<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 12, 1998
WESTFIELD AMERICA, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
MISSOURI 1-12923 43-0758627
- ---------------------------- ------------------------ ----------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification Number)
11601 WILSHIRE BOULEVARD
12TH FLOOR
LOS ANGELES, CALIFORNIA 90025
(Address of principal executive offices)
----------------------------------------
Registrant's telephone number, including area code: 310/445-2427
NO CHANGE
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
------------
On October 30, 1998, certain subsidiaries of Westfield America, Inc.
(the "Company") borrowed $281 million from The Capital Company of America LLC
("Capital Company"). On December 9, 1998, certain subsidiaries of the Company
borrowed an additional $465.1 million from Capital Company. These funds
replaced borrowings (other than $100 million) made under a bridge financing
provided by a consortium of banks led by Union Bank of Switzerland. The Capital
Company loan was made pursuant to a loan agreement, dated as of October 30,
1998, between Capital Company and the subsidiaries of the Company party
thereto, as amended by an Assumption and Amendment Agreement, dated as of
December 9, 1998, by and among Capital Company and the subsidiaries of the
Company party thereto.
On December 29, 1998, the Company issued 138,889 shares of Series C-2
cumulative convertible redeemable preferred stock, par value $1.00 per share and
liquidation value $180 per share (the "Series C-2 Preferred Shares"), to
Security Capital Preferred Growth Incorporated ("SCPG"), in exchange for gross
proceeds of $25,000,020. The Series C-2 Preferred Shares are convertible into
common stock of the Company. Each Series C-2 Preferred Share is currently
convertible into 10 shares of common stock of the Company, subject to
adjustment. All of the Series C-2 Preferred Shares were 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 sale, the Company paid an
aggregate of $250,000 in private placement commissions.
On December 24, 1998, the Company issued 138,889 shares of Series C-1
cumulative convertible redeemable preferred stock, par value $1.00 per share and
liquidation value $180 per share (the "Series C-1 Preferred Shares"), to SCPG,
in exchange for gross proceeds of $25,000,020. The Series C-1 Preferred Shares
are convertible into common stock of the Company. Each Series C-1 Preferred
Share is currently convertible into 10 shares of common stock of the Company,
subject to adjustment. All of the Series C-1 Preferred Shares were offered and
sold to SCPG, an accredited investor, pursuant to the exemption from the
registration requirements of the Act, provided by Section 4(2) of the Act. In
connection with such sale, the Company paid an aggregate of $250,000 in private
placement commissions.
On December 22, 1998, the Company issued 138,889 shares of Series D-1
cumulative convertible redeemable preferred stock, par value $1.00 per share and
liquidation value $180 per share (the "Series D-1 Preferred Shares"), to
Westfield America Trust ("WAT"), the Company's largest shareholder, in exchange
for gross proceeds of $25,000,020. The Series D-1 Preferred Shares are 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 of shareholders) or (ii) the holder of the
Series D-1 Preferred Shares is an individual to
2
<PAGE>
whom the Company may issue its common stock without shareholder approval.
Subject to the foregoing, the Series D-1 Preferred Shares are convertible into
common stock of the Company. Each Series D-1 Preferred Share is currently
convertible into 10 shares of common stock of the Company, subject to
adjustment. All of the Series D-1 Preferred Shares were offered and sold to WAT
pursuant to the exemption from the registration requirements of the Act,
provided by Section 4(2) of the Act.
On August 12, 1998, the Company issued 416,667 shares of Series C
cumulative convertible redeemable preferred stock, par value $1.00 per share and
liquidation value $180 per share (the "Series C Preferred Shares"), to SCPG, in
exchange for gross proceeds of $75,000,060. The Series C Preferred Shares are
convertible into common stock of the Company. Each Series C Preferred Share is
currently convertible into 10 shares of common stock of the Company, subject to
adjustment. All of the Series C Preferred Shares were offered and sold to SCPG,
an accredited investor, pursuant to the exemption from the registration
requirements of the Act, provided by Section 4(2) of the Act. In connection
with such sale, the Company paid an aggregate of $750,000 in private placement
commissions.
