 7.1. Manager may assign all or any part of its interest in or
obligations arising out of this Agreement to (i) a partnership or other
entity owned by GGP Limited Partnership and a wholly-owned (direct or
indirect) subsidiary of Westfield Holdings Limited, (ii) any of (a)
Westfield Holdings Limited, (b) General Growth Management, Inc., (c)
General Growth Properties, Inc., (d) GGP Limited Partnership, or (e) any
entity wholly-owned by one or more of the foregoing entities, PROVIDED
that (1) an assignment under this clause (ii) shall be permitted on one
occasion only and (2) Owner may terminate this Agreement at any time
following an assignment under this subparagraph (ii) if a direct or
indirect owner of the Manager hereunder is not a direct or indirect
owner of a substantial interest in Co-Partner or (iii) any "PERMITTED
TRANSFEREE." For purposes of this Agreement, the term "PERMITTED
TRANSFEREE" shall mean any entity in which at least 50% of the voting
rights and economic interests are owned (directly or indirectly) by a
person or entity which owns (directly or indirectly) at least 50% or
more of the voting rights and economic interests of Co-Partner. Any
transfer of stock or of a partnership interest in a Permitted Transferee
which reduces the interest of the entities referenced in clause (ii) to
less than 50%, collectively, shall be deemed not to constitute a
Permitted Transferee."
3. REINCORPORATION OF MANAGER. In connection with the sale of the
stock of Manager to GGP Limited
3
<PAGE>
Partnership, Westfield U.S. Investment Pty. Limited and Whitehall Street Real
Estate Limited Partnership III (collectively, the "Purchasers"), it is
currently intended to merge Manager into a newly-formed Delaware corporation
owned by the Purchasers ("New CenterMark"). Such merger may occur
concurrently or shortly after the closing of the acquisition. To the extent
the consent of Owner may be required for such merger, Owner hereby consents
to such merger and agrees that such merger shall not be deemed an assignment
under Section 7.1. Upon any such merger, all references in the Agreement to
May Centers, Inc. or CenterMark Properties, Inc. shall be deemed to refer to
New CenterMark.
4. SUCCESSORS. This Amendment shall inure to the benefit of and
be binding upon Manager and Owner and their respective successors and assigns.
5. GOVERNING LAW. This Amendment shall be construed and enforced
in accordance with the laws of the State of California.
6. COUNTERPARTS. This Amendment may be executed in several
counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument.
7. RATIFICATION. Except as modified herein, the Management
Agreement shall continue in full force and effect in accordance with its
terms. In the event of any conflict between the terms and provisions
contained in the Management Agreement and this Amendment, the terms and
provisions of this Amendment shall prevail.
[SIGNATURE BLOCKS TO FOLLOW ON THE NEXT PAGE]
4
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed as of the date and
year first above written.
MANAGER
CENTERMARK PROPERTIES, INC.
a Missouri corporation
By: /s/ Thomas E. Frost
--------------------------------
Name: Thomas E. Frost
--------------------------------
Title: Senior Vice President
--------------------------------
OWNER
TOPANGA PLAZA PARTNERSHIP,
a California partnership
By: TOPANGA CENTER, INC.,
as general partner
By: /s/ Thomas E. Frost
---------------------------
Name: Thomas E. Frost
---------------------------
Title: Senior Vice President
---------------------------
By: JMB INCOME PROPERTIES,
LTD - XII, as general partner
By: JMB REALTY CORPORATION,
general partner
By: /s/ Glenn E. Emig
---------------------------
Name: Glenn E. Emig
---------------------------
Title: Executive Vice President
---------------------------
5
<PAGE>
EXHIBIT 10.46
JOINT VENTURE AGREEMENT
FOR
VANCOUVER MALL
MAY CENTERS, INC., a Delaware corporation (hereinafter sometimes
referred to as the "Managing Partner"), and VANCOUVER ASSOCIATES, a
California Limited Partnership which has HARRY NEWMAN, JR., and LEROY BRETTIN
as its only general partners (hereinafter sometimes referred to as
"Associates"), hereby form a general partnership (hereinafter sometimes
referred to as the "Partnership") pursuant to the provisions of Chapter 25.04
of the Revised Code of Washington, known as the Uniform Partnership Act, under
the following terms and conditions, and hereby execute this Joint Venture
Agreement (hereinafter referred to as the "JVA") for that purpose, as of this
29th day of September, 1975. The parties hereto are hereinafter sometimes
referred to as "Partner" or collectively as "Partners".
ARTICLE I
NAME OF THE PARTNERSHIP
The name of the Partnership shall be VANCOUVER MALL.
ARTICLE II
THE CHARACTER OF THE BUSINESS
The character of the business and the purposes of the Partnership shall
be the ownership, development, construction, operation, management and
maintenance of a regional shopping center, including office, commercial and
medical buildings, on the Partnership Tract, as hereinafter defined,
provided, however, the aforesaid statement of the character of the business
and purposes of the Partnership shall not be deemed or construed to limit,
restrict or qualify in any manner whatsoever the powers of (i) the
Partnership and/or (ii) Managing Partner herein.
<PAGE>
ARTICLE III
THE LOCATION OF THE PRINCIPAL PLACE OF BUSINESS
The location of the principal place of business of the Partnership shall
be at the Partnership Tract and the location of the office of the
Partnership shall be at the office of the Managing Partner, 10738 West Pico
Boulevard, Los Angeles, California 90064, or at such other location as the
Managing Partner may select.
ARTICLE IV
NAME AND PLACE OF RESIDENCE OF THE PARTNERS
The names and places of residence of each Partner and its respective
Capital Interest in the Partnership are as follows:
<TABLE>
<CAPTION>
Name of Partner Place of Residence Capital Interest
- --------------- ------------------ ----------------
<S> <C> <C>
May Centers, Inc. 10738 West Pico Boulevard 50%
Los Angeles, California 90064
Vancouver Associates 3711 Long Beach Boulevard 50%
Long Beach, California 90801
</TABLE>
ARTICLE V
TERM OF PARTNERSHIP
Section 5.1 The term of the Partnership shall commence on the execution
of this JVA as of date hereof.
Section 5.2 The Partnership shall terminate and be dissolved, as
provided in Article XIV, (i) ninety-nine (99) years from the date hereof, or
(ii) upon agreement to terminate by Managing Partner and fifty-five percent
(55%) of the ownership of partnership interests in Associates, including
ownership interests of general partners, or (iii) upon Bankruptcy (as that
term is defined in Article XXVII hereof) of Managing Partner, or (iv) upon
the dissolution or termination of the corporate existence of Managing
Partner, except where such dissolution or termination of corporate existence
results from a merger, consolidation, transfer of all the assets of Managing
Partner or any other form of corporate succession, whichever of the aforesaid
four events shall first occur (herein referred to as "Termination Date").
<PAGE>
ARTICLE VI
CAPITAL CONTRIBUTIONS
Section 6.1 The amount and nature of the capital contributions of the
Partners are set forth in Exhibit 1 attached hereto and by this reference
made a part hereof, which said Exhibit 1 refers to certain real property
located in Clark County, Washington, which is hereinafter referred to as the
"Partnership Tract" and more particularly described by metes and bounds in the
Exhibit A which is attached to Exhibit 1 and by this reference made a part
hereof. At any particular point in time, the portion of the Partnership
Tract not conveyed to department store operators or other Persons, as herein
provided, is sometimes hereafter referred to as the "Joint Venture Parcel".
Section 6.2 The respective amounts of the capital contributions of each
Partner, as referred to above, shall be credited to the respective capital
account of each Partner (hereinafter referred to as "Capital Account" or
"Capital Accounts").
Section 6.3 No interest shall be paid on capital contributions or on the
balances in the respective Capital Accounts.
Section 6.4 Subject to the provisions of Article XI, Associates shall
not be entitled to a return of its capital contribution prior to Termination
Date and shall not have the right to receive property other than cash in
return of its capital contribution.
<PAGE>
ARTICLE VII
DEVELOPMENT AND FINANCING OF PARTNERSHIP TRACT
Section 7.1 Managing Partner shall use reasonable efforts
to develop a regional shopping center on the Shopping Center Site, as
hereinafter defined, consisting of (i) three department store buildings
in Phase I and as many as two more department store buildings in Phase II,
each to be occupied by a major retailer, (ii) an Enclosed Mall connecting the
department store buildings, and (iii) Mall Stores along the Enclosed Mall
containing approximately two hundred thousand (200,000) to three hundred
seventy-five thousand (375,000) square feet of Floor Area, as defined in the
REA referred to in Section 7.3 hereof. Such other commercial, office and
medical building as Managing Partner deems appropriate may be developed on
that portion of the Joint Venture Parcel which is not included in the
Shopping Center Site. The "Shopping Center Site" is that portion of the
Partnership Tract which, subject to an accurate survey, is more particularly
described by metes and bounds in Exhibit A, Part E. During the course of the
development of the regional shopping center, and in connection with all other
development of the Partnership Tract, Managing Partner shall consult with
Associates on plans and design. During the course of any construction by
Managing Partner on the Partnership Tract, Managing Partner shall furnish
Associates with copies of construction schedules and bar charts and reports
of construction representatives, as and when the same are available to
Managing Partner, and Associates shall have the right to check on
construction progress. During the course of the operation of the regional
shopping center, and so long as Harry Newman is a general partner of
Associates, the Managing Partner shall consult with Associates regarding the
matters referred to paragraph (M) of Section 9.2 hereof.
4
<PAGE>
Section 7.2 If not accomplished as of the date of the execution of
this JVA, the Managing Partner shall use reasonable efforts to enter into
agreements with Sears, Roebuck and Co. (hereinafter called "Sears") and J. C.
Penney Company, Inc. (hereinafter called "Penney") and The May Department
Stores Company (hereinafter called "May") for the sale of certain portions of
the Partnership Tract to Sears, Penney and May respectively, for the
construction and operation by Sears, Penney and May of department stores,
said portions of the Partnership Tract being hereinafter referred
respectively as the "Sears Parcel", "Penney Parcel" and "May Parcel",
provided, however, Managing Partner may sell such certain portions of the
Shopping Center Site to another department store operator, if it determines
that it cannot make satisfactory arrangements with Penney for the construction
and operation of a department store. In addition the foregoing, Managing
Partner may enter in agreements with other department store operators for
the sale of additional portions of the Partnership Tract in connection with
the construction and operation of other department stores on the Shopping
Center Site. The exact size and location of the said Parcels shall be
determined by Sears, Penney, May or other department store operator(s), as
the case may be, and Managing Partner upon completion of architectural and
engineering design studies of the Shopping Center Site, it being understood
that the size of said Parcels shall be determined by the amount of acreage
required by Sears, Penney, May or other department store operator(s) to
meet the greater of local parking regulations or the parking ratio
established by the REA referred to in Section 7.3 hereof based on the size of
department stores to be constructed, plus perimeter sidewalks and
truckloading and service areas, together with associated landscaped and
buffer areas, if any. The purchase price for the sales of said Parcels shall
be as provided in Exhibit 1 hereof.
5
<PAGE>
Section 7.3 If not accomplished as of the date of the execution of
this JVA, Managing Partner shall use reasonable efforts to enter into an
agreement with Sears and May providing for the construction and operation of
the regional shopping center on the Shopping Center Site and reciprocal
easements in regard thereto, all similar in form to the form of REA that was
discussed with Sears and May in Los Angeles on June 15, 1975. If such
agreement with Sears and May (herein referred to as the "REA") is executed at
or contemporaneous with the execution of this JVA, the REA shall be
conclusively determined to be so similar, but in all such other events,
Managing Partner shall determine, in its sole and absolute discretion (such
determination being exercised by the execution of the REA), whether the REA
is so similar.
Section 7.4 Managing Partner will enter into a leasing agreement
with Harry Newman Properties, a California corporation, d/b/a Property
Leasing Associates, regarding the initial leasing of Mall Stores and other
areas and/or buildings on the Joint Venture Parcel in accordance with the
form of agreement attached hereto as Exhibit 2, and the payments due Harry
Newman Properties shall be paid by the Partnership, provided, however, no
lease or other arrangement for occupancy of Mall Stores or other areas
and/or buildings on the Joint Venture Parcel shall be binding upon the
Partnership unless executed by Managing Partner after approval of all terms
and provisions of said lease or other arrangement. After initial leasing, as
aforesaid, all re-leasing shall be performed by the Managing Partner, but no
leasing fee shall be charged to the Partnership except in those instances
where a prospective tenant requires payment by the Partnership of a leasing
fee to a broker representing the prospective tenant. Leasing of Phase II will
be performed by Harry Newman Properties,
6
<PAGE>
if a leasing fee for such services can be agreed upon between Managing Partner
and Harry Newman Properties.
Section 7.5 Prior to obtaining a Permanent Loan, Managing Partner
shall loan or cause to be loaned to the Partnership, from time to time,
sufficient funds to pay all Partnership liabilities, distributions and
expenses as they become due and payable, including, but not limited to (i)
Taxes, as defined in Section 9.2(K), (ii) interest and principal due on any
loan secured by Partnership property and on unsecured loans of the
Partnership, (iii) the total cost of development of the regional shopping
center or other improvements on the Partnership Tract other than costs paid
by other Persons or cost of buildings to be located other than on the Joint
Venture Parcel, and (iv) any cash necessary for the operation of the retail
shopping center or the Partnership Tract or any other improvements
constructed thereon. Any such loans made by the Managing Partner or otherwise
caused to be made to the Partnership may be secured by deeds of trust or
other security interests in the Partnership Tract, or portions thereof and,
subject to the provisions of Section 9A.3 hereof, shall bear interest at a
rate agreed to by Managing Partner, except for loans from Managing Partner or
Subsidiaries or Parent or Holding Corporations as defined in Section 27.1(C),
which shall bear interest adjusted on the first of each month to a rate not
greater than one and one-half percent (1 1/2%) over the Prime Rate of
interest than being charged by Manufacturers Bank, Los Angeles, California,
with interest payable monthly and with principal on any loans other than
loans made by the Managing Partner or Subsidiaries or Parent or Holding
Corporations payable on such terms as Managing Partner deems appropriate. The
term "Prime Rate" shall mean the rate of interest charged by said
Manufacturers Bank to the prime customers of said bank.
7
<PAGE>
Notwithstanding the foregoing provisions of this Section 7.5,
Managing Partner shall not be obligated to loan or cause to be loaned any
amounts to the Partnership unless Associates and its general partners, Harry
Newman, Jr., and Leroy Brettin, become personally liable for such loans with
Managing Partner. As between the Partners, Managing Partner shall be liable
for only fifty percent (50%) of all amounts due on loans to the Partnership
pursuant to this Section 7.5 and Associates and its general partners shall be
jointly liable for the remaining fifty percent (50%) of all amounts due on
loans to the Partnership pursuant to this Section 7.5. Managing Partner shall
use its best efforts to cause the documentation of all loans to reflect the
foregoing allocation of liability, but the failure of such loan documentation
to so provide shall have no effect on the allocation of liability as between
the Partners and Associates' general partners.
If any such loan requires Associates or its general partners to pay
a higher rate of interest than charged to Managing Partner, then Managing
Partner shall pay one-half (1/2) of the interest in excess of the amount so
charged to Managing Partner.
Notwithstanding the foregoing provisions of clause (iii) in this
Section 7.5, the Managing Partner shall loan or cause to be loaned to the
Partnership sufficient funds to pay the amounts due and payable according to
the provisions of Exhibit 1, which Associates represents to contain an
accurate and complete accounting of all amounts due as of the date of the
execution of this JVA for any and all work, services, materials or other
costs incurred in connection with previous efforts to develop the Partnership
Tract, or any part thereof.
Section 7.6 The Managing Partner shall use its best efforts to
obtain a Permanent Loan, as hereinafter defined, for
8
<PAGE>
the regional shopping center. A Permanent Loan shall be a loan from any bank,
savings and loan institution, savings bank, real estate investment trust,
insurance company, credit union or pension fund, payable in equal monthly
installments of principal and interest over such period of time as Managing
Partner deems appropriate, upon which neither Partner, directly or indirectly,
shall have any personal liability and the sole recourse for which in the
event of default or foreclosure shall be the foreclosure of the security for
such loan. Subject to the provisions of Section 9A.3 hereof the Permanent
Loan shall be at such rate of interest and for such principal amount as
Managing Partner deems appropriate. At any time after the Managing Partner
secures such Permanent Loan, Managing Partner may obtain a new loan ("New
Permanent Loan") which shall satisfy all of the requirements of a Permanent
Loan in an amount necessary to pay off the existing Permanent Loan and the
Managing Partner shall distribute any excess proceeds of any such Permanent
Loan or New Permanent Loan as provided herein.
In the event the proceeds of the Permanent Loan are less than the
sum of (a) the amount needed to repay all loans made by the Managing Partner
or otherwise caused to be made to the Partnership pursuant to Section 7.5
hereof, plus (b) the amount needed for the Operation of the Property, as
defined in Section 8.1, during the Accounting Period in which the proceeds of
the Permanent Loan are received, as determined in accordance with
Section 11.4(B) hereof, Managing Partner shall loan or cause to be loaned to
the Partnership sufficient funds to make up the difference between the
proceeds of the Permanent Loan and said sum of (a) and (b) above in the same
manner as contemplated by Section 7.5 hereof, including security and interest
rates.
9
<PAGE>
ARTICLE VIII
COVENANTS OF MANAGING PARTNER
Section 8.1 Subject to the provisions of Section 8.2 and Article XIII
hereof, until Termination Date, Managing Partner covenants to use reasonable
efforts:
(A) To (i) develop, (ii) improve, and (iii) obtain financing for the
construction of improvements on the Joint Venture Parcel or portions thereof,
and to (i) manage, (ii) lease, (iii) operate, (iv) maintain, and (v) preserve
(including, but not by way of limitation, the obtaining of such public liability
insurance and fire and extended coverage insurance as Managing Partner shall
deem appropriate) the Property, as hereinafter defined, with the Shopping Center
Site being so managed, leased, operated, maintained and preserved as a regional
shopping center (all of which actions are herein sometimes collectively referred
to as "Operation of the Property");
(B) To do that which is reasonably necessary or proper to carry out the
purpose of the Partnership, as set forth in Article II; and
(C) To exercise its powers herein in good faith and with due consideration
of fairness to the Partnership in the exercise thereof.
Section 8.2 Unless and until the Partnership shall acquire fee simple
title to the Partnership Tract the provisions of Article VII and Section 8.1
shall not be in effect.
Section 8.3 The term "Property" as the same is used herein shall have
reference to and shall include (subject to the provisions of Sections 9.2(C) and
(G)): (A) the land comprising the Joint Venture Parcel, (B) all improvements at
any time or from time to time to or upon the Joint Venture Parcel (whether real,
personal and/or mixed), (C) all personal property, tangible or
10
<PAGE>
intangible (whether located on or away from the Joint Venture Parcel), and/or
real property used at any time or from time to time in connection with and/or
acquired in the course of, or incidental to the development of the Joint Venture
Parcel, the construction of improvements thereon or thereto, and/or the
operation, management, maintenance and/or preservation thereof and/or of a
regional shopping center thereon, (D) all rights, privileges, rights of way and
easements, now or hereafter unto the Joint Venture Parcel appurtenant and/or to
the Partnership thereunto belonging, under private and/or public grant or
authority and/or (E) any land or improvements acquired pursuant to
Section 9.2(L), and all references herein to the term "Property" shall be
deemed to include reference to any part or parts, or portion or portions of
the Property, as the context may appropriately require, it being understood
and agreed that reference to "Property" shall be deemed to refer to (i) the
whole of the Property as respects the maximum extent and scope of the
authority and powers of the Managing Partner herein and, (ii) any part or
parts, or portion or portions of the Property as respects the discretionary
or necessary authority and powers of Managing Partner in acting in respect of
less than the whole of the Property.
11
<PAGE>
ARTICLE IX
RIGHTS, POWERS, PRIVILEGES AND IMMUNITIES OF MANAGING PARTNER
Section 9.1 Except as the powers enumerated in Section 9.2 shall be
qualified, limited or restricted by the express qualifications, limitations or
restrictions respectively provided with respect thereto in Section 9.2, for the
purposes of this JVA and as respects all Person(s), (as that term is defined in
Article XXVII hereof), including the Partnership, Managing Partner shall be
deemed to have, on and from the date hereof and until Termination Date, the
same, maximum, sole and exclusive rights, powers, privileges and immunities with
respect to the Property and the Operation of the Property that any fee absolute
owner(s) of the Property would have, without any authorization, direction or
instruction from or control by Associates, or its sole general partners, or any
one or more of its limited partners, provided, however, without the prior
written consent or subsequent written ratification of Associates, Managing
Partner shall have no power or authority to:
(A) Do any act in contravention of this JVA, as the same is now
constituted or as the same may hereafter be amended.
(B) Do any act which would make it impossible to carry on the ordinary
business of the Partnership.
Section 9.2 Without limiting in any way (by reason of enumeration,
qualification or otherwise) the generality of the provisions of Section 9.1,
Managing Partner shall have the following authority and powers (and all
authority and all powers necessary or appropriate or related or incidental to or
implied from the following enumerated powers) with respect to the Property and
for the purposes of Operation of the Property:
(A) To enter into and execute and deliver (as the case may appropriately
require), and perform any and all oral and/or
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<PAGE>
written contracts, agreements and commitments (including all amendments,
modifications and/or supplements thereto): (i) for materials and/or services
(personal or otherwise) for, and/or work with respect to, on-site and/or
off-site development, architectural and/or engineering services, construction
and/or other improvement in respect of the Property and (ii) for and/or in
respect of and/or appropriate to the Operation of the Property, all on such
terms and conditions and for such consideration as Managing Partner shall deem
appropriate; and to perform any and all such contracts, agreements and
commitments, and expend funds and incur obligations in connection therewith.
(B) Except as otherwise specifically provided in Article VII, to borrow and
receive from any Person(s) including, but not by way of limitation:
(i) itself (acting in its individual capacity and not as
Managing Partner) and/or
(ii) any Subsidiaries of Managing Partner and/or
(iii) any Parent or Holding Corporation of Managing
Partner and/or
(iv) any Subsidiaries of any Parent or Holding Corporation of
Managing Partner and/or
(v) any Parent or Holding Corporation of Managing Partner's
Parent or Holding Corporation and/or
(vi) any Subsidiaries of any Parent or Holding Corporation of
Managing Partner's Parent or Holding Corporation (which aforesaid
Subsidiaries or Parent or Holding Corporations now or at any time and from
time to time hereafter exist) at any time and from time to time such sum or
sums of money and upon such terms, conditions and rates of interest as
Managing Partner shall deem appropriate for or in relation to (i) the
Property, and/or (ii) the Operation of the Property, and/or (iii) the
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<PAGE>
refinancing of any indebtedness in respect of the Property and/or (iv) the
performance by Partnership of its obligations, agreements and undertakings under
such contracts, agreements and commitments as may be entered into pursuant to
the provisions of this JVA; and to execute and deliver, as Managing Partner
shall deem appropriate or necessary, with respect to the Property (and
including, but not by way of limitation, the Joint Venture Parcel) any and all
notes or other instruments or evidence of indebtedness and any and all deeds of
trust, mortgages, pledge agreements, instruments of hypothecation or other
security instruments (including, but not by way of limitation, instruments of
secondary encumbrance), and/or any extensions, replacements and/or renewals
thereof, all of which are herein referred to as "Instruments of Indebtedness",
all on such terms and conditions as Managing Partner shall deem appropriate as
security or securities for the payment of such indebtedness (including, but not
by way of limitation, the indebtedness of any tenants, licensees or occupants of
portions of the Property with respect to their respective portion and/or
portions of the Property, provided the tenants, licensees or occupants, as the
case may be, shall execute or cause to be executed by other Persons such written
guaranty or guarantees of the payment of such indebtedness as Managing Partner
shall deem appropriate); provided, however, in the execution of any Instruments
of Indebtedness, Managing Partner shall not be required in any manner whatsoever
to subject itself or Associates to personal liability thereunder (including, but
not by way of limitation, personal liability for any deficiency judgment),
except as specifically provided in Sections 7.5 and 7.6 hereof.
(C) (1) To execute and/or deliver and/or record (and to modify, amend,
supplement and terminate) any and all leases,
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<PAGE>
deeds or other agreements for the possession, use or occupancy of any portion or
portions or part or parts of the Property or any other real property, including,
but not by way of limitation, deeds for exchange of property, deeds of
subdivision and/or deeds of resubdivision, leases, subleases and licenses
(herein collectively referred to as "Leases") to such Persons and for such rent
and/or other considerations and under such terms, covenants, conditions and
undertakings as Managing Partner shall deem appropriate; to demand, receive,
collect and hold all the rents or other payments or consideration payable under
Leases; to commence, maintain and prosecute (including appellate proceedings)
all actions or other proceedings deemed by Managing Partner to be appropriate
for the collection of all rents or other payments or consideration payable under
the Leases, or for the enforcement of any other terms, conditions or
undertakings set forth in any Leases; and to defend actions or other
proceedings (including appellate proceedings) and/or to compromise, adjust
and/or arbitrate claims, actions or other proceedings in respect of any Leases.
(2) Except as otherwise specifically provided in Article VII, in
such cases where Managing Partner shall deem it appropriate (in the exercise of
its sole and absolute discretion) for the Operation of the Property to have at
any time or from time to time Leases providing for single retail department
store facilities on the Joint Venture Parcel, and Managing Partner shall have
determined, in the exercise of a reasonable discretion, that such Leases cannot
be entered into pursuant to a ground lease or a building lease of a portion of
the Joint Venture Parcel on terms acceptable to Managing Partner (as determined
by Managing Partner in the exercise of its sole and absolute discretion), then
Managing Partner may grant to such Person(s) (as will not enter into a Lease
pursuant to a ground lease or a building lease of a portion of the Joint Venture
Parcel on terms acceptable
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to Managing Partner), exclusive of any Subsidiaries of May or Managing Partner,
fee title to portions of the land comprising the Joint Venture Parcel, the
size(s) of which said portion(s) of land shall be determined using the formula
set forth in Article VII hereof, provided, however, such fee title grants shall
not be deemed to exclude: (i) the grant to such Persons of additional interests
in the Property, including, but not by way of limitation, such additional
interests as provided for in the following subsection (D); and/or (ii) the
execution with such Person(s) of collateral agreements, as part of such fee
title grants, pertaining to those matters which are the subjects of agreements
with Sears and May in the REA.
(D) To grant to any Persons entitled under the Leases such easements,
licenses, rights, privileges or powers in or incidental to the Property,
including any Common Area (as that term is defined in the REA) or parts thereof,
as Managing Partner shall deem appropriate, including, but without limiting the
generality of the foregoing, the grant to any such Persons of the power to
license such Persons' directors, officers, employees, agents, contractors,
invitees, licensees, concessionaires, patrons and clients to use such common
areas.
(E) To commence, maintain and prosecute to final judgment or decision,
and to dismiss, any and all actions or proceedings which Managing Partner
shall deem appropriate for the establishment, enforcement, preservation or
maintenance of all rights, privileges, powers or immunities with respect to
the Property; and to defend actions or other proceedings to final judgment or
decision and/or compromise, adjust and/or arbitrate claims, actions or other
proceedings in respect of the Property.
(F) To ask, demand, sue for, recover, collect, receive, deposit, hold and
withdraw (and to expend and disburse the proceeds
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thereof for any and all purposes of this JVA) each and every sum of money, debt
and account which shall become due, owing or payable in respect of the Operation
of the Property and to use and take any lawful means for the recovery thereof by
legal process or otherwise, and to execute and deliver a satisfaction or release
therefor, together with the right and power to compromise or compound any claim
or demand; and to execute or issue all checks or other non-negotiable
instruments, as Managing Partner shall deem appropriate.