Also on August 12, 1998, the Company issued 416,667 shares of Series D
cumulative convertible redeemable preferred stock, par value $1.00 per share and
liquidation value $180 per share (the "Series D Preferred Shares"), to WAT and
277,778 shares of the Series D Preferred Shares to Westfield American
Investments Pty Limited ("WAI"), a subsidiary of Westfield Holdings Limited, in
exchange for gross proceeds of $125,000,100. The Series D Preferred Shares are
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 of shareholders) or (ii) the holder of the
Series D Preferred Shares is an individual to whom the Company may issue its
common stock without shareholder approval. Subject to the foregoing, the Series
D Preferred Shares are convertible into common stock of the Company. Each Series
D Preferred Share is currently convertible into 10 shares of common stock of the
Company, subject to adjustment. All of the Series D Preferred Shares were
offered and sold to WAT and WAI, pursuant to the exemption from the registration
requirements of the Act, provided by Section 4(2) of the Act.
The Company recently amended (i) its Second Amended and Restated By-
Laws of the Company and (ii) the Asset Purchase Agreement, dated as of April 6,
1998, between TrizecHahn Centers, Inc. ("TrizecHahn") and The Rouse Company
("Rouse") and the Company, as amended. In addition, the Company, as managing
general partner of Westfield America Limited Partnership (the "Operating
Partnership"), recently amended the Operating Partnership's First Amended and
Restated Agreement of Limited Partnership. Also, the Operating Partnership
recently issued Investor Unit Rights of the Operating Partnership to several
third parties.
3
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Item 7. Financial Statements and Exhibits.
---------------------------------
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<C> <S>
3.1 Restated Articles of Incorporation of the Company.
3.2 Second Amended and Restated By-Laws of the Company.
3.3 Amendment No. 1 to the Second Amended and Restated By-Laws of the
Company.
3.4 Amendment No. 2 to the Second Amended and Restated By-Laws of the
Company.
10.1 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.
10.2 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.
10.3 The First Amended and Restated Agreement of Limited Partnership
of Westfield America Limited Partnership, dated as of August 3,
1998 (the "OP Agreement").
10.4 Amendment No. 1 to the OP Agreement, dated as of August 12, 1998.
10.5 Amendment No. 2 to the OP Agreement, dated as of December 8,
1998.
10.6 Amendment No. 3 to the OP Agreement, dated as of December 24,
1998.
10.7 Amendment No. 4 to the OP Agreement, dated as of December 29,
1998.
</TABLE>
4
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<TABLE>
<C> <S>
10.8 Amendment No. 9 to the Asset Purchase Agreement, dated as of
December 3, 1998, between TrizecHahn, and Rouse and the Company.
10.9 Amendment No. 10 to the Asset Purchase Agreement, dated as of
December 9, 1998, between TrizecHahn, and Rouse and the Company.
99.1 Copy of the Press Release, dated December 28, 1998, issued by the
Company, publicly announcing the activities reported therein.
</TABLE>
5
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WESTFIELD AMERICA, INC.
Date: February 19, 1999 By: /s/ Irv Hepner
--------------------------------
Irv Hepner
Secretary
6
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<C> <S>
3.1 Restated Articles of Incorporation of the Company.
3.2 Second Amended and Restated By-Laws of the Company.
3.3 Amendment No. 1 to the Second Amended and Restated By-Laws of the
Company.
3.4 Amendment No. 2 to the Second Amended and Restated By-Laws of the
Company.
10.1 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.
10.2 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.
10.3 The First Amended and Restated Agreement of Limited Partnership
of Westfield America Limited Partnership, dated as of August 3,
1998 (the "OP Agreement").
10.4 Amendment No. 1 to the OP Agreement, dated as of August 12, 1998.
10.5 Amendment No. 2 to the OP Agreement, dated as of December 8,
1998.
10.6 Amendment No. 3 to the OP Agreement, dated as of December 24,
1998.
10.7 Amendment No. 4 to the OP Agreement, dated as of December 29,
1998.
10.8 Amendment No. 9 to the Asset Purchase Agreement, dated as of
December 3, 1998, between TrizecHahn, and Rouse and the Company.
</TABLE>
7
<PAGE>
<TABLE>
<C> <S>
10.9 Amendment No. 10 to the Asset Purchase Agreement, dated as of
December 9, 1998, between TrizecHahn, and Rouse and the Company.
99.1 Copy of the Press Release, dated December 28, 1998, issued by the
Company, publicly announcing the activities reported therein.
</TABLE>
8
<PAGE>
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
WESTFIELD AMERICA, INC.
Westfield America, Inc., a Missouri corporation organized on September
24, 1924, does hereby restate its Articles of Incorporation and certifies that
the Restated Articles of Incorporation correctly sets forth, without change, the
corresponding provisions of the Articles of Incorporation as heretofore amended
and that the Restated Articles of Incorporation supersede the original Articles
of Incorporation and all amendments thereto.
The Restated Articles of Incorporation were adopted May 12, 1997 by
unanimous consent of the share holders of the corporation and are attached
hereto as Exhibit A.
IN WITNESS WHEREOF, the undersigned, Co-President has executed this
instrument and its Assistant Secretary has attested to said instrument on the
16th day of May, 1997.
WESTFIELD AMERICA, INC.
ATTEST: By: /s/ Peter Lowy
---------------------------
Co-President
/s/ Barry Mills
- ------------------------
Assistant Secretary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
I, Gail Shulman, a notary public, do hereby certify that on this 16th
day of May, 1997, personally appeared before me Peter S. Lowy, and being first
duly sworn by me, declared that he is the Co-President of Westfield America,
Inc., that he signed the foregoing document as Co-President of the corporation,
and that the statements therein contained are true.
[SEAL] /s/ Gail Shulman
------------------------------
Notary Public
My Commission Expires: February 28, 1998
<PAGE>
EXHIBIT A
ARTICLE FIRST
The name of the corporation is: Westfield America, Inc.
ARTICLE SECOND
The Corporation's registered agent in the State of Missouri shall be
The Corporation Company, 7733 Forsyth Boulevard, Clayton, Missouri 631015-1817.
ARTICLE THIRD
The Corporation is formed for the following purposes:
(a) To take, purchase or otherwise acquire, and to hold, own, use,
manage, develop, control, improve, sell, exchange, convey, transfer, assign,
mortgage or otherwise encumber, and to let, lease as lessor or lessee, invest in
and otherwise deal in and with real property, or any estate or interest therein,
within and without the State of Missouri and in any part of the world; and
(b) To have and exercise all powers which are or may be conferred upon
corporations organized under and pursuant to The General and Business
Corporation Law of Missouri (the "GBCL").
ARTICLE FOURTH
SECTION 4.1 Classes and Number of Shares.