(G) To grant or dedicate by deed or otherwise at any time and from time to
time, such interests in fee, easements, rights, rights of way, licenses, or
other interests in the Property, as Managing Partner shall deem appropriate for
street, highway, bridge, tunnel, flood control, public utility or other public
purposes, and to execute and deliver all such deeds, grants or other instruments
to effectuate the same, without consideration or for such consideration as
Managing Partner shall deem appropriate.
(H) To file at any time and from time to time such reservations,
restrictions, covenants or conditions with respect to the Property, as Managing
Partner shall deem appropriate, and to make, execute and deliver all such
instruments as Managing Partner shall deem appropriate to effectuate the same.
(I) To acquire, develop, construct, manage, operate, preserve and
maintain, as part of the Property, common areas and facilities, as Managing
Partner shall deem appropriate, for the use, convenience, enjoyment, or comfort
of Persons occupying, using, or otherwise coming upon the Property for purposes
connected with its operation or operation of the businesses or conduct of the
profession of Persons entitled under Leases, including, but not by way of
limitation, surface vehicular
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parking, subsurface vehicular parking, elevated vehicular parking, service
delivery tunnels, concourses, sidewalks, landscaping, fencing, malls, roadways,
driveways, exterior stairways and rest rooms (adjunctive to common areas).
(J) To enter into, execute, acknowledge and record the REA (and all
amendments, modifications and/or supplements thereto) and to perform all the
terms, provisions, conditions and agreements on the part of Partnership to be
performed under the REA (and all amendments, modifications and/or supplements
thereto).
(K) (1) To pay or cause to be paid all Taxes (as that term is hereinafter
defined in this subparagraph 1) levied upon, imposed on or assessed to or with
respect to the Property and the Operation of the Property, including, but not by
way of limitation, (i) all general and special real property taxes and
assessments (including improvement district charges and other charges in the
nature of taxes which are not included as part of the general and special real
property taxes), (ii) all personal property taxes, (iii) all sales, use,
transfer and other revenue producing or regulative taxes and (iv) all municipal
or county license taxes (all of the foregoing being herein collectively referred
to as "Taxes"), and any penalties imposed or interest charges in connection
therewith; provided, however, Taxes shall not include income, corporation,
inheritance, devolution, gift or estate taxes which may be charged to or
assessed against either of the Partners or any general or limited Partners of
Associates, as the case may be.
(2) To contest, protest or object to the validity and/or the amount
and/or applicability of any Taxes, or any part thereof, or any portion or
portions of any part thereof, as Managing Partner shall deem appropriate.
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(3) To make and file any statement or report required by or provided
for under law with respect to the determination, equalization, reduction,
payment or contest of any Taxes.
(L) To acquire at any time and from time to time (1) for Common Area
purposes in respect to the Operation of the Property, such land or other real
property or interests in the nature of real property and (2) such land and/or
improvements from the City of Vancouver and/or Clark County and/or State of
Washington, as Managing Partner shall deem appropriate, under a deed, lease,
contract or other instrument of transfer or entitlement, and for such
consideration and under such terms and conditions, as Managing Partner shall
deem appropriate.
(M) Subject to the provisions of Section 7.1, to organize and/or sponsor
and/or manage and/or join associations (including associations organized as
corporations) organized and/or operated for purposes of (i) the promotion of
commercial enterprises on the Partnership Tract and other property and/or (ii)
the maintenance operation, control and regulation of the Property and other
property, as Managing Partner shall deem appropriate.
(N) To maintain, preserve and improve the Property.
(0) To perform such necessary day-to-day transactions with any banking
institution, savings or savings and loan institutions, real estate investment
trust, insurance company or other institutional lender and/or pension or trust
fund, as Managing Partner shall deem appropriate.
Section 9.3
(A) All acts and actions by Managing Partner in respect of the Property
and the Operation of the Property shall be conclusively presumed, in favor of:
(1) any lender(s) under the provisions of Section 9.2(B), and
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(2) all other Person(s) interested in the Property or the Operation of the
Property who have incurred liability or parted with value with respect thereto,
to be valid and binding upon the Partnership and to have been done within the
scope of authority of Managing Partner.
(B) The powers and authority of Managing Partner herein (including, but
not by way of limitation, the powers and authority set forth in Sections 9.1
and 9.2), if, as and when exercised (as Managing Partner shall deem
appropriate), shall be exercised for and on behalf of the Partnership and in
the name of the Partnership. The powers of Managing Partner herein may be
exercised at any time and from time to time until Termination Date in such
manner that the effectiveness of any such exercise and the legal consequences
thereof may be for periods within or extending beyond Termination Date, and
the termination and/or dissolution of the Partnership shall not impair the
rights of any Person(s) under any instruments or agreements executed by the
Partnership prior to Termination Date (except where such instrument(s) shall
provide to the contrary), including, but not by way of limitation, contracts,
mortgages, deeds, deeds of trust, leases, subleases, licenses, easements
and/or the REA. The powers and authority of Managing Partner herein may be
exercised by Managing Partner through such officer and employees of Managing
Partner and/or Subsidiaries and/or Parent or Holding Corporation of Managing
Partner or through such agents, subagents and independent contractors, as
Managing Partner shall deem appropriate, for such reasonable compensation as
Managing Partner shall deem appropriate.
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ARTICLE IX A
RIGHTS, POWERS, PRIVILEGES AND IMMUNITIES OF ASSOCIATES
Section 9A.1 Except as may be otherwise expressly provided in this
Article IX A, Associates shall have no rights, authority or powers in respect
of the Operation of the Property.
Section 9A.2 Associates covenants and agrees to promptly and properly
execute and acknowledge, upon the request therefor by Managing Partner, such
additional documents, instruments or statements, as may be submitted to
Associates by Managing Partner, to confirm, explicate or implement the authority
and powers of Managing Partner with respect to the Property and the Operation of
the Property, as may be required by Persons dealing with or interested in the
Property or the Operation of the Property.
Section 9A.3 The provisions of Section 7.5 regarding temporary financing
shall be subject to the rights of Associates to secure a more favorable interest
rate than that proposed to be secured by Managing Partner, all other terms of
such temporary financing suggested by Associates being at least as favorable as
that proposed to be secured by Managing Partner, and the provisions of Section
7.6 regarding permanent financing shall be subject to the rights of Associates
to secure a more favorable interest rate and/or greater principal amount than
that proposed to be secured by Managing Partner, all other terms of such
permanent financing suggested by Associates being at least as favorable as that
proposed to be secured by Managing Partner. With respect to any New Permanent
Loan, and in addition to the above rights, Associates shall have the right to
approve a decision by Managing Partner to replace an existing Permanent Loan
with a New Permanent Loan, which right of approval shall not be unreasonably
withheld. The rights of Associates as herein set forth shall be exercised within
thirty (30) days following written notification by Managing
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Partner to Associates of a proposed borrowing pursuant to Sections 7.5 and
7.6, respectively.
Section 9A.4 Neither Associates or the general partners or any of the
limited partners of Associates shall have any right, power or authority to
bind or otherwise obligate the Partnership to any contract, agreement or in
any manner whatsoever without the prior written consent and approval of
Managing Partner, and Associates and its general partners agree to indemnify
and hold the Partnership harmless from any claims, liabilities or damages
resulting from any acts of Associates, or its general or limited partners,
which are not consented to or approved by Managing Partner.
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ARTICLE X
LIMITATIONS ON COVENANTS OF MANAGING PARTNER
Notwithstanding the provisions of ARTICLES VII and VIII, the covenants
of Managing Partner set forth in ARTICLES VII and VIII shall be subject to
the following provisions:
Section 10.1 The determination at any time and from time to time to
exercise or not to exercise the authority and powers herein of Managing
Partner and/or vested in Managing Partner by law shall be in the sole and
absolute discretion of Managing Partner, acting in good faith.
Section 10.2 The manner and nature of the exercise of the authority and
powers herein of Managing Partner and/or vested in Managing Partner by law
shall be in the sole and absolute discretion of Managing Partner, subject to
the provisions of Section 9A.3 hereof, acting in good faith.
Section 10.3 Managing Partner shall incur no liability whatsoever to
Associates, its general partners or any of its limited partners so long as
Managing Partner (and Persons acting under the provisions of the last
sentence of Section 9.3(B)) shall have acted, or omitted to act, in good
faith including, but not by way of limitation, for failure to (i) construct
and/or operate the Property or (ii) operate the Property at a profit; and
Associates, its general partners and its limited partners hereby release
Managing Partner (and all Persons [excepting independent contractors] acting
under the provisions of the last sentence of Section 9.3(B)) from any and all
claims, rights, causes or causes of action Associates, its general partners
and its limited partners or any of them might now or hereafter have arising
from the manner or nature of Managing Partner's performance of this JVA and
the exercise or non-exercise of the authority and powers herein of Managing
Partner and/or vested in
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Managing Partner by law, except for the failure to act, or to omit to act, in
good faith as provided in the immediately preceding independent clause.
Nothing contained in the foregoing provisions of this Section 10.3 shall
be deemed to waive any rights or claims Managing Partner may have or assert,
on behalf of the Partnership or itself (acting in its individual capacity and
not as a member of the Partnership), against any of said Persons referred to
in the foregoing provisions of this Section 10.3.
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ARTICLE XI
ACCOUNTING PROVISIONS
Section 11.1 Subject to the approval of the Internal Revenue Service,
the Partners agree that (i) the fiscal year of the Partnership and (ii) the
accounting year for the Operation of the Property (herein referred to as the
"Accounting Period") shall be from January 1st through December 31st of each
year during the term of the Partnership, provided, however, the first
Accounting Period shall commence as of the time the provisions of Section 8.1
hereof shall become effective (subject to Section 8.2 hereof) and end on the
succeeding December 31st and the last Accounting Period shall commence on
January 1st in the year in which the Partnership terminates and end on
Termination Date.
Section 11.2 In addition to amounts payable to Managing Partner
pursuant to Section 11.3, Managing Partner shall be entitled to the following
fees for services rendered to the Partnership without reference to the income
of the Partnership, which shall constitute a guaranteed payment as that term
is defined in Internal Revenue Code Section 707(c):
(A) Managing Partner shall be entitled to prompt reimbursement
from the Partnership of a pro rata share of non-direct costs and
expenses allocated to the Partnership for the same non-direct costs and
expenses and on the same basis as such non-direct costs and expenses are
allocated by Managing Partner and its Parent or Holding Corporations to
other shopping centers, provided, however, for each Accounting Period
such reimbursement from the Partnership, net of recovery from Occupants,
as that term is defined in the REA, shall not exceed four percent (4%) of
the gross annual minimum and percentage rents (determined on the accrual
basis) for such Accounting Period; and
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(B) Managing Partner shall be entitled to receive a fee for providing
the interim financing referred to in Section 7.5 hereof, if such interim
financing is provided by Managing Partner or its Parent or Holding
Corporations, said fee to be one and one-half percent (1-1/2%) of the
interim financing monies that are made available to the Partnership,
payable as and when such interim financing monies are made available to the
Partnership.
Associates shall be entitled to no fees or payments pursuant to this JVA,
except as provided in Section 11.3 hereof.
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Section 11.3 (A) The net profits or net losses of the Partnership
(herein referred to as Partnership Net Profits or Partnership Net Losses, as the
case may be) for each Accounting Period shall be allocated in the following
percentages:
May Centers, Inc. 50%
Vancouver Associates 50%
No distribution shall be made of Partnership Net Profits, except as and to the
extent provided in Section 11.4 hereof.
(B) The Partnership Net Profits or the Partnership Net
Losses, as the case may be, shall be determined in accordance with generally
accepted accounting principles consistently applied.
Section 11.4
(A) Except as provided in the following subsection (B), the Managing
Partner shall distribute to the Partners (i) the Partnership Net Profits and
(ii) any other funds of the Partnership not constituting Partnership Net Profits
in the proportions set forth in 11.3(A) hereof as soon after the end of each
Accounting Period as the amount thereof reasonably can be determined, provided,
however, Managing Partner may make quarterly distributions to the Partners on
the basis of estimates of amounts due for an Accounting Period.
(B) For each Accounting Period, Managing Partner may (as it shall deem
appropriate) set aside such amounts of money from funds of the Partnership
(including, but not by way of limitation, Partnership Net Profits) as it shall
deem necessary to retain in order to distribute or pay amounts specified in
Section 11.5 hereof or to meet estimated payments and expenditures required in
respect of the Operation of the Property for succeeding Accounting Period(s) and
prior Accounting Periods, in excess of the current anticipated receipts of the
Partnership for such succeeding
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Accounting Period(s), such amounts so retained for each respective Accounting
Period being herein referred to without distinction as "Retentions"; provided,
however, the Retentions for any respective Accounting Period shall be restricted
in amount so as not to reduce the amount of distributions to Partners below the
amount of the Partnership Net Profits, except to the extent necessary, as
determined by Managing Partner, to:
(1) make adequate provision for payment of debts of the
Partnership incurred in the ordinary course of business and not payable in
installments;
(2) make adequate provision for payment of the principal and
interest on debts of the Partnership payable in installments;
(3) not render the Partnership insolvent at any time (insolvency
being defined, for the purposes of this clause (3), as the inability of the
Partnership to meet its obligations as they mature in the ordinary course of the
Partnership business); and
(4) pay Managing Partner the amounts due it pursuant to the
provisions of Section 11.5 hereof, provided, however, this clause (4) shall be
subject and subordinate to each of the foregoing clauses numbered (1), (2) and
(3).
Section 11.5 In addition to other amounts properly payable to Managing
Partner pursuant to this JVA, the Managing Partner shall be entitled to receive:
(A) out of the first funds available other than interim financing, the
Partnership shall distribute cash to Managing Partner in one or more payments of
an aggregate amount of Four Hundred Eighty Thousand Dollars ($480,000) provided,
however, to the extent the amount required to be paid to Managing Partner
pursuant to this Section 11.5(A) is not paid, such unpaid amount shall be due to
Managing Partner with interest after the date of
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the opening of fifty percent (50%) of the Floor Area of the Mall Stores at the
same rate of interest as specified in Section 7.5 hereof; and
(B) if Managing Partner has loaned funds to the Partnership pursuant to
the provisions of Section 7.6 hereof, the Partnership shall repay Managing
Partner the sum of the principal amount of such loan plus interest at the same
rate as specified in Section 7.5 hereof, provided, however, payments by the
Partnership to Managing Partner pursuant to this Section 11.5(B) shall be
limited by the following:
(1) If Operating Cash Flow, as hereinafter defined in Section 11.9,
is in excess of Four Hundred Thousand Dollars ($400,000), sixty percent (60%)
of such Operating Cash Flow shall be so paid to Managing Partner and the balance
of the Operating Cash Flow shall be distributed to the Partners in accordance
with the percentages set forth in Section 11.3 hereof; and
(2) If Operating Cash Flow is Four Hundred Thousand Dollars
($400,000) or less, eighty percent (80%) of such Operating Cash Flow shall be so
paid to Managing Partner and the balance of the Operating Cash Flow shall be
distributed to the Partners in accordance with the percentages set forth in
Section 11.3 hereof; provided, however, amounts paid to Managing Partner
pursuant to this Section 11.5(B) shall first be considered as payment of
interest, as aforesaid, and any balance of any payment so made shall be
considered as a payment of the principal amount loaned to the Partnership by
Managing Partner pursuant to Section 7.6 hereof.
Section 11.6 For each Accounting Period, Managing Partner shall prepare
or shall cause to be prepared statements, in accordance with generally
accepted accounting principles consistently applied, of the financial
position of the Partnership and Partnership Net Profits, or Partnership Net
Losses, as the case may be, and of
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any other funds of Partnership (not derived from earnings) received during such
respective Accounting Period. Said statements shall be prepared within a
reasonable time after the close of the immediately preceding Accounting Period
and shall be transmitted to Associates within a reasonable time after the
preparation thereof. Similar statements shall be prepared for each quarter of an
Accounting Period and transmitted to Associates within a reasonable time after
the preparation thereof. Upon request of Associates, Managing Partner shall
prepare a statement showing the revenues and expenses of the Partnership during
the calendar month prior to the date of such request by Associates and transmit
the same to Associates within a reasonable time after the preparation thereof.
Section 11.7 Proper and complete books of account in respect of the
Operation of the Property shall be kept at such place as Managing Partner shall
determine from time to time (Managing Partner to notify Associates of the
address of such place), and shall be open to inspection by Associates or its
duly authorized representatives at any reasonable time during normal business
hours, subject to the provisions of the following sentence. The said books of
account shall be maintained by General Partner for a period of three (3) years
after the end of the respective Accounting Period as to which they appertain or
such longer period as may be deemed necessary by Managing Partner. The said
books and records of account as at the close of each Accounting Period shall be
examined at the cost of the Partnership by an independent certified public
accountant, selected by Managing Partner, who shall make a report thereon.
Managing Partner shall submit a true copy of such report to Associates within
sixty (60) days after receipt thereof from such independent certified public
accountant. If Associates shall fail to object to any respective
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report within one hundred eighty (180) days after the receipt thereof, then such
report shall be conclusively deemed true and correct for all purposes of this
JVA.
Section 11.8 With respect to the federal and state income tax returns
required of the Partnership, Managing Partner shall prepare the same or cause
the same to be prepared at the expense of the Partnership and all decisions with
respect to the income and expenses to be shown on said tax returns shall be
decided by the Managing Partner, provided, however, depreciation shall be
calculated, subject to the provisions of the Internal Revenue Code, on a
composite basis with accelerated depreciation for any Property of the
Partnership for the optimum period of time applicable to each composite group
and straight line depreciation thereafter, so as to maximize depreciation in
every year. Subject to the provisions of the Internal Revenue Code, investment
credit shall be divided between the Partners in accordance with the percentages
set forth in Section 11.3 hereof.
Section 11.9 As used herein, the term "Operating Cash Flow" shall mean
the amount of Partnership Net Profits or Partnership Net Losses for an
Accounting Period as adjusted by non-cash items in accordance with generally
accepted accounting principles consistently applied, less the Retentions set
aside pursuant to Section 11.4 hereof.
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ARTICLE XII
RESTRICTIONS ON TRANSFER
Section 12.1 No Partner shall mortgage, pledge, sell, assign,
hypothecate or otherwise encumber, transfer or permit to be transferred in
any manner or by any means whatever, whether voluntarily or by operation of
law, all or any part of its interest in the Partnership, except as herein
provided:
(a) No Partner shall mortgage, pledge, sell, assign, hypothecate or
otherwise encumber, transfer or permit to be transferred in any manner or by any
means whatever, whether voluntarily or by operation of law, all or any part of
its interest in the Partnership after execution of this JVA but prior to the
earlier of August 1, 1985 or the date that 200,000 square feet of Floor Area of
Mall Stores are open to the public.
(b) Following the first to occur of July 31, 1985 or the date that 200,000
square feet of Floor Area of Mall Stores are open to the public, no Partner
shall mortgage, pledge, sell, assign, hypothecate or otherwise encumber,
transfer or permit to be transferred in any manner or by any means whatever,
voluntarily or by operation of law, all or any part of its interest in the
Partnership, except as otherwise expressly provided in this Article XII. Either
Partner may, following the first to occur of July 31, 1985 or the date that
200,000 square feet of Floor Area of Mall Stores are open to the public, sell,
assign or otherwise transfer all (but no fractional part, subject to the last
paragraph of this Section 12.1(b)) of its interest in the Partnership, provided
that any such assignee or transferee shall take such interest subject to the
terms, provisions and conditions of this JVA and shall acknowledge his or its
acceptance of this JVA by executing and delivering to the other Partner an
instrument in form satisfactory to the other Partner, whereby he or it assumes
and agrees to be bound by all the terms, provisions and conditions hereof and to
become a Partner for all purposes hereof; provided,
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however, that any Partner so desiring to sell, assign or transfer its interest
in the Partnership (hereinafter referred to in this Section 12.1(b) as "Seller")
may do so only after complying with the following requirements and subject only
to the rights and option herein contained: (i) Seller shall give written notice
to the other Partner of its intention to sell, assign or transfer its interest,
and shall accompany said notice with a true copy of a written offer executed by
a bona fide prospective purchaser (hereinafter referred to in this Section
12.1(b) as "Purchaser") containing all of the terms and conditions of such
offer, which must be consistent with the last paragraph of this Section 12.1(b);
and (ii) the remaining Partner shall then have the option to purchase the
interest so offered for sale upon the same terms and conditions as are set forth
in said written offer.
If the consideration to be paid pursuant to such written offer is to be
paid wholly in cash, and the remaining Partner desires to effectively exercise
such option, the remaining Partner must give written notice of the exercise of
the option to Seller within sixty (60) days after receipt of the above-mentioned
notice from Seller. If the consideration to be paid pursuant to such written
offer is not wholly to be paid in cash, the price to be paid by the remaining
Partner for such interest shall be equal to (i) the amount of any cash to be
paid pursuant to such written offer, plus (ii) the appraised value of the
non-cash consideration to be paid pursuant to such written offer as determined
by three arbitrators appointed and acting in the manner set forth for the
appointment and conduct of arbitrators in Article XVII hereof, except that each
of such arbitrators shall be professionally qualified with respect to the
appraisal of such non-cash consideration. A copy of the arbitrators'
determination of the value of the non-cash consideration shall be furnished to
each Partner,
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and if the remaining Partner desires to effectively exercise such option, the
remaining Partner must give written notice of the exercise of the option to
Seller within thirty (30) days after receipt of such arbitrators' determination.
If the remaining Partner exercises the option herein granted, as a
condition of this option, the purchase of Seller's interest shall take place at
a time, place and date (within six (6) months after exercise of the option)
specified by notice by the remaining Partner within thirty (30) days after
exercise of the option.
If the foregoing option is not exercised, then and in that event Seller
may, within one hundred twenty (120) days following the last day upon which the
remaining Partner could have exercised its option, sell, assign or transfer to
Purchaser its interest in the Partnership, subject to the last paragraph of this
Section 12.1(b), provided that such sale to Purchaser is made strictly in
accordance with the terms and conditions of such written offer, which written
offer must be consistent with the last paragraph of this Section 12.1(b), and
such Purchaser assumes and agrees to be bound by all the terms, provisions and
conditions of this JVA, as aforesaid. If such sale, assignment or transfer to
Purchaser is not completed within such one hundred twenty (120) day period,
except as provided in the last paragraph of this Section 12.1(b), the option in
favor of the remaining Partner contained in this Section 12.1(b) shall be
reinstated.
The Partners agree not to sell, assign or transfer fifty percent (50%) or
more interest in the Partnership in any twelve (12) calendar month period
pursuant to this Section 12.1(b) and, should one Partner give the notice of
intention to sell, assign or transfer hereinabove referred to, the other Partner
shall have no right to sell, assign or transfer its interest in the Partnership
pursuant to this Section 12.1(b) until the expiration of
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twelve (12) calendar months after the sale, assignment or transfer contemplated
by such notice of intention (except to the extent that sales, assignments or
transfers by both Partners would aggregate less than fifty percent (50%)
interest in the Partnership), unless the sale, assignment or transfer
contemplated by the notice of intention is not made within the one hundred
twenty (120) day period referred to in the immediately preceding paragraph
hereof. In the event that a Partner owns a fifty percent (50%) or more interest
in the Partnership, the offer of the Purchaser shall provide for a sale,
assignment or transfer of forty-nine percent (49%) within said one hundred
twenty (120) day period and a sale, assignment or transfer of the balance of the
interest of the Seller after the expiration of twelve (12) months thereafter.
(c) Either Partner may, following July 31, 1985, withdraw from the
Partnership by giving notice of such intention to withdraw to the other
Partner, provided, however, that any Partner so desiring to withdraw from the
Partnership (hereinafter referred to in this Section 12.1(c) as "Offeror")
may do so only after complying with the following requirements and subject
only to the rights and option herein contained: (i) Offeror shall give
written notice to the other Partner ("Offeree") of its intention to withdraw,
and shall accompany said notice with an offer in writing ("Offer") stating
the cash purchase price at which the Offeror is willing to purchase an
undivided 100% interest in the Property as of the date of the Offer, subject
to which mortgages, deeds of trust and other liens the Property is being
conveyed and which are listed in the Offer; and (ii) the Offeree shall then
be obligated, subject to the provisions of this Section 12.1(c), either to:
(1) purchase the Offeror's interest in the Property for cash at a
price equal to the 100% price referred to
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above multiplied by the percentage specified for the Offeror in Section
11.3 hereof; or
(2) sell to the Offeror the interest of the Offeree in the Property
for cash at a price equal to the 100% price referred to above multiplied by
the percentage specified for the Offeree in Section 11.3 hereof.
The Offeree must give written notice of its election to the Offeror within
sixty (60) days after receipt of the Offer, which notice shall, if the Offeree
elects to purchase pursuant to subparagraph (1) above, specify the place, time
and date within six (6) months after said notice for the closing, provided,
however, that the failure of the Offeree to give OfferOr notice that the Offeree
has elected under subparagraph (1) above shall be conclusively deemed to be an
election under subparagraph (2) above.
If, following an election by the Offeree to purchase, the Offeree is not
ready and willing to consummate the purchase in accord with this Section
12.1(c), the Offeree shall be deemed to be in default and the Offeror, in
addition to all other rights and remedies available at law or in equity
against the Offeree, shall have the right to purchase the interest of the
Offeree in the property pursuant to subparagraph (2).
At the closing of any sale of the Property pursuant to this Section
12.1(c), the purchasing Partner shall by a legally enforceable agreement assume
the payment of, and indemnify and hold the selling Partner harmless from, any
indebtedness of the Partnership for which the Partners have personal liability,
including without limitation any lien on the Property set forth in the Offer to
which the Partners have personal liability.
If, at the time of the purchase of the Property, such Property is subject
to an encumbrance, other than an encumbrance listed in
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the Offer, the purchasing Partner shall discharge such encumbrance and reduce
the amount of the purchase price by the amount of money required to discharge
such encumbrance. If, at the time of the purchase of the Property, the purchase
price is less than the amount of all the encumbrances on the Property, whether
listed in the Offer or not, purchaser may, at its option, cancel the purchase or
conclude the transaction on terms acceptable to purchaser, the seller and the
holder of the encumbrance or holders of the encumbrances. In the event the
purchase is cancelled by the purchaser, the terms of this JVA shall remain in
effect and continue to be binding on the Partners.
The closing of any sale of the Property pursuant to this Section 12.1(c)
shall take place at the time, place and date specified by Offeree in its
election to purchase or, if Offeror is to purchase the Property, Offeror shall
give a notice to Offeree within sixty (60) days after it is determined hereunder
that Offeror is to purchase the Property, which notice shall specify the place,
time and date within six (6) months after said notice for the closing. The
instruments and documents to be exchanged at the closing shall, in the
reasonable opinion of counsel for the purchasing Partner, be legally sufficient
to convey to the purchasing Partner the Property free and clear of all liens,
claims and encumbrances, except the liens, claims and encumbrances listed in the
Offer as being those liens, claims and encumbrances subject to which the
Property is being sold.
(d) Notwithstanding the limitations contained in this Article XII,
Managing Partner may at any time sell, assign or otherwise transfer its interest
in the Partnership or part thereof to a corporation which is the parent or an
affiliate of Managing Partner or to a corporation which is controlled by said
Managing Partner, provided that (i) such corporation shall have a
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minimum net worth of One Million Dollars ($1,000,000.00), including the value of
its participation in the Partnership, and (ii) such corporation shall take such
interest subject to the terms, provisions and conditions of this JVA and shall
acknowledge its acceptance of this JVA by executing and delivering to the other
Partner an instrument, in form reasonably satisfactory to the other Partner,
whereby it assumes and agrees to be bound by all the terms and conditions hereof
and to become Managing Partner for all purposes hereof.