----------------------------
The total number of shares of all classes of stock that the
Corporation shall have authority to issue is four hundred ten million, and two
hundred (410,000,200) shares, consisting of (i) two hundred (200) shares of non-
-
voting senior preferred stock, par value $1.00 per share (the "Senior Preferred
Shares"), (ii) five million (5,000,000) shares of preferred stock, par value
--
$1.00 per share (the "Preferred Shares"), of which nine hundred forty thousand
(940,000) shares shall be designated Series A cumulative redeemable preferred
stock (the "Series A Preferred
2
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Shares"), (iii) two-hundred million (200,000,000) shares of common stock, par
---
value $.0l per share (the "Common Shares"), and (iv) two hundred five million
--
(205,000,000) shares of excess stock, par value $.0l per share (the "Excess
Shares"). Excess Shares, if any, that are exchanged pursuant to Sections 4.5(c)
and 4.7 hereof (i) for Common Shares, are sometimes referred to herein as
"Excess Common Shares", (ii) for Preferred Shares, are sometimes referred to
--
herein as "Excess Preferred Shares", and together with the Preferred Shares, as
"Preferred Equity Shares", and (iii) for Series A Preferred Shares, are
---
sometimes referred to herein as "Excess Series A Preferred Shares", and together
with the Series A Preferred Shares, as "Series A Equity Shares". The Preferred
Shares and Excess Preferred Shares may be issued, from time to time, in one or
more series as authorized by the Board of Directors of the Corporation (the
"Board of Directors"). Prior to issuance of a series, the Board of Directors by
resolution shall designate that series to distinguish it from other series and
classes of stock of the Corporation, shall specify the number of shares to be
included in the series, and shall fix the terms, rights, restrictions and
qualifications of the shares of the series, including any preferences, voting
powers, dividend rights and redemption, sinking fund and conversion rights.
Subject to the express terms of any other series of Preferred Equity Shares
outstanding at the time, the Board of Directors may increase or decrease the
number of shares or alter the designation or classify or reclassify any unissued
shares of a particular series of Preferred Equity Shares by fixing or altering
in any one or more respects from time to time before issuing the shares any
terms, rights, restrictions and qualifications of the shares. The Senior
Preferred Shares and the Preferred Shares are sometimes referred to herein
collectively as the "Senior Shares". The Common Shares and the Excess Common
Shares are sometimes referred to herein collectively as the "Common Equity
Shares".
SECTION 4.2 Senior Preferred Shares.
-----------------------
(a) General Terms. Each Senior Preferred Share shall be identical in
-------------
all respects with each other Senior Preferred Share. Senior Preferred Shares
that are redeemed or purchased by the Corporation may, at the election of the
Corporation either (i) be reissued by the Corporation or (ii) be canceled and if
- --
so canceled shall revert to authorized but unissued Senior Preferred Shares. No
other shares of the Corporation may be authorized that are senior to or pari
----
passu with the Senior Preferred Shares with
- -----
3
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respect to rights to receive dividends and rights upon liquidation of the
Corporation.
(b) Dividend Rights. (i) The holders of Senior Preferred Shares
---------------
shall be entitled to receive, when and as declared by the Board of Directors,
but only out of funds legally available therefor, cash dividends at the annual
rate of $35.00 per share, and no more, payable quarterly on the first day of
January, April, July and October, respectively, in each year with respect to the
quarterly dividend period (or portion thereof) ending on the day preceding such
respective dividend payment date, to shareholders of record on the respective
date, not exceeding fifty days preceding such dividend payment date, fixed for
the purpose by the Board of Directors in advance of payment of each particular
dividend.
(ii) So long as any Senior Preferred Shares remain outstanding, no
dividend whatever shall be paid or declared and no distribution made on any
Preferred Shares or Common Equity Shares other than a dividend payable in
Preferred Shares or Common Equity Shares, and no shares of Preferred Shares or
Common Equity Shares shall be purchased, redeemed or otherwise acquired for
consideration by the Corporation, directly or indirectly (other than as a result
of a reclassification of Preferred Shares or Common Equity Shares, or the
exchange or conversion of one Preferred Share or Common Equity Share for or into
another Preferred Share or Common Equity Share or other than through the use of
the proceeds of a substantially contemporaneous sale of other Preferred Shares
or Common Shares), unless the full dividend payable with respect to the Senior
Preferred Shares for the then current quarterly-yearly dividend period shall
have been paid or declared and set apart for payment. Subject to the foregoing,
and not otherwise, dividends may be declared by the Board of Directors and paid
on any Series A Equity Shares or Common Equity Shares from time to time out of
any funds legally available therefor, and the Senior Preferred Shares shall not
be entitled to participate in any such dividends, whether payable in cash, stock
or otherwise.