(e) No transfer of any interest, whether or not permitted by this
Article XII, shall be deemed to terminate the Partnership, but (i) if
Associates makes an assignment for the benefit of creditors, or applies for
the appointment of a trustee, liquidator or receiver of any substantial part
of its assets, or commences any proceeding relating to itself under any
bankruptcy, reorganization, arrangement or similar law; or (ii) if any such
application is filed or proceeding is commenced against Associates and
Associates indicates its consent thereto, or an order is entered appointing
any such trustee, liquidator or receiver or approving a petition in any such
proceedings and such order remains in effect for more than sixty (60) days;
or (iii) if Harry Newman, Jr. dies and Associates does not provide the waiver
referred to in the last sentence of this Section 12.1(e); or (iv) if Harry
Newman, Jr. is adjudged incompetent and Associates does not provide the
waiver referred to in the last sentence of this Section 12.1(e); or (v) if
Associates is dissolved or its existence is terminated by operation of law or
otherwise, including without limitation as a result of the death or
incompetency of a general partner; then and in any such event, Managing
Partner shall have the exclusive right and option, exercisable by written
notice given not later than sixty (60) days after receipt by Managing Partner
of written
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notice (hereinafter referred to as "Notice of Event") of the event giving rise
to the option (but such receipt of Notice of Event shall not be deemed a
condition precedent to exercise by Managing Partner of the option hereby granted
it) to purchase the interest of Associates at a price equal to the net fair
market value of the Partnership determined as provided in Article XVII hereof
multiplied by the percentage specified for Associates in Section 11.3 hereof. A
copy of the arbitrators' determination of net fair market value made pursuant to
the provisions of Article XVII hereof shall be furnished to each Partner, and,
if Managing Partner has exercised its option to purchase pursuant to this
Section 12.1(e), Managing Partner may rescind its exercise of such option by
notice to the other Partner or its representative within thirty (30) days of its
receipt of such arbitrators' determination. In the event of a sale under this
Section 12.1(e), the transaction shall be consummated at a time, place and date
(within six (6) months after receipt of such arbitrators' determination)
specified by notice by Managing Partner within thirty (30) days after receipt
of such arbitrators' determination. In the event of the death or incompetency
of Harry Newman, Jr., if Associates within thirty (30) days after written
request of Managing Partner agrees to waive and renounce in writing and in a
form reasonably satisfactory to counsel for Managing Partner any and all
rights herein granted to Associates (other than the rights to receive
payments pursuant to Section 11.3 and Article XIV) including without
limitation the rights to consult with, approve or otherwise control, directly
or indirectly, the actions or rights of Managing partner and the rights,
powers, privileges and immunities of Associates as set forth in Article IX-A
hereof, Managing Partner shall not have the option that would be otherwise
granted pursuant to clause (iii) or (iv) above, as the case may be.
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(f) Neither the Partnership nor any Partner shall be required to recognize
as a Partner the transferee of any interest, not made pursuant to the terms
hereof, or the guardian of an incompetent or the representative in probate of
any estate as a Partner, and the sole right of any such transferee, guardian or
representative shall be to receive from the Partnership any distributions to
which the assignor of such interest, or the incompetent or deceased Partner
would have been entitled but for such sale or transfer, or but for such
incompetency or death of a Partner, as the case may be, subject to reduction by
reason of any exercise of any option contained in this Article XII.
Notwithstanding the foregoing, the Partnership and Managing Partner shall
recognize for all purposes hereunder any transferee, guardian or representative
in probate who is a transferee pursuant to a transfer permitted by this Article
XII, provided that any successor to the guardian or representative in probate
shall have no authority to act hereunder unless and until such authority is
established to the reasonable satisfaction of Managing Partner, and no such
guardian or representative shall have any authority to act with respect to any
matter as to which such guardian or representative would be required to obtain
the approval of any court.
(g) Any Partner who makes a sale or assignment in accordance with the
provisions of Sections 12.1(b), 12.1(c), 12.1(d), or 12.1(e) hereof shall be
released from any and all obligations and liability hereunder except for
obligations, liabilities, duties and rights arising before such sale or
assignment which have not been determined or ascertained as of the date of such
sale or assignment and for rights or remedies which a non-defaulting Partner may
have against a defaulting Partner in law or equity.
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(h) The restrictions upon transfer contained in this Article XII shall not
be applicable to a sale, assignment or other transfer of Managing Partner's
interest in the Partnership to any corporation with whom Managing Partner may
become merged or consolidated, or to whom Managing Partner may sell, assign or
transfer substantially all of its assets, or who may succeed to substantially
all of the assets of Managing Partner by reason of any manner of reincorporation
or reorganization (except under the provisions of any Bankruptcy Act), and the
corporation resulting from such merger, consolidation, reorganization or
reincorporation shall thereupon become Managing Partner hereunder, provided that
any such transferee shall take such interest subject to the terms, provisions
and conditions of this JVA and shall acknowledge its acceptance of this JVA by
executing and delivering to Associates an instrument whereby such transferee
assumes and agrees to be bound by all of the terms and conditions hereof,
whereupon Managing Partner shall be released from any and all liability
hereunder.
(i) The restrictions upon transfer contained in this Article XII shall
not be applicable to the admission of additional limited partner(s) by
Associates or the withdrawal of limited partner(s) provided that (i) the
total number of limited partners of Associates does not at any time exceed
ten (10) in number, (ii) such admission or withdrawal of limited partner(s)
does not result in or cause a dissolution of, or the termination of the
existence of, Associates by operation of law or otherwise, and (iii) other
than to provide for the admission or withdrawal of limited partner(s), the
Limited Partnership Agreement of Vancouver Associates will not be modified,
changed or amended in any manner whatsoever, except that there may be
amendments of the portions of the Limited Partnership Agreement of Vancouver
Associates concerning distributions to limited partners of profits and
amounts due on dissolution and accounting provisions effecting the limited
partners of Associates
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with the approval of Managing Partner, which approval may not be unreasonably
withheld.
Associates agrees that the Limited Partnership Agreement of Vancouver
Associates will not be amended in any way, except as specifically provided in
this Section 12.1(i) and further agrees and represents that the Certificate
attached to this JVA as Exhibit 3 is true and correct and shall not be changed,
modified or withdrawn in any way without the approval of Managing Partner, in
the sole and absolute discretion of Managing Partner.
(j) No Partner shall mortgage, pledge, hypothecate or otherwise encumber
its interest in the Partnership without the consent of the other Partner in its
sole and absolute discretion. A Partner may not withdraw, retire or resign as a
Partner nor may any person be admitted as a Partner without the approval of the
other Partner, except as specifically permitted by this Article XII or in
Article XV.
(k) All restrictions on transfer and the options contained in this Article
XII shall survive the termination of this JVA and shall continue to be binding
upon the Parties hereto and the heirs, executors, administrators, successors and
assigns of the respective Parties, as the case may be, so long as they shall
hold title to the Property.
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ARTICLE XIII
FORCE MAJEURE
Notwithstanding anything contained in this JVA, Managing Partner shall be
excused from performing any obligation or undertaking provided in this JVA, and
any delay in the performance of any obligation under this JVA shall be excused,
in the event and/or so long as the performance of such obligation is prevented,
delayed, retarded, hindered or prohibited by Act of God, fire, earthquake,
flood, explosion, actions of the elements, war, invasion, insurrection, riot,
mob violence, sabotage, malicious mischief, inability to procure, or
unavailability of, or general shortage of labor, equipment, facilities,
materials or supplies in the open market, failure of transportation, strikes,
lockouts, action of labor unions or trade organizations, condemnation or
agreement by Managing Partner in lieu thereof, pending litigation or appeal
thereof or therefrom, requisition, laws, orders, statutes, ordinances,
directives, regulations or other proscription of any government authority
whatever, whether civil, military, naval, environmental, municipal, state or
federal authority, or any commission, board or agency of the same, having
jurisdiction over the premises, or any other cause, whether similar or
dissimilar to the foregoing, not within the reasonable control of Managing
Partner. Nothing contained in the foregoing provisions of this Article XIII
shall be deemed to derogate or be construed as derogating from the rights,
powers, privileges, immunities and/or discretion of Managing Partner as provided
herein.
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ARTICLE XIV
DISSOLUTION AND LIQUIDATION
Section 14.1 Dissolution of the Partnership shall occur only on
Termination Date. On dissolution of the Partnership, Managing Partner (except
in the case where Termination Date shall occur as a result of the Bankruptcy
of Managing Partner or pursuant to Section 5.2(iv), in which case Managing
Partner shall have no right or power to wind up the Partnership affairs, and
in which event Associates shall designate a bank or trust company to act for
the Partnership in winding up the Partnership affairs) shall have full and
exclusive authority and power to proceed to the liquidation of the Property
and wind up the Partnership affairs in accordance with the applicable laws of
the State of Washington and the terms of this JVA.
Section 14.2 The proceeds of liquidation and other assets of the
Partnership shall be applied and distributed in the following manner in the
order of priority and to the extent funds and other assets shall be available
therefor:
(A) All liabilities and obligations to creditors (except as respects
Instruments of Indebtedness secured exclusively by liens or encumbrances on the
Property [except any portions thereof constituting personal property]) and all
amounts due Managing Partner pursuant to Section 11.5(B) shall be paid.
(B) Amounts due Managing Partner pursuant to Section 11.5(A) shall be paid
to the extent not previously paid.
(C) For the last Accounting Period and for previous Accounting Periods
(if not theretofore distributed), the amounts due Managing Partner pursuant
to Section 11.2 shall be paid.
(D) Amounts due Partners for the last Accounting Period pursuant to
Section 11.4 shall be paid.
(E) The respective amounts of the Capital Account of the Partners shall be
paid to the Partners.
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(F) The remaining cash and other assets of Partnership, if any, shall be
distributed in kind, subject to any Instruments of Indebtedness, lien or
encumbrance on the Property (except any portions thereof constituting personal
property), to the Partners in accordance with the percentage specified for the
Partners in Section 11.3 hereof.
Section 14.3 If the assets of the Partnership on dissolution consist of
cash and non-cash assets, the cash shall first be used to make distributions in
the required order of priority until exhausted and then the non-cash assets
shall be distributed in the remaining priorities. Assets of the Partnership may
be distributed in kind on the basis of the then fair market value thereof as
determined by Managing Partner, provided, however, if Associates disapproves
such determination by Managing Partner within thirty (30) days after notice of
such determination is given to Associates, said fair market value shall be
determined by an independent appraiser of the American Institute of Real Estate
Appraisers appointed by the American Arbitration Association. If assets are
distributed in kind to more than one Partner, they shall be distributed to the
Partners as tenants in common.
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ARTICLE XV
SUCCESSORS AND ASSIGNS
Section 15.1 Subject to the provisions of Article XII and Section 15.2,
this JVA shall be binding upon and inure to the benefit of the heirs,
representatives, administrators, executors, successors and assigns of the
respective Partners hereto, and all references to Managing Partner or
Associates, as the case may be, shall be deemed a reference to their
respective heirs, representatives, administrators, executors, successors or
assigns, from time to time (as the applicable case may be, and as the actual
situation may require); provided, however, the foregoing provisions of this
Article XV shall not be construed as consent by the Partners to, or
empowerment by this JVA of, an assignee or successor of or through a Partner
other than as permitted by Article XII and Section 15.2. In the event that
any sale, assignment or other transfer of any Partner's interest in the
Partnership is made pursuant to this JVA, the Partner so selling, assigning
or otherwise transferring its interest shall inform the remaining Partner of
such transfer in writing within fifteen (15) days after the completion of the
transaction giving rise to such transfer. Such notice shall be signed by both
the transferor and the transferee and shall set forth the proportion of such
Partner's interest so transferred and the proportion of such Partner's
interest, if any, retained by such Partner. Following the receipt by the
remaining Partner of such notice the books and records of the Partnership
shall be adjusted accordingly.
Section 15.2 Apart from and independent of that which is provided for in
the provisions of Article XII, from and after twenty (20) years from the date
hereof, Managing Partner, upon forty-five (45) days' notice to Associates, may
substitute for itself any other Person as Managing Partner (and assign to
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such Person all its rights and interest hereunder, subject to the provisions of
the last paragraph of Section 12.1(b) hereof), provided that such Person shall
have, on the effective date of substitution, a net worth of not less than One
Million Dollars ($1,000,000); and effective upon the date of such substitution,
Managing Partner shall thereupon be released from all liability and obligation
hereunder arising thereafter.
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ARTICLE XVI
OTHER ENTERPRISES OF MANAGING PARTNER
Associates acknowledges that is has fully knowledge and understanding (and
agrees to be conclusively bound in respect thereof) that Managing Partner and
its respective Parent, Holding Corporation, Subsidiaries or other Persons
related to or affiliated with, now or hereafter formed (and all respective
successors or assigns), will be involved and interested, as sole or joint
owner, lessee, partner of a general or limited partnership or other form of
juridical entity or business association, through their officers, agents,
employees or contractors, now and hereafter, in the development,
construction, operation, maintenance, management and/or preservation of
department stores and/or shopping centers, or other developments, which such
actions may now or hereafter be in substantial conflict or competition,
directly or indirectly, with the Operation of the Property, and that such
officers, agents, employees or contractors, acting in respect of and for such
department stores and/or shopping centers, may have conflicting loyalties
with respect to any actions taken or omitted to be taken by them in respect
of the Operation of the Property. Associates agreeing to be conclusively
bound herewith:
(A) Consents to the foregoing, and
(B) Stipulates that in respect of any and all actions, described
aforesaid, Managing Partner shall not be deemed in any respect or in any
manner to have violated any terms or provisions of this JVA or its fiduciary
duty herein, or to have diverted any business opportunity of the Partnership
or Associates.
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ARTICLE XVII
ARBITRATION
Section 17.1 In every case where this JVA provides for or permits the
resolution of a dispute or controversy by arbitration and in the case of any
determination of value pursuant to the provisions of Article XII, such
dispute, controversy or determination of value shall be resolved by
arbitration under this Article. However, nothing herein requires arbitration
of any dispute arising under this JVA for which injunctive relief is sought
by a Partner.
Section 17.2 If the Partners are unable to reach an agreement with
respect to any such dispute, controversy or determination of value, it is
agreed and understood that, if such agreement shall not be arrived at within
thirty (30) days after written notice that such dispute or controversy
exists, or such determination of value is needed, then either Managing
Partner or Associates shall have the right at any time after the expiration
of such thirty (30) day period to require the same to be submitted to
arbitration as herein provided by giving notice thereof to the other Partner.
Section 17.3 On the election of either the Managing Partner or
Associates to arbitrate any dispute, controversy or determination of value,
Managing Partner shall select a person to act as arbitrator and Associates
shall select a person to act as arbitrator, and a neutral arbitrator shall be
selected by both the Managing Partner and Associates. If, within thirty (30)
days after either Partner's notice to the other of the required notice to
submit a dispute, controversy or determination of value to arbitration,
either Managing Partner or Associates fails to select an arbitrator or if
they are unable to agree on a third arbitrator, the remaining arbitrator(s)
shall be selected, except in the case of a determination of value, on
application to the
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Chief Justice of the Supreme Court of Washington, and if he shall not so act
then the Senior Presiding Judge of the Superior Court sitting in Clark
County, State of Washington, and said third arbitrator shall be a judge or
lawyer, or retired judge or retired lawyer. In the case of a determination
of value, the remaining arbitrator(s) shall be selected by the then President
of the American Institute of Real Estate Appraisers or successor body
hereafter constituted exercising similar functions. Any person designated as
an arbitrator shall be knowledgable and experienced in the matters sought to
be arbitrated, but shall not be in the employment of either Partner,
directly, indirectly or as an agent, except in connection with the
arbitration then proceeding. In the case of a determination of value, all
arbitrators shall be members of the American Institute of Real Estate
Appraisers.
The arbitrators shall meet or otherwise confer as deemed necessary by
the arbitrators to resolve the dispute and, except in the case of a
determination of value, a decision of a majority of the arbitrators will be
binding upon the Partners. In the case of a determination of value, if the
determinations of any two or all three of the arbitrators shall be identical
in amount, said amount shall be deemed to be the value in question. If the
determinations of all three arbitrators shall be different in amount, the
highest appraised value shall be averaged with the middle value (said average
being hereinafter referred to as "Sum A"), the lowest appraised value shall
be averaged with the middle value (said average being hereinafter referred to
as "Sum B"), and the value in question shall be determined as follows:
(a) If neither Sum A nor Sum B differs from the middle appraised value
by more than five percent (5%) of such middle appraised value, then the value
in question shall be deemed to be the average of the three appraised values;
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(b) If either Sum A or Sum B (but not both of said sums) differs from
the middle appraised value by more than five percent (5%) of such middle
appraised value, then the value in question shall be deemed to be the average
of the middle appraised value and the appraised value closest in amount to
said middle appraised value; and
(c) If both Sum A and Sum B differ from the middle appraised value by
more than five percent (5%) of such middle appraised value, all appraisals
shall have no force and effect, and the Partners shall select different
arbitrators and proceed again with a new arbitration in accordance with this
Article XVII. The determination of value in accordance with the provisions of
this Article XVII shall be binding upon the Partners.
The decision of the arbitrators shall be in writing and shall be made as
promptly as possible after the designation of the last additional arbitrator,
but in no event later than forty-five (45) days from the date of the
designation of the last additional arbitrator. A copy of the decision of the
arbitrators shall be signed by at least a majority of the arbitrators and
given to each Concerned Party in the manner provided in Article XVIII of this
JVA for the giving of notices.
Section 17.4 To the extent permitted by law, compliance with the
provisions of this Article XVII shall be a condition precedent to the
commencement by Associates or Managing Partner of any judicial proceeding
arising out of any such dispute, controversy or determination of value.
Section 17.5 The costs and expenses of the arbitrators and arbitration
proceeding shall be borne equally by Associates and Managing Partner, unless
the arbitrators assess the same unequally among the Partners.
Section 17.6 A judgment may be entered on a decision of the arbitrators
that is binding upon the Partners in any court of competent jurisdiction.
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ARTICLE XVIII
NOTICES
Every notice, demand, request, consent, approval, disapproval,
designation or other communication (herein without distinction sometimes
referred to as "notice") which Associates or Managing Partner is respectively
required or desires to give or make or communicate upon or to the other shall
be in writing and shall be given or made or communicated by personally
delivering the same or by mailing the same by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to Associates to:
Vancouver Associates
P. O. Box 40
Long Beach, California 90801
Attention: Harry Newman, Jr.
If to Managing Partner to:
May Centers, Inc.
c/o The May Stores Shopping Centers, Inc.
10738 West Pico Boulevard, Suite 1
Los Angeles, California 90064
Attention: President
with a duplicate to:
The May Stores Shopping Centers, Inc.
611 Olive Street
St. Louis, Missouri 63101
Attention: Executive Vice President
subject to the right of a Partner to designate a different address by notice
similarly given at least ten (10) days in advance. Unless specifically stated
to the contrary elsewhere in this JVA, any notice shall be deemed to have
been given, made or communicated as the case may be, on the date the same was
personally delivered or deposited in the United States Mail, registered or
certified, return receipt requested, properly addressed, with postage thereon
fully prepaid.
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Until Managing Partner shall be notified of changes in rights to share
in (i) Partnership Net Profits and (ii) distributions on dissolution, as
provided in Article XIV hereof, Managing Partnershall be entitled to rely on
the last notices received by it in respect thereof.
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ARTICLE XIX
SEVERABILITY
If any provision or provisions of this JVA shall to any extent prove to
be invalid, void, illegal or unenforceable, the remainder of this JVA (or the
application of such provision to persons or circumstances other than those in
respect of which it is invalid or unenforceable) shall not be affected or
impaired or invalidated thereby, and each provision hereof shall be valid and
enforceable to the fullest extent permitted by law.
ARTICLE XX
CONSTRUCTION OF AGREEMENT
This JVA shall be construed, interpreted and applied in accordance with
the laws of the State of Washington.
ARTICLE XXI
AMENDMENT
Section 21.1 This JVA may be amended or otherwise modified only by a
written agreement signed by the Partners and the consent or approval of any
other Person(s) shall not be required, subject, however, to any right with
respect thereto of the holders of any mortgages, trust deeds or indentures
encumbering the Property.
Section 21.2 Only fifty-five percent (55%) of the ownership of
partnership interests in Associates is needed for any such amendment or
modification to be binding upon Associates, provided, however, Managing
Partner and all other Persons may rely on the signature of only one general
partner of Associates, notwithstanding the fact that his individual ownership
interests in Associates may be less than fifty-five percent (55%) thereof.
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ARTICLE XXII
PARTITION
Neither Partner shall have the right to partition any Property of the
Partnership during the term of this JVA nor shall any Partner make
application to any court or authority having jurisdiction in the matter or
commence or prosecute any action or proceeding for partition and the sale
thereof, and upon any breach of the provisions of this Article by either
Partner, the other in addition to all rights and remedies in law and in
equity which it may have, shall be entitled to a decree or order restraining
and enjoining such application, action or proceeding.
ARTICLE XXIII
ENTIRE AGREEMENT
This JVA sets forth the entire agreement between the Partners with
regard to the subject matter hereof and may not be amended, modified,
superseded or cancelled except as hereinabove provided. Any waiver of any of
the provisions of this JVA shall be in writing and shall be executed by the
Partners in the same manner as provided for amendments hereto. No waiver of
the failure of any Partner hereto to comply with any of the provisions of
this JVA shall be construed to be a waiver of any other failure of compliance
by such party with the same or other provisions of this JVA. All agreements,
covenants, representations and warranties, express and implied, oral and
written, of the parties with regard to the subject matter hereof are
contained herein, in the Exhibits hereto, and the documents referred to
herein. No other agreements, covenants, representations or warranties,
express or implied, oral or written, have been made by any Partner to the
other with respect to the subject matter of this JVA. All prior and
contemporaneous conversations, negotiations, possible and alleged agreements
and representations, covenants and warranties with respect to the subject
matter hereof are waived, merged herein and superseded hereby. This is an
integrated agreement.
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ARTICLE XXIV
RECORDATION
This JVA may be recorded by Managing Partner on the date of execution
hereof, or at any time thereafter, in Clark County, Washington, and at any
time and from time to time in such other counties within or without the State
of Washington, as Managing Partner shall determine in its sole and absolute
discretion. The cost of all such recordation shall be paid by the Partnership.
ARTICLE XXV
CERTIFICATES
The Partners agree to execute, acknowledge and cause to be recorded a
certificate or memorandum of this JVA, if in the opinion of Managing Partner
it is necessary or desireable to record the same in lieu of recording the JVA
in its entirety or to reflect any change in the status of the Partnership, or
a cancellation of this Partnership when the Partnership is dissolved.
ARTICLE XXVI
PRIORITY OF AGREEMENT
To the extent, and in those cases where, the laws of the State of
Washington now or hereafter in force and effect, (i) are inconsistent or in
conflict with, or (ii) limit, qualify or restrict the powers and authority of
Managing Partner under this JVA (as of the date hereof or as the same may be
modified, supplemented or amended hereafter), then such laws or any part or
parts thereof or the interpretation, construction or application thereof, as
respects the powers and authority of Managing Partner herein, shall be deemed
(to the extent, under the laws of the State of Washington, parties by
agreement may effect such result) superseded by the provisions of this JVA.
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ARTICLE XXVII
DEFINITIONS; MISCELLANEOUS PROVISIONS
Section 27.1 As used in this JVA, the following terms shall have the
following respective meanings:
(A) The term "Person(s)" shall refer to and include individuals,
partnerships, firms, associations, trusts, corporations (or any other form of
juridical or business entity), governments or governmental bodies.
(B) The term "Bankruptcy" shall be deemed to include: (1) the
assignment of the property of Managing Partner for the benefit of creditors,
or (2) the filing by Managing Partner of a voluntary petition, under the laws
of the United States or any state, in bankruptcy, in insolvency, for
reorganization or for appointment of a receiver or trustee, or (3) the filing
of an involuntary petition for bankruptcy or insolvency of Managing Partner,
or for reorganization or for appointment of a receiver or trustee, which such
petition shall not be discharged within sixty (60) days after the filing
thereof.
(C) The terms "Parent or Holding Corporation" and "Subsidiary" shall
respectively mean any corporation which directly or indirectly owns or
controls more than fifty percent (50%) of the issued and outstanding voting
stock of another corporation, or of which another corporation directly or
indirectly owns or controls more than fifty percent (50%) of the issued and
outstanding voting stock of such corporation, as the applicable case may be.
(D) Whenever in this JVA the locative adverbs "herein", "hereunder"
or other like words are used, the same shall mean and refer to this JVA in
its entirety and not to any specific Article, Section, subsection or
subparagraph hereof.
Section 27.2 Whenever the singular number is used in this JVA and
when required by the context, the same shall include
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the plural, and the masculine, feminine and neuter genders shall each include
the others.
Section 27.3 The captions and headings in this JVA are for
convenience only and shall not be considered in interpreting any provision of
this JVA. No provision in this JVA is to be interpreted for or against any
party because that party or his legal representative drafted the provision.
Section 27.4 Each reference herein to an Exhibit refers to the
applicable Exhibit that is attached to this JVA, which may be amended by the
parties from time to time in accordance with Article XXI. All such Exhibits
constitute a part of this JVA and by this Section are expressly made a part
hereof.
Section 27.5 Whenever a Partner is requested to consent to or
approve of any matter with respect to which its consent or approval is
required by this JVA, such consent or approval shall be given in writing, and
shall (except as otherwise provided in this JVA) not be unreasonably withheld.
IN WITNESS WHEREOF, the Partners have executed this JVA as of the
day and year first above written.
MAY CENTERS, INC.
ATTEST:
/s/ Authorized Officer By /s/ Authorized Officer
- ---------------------------- ----------------------------
Secretary Vice President
VANCOUVER ASSOCIATES,
a limited partnership
By /s/ Harry Newman, Jr.
-----------------------------
Harry Newman, Jr.
and
/s/ Leroy Brettin
-----------------------------
Leroy Brettin
Its General Partners
56
<PAGE>
STATE OF Missouri )
) SS
COUNTY OF St. Louis )
On this 26th day of September, 1975 before me personally appeared
[Illegible] and Louis J. [Illegible], to me known to be the Vice President
and Secretary respectively of the corporation that executed the within and
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that they were authorized to execute said
instrument and that the seal affixed is the corporate seal of said
corporation.
In witness whereof, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ Notary Public
----------------------------------
Notary Public
My commission expires MY COMMISSION EXPIRES JULY 20, 1978
----------------------------------------
STATE OF )
) SS
COUNTY OF )
On this 29 day of September, 1975, before me personally appeared Harry
Newman, Jr. and Leroy Brettin to me known to be the General Partners of
Vancouver Associates, the Limited Partnership that executed the within and
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said Limited Partnership, for the uses and purposes
therein mentioned, and that they signed the same as their free and voluntary
act and deed.
In witness whereof, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ Notary Public
----------------------------------
Notary Public
My commission expires 8-6-78
--------------
57
<PAGE>
[LETTERHEAD]
May 12, 1976
Vancouver Associates
Post Office Box 40
Long Beach, California 90801
Attention: Harry Newman, Jr.
Re: Vancouver Mall
Vancouver, Washington
Gentlemen:
This letter, when signed and returned by you will serve to amend in the
manner set forth below, as of May 11, 1976, that certain Joint Venture
Agreement for Vancouver Mall dated September 28, 1975 by and between May
Centers, Inc. and Vancouver Mall Associates:
Section 11.5 (B) (1) is hereby deleted and a new Section 11.5 (B) (1)
is added as follows:
"If Operating Cash Flow, as hereinafter defined in Section 11.9, is in
excess of Four Hundred Thousand Dollars ($400,000), eighty percent (80%)
of such Operating Cash Flow up to and including Four Hundred Thousand
Dollars ($400,000) plus sixty percent (60%) of such Operating Cash Flow
in excess of Four Hundred Thousand Dollars ($400,000) shall be so paid
to Managing Partner and the balance of the Operating Cash Flow shall be
distributed to the Partners in accordance with the percentages set forth
in Section 11.3 hereof; and"
Except as modified herein the Joint Venture Agreement shall continue in full
force and effect in accordance with its terms.
MAY CENTERS, INC.
ATTEST:
/s/ Authorized Officer By /s/ Authorized Officer
- --------------------------- ---------------------------
Secretary Vice President
VANCOUVER ASSOCIATES,
a limited partnership
By /s/ Harry Newman, Jr.
-------------------------------
Harry Newman, Jr.
and
/s/ Leroy Brettin
-----------------------------------
Leroy Brettin
Its General Partners
<PAGE>
SECOND AMENDMENT
TO
JOINT VENTURE AGREEMENT
FOR
VANCOUVER MALL
This Second Amendment (the "Second Amendment") to Joint Venture
Agreement for Vancouver Mall (the "Partnership Agreement") is made and
entered into as of September 1, 1990, by and between MAY CENTERS OF
VANCOUVER, INC. ("MCV"), a Delaware corporation, and VANCOUVER ASSOCIATES
("Associates"), a California limited partnership.
RECITALS
A. Associates and MCV (formerly known as May Centers, Inc.)
have made and entered into the Partnership Agreement as of
September 29, 1975 as amended by a letter on May 12, 1976, for
the purpose of forming and establishing a general partnership
under the laws of the state of Washington known as Vancouver Mall
(the "Partnership") for the limited purposes set forth in the
Partnership Agreement.
B. May Centers, Inc., a Missouri corporation and parent
company of MCV ("MCI") desires to loan the Partnership funds up
to and not exceeding Three Hundred Thousand Dollars ($300,000.00)
(the "Funds") and the Partnership desires to borrow the Funds
from MCI (the "Loan").
<PAGE>
C. Section 7.5 of the Partnership Agreement sets forth
certain terms and conditions concerning loans made to the
Partnership by MCI or its subsidiaries, among others.
D. Section 11.5(B) of the Partnership Agreement provides
among other things, for limitations on payments by the
Partnership under certain loans.
THEREFORE, for good and valuable consideration and in consideration of
the mutual promises and covenants contained herein, Properties and TCI hereby
agree as follows:
1. APPROVAL OF LOAN. MCV and Associates hereby approve the making of
the Loan from MCI to the Partnership and shall execute a promissory note and
each of MCV and Associates shall execute its respective guaranty in the form
of the Promissory Note and each Guaranty attached hereto as Exhibit A (the
"Documents").
2. LOAN PERMITTED BY PARTNERSHIP. MCV and Associates agree the Loan
is in compliance with Section 7.5 of the Partnership Agreement and that in
the event of any conflict between Section 7.5 of the Partnership Agreement or
any other term or provision of the Partnership Agreement, the terms and
provisions of the Documents shall control.
3. SATISFACTION OF APPROVAL REQUIREMENT. MCV and Associates agree
that this Second Amendment shall satisfy the terms and provisions of the
Partnership Agreement and the requirement for any written approvals of the
Loan or the execution of the Documents as may be set forth in the Partnership
Agreement.
-2-
<PAGE>
4. PARTNERSHIP AGREEMENT IN FULL FORCE AND EFFECT. Except as
specifically set forth herein, the terms and provisions of the Partnership
Agreement shall remain in full force and effect. However, in the event of any
conflict between the terms and provisions of the Partnership Agreement and the
terms and provisions of this Second Amendment, the terms and provisions of
this Second Amendment shall control.
IN WITNESS WHEREOF, the undersigned have executed this Second Amendment
as of the date first written above.
Witness: VANCOUVER ASSOCIATES
By: /s/ Harry Newman, Jr.
- ------------------------------ -----------------------------------
Harry Newman, Jr.
By: /s/ LeRoy H. Brettin
- ------------------------------ -----------------------------------
LeRoy H. Brettin
MAY CENTERS OF VANCOUVER, INC.,
Attest: a Delaware corporation
/s/ Authorized Officer By: /s/ Authorized Officer
- ------------------------------ ------------------------------------
210/90/424
-3-
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$300,000.00 As of September 1, 1990
St. Louis, Missouri
This Promissory Note (the "Note") is given by VANCOUVER MALL, a
Washington general partnership ("Maker") and with an address of c/o May
Centers, Inc., 611 Olive Street, Suite 1555, St. Louis, Missouri 63101, to
MAY CENTERS, INC., a Missouri corporation ("Holder") with an address of 611
Olive Street, Suite 1555, St. Louis, Missouri 63101.
For value received, Maker hereby covenants and agrees with Holder as
follows:
1. The term "Principal Amount" shall mean the sum borrowed by Maker up
to an amount of Three Hundred Thousand Dollars ($300,000.00).
2. The term "Interest Rate" shall mean a variable rate which is May
Centers, Inc. cost of funds plus .75%.
3. The term "Commencement Date" shall mean the date Maker first borrows
any of the Principal Amount from Holder.
4. The term "Principal Payment Date" shall mean the date(s) Maker shall
pay to Holder the Principal Amount which has been borrowed by Maker and is
outstanding which is the date on which the construction loan for the
renovation of Vancouver Mall is closed.
5. The term "Interest Payment Date(s)" shall mean the date(s) Maker
shall pay the interest accruing on the Principal Amount to Holder which shall
be on the last day of each month beginning on the last day of the first
month following the month in which the Commencement Date falls.
6. Maker does hereby covenant and promise to pay to the order of Holder,
its successors and assigns on the Principal Payment Date, that portion of the
Principal Amount which has been borrowed by Maker and is outstanding on the
Principal Payment Date and on each of the Interest Payment Dates interest at
the Interest Rate accruing from the Commencement Date to the first Interest
Payment Date or from the immediately preceding Interest Payment Date to the
next succeeding Interest Payment Date, as the case may be, without deduction
or offset of any kind whatsoever in lawful money of the United States of
America, at Holder's option either (a) by delivering a check at least two
business days prior to the Principal Payment Date or Interest Payment Date,
as the case may be, or (b) in immediately available funds on the Principal
Payment Date or the Interest Payment Date, as the case may be.
Exhibit A, Page 1 of 14
<PAGE>
7. Maker shall have the right to prepay all or any part of the
Principal Amount and the interest accruing thereon without penalty at any
time, except as follows: If Holder has borrowed a sum equal to the Principal
Amount from an institutional investor in order to loan Maker the Principal
Amount (the "Institutional Loan") then Maker shall pay Holder, in addition to
all other payments then due and owing to Holder, a premium which shall be
equal to the premium, if any, charged by such institutional investor to
Holder because of the prepayment by Holder of sums owed under the
Institutional Loan (the "Prepayment Penalty"). All determinations of the
amount of the Prepayment Penalty shall be made by such institutional investor
and such institutional investor's determination shall be final, binding and
conclusive upon Maker. In such event, Holder shall submit to Maker
documentation evidencing such determination by such institutional investor.
8. Maker hereby makes the following covenants, warranties and
representations to Holder:
(a) Maker was duly organized and continues to exist as a general
partnership under the laws of the state of Washington.
(b) The execution and delivery of this Note was duly authorized by
Maker and represents the binding acts of Maker.
(c) Maker shall not assert a defense or claim, in any action or
proceedings initiated to collect the amounts due under this Note, that
the Interest Rate was usurious.
(d) Neither the execution nor the delivery by the Maker of this
Note shall constitute, either by itself or with the delivery of notice,
the passage of time, or both, an event of default under the terms of the
Joint Venture Agreement dated September 29, 1975 as amended on May 12,
1975, and as amended as of September 1, 1990, or any other agreement or
instrument to which the Maker is a party or under which the Maker is
obligated.
9. The occurrence of any of the following events shall constitute an
"Event of Default" hereunder:
(a) The failure by Maker to make the payment of Principal and
interest hereunder when such Principal and interest become due, which
failure shall not have been cured within ten (10) days after delivery by
Holder of written notice of such nonpayment.
Exhibit A, Page 2 of 14
-2-
<PAGE>
(b) The failure by Maker to perform or abide by any of the
covenants, conditions, provisions or terms contained in this Note or the
breach of any warranty made by Maker under this Note provided that such
failure or breach shall not have been cured within thirty (30) days
after the delivery by Holder to Maker of written notice of such default.
(c) Maker becomes insolvent or unable to pay its debts as they
mature or bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar proceedings are instituted by or against Maker
under any bankruptcy, insolvency or similar law now or hereafter in
effect; provided that in the case of proceedings instituted against
Maker, Maker shall have a period of thirty (30) days in which to cause
such proceeding to be terminated.
10. Upon the occurrence of any Event of Default, the Holder may, at its
sole option, declare this Note, all interest accrued thereon, and any and all
other moneys which may be due and owing by Maker to Holder, to be immediately
due and payable without notice of any kind; any expenses incurred by Holder
in so doing shall be deemed to be additional principal indebtedness under the
terms of this Note and shall bear interest at the Interest Rate accruing from
the date such expenses were incurred by Holder. In the event of such
acceleration because of an Event of Default, the Maker shall pay the
Prepayment Penalty, and such unpaid Principal Amount and any other sum owed by
Maker pursuant to this Note shall accrue interest at a variable interest rate
equal to the sum of the Corporate Base Rate charged from time to time by The
Boatman's National Bank of St. Louis plus two percent (2%).
11. If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, probate or other
court, whether before or after the Payment Date, or should this Note be
placed in the hands of attorneys for collection after the occurrence of an
Event of Default, Maker agrees to pay all costs of collection, including but
not limited to, reasonable attorneys' fees incurred by the Holder in such
collection.
12. Maker as well as all others who may become liable for all or any
part of this Note expressly, jointly and severally waive presentment for
payment, protest and demand, notice of protest, demand and dishonor, and
non-payment of this Note as well as diligence of collection and hereby
consent that Holder may extend the time of payment or otherwise modify the
terms of payment of any part of the whole of the debt evidenced by this Note,
which extensions and modifications shall not affect the liability of any
party hereto; and they further agree that Holder (a) may accept, by way of
compromise or settlement, from any one or more of the parties liable
hereunder, a sum or sums less than the amount of this Note, and (b) may give
releases to any parties without affecting the liability of any other party
for the unpaid balance. Any such renewals or extensions may be made and any
such
Exhibit A, Page 3 of 14
-3-
<PAGE>
partial payments accepted or releases given without notice to any parties.
13. Holder shall not be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by Holder, and then only to the extent specifically set forth
in writing. A waiver as to one event shall not be construed as continuing or as
a bar to or waiver of any right or remedy to a subsequent event.
14. Any notice to or demand upon the parties hereto shall be in writing
and shall be deemed to have been sufficiently given or served for all purposes
herein set forth if mailed by registered or certified mail, addressed to such
party at the address first set forth in this Note, or to such other address in
lieu thereof for such party as it may designate by written notice made to the
other party hereto in accordance with this Paragraph 14.
15. This instrument shall be governed by and construed according to the
laws of the State of Missouri.
16. Whenever used, the singular number shall include the plural, the
plural the singular, the use of any gender shall be applicable to all genders,
and the word "Holder" and "Maker" shall be deemed to include the respective
heirs, personal representatives, successors and assigns of Holder and Maker.
IN WITNESS WHEREOF, intending to be legally bound hereby, the undersigned
have hereunto set their hands and seals the day and year first above written.
VANCOUVER MALL
By: May Centers of Vancouver,
Inc., general partner
Attest:
By:
- ----------------------------------- --------------------------------
Witness: By: Vancouver Associates
By:
- ----------------------------------- --------------------------------
Harry Newman, Jr.
Witness:
By:
- ----------------------------------- --------------------------------
LeRoy H. Brettin
210/90/404
-4- Exhibit A, Page 4 of 14
<PAGE>
STATE OF ______________ )
) SS.
_____ OF ______________ )
On this _____ day of _______________, 19__, before me personally
appeared_________________ and _________________ to me known to be the
_________________ and _________________, respectively, of May Centers of
Vancouver, Inc., a general partner of Vancouver Mall that executed the within
and foregoing instrument, and acknowledged this instrument to be the free and
voluntary act and deed of such corporation and partnership, for the uses and
purposes therein mentioned, and on oath stated that they were authorized to
execute this instrument and that the seal affixed is the corporate seal of such
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
----------------------------------------
Notary Public
My Commission Expires:
STATE OF ______________ )
) SS.
_____ OF ______________ )
On this _____ day of ________________, 19__, before me personally appeared
__________________ a general partner of Vancouver Associates, a general partner
of Vancouver Mall that executed the within and foregoing instrument, and
acknowledged this instrument to be the free and voluntary act and deed of such
corporation and partnership, for the uses and purposes therein mentioned, and on
oath stated that they were authorized to execute this instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
----------------------------------------
Notary Public
My Commission Expires:
-5- Exhibit A, Page 5 of 14
<PAGE>
STATE OF ______________ )
) SS.
_____ OF ______________ )
On this _____ day of ________________, 19__, before me personally appeared
__________________ a general partner of Vancouver Associates, a general partner
of Vancouver Mall that executed the within and foregoing instrument, and
acknowledged this instrument to be the free and voluntary act and deed of such
corporation and partnership, for the uses and purposes therein mentioned, and on
oath stated that they were authorized to execute this instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
----------------------------------------
Notary Public
My Commission Expires:
210/90/404
-6- Exhibit A, Page 6 of 14
<PAGE>
GUARANTY
THIS GUARANTY (the "Guaranty") is made as of the 1st day of September,
1990, by MAY CENTERS OF VANCOUVER, INC. (the "Guarantor"), to and for the
benefit of MAY CENTERS, INC., a Missouri corporation ("MCI").
RECITALS:
(A) Guarantor is a a general partner of Vancouver Mall, a Washington
general partnership ("Maker").
(B) Concurrently herewith, Maker has executed a promissory note (the
"Promissory Note") in favor of MCI in the principal amount of up to Three
Hundred Thousand Dollars ($300,000.00) (the "Principal Amount").
(C) Guarantor shall be responsible for paying fifty percent (50%) of (i)
the outstanding Principal Amount and (ii) all other sums owed pursuant to the
Promissory Note.
(D) It is a condition precedent to the execution of the Promissory Note
that Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of and as an inducement to the loan by MCI
of money pursuant to the Promissory Note, and in consideration of the above
recitals and other good and valuable consideration paid by MCI to Guarantor and
intending to be legally bound hereby, Guarantor does hereby covenant and agree
as follows:
1. Guarantor hereby absolutely, unconditionally and irrevocably
guarantees to MCI that Guarantor is and shall be directly liable to MCI, for the
full and prompt payment of fifty percent (50%) of all amounts (including, but
not limited to, principal and interest) due from time to time under the
Promissory Note (the "Guaranteed Obligations") and Guarantor does hereby become
surety to Landlord, its successors and assigns, for and with respect to the
Guaranteed Obligations.
2. Guarantor does hereby covenant and agree to and with MCI, that if
default shall at any time be made by Maker, in the payment of any sums payable
by Maker under the Promissory Note or in the performance of any of the
obligations under the Promissory Note, Guarantor will pay such sums to MCI, any
arrearages thereof (including, without limitation, any and all interest or
additional charges as provided in the Promissory Note), and will faithfully
perform and fulfill all of such obligations up to the amount of the Guaranteed
Obligations, and will pay to MCI all damages and all costs and expenses up to
the amount of the Guaranteed Obligations that may arise in consequence of any
default by Maker under the Promissory Note (including, without limitation, all
Exhibit A, Page 7 of 14
<PAGE>
attorneys' fees and any and all expenses incurred by MCI or caused by any such
default and/or by the enforcement of this Guaranty).
3. This Guaranty is an absolute and unconditional guaranty of payment and
of performance and is a surety agreement. Guarantor's liability hereunder is
direct and may be enforced immediately without MCI being required to resort to
any other right, remedy or security and this Guaranty shall be enforceable
immediately against Guarantor, without the necessity for any suit or proceedings
on MCI's part of any kind or nature whatsoever against Maker or any other
guarantor and without the necessity of any notice of non-payment,
non-performance or non-observance or the continuance of any such default or of
any notice of acceptance of this Guaranty or of MCI's intention to act in
reliance herein or of any other notice or demand to which Guarantor might
otherwise be entitled, all of which Guarantor hereby expressly waives; and
Guarantor hereby expressly agrees that the validity of this Guaranty and the
obligations of Guarantor hereunder shall in no manner be terminated, affected,
or impaired by reason of the assertion or the failure to assert by MCI against
Maker or any other guarantor or of any of the rights or remedies reserved to
MCI pursuant to the provisions of the Promissory Note.
4. This Guaranty shall be a continuing Guaranty, and (whether or not
Guarantor shall have notice or knowledge of any of the following) the liability
and obligation of Guarantor hereunder shall be absolute and unconditional
irrespective of:
(i) any amendment or modification of, or supplement to, or extension
or renewal of the Promissory Note or any assignment or transfer thereof.
Notwithstanding the foregoing, Guarantor shall not be liable for any
increased obligation of Maker under the Promissory Note, which obligation
has been increased because of any amendment, modification, or supplement to
the Promissory Note between Maker and any assignee or transferee after an
assignment or transfer of the Promissory Note, unless Guarantor has given
its written consent to such amendment, modification or supplement to MCI;
(ii) any exercise or non-exercise of any right, power, remedy or
privilege under or in respect to the Promissory Note or this Guaranty or
any waiver, consent or approval by MCI with respect to any of the
covenants, terms, conditions or agreements contained in the Promissory Note
or any indulgences, forbearances or extensions of time for performance or
observance allowed to Maker from time to time, at any time and for any
length of time;
(iii) any lack of validity or enforceability of the Promissory Note
or any other agreement or instrument relating thereto;
-2- Exhibit A, Page 8 of 14
<PAGE>
(iv) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition or liquidation or similar proceedings relating to
Maker, or its properties or creditors;
(v) any impairment, modification, change, release or limitation of
liability or obligation of Maker under the Lease (including, but not
limited to, any disaffirmance or abandonment by a trustee of Maker),
resulting from the operation of any present or future provision of the
Bankruptcy Reform Act of 1978 or any other similar federal or state
statute, or from the decisions of any court;
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Maker in respect of the
Promissory Note or the Guarantor in respect of the Promissory Note or the
Guarantor in respect of this Guaranty.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of the sums and any and all other charges by
Maker, under the Promissory Note, or performance and observance of any and all
of the obligations under the Promissory Note are rescinded, cancelled or
otherwise must be returned by MCI upon the insolvency, bankruptcy or
reorganization of Maker, all as though such payment had not been made and/or
such performance and observance had not occurred.
5. All of MCI's rights and remedies under the Promissory Note and under
this Guaranty are intended to be distinct, separate and cumulative and no such
right and remedy therein or herein mentioned is intended to be in exclusion of
or a waiver of any of the others. No termination of the Promissory Note shall
deprive MCI of any of its rights and remedies against Guarantor under this
Guaranty. This Guaranty shall apply to Maker's obligations pursuant to any
extension, renewal, amendment, modification and supplement of or to the
Promissory Note as well as to Maker's obligations thereunder during the original
term thereof in accordance with the original provisions thereof.
6. As a further inducement to MCI to make and enter into the loan as
documented by the Promissory Note and in consideration thereof, Guarantor
covenants and agrees that in any action or proceeding brought on, under or by
virtue of this Guaranty, Guarantor shall and does hereby waive trial by jury.
Guarantor agrees to pay MCI's reasonable attorneys' fees and all costs and other
expenses incurred in any collection or attempted collection or in any
negotiations relative to the obligations hereby guaranteed or in enforcing this
Guaranty against the undersigned.
-3- Exhibit A, Page 9 of 14
<PAGE>
7. This Guaranty shall be legally binding upon Guarantor, its successors
and assigns, heirs and personal representatives and shall inure to the benefit
of MCI, its successors and assigns. The word Maker is used herein to include
Maker as well as its successors and assigns.
8. This Guaranty shall be governed by, and constructed in accordance
with, the laws of the state of Missouri.
IN WITNESS WHEREOF, Guarantor, intending to be legally bound hereby, has
caused this Guaranty to be executed as of the date first written above.
GUARANTOR
ATTEST: MAY CENTERS OF VANCOUVER, INC.
By:
- ----------------------------------- -------------------------------------
210/90/406
-4- Exhibit A, Page 10 of 14
<PAGE>
GUARANTY
THIS GUARANTY (the "Guaranty") is made as of the 1st day of September,
1990, by Vancouver Associates, a California limited partnership (the
"Guarantor"), to and for the benefit of MAY CENTERS, INC., a Missouri
corporation ("MCI").
RECITALS:
(A) Guarantor is a general partner of Vancouver Mall, a Washington general
partnership ("Maker").
(B) Concurrently herewith, Maker has executed a promissory note (the
"Promissory Note") in favor of MCI in the principal amount of up to Three
Hundred Thousand Dollars ($300,000.00) (the "Principal Amounts").
(C) Guarantor shall be responsible for paying fifty percent (50%) of
(i) the outstanding Principal Amount and (ii) all other sums owed pursuant to
the Promissory Note.
(D) It is a condition precedent to the execution of the Promissory Note
that Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of and as an inducement to the loan by MCI
of money pursuant to the Promissory Note, and in consideration of the above
recitals and other good and valuable consideration paid by MCI to Guarantor and
intending to be legally bound hereby, Guarantor does hereby covenant and agree
as follows:
1. Guarantor hereby absolutely, unconditionally and irrevocably
guarantees to MCI that Guarantor is and shall be directly liable to MCI, for the
full and prompt payment of fifty percent (50%) of all amounts (including, but
not limited to, principal and interest) due from time to time under the
Promissory Note (the "Guaranteed Obligations") and Guarantor does hereby become
surety to Landlord, its successors and assigns, for and with respect to the
Guaranteed Obligations.
2. Guarantor does hereby covenant and agree to and with MCI, that if
default shall at any time be made by Maker, in the payment of any sums payable
by Maker under the Promissory Note or in the performance of any of the
obligations under the Promissory Note, Guarantor will pay such sums to MCI, any
arrearages thereof (including, without limitation, any and all interest or
additional charges as provided in the Promissory Note), and will faithfully
perform and fulfill all of such obligations up to the amount of the Guaranteed
Obligations, and will pay to MCI all damages and all costs and expenses up to
the amount of the Guaranteed Obligations that may arise in consequence of any
default by Maker under the Promissory Note (including, without limitation, all
Exhibit A, Page 11 of 14
<PAGE>
attorneys' fees and any and all expenses incurred by MCI or caused by any such
default and/or by the enforcement of this Guaranty).
3. This Guaranty is an absolute and unconditional guaranty of payment
and of performance and is a surety agreement. Guarantor's liability hereunder
is direct and may be enforced immediately without MCI being required to
resort to any other right, remedy or security and this Guaranty shall be
enforceable immediately against Guarantor, without the necessity for any suit
or proceedings on MCI's part of any kind or nature whatsoever against Maker
or any other guarantor and without the necessity of any notice of
non-payment, non-performance or non-observance or the continuance of any such
default or of any notice of acceptance of this Guaranty or of MCI's intention
to act in reliance herein or of any other notice or demand to which Guarantor
might otherwise be entitled, all of which Guarantor hereby expressly waives;
and Guarantor hereby expressly agrees that the validity of this Guaranty and
the obligations of Guarantor hereunder shall in no manner be terminated,
affected, or impaired by reason of the assertion or the failure to assert by
MCI against Maker or any other guarantor or of any of the rights or remedies
reserved to MCI pursuant to the provisions of the Promissory Note.
4. This Guaranty shall be a continuing Guaranty, and (whether or not
Guarantor shall have notice or knowledge of any of the following) the liability
and obligation of Guarantor hereunder shall be absolute and unconditional
irrespective of:
(i) any amendment or modification of, or supplement to, or extension
or renewal of the Promissory Note or any assignment or transfer thereof.
Notwithstanding the foregoing, Guarantor shall not be liable for any
increased obligation of Maker under the Promissory Note, which obligation
has been increased because of any amendment, modification, or supplement to
the Promissory Note between Maker and any assignee or transferee after an
assignment or transfer of the Promissory Note, unless Guarantor has given
its written consent to such amendment, modification or supplement to MCI;
(ii) any exercise or non-exercise of any right, power, remedy or
privilege under or in respect to the Promissory Note or this Guaranty or
any waiver, consent or approval by MCI with respect to any of the
covenants, terms, conditions or agreements contained in the Promissory Note
or any indulgences, forbearances or extensions of time for performance or
observance allowed to Maker from time to time, at any time and for any
length of time;
(iii) any lack of validity or enforceability of the Promissory Note
or any other agreement or instrument relating thereto;
-2- Exhibit A, Page 12 of 14
<PAGE>
(iv) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition or liquidation or similar proceedings relating to
Maker, or its properties or creditors;
(v) any impairment, modification, change, release or limitation of
liability or obligation of Maker under the Lease (including, but not
limited to, any disaffirmance or abandonment by a trustee of Maker),
resulting from the operation of any present or future provision of the
Bankruptcy Reform Act of 1978 or any other similar federal or state
statute, or from the decisions of any court;
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Maker in respect of the
Promissory Note or the Guarantor in respect of the Promissory Note or the
Guarantor in respect of this Guaranty.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of the sums and any and all other charges by
Maker, under the Promissory Note, or performance and observance of any and all
of the obligations under the Promissory Note are rescinded, cancelled or
otherwise must be returned by MCI upon the insolvency, bankruptcy or
reorganization of Maker, all as though such payment had not been made and/or
such performance and observance had not occurred.
5. All of MCI's rights and remedies under the Promissory Note and under
this Guaranty are intended to be distinct, separate and cumulative and no such
right and remedy therein or herein mentioned is intended to be in exclusion of
or a waiver of any of the others. No termination of the Promissory Note shall
deprive MCI of any of its rights and remedies against Guarantor under this
Guaranty. This Guaranty shall apply to Maker's obligations pursuant to any
extension, renewal, amendment, modification and supplement of or to the
Promissory Note as well as to Maker's obligations thereunder during the original
term thereof in accordance with the original provisions thereof.
6. As a further inducement to MCI to make and enter into the loan as
documented by the Promissory Note and in consideration thereof, Guarantor
covenants and agrees that in any action or proceeding brought on, under or by
virtue of this Guaranty, Guarantor shall and does hereby waive trial by jury.
Guarantor agrees to pay MCI's reasonable attorneys' fees and all costs and other
expenses incurred in any collection or attempted collection or in any
negotiations relative to the obligations hereby guaranteed or in enforcing this
Guaranty against the undersigned.
-3- Exhibit A, Page 13 of 14
<PAGE>
7. This Guaranty shall be legally binding upon Guarantor, its successors
and assigns, heirs and personal representatives and shall inure to the benefit
of MCI, its successors and assigns. The word Maker is used herein to include
Maker as well as its successors and assigns.
8. This Guaranty shall be governed by, and constructed in accordance
with, the laws of the state of Missouri.
IN WITNESS WHEREOF, Guarantor, intending to be legally bound hereby, has
caused this Guaranty to be executed as of the date first written above.
GUARANTOR
Witness: VANCOUVER ASSOCIATES
By:
- ----------------------------------- -------------------------------------
Harry Newman, Jr.
general partner
Witness:
By:
- ----------------------------------- -------------------------------------
LeRoy H. Brettin
general partner
-4- Exhibit A, Page 14 of 14
<PAGE>
THIRD AMENDMENT
TO
JOINT VENTURE AGREEMENT
FOR
VANCOUVER MALL
This Third Amendment (the "Third Amendment") to Joint Venture Agreement
for Vancouver Mall is made and entered into as of September 1, 1990, by and
between MAY CENTERS OF VANCOUVER, INC. ("MCV"), a Delaware corporation, and
VANCOUVER ASSOCIATES ("Associates"), a California limited partnership.