(c) Rights Upon Liquidation. In the event of any voluntary
-----------------------
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Senior Preferred Shares shall be entitled, before any distribution or
payment is made to the holders of any Preferred Shares or Common Equity Shares,
to be paid in full an amount equal to $550.00 per share (which amount is
hereinafter referred to as the "senior voluntary liquidation amount"), together
with the
4
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full dividend thereon for the then current quarterly-yearly dividend period. In
the event of any involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, then, before any distribution or payment shall be
made to the holders of any Preferred Shares or Common Equity Shares, the holders
of Senior Preferred Shares shall be entitled to be paid in full an amount equal
to $550.00 per share (which amount is hereinafter referred to as the "senior
involuntary liquidation amount"), together with the full dividend thereon for
the then current quarterly-yearly dividend period.
If payment shall have been made in full to all holders of Senior
Preferred Shares, the remaining assets of the Corporation shall be distributed
among the holders of Preferred Shares or Common Equity Shares, according to
their respective numbers of shares. For the purposes of this Section 4.2(c),
the consolidation or merger of the Corporation with any other corporation shall
not be deemed to constitute a liquidation, dissolution or winding up of the
Corporation.
(d) Redemption. The Corporation, at the option of the Board of
----------
Directors, may redeem in whole, but not in part, the Senior Preferred Shares at
the time outstanding at any time from and after February 20, 1999, upon notice
given as hereinafter specified, at a redemption price for each Senior Preferred
Share equal to $550.00, together with the full dividend thereon for the then
current quarterly-yearly dividend period.
Notice of redemption of the Senior Preferred Shares shall be mailed by
first class mail, postage prepaid, addressed to the holders of record of the
shares to be redeemed at their respective last addresses as they shall appear on
the books of the Corporation. Such mailing shall be at least 30 days and not
more than 60 days prior to the date fixed for redemption. Any notice which is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the shareholder receives such notice, and failure
duly to give such notice by mail, or any defect in such notice, to any holder of
Senior Preferred Shares designated for redemption shall not affect the validity
of the proceedings for the redemption of any other Senior Preferred Shares.
The Board of Directors shall have full power and authority, subject to
the provisions herein contained, to
5
<PAGE>
prescribe the terms and conditions upon which Senior Preferred Shares shall be
redeemed.
If notice of redemption shall have been duly given, and if, on or
before the redemption date specified therein, all funds necessary for such
redemption shall have been set aside by the Corporation, separate and apart from
its other funds, in trust for the pro rata benefit of the holders of the shares
called for redemption, so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for redemption shall
not have been surrendered for cancellation, all shares so called for redemption
shall no longer be deemed outstanding on and after such redemption date, and
all rights with respect to such shares shall forthwith on such redemption date
cease and terminate, except only the right of the holders thereof to receive the
amount payable on redemption thereof, without interest.
Any funds so set aside and unclaimed at the end of three years from
such redemption date shall, to the extent permitted by law, be released or
repaid to the Corporation, after which repayment the holders of the shares so
called for redemption shall look only to the Corporation for payment thereof.
(e) Voting Rights. Except as required by applicable law, the holders
-------------
of Senior Preferred Shares shall have no voting rights in the Corporation.
(f) No Other Rights. The Senior Preferred Shares shall not have any
---------------
relative, participating, optional or other special rights and powers other than
as set forth herein.
(g) Legend. Any certificate evidencing Senior Preferred Shares shall
------
be stamped or endorsed with a legend in substantially the following form:
THE SHARES OF SENIOR PREFERRED STOCK REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, AND ACCORDINGLY NEITHER THE
SHARES NOR ANY INTEREST THEREIN MAY BE SOLD,
TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND ANY
6
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SUCH LAWS APPLICABLE THERETO AND THE RULES AND
REGULATIONS THEREUNDER.