RECITALS
--------
A. Associates and MCV (formerly known as May Centers, Inc.) have
made and entered into a Joint Venture Agreement for Vancouver Mall as of
September 29, 1975 as amended by a letter on May 12, 1976, and as amended by
a Second Amendment to Joint Venture Agreement for Vancouver Mall made as of
September 1, 1990 (together the "Partnership Agreement"), for the purpose of
forming and establishing a general partnership under the laws of the state of
Washington known as Vancouver Mall (the "Partnership") for the limited
purposes set forth in the Partnership Agreement.
B. May Centers, Inc., a Missouri corporation and parent company of
MCV ("MCI") desires to loan the Partnership funds up to and not exceeding
$1,600,000.00 (the "Funds") and the Partnership desires from time to time to
borrow the Funds from MCI (the "Loan").
C. Section 7.5 of the Partnership Agreement sets forth certain
terms and conditions concerning loans made to the Partnership by MCI or its
subsidiaries, among others.
<PAGE>
D. Section 11.5(B) of the Partnership Agreement provides among other
things, for limitations on payments by the Partnership under certain loans.
THEREFORE, for good and valuable consideration and in consideration of
the mutual promises and covenants herein, Properties and TCI hereby agree as
follows:
1. APPROVAL OF LOAN. MCV and Associates hereby approve the making of
the Loan from MCI to the Partnership from time to time and shall execute a
promissory note and each of MCV and Associates shall execute its respective
guaranty in the general from of the Promissory Note and each Guaranty
attached hereto as Exhibit A (the "Documents").
2. LOAN PERMITTED BY PARTNERSHIP. MCV and Associates agree the Loan is
in compliance with Section 7.5 of the Partnership Agreement and that in the
event of any conflict between Section 7.5 of of the Partnership Agreement or
any other term or provision of the Partnership Agreement, the terms and
provisions of the Documents shall control.
3. SATISFACTION OF APPROVAL REQUIREMENT. MCV and Associates agree that
this Third Amendment shall satisfy the terms and provisions of the Partnership
Agreement and the requirement for any written approvals of the Loan or the
execution of the Documents as may be set forth in the Partnership Agreement.
4. PARTNERSHIP AGREEMENT IN FULL FORCE AND EFFECT. Except as
specifically set forth herein, the terms and provisions of the Partnership
Agreement shall remain in full force and effect. However, in the event of any
conflict between the terms and provisions of the Partnership Agreement and
the terms and provisions of this Third Amendment, the terms and provisions of
this Third Amendment shall control.
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Third Amendment
as of the date first written above.
Witness: VANCOUVER ASSOCIATES
/s/ Rosemary Yoon By: /s/ Harry Newman, Jr.
- ---------------------- -----------------------------
Harry Newman, Jr.
Witness:
/s/ Roni L. Gould By: /s/ LeRoy H. Brettin
- ---------------------- -----------------------------
LeRoy H. Brettin
MAY CENTERS OF VANCOUVER, INC.,
Attest: a Delaware corporation
/s/ Authorized Officer By: /s/ Authorized Officer
- ---------------------- -----------------------------
-3-
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$1,600,000.00 As of September 1, 1990
St. Louis, Missouri
This Promissory Note (the "Notes") is given by VANCOUVER MALL, a
Washington general partnership ("Maker") and with an address of c/o May
Centers, Inc., 611 Olive Street, Suite 1555, St. Louis, Missouri 63101, to
MAY CENTERS, INC., a Missouri corporation ("Holder") with an address of 611
Olive Street, Suite 1555, St. Louis, Missouri 63101.
For value received, Maker hereby covenants and agrees with Holder as
follows:
1. The term "Principal Amount" shall mean the sum borrowed by Maker up
to an amount of One Million Six Hundred Thousand Dollars ($1,600,000.00)
which shall be memorialized on the attached Exhibit A to this Promissory Note
as each portion of the Principal Amount is borrowed by Maker.
2. The term "Interest Rate" shall mean a variable interest rate equal
to the sum of the Corporate Base Rate charged from time to time by the
Boatmen's National Bank of St. Louis, Missouri plus one percent (1%).
3. The term "Commencement Date" shall mean the date Maker first borrows
any of the Principal Amount from Holder.
4. The term "Principal Payment Date" shall mean the date(s) Maker shall
pay to Holder the Principal Amount which has been borrowed by Maker and is
outstanding which is the date on which Maker has positive cash flow available
to pay the Principal Amount or portions thereof or on which a loan for a
financing of Vancouver Mall Shopping Center is closed, but in no event later
than December 31, 1992.
5. The term "Interest Payment Date(s)" shall mean the date(s) Maker
shall pay the interest accruing on the Principal Amount to Holder which shall
be on the last day of each month beginning on the last day of the first
month following the month in which the Commencement Date falls.
6. Maker does hereby covenant and promise to pay to the order of
Holder, its successors and assigns on the Principal Payment date, that
portion of the Principal Amount which has been borrowed by Maker and is
outstanding on the Principal Payment Date and on each of the Interest Payment
Dates interest at the Interest Rate accruing from the Commencement Date to
the first Interest Payment Date or from the immediately preceding Interest
Payment Date to the next succeeding Interest Payment Date, as the case may
be, without deduction or offset of any kind whatsoever in lawful money of the
United States of America, at Holder's option either (a) by delivering a check
at least two business days prior to the Principal Payment Date or Interest
Payment Date, as the case may be, or (b) in immediately available funds on
the Principal Payment Date or the Interest Payment Date, as the case may be.
<PAGE>
7. Maker shall have the right to prepay all or any part of the
Principal Amount and the interest accruing thereon without penalty at any
time, except as follows: If the Holder has borrowed a sum equal to the
Principal Amount from an institutional investor in order to loan Maker the
Principal Amount (the "Institutional Loan") then Maker shall pay Holder, in
addition to all other payments then due and owing to Holder, a premium which
shall be equal to the premium, if any, charged by such institutional investor
to Holder because of the prepayment by Holder of sums owed under the
Institutional Loan (the "Prepayment Penalty"). All determinations of the
amount of the Prepayment Penalty shall be made by such institutional investor
and such institutional investor's determination shall be final, binding and
conclusive upon Maker. In such event, Holder shall submit to Maker
documentation evidencing such termination by such institutional investor.
8. Maker hereby makes the following covenants, warranties and
representations to Holder:
(a) Maker was duly organized and continues to exist as a general
partnership under the laws of the state of Washington.
(b) The execution and delivery of this Note was duly authorized by
Maker and represents the binding acts of Maker.
(c) Maker shall not assert a defense or claim, in any action or
proceedings initiated to collect the amounts due under this Note, that
the Interest Rate was usurious.
(d) Neither the execution nor the delivery by the Maker of this Note
shall constitute, either by itself or with the delivery of notice, the
passage of time, or both, an event of default under the terms of the
Joint Venture Agreement dated September 29, 1975 as amended on May 12,
1975, and as amended by a Second Amendment as of September 1, 1990, and
as amended by a Third Amendment as of September 1, 1990, or any other
agreement or instrument to which the Maker is a party or under which the
Maker is obligated.
9. The occurrence of any of the following events shall constitute an
"Event of Default" hereunder":
(a) The failure by Maker to make the payment of Principal and
interest hereunder when such Principal and interest become due, which
failure shall not have been cured within ten (10 days after delivery by
Holder of written notice of such nonpayment.
(b) the failure by Maker to perform or abide by any of the
covenants, conditions, provisions or terms contained in this Note or the
breach of any warranty made by Maker under this Note provided that such
failure or breach shall not have been cured within thirty (3) days after
the delivery by Holder to Maker of written notice of such default.
(c) Maker becomes insolvent or unable to pay its debts as they
mature or bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar proceedings are instituted by or against Maker
under any
Exhibit A, Page 2 of 13
<PAGE>
bankruptcy, insolvency or similar law now or hereafter in effect; provided
that in the case of proceedings instituted against Maker, Maker shall have
a period thirty (30) days in which to cause such proceeding to be
terminated.
10. Upon the occurrence of any Event of Default, the Holder may, at its
sole option, declare this Note, all interest accrued thereon, and any and all
other moneys which may be due and owing by Maker to Holder, to be
immediately due and payable without notice of any kind; any expenses incurred
by Holder in so doing shall be deemed to be additional principal indebtedness
under the terms of this Note and shall bear interest at the Interest Rate
accruing from the date such expenses were incurred by Holder. In the event of
such acceleration because of an Event of Default, the Maker shall pay the
Prepayment Penalty, and such unpaid Principal Amount and any other sum owed
by Maker pursuant to this Note shall accrue interest at a variable interest
rate equal to the sum of the Corporate Base Rate charged from time to time by
the Boatman's National Bank of St. Louis plus three percent (3%).
11. If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, probate or other
court, whether before or after the Payment Date, or should this Note be
placed in the hands of attorneys for collection after the occurrence of an
Event of Default, Maker agrees to pay all costs of collection, including but
not limited to, reasonable attorneys' fees incurred by the Holder in such
collection.
12. Maker as well as all others who may become liable for all or any
part of this Note expressly, jointly and severally waive presentment for
payment, protest and demand, notice of protest, demand and dishonor, and
non-payment of this Note as well as diligence of collection and hereby
consent that Holder may extend the time of payment or otherwise modify the
terms of payment of any part of the whole of the debt evidenced by this Note,
which extensions and modifications shall not affect the liability of any
party hereto; and they further agree that Holder (a) may accept, by way of
compromise or settlement, from any one or more of the parties liable
hereunder, a sum or sums less than the amount of this Note, and (b) may give
releases to any parties without affecting the liability of any other party
for the unpaid balance. Any such renewals or extensions may be made and any
such partial payments accepted or releases given without notice to any
parties.
13. Holder shall not be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by Holder, and then only to the extent specifically set
forth in writing. A waiver as to one event shall not be construed as
continuing or as a bar to or waiver of any right or remedy to a subsequent
event.
14. Any notice to or demand upon the parties hereto shall be in writing
and shall be deemed to have been sufficiently given or served for all
purposes herein set forth if mailed by registered or certified mail,
addressed to such party at the address first set forth in this Note, or to
such other address in lieu thereof for such party as it may designate by
written notice made to the other party hereto in accordance with this
Paragraph 14.
15. This instrument shall be governed by and construed according to the
laws of the State of Missouri.
Exhibit A, Page 3 of 13
<PAGE>
16. Whenever used, the singular number shall include the plural, the
plural the singular, the use of any gender shall be applicable to all
genders, and the word "Holder" and "Maker" shall be deemed to include the
respective heirs, personal representatives, successors and assigns of Holder
and Maker.
IN WITNESS WHEREOF, intending to be legally bound hereby, the
undersigned have hereunto set their hands and seals the day and year first
above written.
VANCOUVER MALL
Attest: By: May Centers of Vancouver,
Inc., general partner
By:
- --------------------------- ---------------------------
Witness: By: Vancouver Associates
By:
- --------------------------- ---------------------------
Harry Newman, Jr.
Witness:
By:
- --------------------------- ---------------------------
LeRoy H. Brettin
Exhibit A, Page 4 of 13
<PAGE>
STATE OF )
--------- ) SS.
OF )
- ------ ---------
On this _____ day of ____________, 19__, before me personally appeared
______________ and ______________ to me known to be the ______________ and
______________, respectively of May Centers of Vancouver, Inc., a general
partner of Vancouver Mall that executed the within and foregoing instrument,
and acknowledged this instrument to be the free and voluntary act and deed of
such corporation and partnership, for the uses and purposes therein
mentioned, and on oath stated that they were authorized to execute this
instrument and that the seal affixed is the corporate seal of such
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand an affixed my official
seal the day and year first above written.
------------------------------
Notary Public
My Commission Expires:
STATE OF )
--------- ) SS.
OF )
- ------ ---------
On this _____ day of ______________, 19__, before me personally appeared
_______________ a general partner of Vancouver Associates, a general partner
of Vancouver Mall that executed the within and foregoing instrument, and
acknowledged this instrument to be the free and voluntary act and deed of such
corporation and partnership, for the uses and purposes therein mentioned, and
on oath stated that they were authorized to execute this instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
------------------------------
Notary Public
My Commission Expires:
Exhibit A, Page 5 of 13
<PAGE>
STATE OF _______________)
) SS.
_________ of ___________)
On this _______ day of _____________, 19__, before me personally
appeared _______________ a general partner of Vancouver Associates, a general
partner of Vancouver Mall that executed the within and foregoing instrument,
and acknowledged this instrument to be the free and voluntary act and deed
of such corporation and partnership, for the uses and purposes therein
mentioned, and on oath stated that they were authorized to execute this
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
_____________________________________
Notary Public
My Commission Expires:
210/90/424
Exhibit A, Page 6 of 13
<PAGE>
EXHIBIT A
TO
PROMISSORY NOTE
<TABLE>
<CAPTION>
TOTAL NET PRINCIPAL
PORTION OF PRINCIPAL PRINCIPAL AMOUNT BORROWED
DATE AMOUNT BORROWED AMOUNT REPAID AND OUTSTANDING
- ---- -------------------- ------------- -------------------
<S> <C> <C> <C>
</TABLE>
Exhibit A, Page 7 of 13
<PAGE>
GUARANTY
THIS GUARANTY (the "Guaranty") is made as of the ____ day of __________,
____, by MAY CENTERS OF VANCOUVER, INC. (the "Guarantor"), to and for the
benefit of MAY CENTERS, INC., a Missouri corporation ("MCI").
RECITALS:
(A) Guarantor is a general partner of Vancouver Mall, a Washington
general partnership ("Maker").
(B) Concurrently herewith, Maker has executed a promissory note (the
"Promissory Note") in favor of MCI in the principal amount of up to One
Million Six Hundred Thousand Dollars ($1,600,000.00) (the "Principal Amount").
(C) Guarantor shall be responsible for paying fifty percent (50%) of (i)
the outstanding Principal Amount and (ii) all other sums owed pursuant to the
Promissory Note.
(D) It is a condition precedent to the execution of the Promissory Note
that Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of and as an inducement to the loan by
MCI of money pursuant to the Promissory Note, and in consideration of the
above recitals and other good and valuable consideration paid by MCI to
Guarantor and intending to be legally bound hereby, Guarantor does hereby
covenant and agree as follows:
1. Guarantor hereby absolutely, unconditionally and irrevocably
guarantees to MCI that Guarantor is and shall be directly liable to MCI, for
the full and prompt payment of fifty percent (50%) of all amounts (including,
but not limited to, principal and interest) due from time to time under the
Promissory Note (the "Guaranteed Obligations") and Guarantor does hereby
become surety to Landlord, its successors and assigns, for and with respect
to the Guaranteed Obligations.
2. Guarantor does hereby covenant and agree to and with MCI, that if
default shall at any time be made by Maker, in the payment of any sums payable
by Maker under the Promissory Note or in the performance of any of the
obligations under the Promissory Note, Guarantor will pay such sums to MCI,
any arrearages thereof (including, without limitation, any and all interest
or additional charges as provided in the Promissory Note), and will faithfully
perform and fulfill all of such obligations up to the amount of the Guaranteed
Obligations, and will pay to MCI all damages and all costs and expenses up
to the amount of the Guaranteed Obligations that may arise in consequence of
any default by Maker under the Promissory Note (including, without limitation,
all attorneys' fees and any and all expenses incurred by MCI or caused by any
such default and/or by the enforcement of this Guaranty).
3. This Guaranty is an absolute and unconditional guaranty of payment and
of performance and is a surety agreement. Guarantor's liability hereunder is
direct and may be enforced immediately without MCI being required to resort
to any other right, remedy or security and this Guaranty shall be enforceable
Exhibit A, Page 8 of 13
<PAGE>
immediately against Guarantor, without the necessity for any suit or
proceedings on MCI's part of any kind or nature whatsoever against Maker or
any other guarantor and without the necessity of any notice of non-payment,
non-performance or non-observance or the continuance of any such default or
of any notice of acceptance of this Guaranty or of MCI's intention to act
in reliance herein or of any other notice or demand to which Guarantor might
otherwise be entitled, all of which Guarantor hereby expressly waives; and
Guarantor hereby expressly agrees that the validity of this Guaranty and the
obligations of Guarantor hereunder shall in no manner be terminated, affected,
or impaired by reason of the assertion or the failure to assert by MCI
against Maker or any other guarantor or of any of the rights or remedies
reserved to MCI pursuant to the provisions of the Promissory Note.
4. This Guaranty shall be a continuing Guaranty, and (whether or not
Guarantor shall have notice or knowledge of any of the following) the
liability and obligation of Guarantor hereunder shall be absolute and
unconditional irrespective of:
(i) any amendment or modification of, or supplement to, or
extension or renewal of the Promissory Note or any assignment or
transfer thereof. Notwithstanding the foregoing, Guarantor shall not be
liable for any increased obligation of Maker under the Promissory Note,
which obligation has been increased because of any amendment,
modification, or supplement to the Promissory Note between Maker and any
assignee or transferee after an assignment or transfer of the Promissory
Note, unless Guarantor has given its written consent of such amendment,
modification or supplement to MCI;
(ii) any exercise or non-exercise of any right, power, remedy or
privilege under or in respect to the Promissory Note or this Guaranty or
any waiver, consent or approval by MCI with respect to any of the
covenants, terms, conditions or agreements contained in the Promissory
Note or any indulgences, forbearances or extensions of time for
performance or observance allowed to Maker from time to time, at any
time for any length of time;
(iii) any lack of validity or enforceability of the Promissory Note
or any other agreement or instrument relating thereto;
(iv) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition or liquidation or similar proceedings relating
to Maker, or its properties or creditors;
(v) any impairment, modification, change, release or limitation of
liability or obligation of Maker under the Lease (including, but
not limited to, any disaffirmance or abandonment by a trustee of Maker),
resulting from the operation of any present or future provision of the
Bankruptcy Reform Act of 1978 or any other similar federal or state
statute, or from the decisions of any court;
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Maker in respect of the
Promissory Note or the Guarantor in respect of the Promissory Note or
the Guarantor in respect of this Guaranty.
Exhibit A, Page 9 of 13
<PAGE>
This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of the sums and any and all other
charges by Maker, under the Promissory Note, or performance and observance of
any and all of the obligations under the Promissory Note are rescinded,
cancelled or otherwise must be returned by MCI upon the insolvency,
bankruptcy or reorganization of Maker, all as though such payment had not
been made and/or such performance and observance had not occurred.
5. All of MCI's rights and remedies under the Promissory Note and under
this Guaranty are intended to be distinct, separate and cumulative and no such
right and remedy therein or herein mentioned is intended to be in exclusion of
or a waiver of any of the others. No termination of the Promissory Note shall
deprive MCI of any of its rights and remedies against Guarantor under this
Guaranty. This Guaranty shall apply to Maker's obligations pursuant to any
extension, renewal, amendment, modification and supplement of or to the
Promissory Note as well as to Maker's obligations thereunder during
the original term thereof in accordance with the original provisions thereof.
6. As a further inducement to MCI to make and enter into the loan as
documented by the Promissory Note and in consideration thereof, Guarantor
covenants and agrees that in any action or proceeding brought on, under or by
virtue of this Guaranty, Guarantor shall and does hereby waive trial by
jury. Guarantor agrees to pay MCI's reasonable attorneys' fees and all costs
and other expenses incurred in any collection or attempted collection or in
any negotiations relative to the obligations hereby guaranteed or in
enforcing this Guaranty against the undersigned.
7. This Guaranty shall be legally binding upon Guarantor, its successors
and assigns, heirs and personal representatives and shall inure to the benefit
of MCI, its successors and assigns. The word Maker is used herein to include
Maker as well as its successors and assigns.
8. This Guaranty shall be governed by, and constructed in accordance
with, the laws of the state or Missouri.
IN WITNESS WHEREOF, Guarantor, intending to be legally bound hereby, has
caused this Guaranty to be executed as of the date first written above.
GUARANTOR
ATTEST: MAY CENTERS OF VANCOUVER, INC.
__________________________________ By: __________________________________
210/90/424
Exhibit A, Page 10 of 13
<PAGE>
GUARANTY
THIS GUARANTY (the "Guaranty") is made as of the ____ day of __________,
____, by Vancouver Associates, a California limited partnership (the
"Guarantor"), to and for the benefit of MAY CENTERS, INC., a Missouri
corporation ("MCI").
RECITALS:
(A) Guarantor is a general partner of Vancouver Mall, a Washington
general partnership ("Maker").
(B) Concurrently herewith, Maker has executed a promissory note (the
"Promissory Note") in favor of MCI in the principal amount of up to One
Million Six Hundred Thousand Dollars ($1,600,000.00) (the "Principal Amount").
(C) Guarantor shall be responsible for paying fifty percent (50%) of (i)
the outstanding Principal Amount and (ii) all other sums owed pursuant to the
Promissory Note.
(D) It is a condition precedent to the execution of the Promissory Note
that Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of and as an inducement to the loan by
MCI of money pursuant to the Promissory Note, and in consideration of the
above recitals and other good and valuable consideration paid by MCI to
Guarantor and intending to be legally bound hereby, Guarantor does hereby
covenant and agree as follows:
1. Guarantor hereby absolutely, unconditionally and irrevocably
guarantees to MCI that Guarantor is and shall be directly liable to MCI, for
the full and prompt payment of fifty percent (50%) of all amounts (including,
but not limited to, principal and interest) due from time to time under the
Promissory Note (the "Guaranteed Obligations") and Guarantor does hereby
become surety to Landlord, its successors and assigns, for and with respect
to the Guaranteed Obligations.
2. Guarantor does hereby covenant and agree to and with MCI, that if
default shall at any time be made by Maker, in the payment of any sums payable
by Maker under the Promissory Note or in the performance of any of the
obligations under the Promissory Note, Guarantor will pay such sums to MCI,
any arrearages thereof (including, without limitation, any and all interest
or additional charges as provided in the Promissory Note), and will faithfully
perform and fulfill all of such obligations up to the amount of the Guaranteed
Obligations, and will pay to MCI all damages and all costs and expenses up
to the amount of the Guaranteed Obligations that may arise in consequence of
any default by Maker under the Promissory Note (including, without limitation,
all attorneys' fees and any and all expenses incurred by MCI or caused by any
such default and/or by the enforcement of this Guaranty).
3. This Guaranty is an absolute and unconditional guaranty of payment and
of performance and is a surety agreement. Guarantor's liability hereunder is
direct and may be enforced immediately without MCI being required to resort
to any other right, remedy or security and this Guaranty shall be enforceable
Exhibit A, Page 11 of 13
<PAGE>
immediately against Guarantor, without the necessity for any suit or
proceedings on MCI's part of any kind or nature whatsoever against Maker or
any other guarantor and without the necessity of any notice of non-payment,
non-performance or non-observance or the continuance of any such default or
of any notice of acceptance of this Guaranty or of MCI's intention to act
in reliance herein or of any other notice or demand to which Guarantor might
otherwise be entitled, all of which Guarantor hereby expressly waives; and
Guarantor hereby expressly agrees that the validity of this Guaranty and the
obligations of Guarantor hereunder shall in no manner be terminated, affected,
or impaired by reason of the assertion or the failure to assert by MCI
against Maker or any other guarantor or of any of the rights or remedies
reserved to MCI pursuant to the provisions of the Promissory Note.
4. This Guaranty shall be a continuing Guaranty, and (whether or not
Guarantor shall have notice or knowledge of any of the following) the
liability and obligation of Guarantor hereunder shall be absolute and
unconditional irrespective of:
(i) any amendment or modification of, or supplement to, or
extension or renewal of the Promissory Note or any assignment or
transfer thereof. Notwithstanding the foregoing, Guarantor shall not be
liable for any increased obligation of Maker under the Promissory Note,
which obligation has been increased because of any amendment,
modification, or supplement to the Promissory Note between Maker and any
assignee or transferee after an assignment or transfer of the Promissory
Note, unless Guarantor has given its written consent of such amendment,
modification or supplement to MCI;
(ii) any exercise or non-exercise of any right, power, remedy or
privilege under or in respect to the Promissory Note or this Guaranty or
any waiver, consent or approval by MCI with respect to any of the
covenants, terms, conditions or agreements contained in the Promissory
Note or any indulgences, forbearances or extensions of time for
performance or observance allowed to Maker from time to time, at any
time for any length of time;
(iii) any lack of validity or enforceability of the Promissory Note
or any other agreement or instrument relating thereto;
(iv) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition or liquidation or similar proceedings relating
to Maker, or its properties or creditors;
(v) any impairment, modification, change, release or limitation of
liability or obligation of Maker under the Lease (including, but
not limited to, any disaffirmance or abandonment by a trustee of Maker),
resulting from the operation of any present or future provision of the
Bankruptcy Reform Act of 1978 or any other similar federal or state
statute, or from the decisions of any court;
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Maker in respect of the
Promissory Note or the Guarantor in respect of the Promissory Note or
the Guarantor in respect of this Guaranty.
Exhibit A, Page 12 of 13
<PAGE>
This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of the sums and any and all other
charges by Maker, under the Promissory Note, or performance and observance of
any and all of the obligations under the Promissory Note are rescinded,
cancelled or otherwise must be returned by MCI upon the insolvency,
bankruptcy or reorganization of Maker, all as though such payment had not
been made and/or such performance and observance had not occurred.
5. All of MCI's rights and remedies under the Promissory Note and under
this Guaranty are intended to be distinct, separate and cumulative and no such
right and remedy therein or herein mentioned is intended to be in exclusion of
or a waiver of any of the others. No termination of the Promissory Note shall
deprive MCI of any of its rights and remedies against Guarantor under this
Guaranty. This Guaranty shall apply to Maker's obligations pursuant to any
extension, renewal, amendment, modification and supplement of or to the
Promissory Note as well as to Maker's obligations thereunder during
the original term thereof in accordance with the original provisions thereof.
6. As a further inducement to MCI to make and enter into the loan as
documented by the Promissory Note and in consideration thereof, Guarantor
covenants and agrees that in any action or proceeding brought on, under or by
virtue of this Guaranty, Guarantor shall and does hereby waive trial by
jury. Guarantor agrees to pay MCI's reasonable attorneys' fees and all costs
and other expenses incurred in any collection or attempted collection or in
any negotiations relative to the obligations hereby guaranteed or in
enforcing this Guaranty against the undersigned.
7. This Guaranty shall be legally binding upon Guarantor, its successors
and assigns, heirs and personal representatives and shall inure to the benefit
of MCI, its successors and assigns. The word Maker is used herein to include
Maker as well as its successors and assigns.
8. This Guaranty shall be governed by, and constructed in accordance
with, the laws of the state or Missouri.
IN WITNESS WHEREOF, Guarantor, intending to be legally bound hereby, has
caused this Guaranty to be executed as of the date first written above.
GUARANTOR
Witness: VANCOUVER ASSOCIATES
__________________________________ By: __________________________________
Harry Newman, Jr.
general partner
Witness:
__________________________________ By: __________________________________
LeRoy H. Brettin
general partner
210/90/424
Exhibit A, Page 13 of 13
<PAGE>
FOURTH AMENDMENT
TO
JOINT VENTURE AGREEMENT
FOR VANCOUVER MALL
This Fourth Amendment (this "Amendment") to Joint Venture Agreement for
Vancouver Mall is made and entered into as of January 1, 1992, by and between
CENTERMARK PROPERTIES OF VANCOUVER, INC. ("CPV"), a Delaware corporation and
VANCOUVER ASSOCIATES ("Associates"), a California limited partnership.
Recitals:
A. CPV (formerly known as May Centers of Vancouver, Inc.) and Associates
have entered into a Joint Venture Agreement for Vancouver Mall dated as of
September 29, 1975, as amended by letter dated May 12, 1976, Second
Amendment to Joint Venture Agreement for Vancouver Mall dated as of
September 1, 1990, and Third Amendment to Joint Venture Agreement for
Vancouver Mall dated as of September 1, 1990 (as amended, the
"Partnership Agreement"), for the purpose of forming and establishing a
general partnership under the laws of the State of Washington known as
"Vancouver Mall" (the "Partnership") for the limited purposes set forth
in the Partnership Agreement.