SECTION 4.2A Series A Preferred Shares.
-------------------------
(a) General Terms. Each Series A Preferred Share shall be identical
-------------
in all respects to each other Series A Preferred Share. Each Excess Series A
Preferred Share shall be identical in all respects to each other Excess Series A
Preferred Share, and except as otherwise provided herein, shall be identical in
all respects to each Series A Preferred Share. Series A Preferred Shares that
are redeemed or purchased by the Corporation may, at the election of the
Corporation either (i) be reissued by the Corporation or (ii) be canceled and if
- --
so canceled shall revert to authorized but unissued Preferred Shares.
(b) Dividend Rights. (i) The holders of Series A Equity Shares shall
---------------
be entitled to receive, when and as declared by the Board of Directors, but only
out of funds legally available therefor, cumulative cash dividends payable to
shareholders of record on the respective date, not exceeding 50 days preceding
such dividend payment date, fixed for the purpose by the Board of Directors in
advance of payment of each particular dividend in an amount equal to the greater
of (A) $8.50 per share per annum and (B) an amount per share equal to 6.2461
(subject to proportional adjustment in the case of any subdivision, stock split,
stock dividend, combination or reverse split of the Common Equity Shares or the
Preferred Equity Shares) (as so adjusted from time to time, the "Common
Equivalent Factor") times the dollar amount of dividends declared with respect
to each Common Equity Share (such product, the "Common Equivalent Amount") for
the same annual period; provided, however, that if, as a result of the quarterly
-------- -------
dividends paid in accordance with the following sentence, the holders of Series
A Equity Shares shall have received for any calendar year more dividends than
such Shares shall be entitled under clauses (A) and (B) above, the dividends
payable in respect of Series A Preferred Shares in subsequent calendar years
shall be reduced to the extent of such overpayment. Subject to the proviso of
the preceding sentence of this Section 4.2A(b)(i), the dividend paid in respect
of each quarterly period in each calendar year shall be determined as follows:
(1) for the first quarter, the greater of $2.125 per share and the Common
-
Equivalent Amount for same quarter; (2) for the second quarter, an amount such
-
that the aggregate amount to be received per Series A Equity Share in respect of
the first two quarters of such calendar
7
<PAGE>
year shall be the greater of $4.25 per share and the Common Equivalent Amount
for the same two quarters; (3) for the third quarter, an amount such that the
-
aggregate amount to be received per Series A Equity Share in respect of the
first three quarters of such calendar year shall be the greater of $6.375 per
share and the Common Equivalent Amount for the same three quarters; and (4) for
-
the fourth quarter, an amount such that the aggregate amount to be received per
Series A Equity Share in respect of such calendar year shall be the amount
provided in the preceding sentence of this Section 4.2A(b)(i). Dividends paid on
shares of Series A Equity Shares in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all Series A Equity Shares as are
outstanding at the time. Accumulated but unpaid dividends for any past quarterly
dividend periods may be declared and paid at any time, without reference to any
regularly scheduled quarterly dividend payment date, to holders of record on
such date, not exceeding 50 days preceding such dividend payment date, fixed for
the purpose by the Board of Directors in advance of payment of each particular
dividend.
(ii) So long as any Series A Equity Shares remain outstanding, no
dividend whatever shall be paid or declared and no distribution made on any
Common Equity Shares other than a dividend payable in Common Equity Shares, and
no shares of Common Equity Shares shall be purchased, redeemed or otherwise
acquired for consideration by the Corporation, directly or indirectly (other
than as a result of a reclassification of Common Equity Shares, or the exchange
or conversion of one Common Equity Share for or into another Common Equity
Share, or other than through the use of the proceeds of a substantially
contemporaneous sale of other Common Shares), unless the full dividend thereon
for the then current quarterly dividend period and all prior dividend periods
shall have been paid or declared and set apart for payment. Subject to the
foregoing, and not otherwise, such dividends may be declared by the Board of
Directors and paid on any Common Equity Shares from time to time out of any
funds legally available therefor, and the Series A Equity Shares shall not be
entitled to participate in any such dividends, whether payable in cash, stock or
otherwise.