B. CenterMark Properties, Inc. ("CenterMark"), a Missouri corporation and
parent company of CPV desires to loan the Partnership funds up to and not
exceeding $10,000,000.00 (the "Loan") to provide interim funding of
costs of renovating and remodeling the shopping center owned by the
Partnership.
C. Section 7.5 of the Partnership Agreement sets forth certain terms and
conditions concerning loans made to the Partnership by CenterMark, among
others.
D. Section 11.5(B) of the Partnership Agreement provides, among other
things, for limitations on payments by the Partnership on certain loans.
THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, CPV and associates hereby agree
as follows:
1. CONSENT TO LOAN. CPV and Associates hereby consent to and approve
the making of the Loan by CenterMark to the Partnership and agree, in their
capacity as general partners of the Partnership, to execute a promissory note
on behalf of the Partnership to evidence the Partnership's obligation to
repay the Loan. Such note shall be substantially in the form of Exhibit A
attached hereto (as the same may be modified, renewed, extended or replaced,
the "Note"). This Amendment shall be deemed to satisfy any conditions or
covenants contained in the Partnership Agreement or in any other agreement
between the parties which may be construed to require prior approval of the
Loan or the execution of the Note.
<PAGE>
2. CONFLICT WITH PARTNERSHIP AGREEMENT. CPV and Associates acknowledge
that the interest rate and certain payment terms of the Note may be
inconsistent with Sections 7.5 and 11.5 of the Partnership Agreement. In that
connection, the parties waive any right they may have to require the terms of
the Loan to be as set forth in Sections 7.5 and 11.5 of the Partnership
Agreement. To the extent of any conflict between the terms of the Note and
Section 7.5, Section 11.5 or any other provision of the Partnership
Agreement, the terms of the Note shall be deemed to control.
3. CONTINUED FORCE AND EFFECT. Except as specifically set forth
herein, the terms, conditions, and other provisions of the Partnership
Agreement are and shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment
effective as of the date first above written.
Witness: VANCOUVER ASSOCIATES
/s/ Rosemary Yorin By: /s/ Harry Newman, Jr.
- --------------------- -----------------------------
Harry Newman, Jr.
General Partner
Witness:
/s/ Rosemary Yorin By: /s/ LeRoy H. Brettin
- --------------------- -----------------------------
LeRoy H. Brettin
General Partner
Attest: CENTERMARK PROPERTIES OF
VANCOUVER, INC.
- --------------------- By: Authorized Officer
------------------------------
2
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$10,000,000.00 As of January 1, 1992
St. Louis, Missouri
This Promissory Note (this "Note") is give by Vancouver Mall, a
Washington general partnership ("Maker"), and with an address of c/o
CenterMark Properties, 611 Olive Street, Suite 1555, St. Louis, Missouri
63101, to CenterMark Properties, Inc., a Missouri corporation ("Holder"),
with an address at 611 Olive Street, Suite 1555, St. Louis, Missouri 63101.
For value received, Maker hereby covenants and agrees with Holder as
follows:
1. The term "Principal Amount" shall mean the sum borrowed from Holder
by Maker up to an amount of Ten Million Dollars ($10,000,000.00), which shall
be memorialized on the attached Exhibit A to this Promissory Note as each
portion of the Principal Amount is borrowed by Maker. Notwithstanding
anything to the contrary contained in this Note, Holder's obligation to
advance funds under this Note shall be contingent upon closing of the
permanent financing for Vancouver Mall shopping center extended or to be
extended by Eastrich No. 89 Corporation to Holder (the "Permanent
Financing"). Advances on this Note shall be made on an "as-needed" basis, as
determined in the discretion of Holder for the purpose of providing interim
funding of remodeling costs for the Vancouver Mall shopping center.
2. The term "Interest Rate" shall mean a per annum fixed rate of 9.78%.
3. The term "Commencement Date" shall mean January 1, 1992.
4. The term "Principal Payment Date(s)" shall mean the dates Maker
shall pay each portion of the Principal Amount to Holder which shall be at
the time of each of the fundings by Estrich No. 89 Corporation to Maker under
the Permanent Financing, but in no event later than June 31, 1993.
5. The term "Interest Payment Date(s)" shall mean the date(s) Maker
shall pay to Holder the interest accruing on the Principal Amount, which
shall be monthly commencing on the first day of the month following the first
month during which there is any amount outstanding under this Note and on the
first day of each month thereafter so long as there is any Principal Amount
outstanding under this Note.
6. Maker does hereby covenant and promise to pay to the order of
Holder, its successors and assigns, on each of the Principal Payment Dates,
that portion of the Principal Amount which has been advanced under this Note
and is then outstanding, and on each of the Interest Payment Dates interest
at the Interest Rate accruing from the Commencement Date to the first
Interest Payment Date or from the immediately preceding Interest Payment Date
to the next succeeding Interest Payment Date, as the case may be without
deduction or offset of any kind whatsoever in lawful money of the
<PAGE>
United States of America, at Holder's option either (a) by delivering a check
at least two business days prior to the Principal Payment Date or Interest
Payment Date, as the case may be, or (b) in immediately available funds on
the Principal Payment Date or the Interest Payment Date, as the case may be.
7. Maker shall have the right to prepay all or any part of the
Principal Amount and the interest accruing thereon without penalty at any
time, except as follows: If Holder has borrowed a sum equal to the Principal
Amount from an institutional investor in order to loan Maker the Principal
Amount (the "Institutional Loan") then Maker shall pay Holder, in addition to
all other payments then due and owing to Holder, a premium which shall be
equal to the premium, if any, charged by such institutional investor to
Holder because of the prepayment by Holder of sums owed under the
Institutional Loan (the "Prepayment Penalty"). All determinations of the
amount of the Prepayment Penalty shall be made by such institutional investor
and such institutional investor's determination shall be final, binding and
conclusive upon Maker. In such event, Holder shall submit to Maker
documentation evidencing such determination by such institutional investor.
8. Maker hereby makes the following covenants, warranties and
representations to Holder:
(a) Maker is a general partnership duly organized and existing in
good standing under the laws of the State of Washington.
(b) The execution and delivery of this Note has been duly
authorized by all requisite partnership action of Maker and its partners
and represents the binding act of Maker.
(c) Maker shall not assert a defense or claim, in any action or
proceeding initiated to collect the amounts due under this Note, that
the Interest Rate was usurious.
(d) Neither the execution nor the delivery by the Maker of this
Note shall constitute, either by itself or with the delivery of notice,
the passage of time, or both, an event of default under the terms of the
Joint Venture Agreement of Vancouver Mall dated May 12, 1976, as amended
by letter dated May 12, 1976, Second Amendment to Joint Venture
Agreement for Vancouver Mall dated as of September 1, 1990, Third
Amendment to Joint Venture Agreement for Vancouver Mall dated as of
September 1, 1990, or Fourth Amendment to Joint Venture Agreement for
Vancouver Mall dated of even date herewith, or any other agreement or
instrument to which the Maker is a party or under which the Maker is
organized.
9. The occurrence of any of the following events shall constitute an
"Event of Default" hereunder:
(a) The failure by Maker to make any payment of principal or
interest hereunder when such principal or interest becomes due, which
failure shall not have been cured
2
<PAGE>
within ten (10) days after delivery by Holder of written notice of such
nonpayment.
(b) The failure by Maker to perform or abide any of the covenants,
conditions, provisions or terms contained in this Note, which failure is
not cured within thirty (30) days after the delivery by Holder to Maker
of written notice of such default, or the breach of any warranty made by
Maker under this note.
(c) Maker becomes insolvent or unable to pay its debts as they
mature or bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar proceedings are instituted by or against Maker
under any bankruptcy, insolvency or similar law now or hereafter in
effect; provided that in the case of proceeding instituted against
Maker, Maker shall have a period of thirty (30) days in which to cause
such proceeding to be terminated.
10. Upon the occurrence of any Event of Default, the Holder may, at its
sole option, declare this Note, all interest accrued thereon, and any and all
other moneys which may be due and owing by Maker to Holder, to be immediately
due and payable without notice of any kind; any expenses incurred by Holder
in so doing shall be deemed to be additional principal indebtedness under the
terms of this Note and shall bear interest at the Interest Rate accruing from
the date such expenses were incurred by Holder. In the event of such
acceleration, Maker shall pay the Prepayment Penalty, and the unpaid
Principal Amount and other sum owed by Maker pursuant to this Note shall
accrue interest, until paid, at a variable interest rate equal to the
Corporate Base Rate charged from time to time by The Boatmen's National Bank
of St. Louis plus three percent (3%) (such rate to change simultaneously with
any change in the Corporate Base Rate).
11. If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, probate or other
court, whether before or after the Payment Date, or should this Note be
placed in the hands of an attorney or attorneys for collection after the
occurrence of an Event of Default, Maker agrees to pay all costs of
collection including, but not limited to, reasonable attorneys' fees incurred
by the Holder in such collection, whether or not there is litigation.
12. Maker as well as others who may become liable for all or any part
of this Note hereby waive presentment for payment, protest, demand, notice of
protest, dishonor and all other notice, and diligence of collection, and
consent and agree that Holder may extend the time of payment or otherwise
modify the terms of payment of any part of the whole of the indebtedness
evidenced by this Note, which extensions and modifications shall not affect
this liability of any party hereto; and Maker further agrees that Holder (a)
may accept, by way compromise or settlement, from any one or more of the
parties liable hereunder, a sum or sums less than the amount of this Note,
and (b) may give releases to any parties without affecting the liability of
any other party for the unpaid
3
<PAGE>
balance. Any such renewals or extensions may be made and any such partial
payments may be accepted or releases given without notice to any parities.
13. Holder shall not be deemed, by any act or omission, to have waived
any of its right or remedies hereunder unless such waiver is in writing and
signed by Holder, and then only to the extent specifically set forth in
writing. A waiver as to one event shall not be construed as continuing or as
a bar to or waiver of any right or remedy to a subsequent event.
14. Any notice to or demand upon the parties hereto shall be in writing
and shall be deemed to have been sufficiently given or served for all
purposes if mailed by registered or certified mail, addressed to such party
at the address first set forth in this Note, or to such other address in lieu
thereof for such party as it may designate by written notice made to the
other party hereto in accordance with this Paragraph 14.
15. This instrument shall be governed by and construed according to the
laws of the State of Missouri.
16. Whenever used, the singular number shall include the plural, the
plural, the singular, the use of any gender shall be applicable to all
genders, and the word "Holder" and "Maker" shall be deemed to include the
respective heirs, personal representatives, successors and assigns of Holder
and Maker.
VANCOUVER MALL, a Washington general
partnership
By: CENTERMARK PROPERTIES OF
VANCOUVER, INC., a Delaware
corporation
Attest:
- ------------------------ By:
----------------------------------
By: VANCOUVER ASSOCIATES, a California
limited partnership
Attest: By:
--------------------------------------
Harry Newman, Jr. general partner
- ------------------------
By:
--------------------------------------
LeRoy H. Brettin, general partner
4
<PAGE>
EXHIBIT A
TO
$10,000,000.00 PROMISSORY NOTE
BY
VANCOUVER MALL
TO
CENTERMARK PROPERTIES, INC.
Total Net Principal
Portion of Principal Principal Amount Borrowed
Date Amount Borrowed Amount Repaid and Outstanding
- ---- -------------------- ------------- -------------------
5
<PAGE>
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
WEST VALLEY PARTNERSHIP
THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (the "Restated
Partnership Agreement") is made as of the 31st day of December, 1985 between MAY
CENTERS, INC., a Missouri corporation ("MCI") as "General Partner" and the
partners (the "Limited Partners") designated as Limited Partners in the
"Schedule of Partners" attached hereto as Exhibit "A" and made a part hereof
(the General Partner and Limited Partners are collectively referred to as the
"Partners").
RECITALS
A. West Valley May Corp., a Missouri corporation, The Landacre
Corporation, and Mervyn LeRoy (the "Original Partners") entered into a
Certificate of Limited Partnership and Limited Partnership Agreement (the
"Original Partnership Agreement") dated February 17, 1960, by which they
established West Valley Partnership as a California limited partnership. A copy
of the Original Partnership Agreement was recorded on February 24, 1960 as
Instrument No. 2785 in Book M 452, Page 433 of the Official Records of Los
Angeles County, California.
B. The Original Partnership Agreement was amended by the following
documents: Amendment dated September 10, 1963, recorded in the Official Records
of Los Angeles County, California on September 26, 1963 as Instrument No. 5725
in Book M 1353, Page 951; Second Amendment dated October 1, 1963, recorded in
the Official Records of Los Angeles County, California on December 31, 1963 as
Instrument No. 6663 in Book M 1421, Page 369; Third Amendment dated
December 31, 1971, recorded in the Official Records of Los Angeles County,
California on December 31, 1971 as Instrument No. 2608 in Book M 3943, Page
820; Fourth Amendment dated February 28, 1973, recorded in the Official
Records of Los Angeles County, California on March 2, 1973 as Instrument No.
4518 in Book M 4301, Page 289; and Fifth Amendment dated August 8, 1979, a
copy of which was recorded in the Official Records of Los Angeles County,
California on August 14, 1979 as Instrument No. 79-899953.
C. The Partners are all the successors in interest to the Original
Partners and collectively hold one hundred percent (100%) of the interests in
and to the Partnership.
<PAGE>
D. The Partners now desire to further amend the Original Partnership
Agreement and to restate the terms thereof in the manner set forth in this
Restated Partnership Agreement.
AGREEMENTS
In consideration of the mutual covenants contained herein, the Partners
amend and restate the Limited Partnership Agreement of West Valley Partnership,
in its entirety, as follows:
ARTICLE 1
1.1 The Partners shall continue to operate as a limited partnership (the
"Partnership") pursuant to the provisions of the Uniform Limited Partnership
Act, Sections 15501 through 15533 and Section 15632 of the California
Corporations Code (the "Act"), and under the terms and conditions of this
Restated Partnership Agreement.
1.2 The Partners shall execute, publish, file and record, in each
jurisdiction where the Partnership acquires property or otherwise does business,
a copy of such certificates of limited partnership, fictitious business name
certificates and such other recordings or filings as may be required under
applicable laws to preserve the Partnership's status as a limited partnership
and the right to the use of its name.
ARTICLE 2
2.1 The only purposes for which the Partnership is formed shall be to own,
develop, construct, operate, lease, manage, maintain, finance and refinance
(collectively, "Manage") the real property and improvements thereto (the
"Partnership Property") described in Exhibit "B", attached hereto and made a
part hereof, primarily for use as a mixed-use, commercial, office and hotel
development. The Partnership shall be authorized to engage in such operations
and businesses and to do such other things as are necessary or appropriate for
the furtherance of the foregoing purposes. The Partnership shall not engage in
any business other than as described herein without the prior written consent of
Class A Limited Partners holding, in the aggregate, "Percentage Interests" (as
defined in Section 4.2 hereof) greater than or equal to 34.5% (which constitutes
at least 60% of the Class A Limited Partners' Percentage Interests).
2.2 Nothing contained in this Restated Partnership Agreement shall be
construed so as to prohibit any Partner or any "Affiliate" (as defined in
Section 6.3 hereof) from owning, operating, or investing, directly or
indirectly, in any real estate development or other business not owned or
operated by the Partnership, wherever located. Each Partner agrees that the
other Partner, any Affiliate or any related person or entity may engage in or
possess an interest in any other business venture or ventures of any nature and
description, independently or with others, whether or not in competition with
the Partnership, in-
2
<PAGE>
cluding but not limited to the ownership, financing, leasing, operation,
management, syndication, brokerage and development of real property; none of the
same shall be deemed a Partnership opportunity; and neither the Partnership nor
the Partners shall have any rights by virtue of this Restated Partnership
Agreement in and to such independent ventures or to the income or profits
derived therefrom.
2.3 The name of the Partnership shall be WEST VALLEY PARTNERSHIP.
2.4 The principal place of business of the Partnership will be at 611
Olive Street, St. Louis, Missouri 63101, or at such other location as the
General Partner may select.
ARTICLE 3
3.1 The Partnership shall continue from the date of this Restated
Partnership Agreement, through December 31, 2015, unless sooner terminated as
hereinafter provided.
ARTICLE 4
4.1 The Partners of this Partnership shall be divided into two classes:
General Partner and Limited Partners. The Limited Partners shall be designated
as Class A Limited Partners and Class B Limited Partner for the purposes set
forth in this Restated Partnership Agreement. As used herein, the terms "Class A
Limited Partners" and "Class B Limited Partner" shall mean the persons or
entities designated as such in the Schedule of Partners, and their respective
successors and assigns.
4.2 The names, places of residence, status and the percentage interests
(the "Percentage Interests") of each Partner of this Partnership are set forth
in the Schedule of Partners.
4.3 The Partners have heretofore contributed to the capital of the
Partnership such sums as they have deemed adequate for the organization and
operation of the Partnership.
4.4 The Partners shall not be required to make any additional
contributions to the capital of the Partnership, except with the prior written
consent of all Partners. Except as specifically provided in this Restated
Partnership Agreement, the Partners shall not make any withdrawals of
Partnership capital, except by their unanimous agreement.
4.5 The General Partner shall Manage the Partnership Property subject to
the following conditions:
(a) The General Partner shall use its best efforts to Manage the
Partnership Property on a financially efficient and businesslike basis.
3
<PAGE>
(b) The General Partner shall not be liable for the failure, for
reasons beyond its reasonable control, to Manage the Partnership Property
on a profitable basis, nor shall it be liable for the results of any action
or nonaction taken by it in good faith and in the exercise of its sound
business judgment. The General Partner shall be excused from performing any
obligation or undertaking provided in this Restated Partnership Agreement
so long as the performance thereof is prevented or delayed, retarded or
hindered by act of God, fire, earthquake, floods, explosion, actions of the
elements, war, invasion, insurrection, riot, mob violence, sabotage,
inability to procure or general shortage of labor, equipment, facilities,
materials or supplies in the open market, failure of transportation,
strikes, lockouts, actions of labor unions, condemnation, requisition,
laws, orders of government or civil or military or naval authorities or any
other cause whether similar or dissimilar to the foregoing not within the
reasonable control of the General Partner.
4.6 The General Partner shall be vested with all powers conferred by law
and particularly is authorized and empowered, acting alone and on behalf of this
Partnership, to Manage the Partnership Property and to perform such acts by,
for, and on behalf of the Partnership as shall be reasonably related and
incidental thereto, all without any authorization or instruction from the
Limited Partners, except as otherwise provided in Sections 4.7, 4.8, 4.9 and 6.2
of this Restated Partnership Agreement. Any act by the General Partner on behalf
of this Partnership shall be conclusively presumed, in favor of any third person
or persons contracting or dealing in good faith with this Partnership, to be
valid and binding upon this Partnership and to have been done within the scope
of the powers given to the General Partner by this Restated Partnership
Agreement. Such powers may be exercised at any time and from time to time during
the existence of this Partnership in such manner that the effectiveness of any
such exercise may be for terms within or extending beyond the duration of this
Partnership. Such powers may be exercised through such officers and employees of
the Partnership or the General Partner, or through such agents and independent
contractors as the General Partner shall deem appropriate. Such powers shall
include but shall not be limited to the power to construct and Manage upon or
beneath the surface of the Partnership Property all such buildings or other
structures or other improvements or facilities as the General Partner, in its
discretion shall deem appropriate. The powers of the General Partner under this
Section shall include, but shall not be limited to, the power to perform the
following:
(a) To make, enter into, execute and deliver in the name and on
behalf of this Partnership any and all such contracts and agreements for
materials and services, personal or otherwise, with respect to site
development, architectural planning, construction, and other improvements
on the Partnership Property, and all such agreements and commit-
4
<PAGE>
ments for the operation, management and maintenance of the Partnership
Property, all on such terms and conditions and for such consideration as
the General Partner shall deem appropriate, and to carry out and perform
any and all such agreements and commitments, and to expend funds of the
Partnership in connection with the development, construction, operation,
leasing, management and maintenance (collectively, "Management") of the
Partnership Property.
(b) To borrow and collect in the name and on behalf of this
Partnership at any time and from time to time such sum or sums of money and
upon such terms, conditions, and rates of interest as the General Partner
shall deem appropriate for or in relation to the Management of the
Partnership Property, or the refinancing of any indebtedness of this
Partnership, and to make, execute and deliver in the name and on behalf of
this Partnership any and all notes or other instruments or evidences of
indebtedness and all such deeds of trust, mortgages, pledge agreements, or
other instruments with respect to the Partnership Property, all on such
terms or conditions as the General Partner shall deem appropriate as
security for the payment of any indebtedness of this Partnership. All
substantial expenditures for capital construction by the Partnership shall
be financed by means of loans from the General Partner, its Affiliates, or
from third parties, it being the intent of the Partners that capital
construction shall not be financed out of the current earnings of the
Partnership; provided, however, that, subject to the terms of Section
4.7(a) hereof, expenditures for capital construction may be financed out of
other funds of the Partnership if the same will not, in the judgment of the
General Partner, jeopardize the ability of the Partnership to distribute
the "Net Cash Flow" (as defined in Section 5.4) of the Partnership to the
Partners as soon after the end of each fiscal year as the amount thereof
reasonably can be determined and paid.
(c) To negotiate for, make, execute and deliver in the name and on
behalf of this Partnership any and all leases, or other agreements for the
possession, use or occupancy of the land and the buildings of the
Partnership Property, to such persons and for such rent, terms, covenants
and conditions and undertakings as the General Partner shall deem
appropriate and to demand, receive and collect for and on behalf of this
Partnership all the rents or other payments payable under such leases or
other agreements and to commence, maintain and prosecute in the name and on
behalf of this Partnership all actions or other proceedings deemed by the
General Partner to be appropriate for the collection thereof, or for the
enforcement of any other terms, conditions or undertakings set forth in any
such lease or other agreement.
(d) To grant for and on behalf of this Partnership such easements,
licenses, rights, privileges, or powers in
5
<PAGE>
or incidental to the Partnership Property or any portion thereof, including
the common areas and facilities referred to in Section 4.5(i), as the
General Partner shall deem appropriate, including but without limiting the
generality of the foregoing, the grant to any such party of the power to
license such party's directors, officers, employees, agents, contractors,
invitees, licensees, concessionaires, patrons and clients to use the common
areas and facilities referred to in Section 4.5(i).
(e) To commence, maintain and prosecute to final judgment or decision
in the name and on behalf of this Partnership any and all actions or
proceedings which the General Partner shall deem appropriate for the
establishment, enforcement, preservation or maintenance of any right,
privilege, power or immunity of this Partnership.
(f) To ask, demand, sue for, recover, collect and receive (and to
expand and disburse the proceeds thereof for any and all purposes to which
this Section 4.5 relates) each and every sum of money, debt, account and
demand which shall become due, owing or payable to this Partnership and to
use and take any lawful means for the recovery thereof by legal process or
otherwise, and to execute and deliver a satisfaction or release therefor,
together with the right and power to compromise or compound any claim or
demand.
(g) To grant or dedicate by deed or otherwise at any time and from
time to time, in the name and on behalf of this Partnership an interest in
fee, easement right, right of way, license, or other interest in or to any
portion or portions of the Partnership Property the General Partner shall
deem appropriate for street, highway, flood control, public utility, or
other public purposes, and to make, execute and deliver in the name of this
Partnership all such deeds, grants, or other instruments to effectuate the
same, without consideration or for such consideration all as the General
Partner shall deem appropriate.
(h) To file at any time and from time to time such reservations,
restrictions, covenants, or conditions, in the name and on behalf of this
Partnership with respect to any portion or portions of the Partnership
Property as the General Partner shall deem appropriate, and to make,
execute and deliver in the name and on behalf of this Partnership all such
instruments as the General Partner shall deem appropriate to effectuate the
same.
(i) To Manage on the Partnership Property at the expense of this
Partnership common areas and facilities for the use, convenience,
enjoyment, or comfort of persons occupying, using, or otherwise coming upon
the Partnership Property for purposes connected with its operation or
operation of the businesses or conduct of the profession of occupants of
the Partnership Property, including, but not limit-
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ed to surface vehicular parking, subsurface vehicular parking, elevated
vehicular parking, service delivery tunnels, concourses, sidewalks, malls,
roadways, driveways, stairways and restrooms.
(j) To grant to and receive from any tenant or occupant of a portion
of the Partnership Property such easements, rights, rights of way and
licenses, surface and subsurface, and to enter into such other agreements
with such tenants or occupants as may be reasonably appropriate including
but not limited to party wall agreements, agreements for the design,
construction, location and maintenance of common foundations, support
structures and other facilities which may serve, support, connect or be a
part of buildings or other improvements of both this Partnership and such
other party, it being contemplated that, in the interest of effecting
over-all economy and efficiency in the development of the Partnership
Property certain facilities of this Partnership and such other party will
be inter-related, connected or located on the premises or building of the
other.
4.7 The General Partner shall not cause the Partnership to take any of the
actions enumerated in subparagraphs (a) through (g) of this Section 4.7 without
the prior written consent of Class A Limited Partners holding, in the aggregate,
Percentage Interests greater than or equal to 34.5% (which constitutes at least
60% of the Class A Limited Partners' Percentage Interests). Each Class A Limited
Partner agrees that it shall not unreasonably withhold or delay such consent.
All disputes concerning whether any such consent was unreasonably withheld or
delayed shall be resolved by arbitration in the manner described in Section 7.6
of this Restated Partnership Agreement. The following actions shall be governed
by this Section.
(a) Any expenditure by the Partnership in excess of $100,000.00 (the
"Capital Expenditure Limit") in any one fiscal year for capital
improvements. The Capital Expenditure Limit shall be increased on
January 1, 1987, and on every annual anniversary thereafter, in proportion
to the increases, if any, in the Consumer Price Index All Items Los
Angeles, Long Beach, Anaheim over the value of such index as of the date
hereof
(b) Any incurrence of indebtedness by the Partnership for the purpose
of distributing the net proceeds thereof to the Partners.
(c) Any material change to the densities and uses proposed for the
Partnership Property in (i) the Disposition and Development Agreement (the
"Lowe Agreement") between Lowe Development Corporation ("LDC") and the
Partnership dated as of June 7, 1985, (ii) the "Master Plan" developed by
LDC pursuant to the Lowe Agreement, and (iii) the letter of intent (the
"Hotel Letter") dated as of July 12, 1985 between the Partnership and
Northview Corporation.
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(d) Any reduction of the Partnership's interest in any partnership
formed pursuant to the Lowe Agreement to less than forty percent (40%).
(e) Any reduction by more than ten percent (10%) of the "Net Rent"
payable by the Tenant under any ground lease entered into by the
Partnership pursuant to the Lowe Agreement, or any such reduction in the
"Base Rent" payable by Northview Corporation pursuant to the Hotel Letter.
(f) The approval, on behalf of the Partnership, of the densities,
uses and material economic terms of any agreement relating to the
development of any portions of the Partnership Property which are not to be
otherwise developed pursuant to the Lowe Agreement or the Hotel Letter.
(g) The entering by the Partnership, into any contract or agreement
between the Partnership and the General Partner or any Affiliate of the
General Partner.