(c) Rights Upon Liquidation. In the event of any voluntary
-----------------------
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Series A Equity Shares shall be entitled, before any distribution or
payment
8
<PAGE>
is made to the holders of any Common Equity Shares, to be paid in full an amount
per share equal to $100.00 (which amount is hereinafter referred to as the
"Series A Preferred voluntary liquidation amount"), together with (x) all
-
accrued and unpaid dividends through the end date of the calender quarter most
recently completed prior to the date of liquidation, dissolution or winding up
of the affairs of the Corporation (any such date, a "Series A Voluntary
Liquidation Date") plus (y) $2.125 times a fraction equal to the actual number
-
of days elapsed from the end date of the calendar quarter most recently
completed to the relevant Series A Voluntary Liquidation Date over ninety days.
In the event of any involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, then, before any distribution or payment shall be
made to the holders of any Common Equity Shares, the holders of Series A Equity
Shares shall be entitled to be paid in full an amount per share equal to $100.00
(which amount is hereinafter referred to as the "Series A Preferred involuntary
liquidation amount"), together with (x) all accrued and unpaid dividends through
-
the end date of the calender quarter most recently completed prior to the date
of involuntary liquidation, dissolution or winding up of the affairs of the
Corporation (any such date, a "Series A Involuntary Liquidation Date"); plus (y)
-
$2.125 times a fraction equal to the actual number of days elapsed from the end
date of the calendar quarter most recently completed to the relevant Series A
Involuntary Liquidation Date over ninety days.
Payment shall be made in full to all holders of Series A Equity Shares
and other Shares ranking pari passu on liquidation with the Series A Equity
---- -----
Shares, before any remaining assets of the Corporation shall be distributed
among the holders of Common Equity Shares, according to their respective numbers
of shares. For the purposes of this Section 4.2A(c), the consolidation or
merger of the Corporation with any other corporation shall not be deemed to
constitute a liquidation, dissolution or winding up of the Corporation, but
shall, to the extent appropriate, cause an adjustment to the Common Equivalent
Factor.
(d) Redemption. The Corporation, at the option of the Board of
----------
Directors, with approval of a majority of the Independent Directors (as defined
in Section 4.5 hereof), may redeem in whole, or in part, the Series A Equity
Shares at the time outstanding at any time and from time to time from and after
July 1, 2003, upon notice given as hereinafter specified, at a redemption price
for each Series A Equity Share equal to $100.00, together with (i)
-
9
<PAGE>
all accrued and unpaid dividends through the end date of the calender quarter
most recently completed prior to the date of redemption of the Series A Equity
Shares (each a "Series A Redemption Date"); plus (ii) $2.125 times a fraction
--
equal to the actual number of days elapsed from the end date of the calendar
quarter most recently completed to the relevant Series A Redemption Date over
ninety days (such fraction, the "Pro Rata Adjustment"); plus (iii) a right to
---
receive on the payment date for dividends declared on the Common Equity Shares
with respect to the calendar quarter during which the relevant Series A
Redemption Date occurs (the "Relevant Quarter"), the excess of (x) the Common
-
Equivalent Factor times (A) the dollar amount of the per share dividends
-
declared on the Common Equity Shares for the Relevant Quarter times the Pro Rata
Adjustment plus (B) the dollar amount of the per share dividends declared on the
-
Common Equity Shares from the beginning of the calendar year in which such
redemption occurs through the end date of the calendar quarter prior to the
Relevant Quarter over (y) the dollar amount calculated in the preceding clause
-
(ii) plus all other dividends paid on the Preferred Shares from the beginning of
--
the calendar year during which the relevant Series A Redemption Date occurs.