4.8 The General Partner shall not cause the Partnership to sell the fee
interest in all or any part of the Partnership Property without the prior
written consent of Class A Limited Partners holding, in the aggregate,
Percentage Interests greater than or equal to 43.125% (which constitutes 75% of
the Class A Limited Partners' interests). All requests by the General Partner
for the consent of the Class A Limited Partners under this Section either shall
be sent simultaneously to all Class A Limited Partners or shall be sent to the
"Limited Partner Representatives" (as such term is defined in Section 7.5
hereof). Any Class A Limited Partner as of the date of this Restated Partnership
Agreement, or any successor to such Class A Limited Partner's interest in the
Partnership if such successor is a "Related Party", may grant or withhold its
consent under this Section for reasons within such Limited Partners' sole and
absolute discretion. For the purposes of this Restated Partnership Agreement, a
"Related Party" shall mean: (a) any ancestor or issue of such Class A Limited
Partner; or (b) any sibling or issue of a sibling of such Class A Limited
Partner; or (c) any spouse of such Class A Limited Partner or any spouse of a
person named in Section 4.8(b) or (c) hereof; or (d) with respect to any Class A
Limited Partner who, on the date of this Restated Partnership Agreement is a
Trustee, the beneficiary of such trust or any person related to such beneficiary
in the manner described in Section 4.8(a), (b), or (c) hereof; or (e) with
respect to Stusan, a limited partnership, then either Stanley K. Sheinbaum or
Susan Sperling Cato in the manner described in Section 4.8(a), (b) or (c)
hereof; or (f) any trust for the benefit of any person described in Section
4.8(a), (b) or (c) hereof; or (g) any corporation or partnership which is wholly
owned by one or more of the persons or entities described in this Section 4.8.
Any successor to any Class A Limited Partner who is not a Related Party to the
Class A Limited Partners as of the date of this Restated Partner-
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ship Agreement shall not unreasonably withhold or delay its consent to a request
for consent under the terms of this Section. Any dispute concerning whether a
consent was unreasonably withheld or delayed shall be resolved by arbitration in
the manner described in Section 7.6 of this Restated Partnership Agreement.
4.9 The Class A Limited Partners acknowledge that Affiliates of MCI (as
such term is defined in Section 6.6 hereof) own or have an interest in certain
real property (the "Topanga Plaza Property") described in Exhibit "D", attached
hereto and made a part hereof. The Limited Partners acknowledge that the General
Partner and its Affiliates may have interests and loyalties ("Conflicts of
Interest") which conflict with the interests and loyalties of the Partnership.
The following provisions shall apply to any such Conflict of Interest:
(a) The General Partner shall not take any action, nor shall the
General Partner cause or permit any Affiliate of the General Partner, to
take any action with respect to any Conflict of Interest which
constitutes fraud, bad faith or gross misconduct, nor shall the General
Partner take any action or cause or permit any Affiliate of the General
Partner to take any action, which is intended to disproportionately
benefit the General Partner or its Affiliates to the material detriment
of the Partnership without the prior written consent of Class A Limited
Partners holding, in the aggregate, Percentage Interests greater than or
equal to 34.5%; provided, however, that no claim shall be made by the
Partnership or the Limited Partners under this Section solely on account
of any lost business opportunity.
(b) The General Partner may, at its election, request the consent of
the Class A Limited Partners to any action by the General Partner or its
Affiliates which the General Partner believes constitutes or may constitute
a Conflict of Interest. The Class A Limited Partners shall not unreasonably
withhold or delay this consent to such a request. The Class A Limited
Partners shall be deemed to have consented to such a request if such
consent shall have been given by Class A Limited Partners holding, in the
aggregate, Percentage Interests greater than or equal to 34.5%.
(c) Any disputes concerning (i) whether an action by the General
Partner or its Affiliates violated the standard of conduct set forth in
Section 4.9(a) hereof, or (ii) whether one or more Class A Limited Partners
unreasonably withheld or delayed its consent to a request made by the
General Partner pursuant to the terms of Section 4.9(b) hereof, shall be
resolved by arbitration in the manner described in Section 7.6 hereof.
(d) The Class A Limited Partners hereby waive any claim or cause of
action against the General Partner or The May Department Stores Company, a
New York corporation ("MDS"), with respect any actions taken by MDS with
respect
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to the parcel of land (the "MDS Parcel") described in Exhibit "E", attached
hereto and made a part hereof.
(e) The Partnership and the Class A Limited Partnership have entered
into a certain Agreement of even date herewith (the "Basic Agreement") by
which the Class A Limited Partners have agreed to sell their interest in
the Topanga Plaza Property to JMB Income Properties, Ltd. - XII. All
disputes relating to or arising out of the Basic Agreement shall be
resolved in the manner provided therein. The General Partner shall be
authorized, without being required to obtain any additional or further
consent, to cause the Partnership to comply with its obligations under
the Basic Agreement.
4.10 The Partnership shall reimburse the General Partner for certain costs
and expenses (the "Management Expenses") as more fully defined in Exhibit "F",
attached hereto and made a part hereof.
ARTICLE 5
5.1 The fiscal year of the Partnership shall be January 1 to December 31.
The net profit or net loss of the Partnership shall be determined in accordance
with generally accepted accounting principles as soon as possible after the
close of each fiscal year.
5.2 The net profits earned by the Partnership during each fiscal year
shall be credited as of the close thereof to capital accounts of the Partners in
the proportion to their respective Percentage Interests set forth in the
Schedule of Partners attached hereto as Exhibit "A".
5.3 Any net loss incurred by the Partnership during any fiscal year shall
be debited as of the close thereof to the capital accounts of the Partners in
the proportion to their respective Percentage Interests.
5.4 The General Partner shall have sole discretion to determine the amount
and time of distributions to Partners on account of earnings, depreciation and
otherwise, provided, however, that all "Net Cash Flow" (as hereinafter defined)
of the Partnership (determined on the basis of generally accepted accounting
principles, consistently applied) shall be distributed to the Partners, in
proportion to their respective Percentage Interests, as soon after the end of
each fiscal year as the amount thereof reasonably can be determined and paid.
The term "Net Cash Flow" shall mean all cash received by the Partnership from
all sources during a fiscal year, including, without limitation, the net
proceeds of any sale, financing or refinancing of Partnership Property, less:
(a) all "Management Expenses" for which the General Partner may be
reimbursed under the terms of Section 4.10 hereof;
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(b) all costs of Managing the Partnership Property to the extent paid
in cash during such fiscal year but excluding such payments to the extent
that the amounts thereof were funded from reserves held for such purpose;
(c) all other operating or other expenses of the Partnership
attributable to the Partnership Property paid in cash during such fiscal
year, or any casualty losses to the extent that such losses are not
reimbursed during such month by any person responsible therefor or through
insurance maintained by the Partnership, but not including any expenses
paid in cash to the extent that such expenses were funded from reserves
held for such purpose;
(d) all cash payments made with respect to the discharge of
Partnership indebtedness during the calendar year, including loans made by
Partners, but excluding any payments to the extent that the amounts thereof
were funded from reserves held for such purpose;
(e) all reasonable amounts of reserved cash as shall be determined by
the General Partner to be necessary or advisable for:
(i) the repayment of Partnership indebtedness coming due in
such future time as shall be determined by the General Partner;
(ii) the Management of the Partnership Property; and
(iii) increases in working capital and other contingencies.
5.5 No Limited Partner shall be personally liable for any of the debts of
the Partnership, or any of the losses thereof beyond the interest of such
Limited Partner in the Partnership.
5.6 Proper and complete books of account of the business of the
Partnership, including separate records as to Management Expenses, shall be kept
under the supervision of the General Partner at the principal place of business
of the Partnership and shall be open to inspection and available for
photocopying and the right to audit by any Limited Partner or their accredited
representatives, at such Limited Partner's expense, at any reasonable time
during business hours.
5.7 The General Partner shall use diligent efforts to cause to be prepared
and distributed to the Limited Partners the following reports:
(a) Within 90 days after the end of each fiscal year of the
Partnership, an annual report containing:
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(i) An audited balance sheet of the Partnership as of the end of
such fiscal year, and audited statements of income, Partners' equity,
and changes in financial position for the Partnership for such fiscal
year; and
(ii) A report of the activities of the Partnership during such
fiscal year;
(b) Within 75 days after the end of each fiscal year of the
Partnership, a report containing all information with respect to the
Partnership and its operations during such fiscal year as the Partners will
require for preparation of their own federal and state income tax returns,
including a copy of each of the Partnership's federal and state information
tax returns for such fiscal year; and
(c) Within 21 days after the end of each quarter, a financial report
of the Partnership for the immediately preceding quarter, in a format
substantially the same as the form attached hereto as Exhibit "G".
ARTICLE 6
6.1 Upon the expiration of the term of this Partnership, or at any time
during the term hereof, upon the agreement of Partners with aggregate Percentage
Interests greater than seventy-five percent (75%), the Partnership shall be
dissolved and its liabilities and obligations to creditors shall be paid or
provided for. Payment next shall be made in cash to the Partners on account of
the unpaid balance of their income accounts, and if necessary, the Partnership
shall borrow against its property as security, sufficient cash to make such
payment. The remaining assets of the Partnership shall be distributed in kind to
the Partners, in undivided interests, in proportion to their respective
Percentage Interests.
6.2 Except for transfers which are permitted under the terms of Section
6.6 hereof, the General Partner shall not voluntarily sell or transfer
("Assign") all or any part of its general partnership interest in this
Partnership except in compliance with the applicable terms of Sections 6.3, 6.4,
6.5 and 6.6 of this Agreement.
6.3 If the General Partner proposes to Assign its interest in this
Partnership (except for transfers which are permitted under the terms of Section
6.6 hereof), the General Partner shall comply with the applicable provisions of
Sections 6.4 and 6.5. In either event, the General Partner shall deliver written
notice of such intent (the "Marketing Notice") to the Limited Partners. The
Marketing Notice shall state the purchase price for which the General Partner
proposes to sell its interest in the Partnership. The Limited Partners shall
have a period of thirty (30) days following delivery of the Marketing Notice in
which they may request the General Partner in writing to sell all of
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the Partnership Property in lieu of such a sale of the General Partner's
interest in the Partnership. If the General Partner receives such
authorization in writing from Class A Limited Partners holding Percentage
Interests which, in the aggregate, are greater than or equal to 43.125% (the
"Sale Authorization Notice"), then the General Partner shall use diligent,
reasonable efforts to sell all the Partnership Property. The sale price for all
of the Partnership Property shall be not less than 2.353 times the sale price
proposed for the sale of the General Partner's interest, as set forth in the
Marketing Notice. The sale price for the Partnership Property under this Section
shall be payable in cash or other immediately available funds, unless otherwise
approved in writing by Class A Limited Partners holding Percentage Interests
greater than or equal to 43.125%, which approval shall not be unreasonably
withheld. The General Partner is hereby authorized to execute on behalf of the
Partnership any agreement for such a sale of all of the Partnership Property
which complies with the requirements of this Section, and the Class A Limited
Partners shall be deemed to have approved such agreement and the sale
contemplated thereby. If (a) despite such diligent, reasonable efforts, the
General Partner shall have been unable to sell all of the Partnership Property
within a three month period following the delivery of the Sale Authorization
Notice on terms authorized by this Section, or (b) if no timely Sale
Authorization Notice is given within the time permitted therefor, or (c) if the
Class A Limited Partners fail to approve, within 15 days after written request
therefor, the terms of sale proposed by the General Partner, then the General
Partner may proceed to sell its interest in this Partnership, subject to the
applicable provisions of Section 6.4 and 6.5 hereof.
6.4 During the period beginning as of the date of this Restated
Partnership Agreement and continuing thereafter until the "Full Development
Date" (as hereinafter defined), but except for transfers which are permitted
under the terms of Section 6.6 hereof, the General Partner shall not Assign all
or any part of its general partnership interest in the Partnership without the
prior written consent of Class A Limited Partners holding, in the aggregate,
Percentage Interests greater than or equal to 34.5%. Such consent by the Class A
Limited Partners shall not be unreasonably withheld or delayed, but may be
withheld if the proposed purchaser: (a) does not have reasonable experience and
an established reputation in developing, owning and operating commercial
property of the size and the character of the Partnership Property in Southern
California or (b) does not possess reasonable financial credit in amounts
sufficient to enable it to conduct the affairs of the Partnership. Any disputes
arising under this Section concerning whether the consent of the Class A Limited
Partners was unreasonably withheld shall be resolved by arbitration pursuant to
Section 7.6 hereof. For purposes of this Article 6, the term "Full Development
Date" shall mean the date two years following the completion of two or more new
commercial buildings on the
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(Next page is 13(a))
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Partnership Property which contain, in the aggregate, not less than 350,000
square feet of Floor Area.
6.5 After the Full Development Date, except for transfers which are
permitted under the terms of Section 6.6 hereof, the General Partner shall not
Assign all or any part of its general partnership interest in this Partnership
except in compliance with the following terms and conditions:
13(a)
<PAGE>
(a) If the General Partner proposes to Assign any or all of its
partnership interest to a third party, the General Partner shall give the
Limited Partner written notice thereof (the "Transfer Notice") which shall
set forth in reasonable detail the terms and conditions of the proposed
assignment of such partnership interest and the identity of the intended
assignee, who must be a bona fide offeree and the sale to whom must be
legally permissible. The Transfer Notice shall contain, or shall be deemed
to contain, an offer to sell the General Partner's partnership interest or
portion thereof covered by the Transfer Notice to the Limited Partners or
their designees on the same terms and conditions. Such offer shall remain
open for acceptance or rejection by the Limited Partners or their designees
for a period of forty-five (45) days after receipt of the Transfer Notice.
(b) If the Limited Partners or their designees do not elect within
such 45-day period to purchase the partnership interest of the General
Partner, the General Partner shall thereafter be entitled to Assign its
partnership interest or portion thereof covered by the Transfer Notice for
a period of one hundred eighty (180) days following the expiration of such
forty-five (45) day period, on terms and conditions no less favorable to
the General Partner than those set forth in the Transfer Notice. If the
General Partner's partnership interest or portion thereof covered by the
Transfer Notice is not assigned in such manner within the 180-day period,
then the restrictions of this Section 6.5 shall again become effective with
respect to the General Partner's partnership interest as if no offer to
Assign such partnership interest had been made.
(c) If the Limited Partners or their designees elect within said
45-day period to purchase the partnership interest of the General Partner
or portion thereof covered by the Transfer Notice, written notice of said
election shall be delivered by such Limited Partners to the General Partner
within said period and the purchase shall be consummated on the terms and
conditions set forth in the Transfer Notice; provided, however, that the
closing shall take place not less than sixty (60) days nor more than ninety
(90) days after the Limited Partners deliver such notice. If more than one
Limited Partner shall elect to purchase the partnership interest of the
General Partner or portion thereof covered by the Transfer Notice, then the
Limited Partners making such election shall acquire the interest of the
General Partner or portion thereof covered by the Transfer Notice in the
proportions which their respective Percentage Interests bear to one
another.
(d) If any Limited Partner shall elect to purchase all or any portion
of the General Partner's partnership interest pursuant to this Section and
shall thereafter, because of its default, fail to consummate such purchase,
then without
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limiting other rights and remedies available to the General Partner, the
defaulting Limited Partner shall forfeit any further rights under this
Section 6.5.
6.6 The Limited Partners have agreed that, upon the execution and delivery
by MCI of a Guaranty in the form attached hereto as Exhibit "H", MCI may
transfer its interest in the Partnership (both as the General Partner and as the
Class B Limited Partner) to Topanga Properties, Inc., a Delaware corporation
("TPI") which is a wholly owned subsidiary of MCI. Thereafter, the rights of the
Limited Partners under Sections 6.2, 6.3, 6.4 and 6.5 shall not apply to any
subsequent sale, transfer or assignment by the General Partner to any
"Affiliate". For purposes of this Restated Partnership Agreement, the term
"Affiliate" shall mean any of the following: (a) MDS; (b) MCI; (c) any wholly
owned subsidiary of either MDS, MCI or TPI; or (d) any entity in which either
MDS, MCI or TPI or their respective, wholly owned subsidiaries own at least
twenty-five percent (25%) of the voting control thereof and over which MDS, MCI
or TPI or their subsidiaries, as the case may be, has effective control. Any
transfer of stock or of a partnership interest in an Affiliate which reduces the
interest of MDS, MCI, TPI or their subsidiaries to less than twenty-five
percent (25%) shall be subject to the rights of the Limited Partners under this
Article 6.
6.7 Upon the sale or transfer by the General Partner of its interest in
the Partnership, the selling General Partner shall be released from all
obligations under this Agreement accruing after the effective date of such sale
or transfer, but the selling General Partner shall remain liable for all
obligations accruing prior thereto.
ARTICLE 7
7.1 Any notice or other document required or permitted to be given
hereunder to any of the Partners by the other, shall be in writing and delivered
personally or sent by registered mail, postage prepaid, return receipt
requested, or any overnight courier service to the address for such Partner set
forth in the Schedule of Partners attached hereto as Exhibit "A".
7.2 Any Partner shall have the right at any time, and from time to time,
to designate another address for the service of notices, by written notice given
to the other Partners in the manner provided in Section 7.1. Any notice,
report, request, instruction, consent, or other document given pursuant to this
Article 7 shall be deemed for all purposes to have been given on the date the
same was personally delivered or the date such notice was either deposited in
the United States mail as registered mail, with postage thereon fully prepaid,
or deposited with an overnight courier service.
7.3 The Partners agree to execute any further instruments, and to perform
any further acts which are or may become necessary
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to effectuate and carry out the purposes of this Partnership, as set forth in
this Restated Partnership Agreement.
7.4 The Partners agree to execute, acknowledge, and cause to be recorded
in the manner prescribed by the Act, any amendment to this Restated Partnership
Agreement which may be required by law as a result of any change in the status
of the Partnership, or a cancellation of this Restated Partnership Agreement, as
required by the Act, when the Partnership is dissolved.
7.5 Any action to be taken, or any approval or consent to be given by the
Limited Partners shall require that such action, approval or consent shall not
be unreasonably withheld or delayed, except as provided in Section 4.8. The
Class A Limited Partners hereby appoint Stanley K. Sheinbaum and Warner LeRoy
as their representatives (the "Limited Partner Representatives") for the purpose
of taking such actions or giving such consents or approvals on their behalf, in
accordance with the Agency Agreement of even date herewith executed by the Class
A Limited Partners. The General Partner may rely upon any written action,
consent or approval signed by both Limited Partner Representatives, as the
binding act of the Class A Limited Partners, as provided in said Agency
Agreement.
7.6 Arbitration shall be the sole and exclusive remedy available under
this Agreement where a controversy has arisen between the Partners with respect
to a claim by any Partner that consent or approval has been unreasonably
withheld or delayed and then only in those instances where this Agreement or
applicable law provides that consent or approval shall not be unreasonably
withheld or delayed. Such arbitration proceedings shall be conducted in the
following manner:
(a) When a request is made by a Partner (the "First Partner") to the
other Partner (the "Second Partner") for the consent or approval of the
Second Partner, and the Second Partner fails to grant such consent or
approval or fails to respond thereto within the time specifically set forth
in this Agreement, or if not so specified, within 20 days after delivery of
such request, and the First Partner believes that such consent or approval
was unreasonably withheld or delayed, then after expiration of the
appropriate period, the First Partner may request arbitration by notifying
the Second Partner in writing of the following: (i) the First Partner's
desire to arbitrate, (ii) the basis on which the First Partner claims that
the withholding of consent or approval was unreasonable, (iii) the First
Partner's arguments in support thereof briefly stated (although the First
Partner will not be foreclosed from advancing other and additional
arguments at the time of the arbitration hearing), and (iv) the names of
three persons, one of whom is to be selected as the arbitrator.
(b) Within seven days after receipt of said notice, the Second
Partner shall deliver a notice to the First Partner containing the same
information, according to its ver-
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sion; if any of the three proposed arbitrators is satisfactory, that
statement shall also be made, naming the satisfactory arbitrator.
(c) If there is any difference between the Partners concerning the
issue or issues or the arbitrator, and if they are unwilling or unable to
resolve those matters within seven days after the First Partner receives
the reply notice from the Second Partner, the dispute concerning the issue
or issues shall be determined by the arbitrator; and if the name of the
arbitrator has not been selected or agreed to, either Partner may apply for
designation of an arbitrator in accordance with Section 1281.6 of the
California Code of Civil Procedure or any successor California statute
pertaining to the court appointment of arbitrators.
(d) The place of arbitration shall be Los Angeles, California, unless
the Partners select in writing another mutually satisfactory location.
(e) The arbitrator shall notify the Partners as promptly as feasible
after the arbitrator has been selected as to the date, time, place of
hearing and any other matters which the arbitrator deems necessary. The
arbitrator shall determine all of the rules to be followed in connection
with the arbitration hearing. The arbitration award shall be rendered in
writing as soon after the conclusion of the arbitration hearing as may be
feasible, and in no event later than ten days thereafter.
(f) The arbitrator shall not have the right to add to, subtract from,
change or otherwise alter this Agreement or any term hereof, and
particularly the arbitrator shall not have the right to include damages as
part of the award. The sole effect of a finding by the arbitrator that a
consent or approval was unnecessarily withheld shall be that such consent
or approval shall be deemed to have been granted.
(g) The cost of arbitration, including, without limitation, the
arbitrator's fees and expenses, and the reasonable attorneys' fees and
costs incurred by the prevailing party in such arbitration, shall be paid
by the nonprevailing party in such arbitration.
(h) The Commercial Rules of the American Arbitration Association,
including the Expedited Procedures, shall be applied in any arbitration
hereunder, to the extent such Rules and Procedures are not inconsistent
with this Section 9.4.
7.7 As used in this Restated Partnership Agreement, the following terms
shall have the meanings indicated below, unless the context in which such term
is used clearly requires a different meaning:
(a) "Act" shall have the meaning set forth in Section 1.1.
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(b) "Affiliate" shall have the meaning set forth in Section 6.6.
(c) "Assign" shall have the meaning set forth in Section 6.2.
(d) "Capital Expenditures Limit" shall have the meaning set forth in
Section 4.7.
(e) "Class A Limited Partners" shall have the meaning set forth in
Section 4.1.
(f) "Class B Limited Partners" shall have the meaning set forth in
Section 4.1.
(g) "Conflicts of Interest" shall have the meaning set forth in
Section 4.9.
(h) "Direct Payroll Costs" shall have the meaning set forth in
Section 4.10.
(i) "First Partner" shall have the meaning set forth in Section 7.6.
(j) "Full Development Date" shall have the meaning set forth in
Section 6.4.
(k) "General Partner" shall mean the Partner designated as the
general partner in the Schedule of Partners, attached hereto as Exhibit
"A", and its permitted successors and assigns.
(l) "Hotel Letter" shall have the meaning set forth in Section 4.7.
(m) "Indirect Payroll Costs" shall have the meaning set forth in
Section 4.10.
(n) "LDC" shall have the meaning set forth in Section 4.7.
(o) "Limited Partners" shall mean the Partners designated as limited
partners in the Schedule of Partners, attached hereto as Exhibit "A", and
their respective successors and assigns.
(p) "Limited Partner Representatives" shall have the meaning set
forth in Section 7.5.
(q) "Lowe Agreement" shall have the meaning set forth in Section 4.7.
(r) "Manage" shall have the meaning set forth in Section 2.1.
(s) "Management" shall have the meaning set forth in Section 4.6.
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<PAGE>
(t) "Management Expenses" shall have the meaning set forth in Section
4.10.
(u) "Marketing Notice" shall have the meaning set forth in Section
6.3.
(v) "MCI" shall have the meaning set forth in the Preamble.
(w) "MDS" shall have the meaning set forth in Section 4.9.
(x) "MDS Parcel" shall have the meaning set forth in Section 4.9.
(y) "Net Cash Flow" shall have the meaning set forth in Section 5.4.
(z) "Original Partners" shall have the meaning set forth in Recital
Paragraph A.
(aa) "Original Partnership Agreement" shall have the meaning set forth
in Recital Paragraph A.
(bb) "Partners" shall have the meaning set forth in the Preamble.
(cc) "Partnership" shall have the meaning set forth in Section 1.1.
(dd) "Partnership's Share" shall have the meaning set forth in Section
4.10.
(ee) "Partnership Property" shall have the meaning set forth in
Section 2.1.
(ff) "Percentage Interest" shall have the meaning set forth in Section
4.1.
(gg) "Related Party" shall have the meaning set forth in Section 4.8.
(hh) "Restated Partnership Agreement" shall have the meaning set forth
in the Preamble.
(ii) "Sale Authorization Notice" shall have the meaning set forth in
Section 6.3.
(jj) "Second Partner" shall have the meaning set forth in Section 7.6.
(kk) "Topanga Plaza Property" shall have the meaning set forth in
Section 4.9.
(ll) "TPI" shall have the meaning set forth in Section 6.6.
19
<PAGE>
(mm) "Transfer Notice" shall have the meaning set forth in
Section 6.5.
7.8 The following Exhibits are attached to this Restated Partnership
Agreement and are made a part hereof by these words of reference:
Exhibit "A" - Schedule of Partners
Exhibit "B" - Legal Description of Partnership Property
Exhibit "C" - [Intentionally Omitted]
Exhibit "D" - Legal Description of Topanga Plaza Property
Exhibit "E" - Legal Description of MDS Parcel
Exhibit "F" - Management Expenses
Exhibit "G" - Form of Quarterly Reports
Exhibit "H" - Form of Guaranty
7.9 If any Partner incurs attorneys' fees or costs as a result of an
action in connection with a default under this Restated Partnership Agreement by
another Partner, then the aggrieved Partner shall be entitled to recover
reasonable attorneys' fees and costs incurred by such aggrieved Partner in
connection with such default. Except as set forth herein, this Agreement shall
be construed and enforced in accordance with the laws of the State of California
and shall inure to the benefit of, and shall be binding upon, the permitted
successors and assigns of each of the Partners.
IN WITNESS WHEREOF, the Partners have executed this Restated Partnership
Agreement, in counterparts, as of the date first above written.
GENERAL PARTNER:
May Centers, Inc.
By /s/ Louis J. Garr, Jr.
--------------------------------------
Louis J. Garr, Jr.
Vice President
By /s/ Thomas E. Frost
--------------------------------------
Thomas E. Frost
Assistant Secretary
20
<PAGE>
(Signature pages to Amended and Restated
Partnership Agreement continued)
CLASS A LIMITED PARTNERS:
/s/ William H. Downs, Trustee
----------------------------------------
William H. Downs, Trustee for
Lewis Brian Vidor
/s/ Arthur E. Goetz
----------------------------------------
Arthur E. Goetz, Trustee for
Quentin Charles Vidor
/s/ Linda LeRoy Janklow
----------------------------------------
Linda LeRoy Janklow
/s/ A.R. Kimbrough
----------------------------------------
A.R. Kimbrough, Trustee for
Debora Cassie Pool
/s/ Karen Jo Silverstein
----------------------------------------
Karen Jo Silverstein
/s/ A.R. Kimbrough
----------------------------------------
A.R. Kimbrough, Trustee for
Matthew Warner Sperling
/s/ Mervyn LeRoy
By HIS ATTORNEY IN FACT
----------------------------------------
Mervyn LeRoy
/s/ Warner Lewis LeRoy
----------------------------------------
Warner Lewis LeRoy
/s/ Rita Rend Roedling
----------------------------------------
Rita Rend Roedling
/s/ Stanley K. Sheinbaum
----------------------------------------
Stanley Sheinbaum
Stusan, a limited partnership
By /s/ Stanley K. Sheinbaum
--------------------------------------
Stanley K. Sheinbaum
Managing Partner
/s/ Susan S. Cato
21
<PAGE>
(Signature pages to Amended and Restated
Partnership Agreement continued)
/s/ Lewis Brian Vidor
----------------------------------------
Lewis Brian Vidor
/s/ Quentin Charles Vidor
----------------------------------------
Quentin Charles Vidor
CLASS B LIMITED PARTNER:
May Centers, Inc.
By /s/ William E. Grafstrom
--------------------------------------
William E. Grafstrom
Chairman
By /s/ Thomas E. Frost
--------------------------------------
Thomas E. Frost
Assistant Secretary
22
<PAGE>
EXHIBIT 10.52
AMENDMENT
TO
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
WEST VALLEY PARTNERSHIP
This AMENDMENT TO AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF
WEST VALLEY PARTNERSHIP (the "Amendment") is entered into as of November 19,
1987 by and between May Centers, Inc., a Missouri corporation, ("MCI") and
the persons and entities (the "Limited Partners") designated as the Class A
Limited Partners and the Class B Limited Partner in the "Schedule of Partners"
attached hereto as Exhibit "A" and made a part hereof (the General Partner
and the Limited Partners and collectively referred to herein as the
"Partners").
RECITALS
A. West Valley May Corp., a Missouri corporation, The Landacre
Corporation, and Mervyn LeRoy (the "Original Partners") entered into a
Certificate of Limited Partnership and Limited Partnership Agreement (the
"Original Partnership Agreement") dated February 17, 1960, by which they
established West Valley Partnership as a California limited partnership. A
copy of the Original Partnership Agreement was recorded on February 24, 1960
as Instrument No. 2785 in Book M 452, Page 433 of the Official Records of Los
Angeles County, California.
B. The Original Partnership Agreement was amended by the following
documents: Amendment dated September 10, 1963, recorded in the Official
Records of Los Angeles County, California on September 26, 1963 as Instrument
No. 5725 in Book M 1353, Page 951; Second Amendment dated October 1, 1963,
recorded in the Official Records of Los Angeles County, California on
December 31, 1963 as Instrument No. 6663 in Book M 1421, Page 369; Third
Amendment dated December 31, 1971, recorded in the Official Records of Los
Angeles County, California on December 31, 1971 as Instrument No. 2608 in
Book M 3943, Page 820; Fourth Amendment dated February 28, 1973, recorded in
the Official Records of Los Angeles County, California on March 2, 1973 as
Instrument No. 4518 in Book M 4301, Page 289; Fifth Amendment dated August 8,
1979, a copy of which was recorded in the Official Records of Los Angeles
County, California on August 14, 1979 as Instrument No. 79-899953; and the
Amended and Restated Limited Partnership Agreement of West Valley Partnership
dated as of December 31, 1985 (the "Restated Partnership Agreement").
C. The Partners are all the successors in interest to the Original
Partners and collectively hold one hundred percent (100%) of the interests in
and to the Partnership.
<PAGE>
D. The Partners now desire to amend the Restated Partnership Agreement
in the manner set forth in this Amendment.
AGREEMENTS
In consideration of the mutual covenants contained herein, the Partners
amend the Restated Partnership Agreement of West Valley Partnership as
follows:
1. All Class A Limited Partners listed in the Schedule of Partners who, prior
to the date of this Amendment, were assignees of or successors to the
interests of a prior Class A Limited Partner, are hereby accepted as
substitute Class A Limited Partners.
2. The "Schedule of Partners" attached to the Restated Partnership Agreement
as Exhibit A thereto is hereby deleted in its entirety and substituted
therefor is the Schedule of Partners attached to this Amendment as Exhibit
"A".
3. Except as specifically amended by the provisions of this Amendment, the
Restated Partnership Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the Partners have executed this Amendment, in
counterparts, as of the date first above written.
GENERAL PARTNER:
May Centers, Inc. a
Missouri corporation
By WILLIAM E. GRAFSTROM
--------------------
William E. Grafstrom
Chairman
By THOMAS E. FROST
--------------------
Thomas E. Frost
Assistant Secretary
2
<PAGE>
(Signature pages to Amendment to Amended and Restated
Partnership Agreement continued)
CLASS A LIMITED PARTNERS:
/s/ ARTHUR E. GOETZ
--------------------------------------
Arthur E. Goetz, Trustee for
Quentin Charles Vidor
/s/ LINDA LEROY JANKLOW
--------------------------------------
Linda LeRoy Janklow
/s/ A. R. KIMBROUGH, TRUSTEE
--------------------------------------
A. R. Kimbrough, Trustee for
Debora Cassie Pool
/s/ KAREN JO SILVERSTEIN
--------------------------------------
Karen Jo Silverstein
/s/ A.R. KIMBROUGH, TRUSTEE
--------------------------------------
A.R. Kimbrough, Trustee
for Matthew Warner Sperling
Estate of Mervyn LeRoy:
By: /s/ WARNER LEWIS LEROY
------------------------------
Warner Lewis LeRoy,
Co-Executor
By: /s/ LINDA LEROY JANKLOW /s/ WARNER LEWIS LEROY
------------------------------ --------------------------------------
Linda LeRoy Janklow, Warner Lewis LeRoy
Co-Executrix
/s/ RITA REND ROEDLING
--------------------------------------
Rita Rend Roedling
/s/ STANLEY K. SHEINBAUM
--------------------------------------
Stanley K. Sheinbaum
/s/ DAVID TELSTAR, TRUSTEE
--------------------------------------
David Telstar,
Trustee of the Valentine Trust
dated January 14, 1987
3
<PAGE>
(Signature pages to Amendment to Amended and Restated
Partnership Agreement continued)
/s/ DESIREE TELSTAR, TRUSTEE
--------------------------------------
Desiree Telstar,
Trustee of the Valentine Trust
dated January 14, 1987
/s/ LEWIS BRIAN VIDOR
--------------------------------------
Lewis Brian Vidor
/s/ QUENTIN CHARLES VIDOR
--------------------------------------
Quentin Charles Vidor
CLASS B LIMITED PARTNERS:
May Centers, Inc. a
Missouri corporation
By /s/ WILLIAM E. GRAFSTROM
-----------------------------------
William E. Grafstrom
Chairman
By /s/ THOMAS E. FROST
-----------------------------------
Thomas E. Frost
Assistant Secretary
4
<PAGE>
EXHIBIT "A"
<TABLE>
<CAPTION>
PERCENTAGE
NAME & PLACE OF RESIDENCE INTEREST
- ------------------------- -----------
<S> <C>
GENERAL PARTNER
May Centers, Inc. 40%
611 Olive Street
St. Louis, MO 63101
CLASS A LIMITED PARTNERS
Arthur E. Goetz, Trustee for 2.375%
Quentin Charles Vidor
61 Pebble Lane
Roslyn Heights,NY 11577
Linda LeRoy Janklow 8.4375%
32 East 64th Avenue, #6-E
New York, NY 10021
A.R. Kimbrough, Trustee for 2.375%
Debora Cassie Pool
Latham and Watkins
555 South Flower Street
Suite 4500
Los Angeles, CA 90071
Karen Jo Silverstein 2.375%
200 Bentley Circle
Los Angeles, CA 90049
A.R. Kimbrough, Trustee for 2.375%
Matthew Warner Sperling
Latham and Watkins
555 South Flower Street
Suite 4500
Los Angeles, CA 90071
Mervyn LeRoy 2.5%
615 North Camden Drive
Beverly Hills, CA 90210
Warner Lewis LeRoy 8.4375%
One West 72nd Street
New York, NY 10023
Rita Rend Roedling 2.5%
1015 North Beverly Drive
Beverly Hills, CA 90210
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
NAME & PLACE OF RESIDENCE INTEREST
- ------------------------- -----------
<S> <C>
Stanley K. Sheinbaum 14.25%
345 North Rockingham Avenue
Los Angeles, CA 90049
David Telstar and Desiree Telstar, 2.375%
Trustees of the Valentine
Trust dated January 14, 1987
195 Sierra Vista Road
Santa Barbara, California 93108
Lewis Brian Vidor 5.9375%
9161 Oriole Way
Los Angeles, CA 90069
Quentin Charles Vidor 3.5625%
34 Grammercy Park E.
New York, NY 10003
CLASS B LIMITED PARTNER
May Centers, Inc. 2.5%
611 Olive Street
St. Louis, MO 63101
</TABLE>
2
<PAGE>
EXHIBIT 10.53
ASSIGNMENT AND ASSUMPTION OF PROPERTY
MANAGEMENT SIDE LETTER AGREEMENT
ASSIGNMENT AND ASSUMPTION OF PROPERTY MANAGEMENT SIDE LETTER AGREEMENT,
dated as of November 12, 1997, between WESTFIELD AMERICA, INC., a Missouri
corporation ("Assignor"), and WESTFIELD AMERICA LIMITED PARTNERSHIP, a Delaware
limited partnership ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor is a party to that certain Property Management Letter
Agreement, dated as of July 1, 1996, as amended by First Amendment to Management
Letter Agreement, dated May 21, 1997 (as amended, the "Management Letter
Agreement") between Westfield Management Company ("Manager") and Assignor,
pursuant to which Manager agrees to provide certain property management services
to Assignor and its subsidiaries and affiliates;
WHEREAS, Assignor has this day transferred and conveyed to Assignee certain
direct and indirect interests in real properties and certain other property
pursuant to the terms of that certain Master Contribution and Assumption
Agreement, dated as of the date hereof, among Assignor, Assignee and certain
other parties (the "Contribution Agreement"), it being intended that Assignee
will be the entity through which Assignor operates substantially all of its
business; and
WHEREAS, in connection with the transfer of the assets under the
Contribution Agreement, Assignor desire to assign to Assignee all of Assignor's
right, title and interest under the Management Letter Agreement and Assignee
desires to assume all liabilities and obligations of Assignor thereunder.
NOW, THEREFORE, in consideration of good and valuable consideration paid by
Assignee to Assignor pursuant to the Contribution Agreement, the receipt and
sufficiency of which is hereby acknowledged, Assignor hereby assigns, transfers
and conveys to Assignee all of its right, title and interest under the
Management Letter Agreement.
Assignee hereby accepts the foregoing assignment and assumes and agrees to
perform all of the obligations of Assignor under the Management Letter
Agreement.
<PAGE>
This Assignment is made without any warranty or representation by Assignor.
IN WITNESS WHEREOF, this Assignment and Assumption of Management Letter
Agreement has been executed on the date and year first above written.
ASSIGNOR:
WESTFIELD AMERICA, INC.,
a Missouri corporation
By: /s/ Mark Stefanek
------------------------
Name: Mark Stefanek
Title: Treasurer and Chief
Financial Officer
ASSIGNEE:
WESTFIELD AMERICA LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: WESTFIELD AMERICA, INC.,
its general partner
By: /s/ Mark Stefanek
------------------------
Name: Mark Stefanek
Title: Treasurer and Chief
Financial Officer
2
<PAGE>
EXHIBIT 11
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION PER SHARE EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARE
OUTSTANDING OUTSTANDING
--------------- --------------
<S> <C> <C> <C> <C>
Average share price for year ended
December 31, 1998 (1) $ 17.44
BASIC
Average common shares outstanding 73,334,315
Net income $106,188
Less dividends on preferred shares:
Series A $ 8,337
Series B 2,556
Series C 2,480
Series C-1 53
Series C-2 12
Series D 4,134
Series D-1 47 (17,619)
--------
Net income allocable to common shares 88,569
-------
-------
Per share amount $ 1.21
---------
---------
DILUTED
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) $ 17.44
Exercise Price (c) $ 16.01
Common equivalent shares ((b-c)*a)/b 365 30,729
1997 WARRANTS:
As of January 1, 1998 2,089,552
Series B Preferred Shares (1,800,000)
---------
Excess 1997 Warrants (d) 289,552
---------
---------
</TABLE>
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION PER SHARE EARNINGS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARE
OUTSTANDING OUTSTANDING
--------------- --------------
<S> <C> <C> <C>
1997 WARRANT: (Continued)
Per Share Price
Average Market Price (b) $ 17.44
Exercise Price (e) $ 15.00
Common equivalent shares ((b-e)*d)/b 365 40,511
1998 SUBSCRIPTION AGREEMENT:
Capital Notes issued 6/19/98 (g) $ 301,088
Per Share Price
Average market price (b) (2) $ 17.19
Common equivalent shares (g*.05)/(b*.95) 921,856 196 495,024
----------
Weighted average common and common
equivalent shares 73,900,579
----------
----------
Net income $ 106,188
Less net income allocable to preferred (17,619)
shares ----------
Net income allocable to common shares $ 88,569
----------
----------
Per share amount
$ 1.20
----------
----------
</TABLE>
Note - The Company's preferred shares were not included in the earnings per
share 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.
(2) The share price used in the average daily closing market price of the
Company's common stock as reported by the New York Stock Exchange from June
19, 1998 to December 31, 1998.
<PAGE>
EXHIBIT 11.2
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION PER SHARE EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARE
OUTSTANDING OUTSTANDING
---------------- --------------
<S> <C> <C> <C> <C>
Average share price for year ended
December 31, 1997(1) $ 17.00
BASIC
Common shares outstanding
As of January 1, 1997 59,929,535 365 52,929,535
Shares issued 5/21/97 20,400,000 225 12,575,342
-----------
Total Common shares 65,504,877
-----------
-----------
Net income $ 46,865
Net income allocable preferred shares (11,428)
-----------
Net income allocable to common shares $ 35,437
-----------
-----------
Per share amount $ 0.54
-----------
-----------
DILUTED
1996 WARRANTS:
As of January 1, 1997 6,246,096
Series A Preferred Shares (5,871,330)
----------
Excess 1996 Warrants (a) 374,766
-----------
-----------
Per Share Price
Average Market Price (b) $ 17.00
Exercise Price (c) $ 16.01
Common equivalent shares (b-c)*a)/b 365 21,825
1997 WARRANTS:
As of May 21, 1997 2,089,552
Series B Preferred Shares (1,800,000)
----------
</TABLE>
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION PER SHARE EARNINGS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
DAYS SHARE
OUTSTANDING OUTSTANDING
---------------- ---------------
<S> <C> <C> <C> <C>
1997 WARRANTS: (Continued)
Excess 1997 Warrants (d) 289,552
-------
-------
Per Share Price
Average Market Price (e) $ 17.00
Exercise Price (f) $ 15.00
Common equivalent shares ((e-f)*d)/e 225 20,999
-----------
Weighted average common and common equivalent
shares 65,547,701
-----------
-----------
Net income $ 46,865
Less net income allocable to preferred
shares (11,428)
-----------
Net income allocable to common shares $ 35,437
-----------
-----------
Per share amount $ 0.54
-----------
-----------
</TABLE>
Note - The Series A and B preferred shares were not included in the earnings per
share calculation as their effect is antidilutive.
(1) The share price used for the EPS calculations is based on the closing market
price as reported by the New York Stock Exchange on December 31, 1997, since the
average market price of the Company's stock was not available prior to the
Company's IPO in May 1997.
<PAGE>
EXHIBIT 11.3
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION PER SHARE EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
DAYS SHARES
OUTSTANDING OUTSTANDING
---------------- ------------------
<S> <C> <C> <C> <C>
Market price for the year ended December 31, 1996(1) $ 16.01
BASIC AND DILUTED
Common Shares Outstanding:
-------------------------
As of January 1, 1996 45,108,541 365 45,108,541
Shares issued 4/1/98 175,656 274 131,742
Shares issued 7/1/96 7,645,338 183 3,822,669
-----------
Total common shares 49,062,952
-----------
-----------
Net income $ 24,696
Net income allocable preferred shares (4,264)
-----------
Net income allocable to common shares 20,432
-----------
-----------
Per share amount $ 0.42
-----------
-----------
</TABLE>
Note - The Company's preferred shares were not included in the earnings per
share calculation as their effect is antiduilutive
(1) The share price used for the EPS calculation is based on the sale of
19,631,543 shares to WAT in July of 1996, since the average market price of the
Company's stock was not available during the year.
<PAGE>
EXHIBIT 12
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 12,
YEAR ENDED DECEMBER 31, 1994 THROUGH
--------------------------------------------------------- DECEMBER 31,
1998 1997 1996 1995 1994 (1)
------------- ------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Income before income taxes $ 106,188 $ 46,865 $ 24,696 $ 21,846 $ 15,241
Add: Minority interest in consolidated real estate
partnerships 4,257 2,478 1,063 - -
Equity in (income) losses of unconsolidated
real estate partnerships (5,949) (3,887) (3,707) (4,412) 386
Distributions from unconsolidated real estate
partnerships 9,812 10,013 11,430 17,611 29,961
Interest expense 106,852 57,472 40,233 27,916 24,156
Less: Gain on sale of investments, net (53,895) - - - -
---------- ----------- ----------- ----------- -----------
Total earnings available to cover fixed charges $ 167,265 $ 112,941 $ 73,715 $ 62,961 $ 69,744
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Total fixed charges-interest expensed and capitalized 108,410 58,876 41,736 27,968 24,156
Total Preferred Stock Dividends 17,619 11,428 4,264 3 -
---------- ----------- ----------- ----------- -----------
Total combined fixed charges and preferred stock
dividends $ 126,029 $ 70,304 $ 46,000 $ 27,971 $ 24,156
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Ratio of earnings to fixed charges 1.54x 1.92x 1.77x 2.25x 2.89x
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Ratio of earnings to fixed charges and preferred
stock dividends 1.33x 1.61x 1.60x 2.25x 2.89x
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Supplemental Disclosure of Ratio of Funds from
Operations (FFO) to Fixed Charges:
FFO $ 140,839 $ 111,271 $ 75,842 $ 65,792 $ 53,315
Interest expense 106,852 57,472 40,233 27,916 24,156
---------- ----------- ----------- ----------- -----------
Adjusted FFO available to cover fixed charges $ 247,691 $ 168,743 $ 116,075 $ 93,708 $ 77,471
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Total combined fixed charges and preferred Stock
dividends $ 126,029 $ 70,304 $ 46,000 $ 27,971 $ 24,156
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Ratio of FFO to fixed charges 2.28x 2.87x 2.78x 3.35x 3.21x
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Ratio of FFO to fixed charges and preferred stock
dividends 1.97x 2.40x 2.52x 3.35x 3.21x
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
</TABLE>
- ----------
(1) The computation for the forty two days ended February 11, 1994 is not
meaningful.
<PAGE>
EXHIBIT 21
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
LIST OF SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Place of Incorporation of
Legal Name of Subsidiary Organization
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Anita Associates California Limited Partnership
Annapolis Mall Limited Partnership Maryland Limited Partnership
Annapolis Mall LLC Delaware Limited Liability Company
Capital Mall Company Washington Limited Partnership
Capital Shopping Center LLC Delaware Limited Liability Company
Capital Shopping Center, Inc. Delaware Corporation
CMF, Inc. Delaware Corporation
Connecticut Post Mall LLC Delaware Limited Liability Company
Connecticut Post Mall No. 2 LLC Delaware Limited Liability Company
Crestwood Plaza, Inc. Delaware Corporation
Downtown Plaza LLC Delaware Limited Liability Company
Eagle Rock Plaza LLC Delaware Limited Liability Company
Eagle Rock Properties, Inc. Delaware Corporation
Eastland Shopping Center LLC Delaware Limited Liability Company
Enfield Square LLC Delaware Limited Liability Company
Enfield Square, Inc. Delaware Corporation
EWH Escondido Associates, L.P. Delaware Limited Partnership
FH Financing LLC Delaware Limited Liability Company
Fox Hills Mall LLC Delaware Limited Liability Company
Fox Hills Mall, Inc. Delaware Corporation
Hahn UPI California Limited Partnership
Horton Land LLC Delaware Limited Liability Company
Horton Plaza LLC Delaware Limited Liability Company
Horton Plaza, Inc. Delaware Corporation
Independence Mall Associates Limited Partnership North Carolina Limited Partnership
Los Cerritos LLC Delaware Limited Liability Company
MBM Associates - New California Limited Partnership
Meriden Square Partnership Connecticut General Partnership
Mid Rivers Land LLC Delaware Limited Liability Company
Mid Rivers Limited Partnership Missouri Limited Partnership
Mid Rivers Mall LLC Delaware Limited Liability Company
Mid Rivers Office Development I, Inc. Delaware Corporation
Mid Rivers, Inc. Delaware Corporation
Mission Valley Center LLC Delaware Limited Liability Company
Mission Valley Finance Corporation Delaware Corporation
Mission Valley Partnership California Limited Partnership
Montgomery Mall Limited Partnership Maryland Limited Partnership
Montgomery Mall of Maryland LLC Delaware Limited Liability Company
Montgomery Mall Properties, Inc. Delaware Corporation
M-R St. Peters, L.P. Delaware Limited Partnership
North County Fair LLC Delaware Limited Liability Company
</TABLE>
<PAGE>
EXHIBIT 21
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
LIST OF SUBSIDIARIES OF THE COMPANY - (CONTINUED)
<TABLE>
<CAPTION>
Place of Incorporation of
Legal Name of Subsidiary Organization
- -------------------------------------------------------------------------- ----------------------------------------
<S> <C>
Northwest Plaza LLC Delaware Limited Liability Company
Northwest Plaza, Inc. Delaware Corporation
Oakridge Mall LLC Delaware Limited Liability Company
Oakridge Mall, Inc. Delaware Corporation
Owensmouth Office Associates, Ltd. California Limited Partnership
Parkway Plaza LLC Delaware Limited Liability Company
Parkway Plaza, Inc. Delaware Corporation
Plaza Bonita LLC Delaware Limited Liability Company
Plaza Bonita, Inc. Delaware Corporation
Plaza Camino Real California Limited Partnership
Plaza Camino Real LLC Delaware Limited Liability Company
Plaza West Covina LLC Delaware Limited Liability Company
Plaza West Covina, Inc. Delaware Corporation
Promenade LLC Delaware Limited Liability Company
Residential Rentals and Investments, Inc. Connecticut Corporation
Santa Anita Fashion Park LLC Delaware Limited Liability Company
Solano Mall LLC Delaware Limited Liability Company
South County Center LLC Delaware Limited Liability Company
South County Post Office LLC Delaware Limited Liability Company
South County Properties, Inc. Delaware Corporation
South Shore Mall LLC Delaware Limited Liability Company
The Connecticut Post Limited Partnership Connecticut Limited Partnership
Topanga Center, Inc. Delaware Corporation
Topanga Plaza LLC Delaware Limited Liability Company
Trumbull Mall LLC Delaware Limited Liability Company
University Towne Centre LLC Delaware Limited Liability Company
UPI Associates California General Partnership
Vancouver Washington General Partnership
Vancouver Mall LLC Delaware Limited Liability Company
VF Mall LLC Delaware Limited Liability Company
WAP HC, Inc. Delaware Corporation
WEA Annapolis, Inc. Delaware Corporation
WEA Crestwood Plaza LLC Delaware Limited Liability Company
WEA CT Houses LLC Delaware Limited Liability Company
WEA Meriden Square LLC Delaware Limited Liability Company
WEA Meriden Square No. 2 LLC Delaware Limited Liability Company
WEA Meriden Square No. 3 LLC Delaware Limited Liability Company
WEA Meriden Square, Inc. Delaware Corporation
WEA North County Fair LLC Delaware Limited Liability Company
WEA NY Houses LLC Delaware Limited Liability Company
WEA Valley Fair LLC Delaware Limited Liability Company
West County Center LLC Delaware Limited Liability Company
West Park Mall LLC Delaware Limited Liability Company
</TABLE>
<PAGE>
EXHIBIT 21
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
LIST OF SUBSIDIARIES OF THE COMPANY - (CONTINUED)
<TABLE>
<CAPTION>
Place of Incorporation of
Legal Name of Subsidiary Organization
- --------------------------------------------------------------------------- ---------------------------------------------
<S> <C>
West Park Mall, Inc. Delaware Corporation
West Park Partners, L.P. Missouri Limited Partnership
West Park Shopping Center, Inc. Delaware Corporation
West Valley LLC Delaware Limited Liability Company
West Valley Partnership California Limited Partnership
Westfield America - Wheaton, Inc. Delaware Corporation
Westfield America G.P., Inc. Delaware Corporation
Westfield America Investor L.P. Delaware Limited Partnership
Westfield America Limited Partnership Delaware Limited Partnership
Westfield America M.S., Inc. Delaware Corporation
Westfield America Meriden Square, Inc. Delaware Corporation
Westfield America of Annapolis, Inc. Delaware Corporation
Westfield America of Bonita, Inc. Delaware Corporation
Westfield America of Missouri, Inc. Delaware Corporation
Westfield America of Vancouver, Inc. Delaware Corporation
Westfield America of West Covina, Inc. Delaware Corporation
Westfield America, Inc. Missouri Corporation
Westfield Independence LLC Delaware Limited Liability Company
Westfield Independence Mall Limited Partnership Delaware Limited Partnership
Westfield Management, Inc. California Corporation
Westfield Mission Valley Corporation Delaware Corporation
Westland Milford Properties, Inc. Delaware Corporation
Westland Partners, Inc. Delaware Corporation
Westland Properties, Inc. Delaware Corporation
Westland Shopping Center, L.P. California Limited Partnership
Westland South Shore Mall, L.P. California Limited Partnership
Westland Town Center LLC Delaware Limited Liability Company
Wheaton Plaza No. 1 LLC Delaware Limited Liability Company
Wheaton Plaza Regional Shopping Center LLP Maryland Limited Liability Partnership
WPI Meriden Square, Inc. Delaware Corporation
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
on Form S-3 (Nos. 333-52977 and 333-68809) and in the related Prospectuses of
Westfield America, Inc., formerly CenterMark Properties, Inc., of our report
dated January 25, 1999, with respect to the consolidated financial statements
and schedule of Westfield America, Inc. included in the Annual Report (Form
10-K) for the year ended December 31, 1998 filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
March 22, 1999
Los Angeles, California
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
Know All Persons By These Presents, that each person whose signature
appears below constitutes and appoints Peter S. Lowy, Mark A. Stefanek and Irv
Hepner, and each of them, with full power to act without the others, his true
and lawful attorneys-in fact and agents, with full and several power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K of Westfield America, Inc.
for the year ended December 31, 1998 (the "Annual Report"), and to file the
same, with all exhibits thereto, and to sign any amendments to the Annual Report
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they or he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney on
this 5th day of March 1999.
<PAGE>
/s/ Frank P. Lowy
- ------------------------------
Frank P. Lowy
Director
/s/ Roy L. Furman
- ------------------------------
Roy L. Furman
Director
/s/ Frederick L. Hilmer
- ------------------------------
Frederick L. Hilmer
Director
/s/ Herman Huizinga
- ------------------------------
Herman Huizinga
Director
/s/ David H. Lowy
- ------------------------------
David H. Lowy
Director
/s/ Bernard Marcus
- ------------------------------
Bernard Marcus
Director
/s/ Larry A. Silverstein
- ------------------------------
Larry A. Silverstein
Director
/s/ Francis T. Vincent
- ------------------------------
Francis T. Vincent, Jr.
Director
/s/ Geroge Weissman
- ------------------------------
Geroge Weissman
Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K,
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1998 JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1998 DEC-31-1997 DEC-31-1996
<CASH> 51,092 39,308 6,729
<SECURITIES> 0 0 0
<RECEIVABLES> 53,725 36,411 26,157
<ALLOWANCES> (8,400) (8,912) (9,157)
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 0 0
<PP&E> 3,643,770 1,793,327 1,172,034
<DEPRECIATION> (340,727) (236,220) (110,260)
<TOTAL-ASSETS> 3,820,639 1,969,630 1,341,854
<CURRENT-LIABILITIES> 0 0 0
<BONDS> 2,641,015 1,107,425 770,625
0 0 0
396,000 121,000 94,000
<COMMON> 731 731 527
<OTHER-SE> 624,388 648,649 424,003
<TOTAL-LIABILITY-AND-EQUITY> 3,820,639 1,969,630 1,341,854
<SALES> 0 0 0
<TOTAL-REVENUES> 328,465 216,808 158,526
<CGS> 0 0 0
<TOTAL-COSTS> 188,208 123,092 92,534
<OTHER-EXPENSES> 4,257 2,478 1,063
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 106,852 57,472 40,233
<INCOME-PRETAX> 106,188 46,865 24,696
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 53,293 46,865 24,696
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 53,895 0 0
<CHANGES> 0 0 0
<NET-INCOME> 106,188 46,865 24,696
<EPS-PRIMARY> 1.21 0.54 0.42
<EPS-DILUTED> 1.20 0.54 0.42
</TABLE>