If the Corporation shall determine to redeem less than all the Series
A Equity Shares then outstanding, the shares to be redeemed shall be selected
pro rata (as nearly as may be) so that the number of shares redeemed from each
holder shall be the same proportion of all the shares to be redeemed that the
total number of Series A Equity Shares then held by such holder bears to the
total number of Series A Equity Shares then outstanding.
Notice of redemption of the Series A Equity Shares shall be mailed by
first class mail, postage prepaid, addressed to the holders of record of the
shares to be redeemed at their respective last addresses as they shall appear on
the books of the Corporation. Such mailing shall be at least 30 days and not
more than 60 days prior to the date fixed for redemption. Any notice which is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the shareholder receives such notice, and failure
duly to give such notice by mail, or any defect in such notice, to any holder of
Series A Equity Shares designated for redemption shall not affect the validity
of the proceedings for the redemption of any other Series A Equity Shares.
10
<PAGE>
The Board of Directors shall have full power and authority, subject to
the provisions herein contained, to prescribe the terms and conditions upon
which Preferred Shares shall be redeemed.
If notice of redemption shall have been duly given, and if, on or
before the redemption date specified therein, the Corporation shall deposit all
funds necessary for such redemption with a bank or trust company in an account
that is separate and apart from its other accounts and shall hold such funds in
trust for the pro rata benefit of the holders of the shares called for
redemption, so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for redemption shall
not have been surrendered for cancellation, all shares so called for redemption
shall no longer be deemed outstanding on and after such redemption date, and all
rights with respect to such shares shall forthwith on such redemption date cease
and terminate, except only the right of the holders thereof to receive the
amount payable on redemption thereof, without interest.
Any funds so deposited and unclaimed at the end of two years from such
redemption date shall, to the extent permitted by law, be released or repaid to
the Corporation, after which repayment the holders of the shares so called for
redemption shall look only to the Corporation for payment thereof.
(e) Voting Rights. The holders of Series A Equity Shares shall have
-------------
no voting rights in the Corporation except: (i) in the event that the Board of
-
Directors has not declared a dividend payable to holders of any series of
Preferred Shares that were authorized with the consent of the holders of a
majority of the Series A Equity Shares or were issued to the original holder of
the Series A Equity Shares (all such Preferred Shares, collectively the "Ranking
Preferred Shares") or the Series A Preferred Shares for four (4) quarterly
dividend periods, the number of directors constituting the Board of Directors
shall, without further action, be increased by one (1) and the holders of a
majority of the Series A Equity Shares shall have the exclusive right together
with holders of all other series of Ranking Preferred Shares, to elect one (1)
director to fill such newly created directorship until such time as all such
dividends in arrears are made current and paid in full, at which time the
director so elected shall cease to be a director, the number of directors
constituting the Board of Directors shall be reduced by one (1) and such
additional
11
<PAGE>
voting rights of the holders of the Series A Equity Shares shall terminate,
subject to revesting in the event of each and every subsequent event of the
character indicated above, (ii) the affirmative vote of the holders of a
--
majority of the Series A Equity Shares voting together as a class shall be
required to approve any amendment to these Articles of Incorporation that
materially and adversely affects the rights, preferences or powers of the Series
A Equity Shares, including, without limitation, the definition of Ownership
Limit with respect to the Series A Equity Shares, provided, that (x) except as
-------- -
required by clause (y) where the amendment to these Articles of Incorporation
-
for which the vote is required pursuant to this clause (ii) adversely affects
--
the rights, powers and preferences of other series of Ranking Preferred Shares,
then such amendment shall be approved by a vote of a majority of the Ranking
Preferred Shares affected thereby, voting together as a class and (y) the
-
unanimous approval of the holders of Series A Equity Shares shall be required
for any amendment to these Articles of Incorporation that would decrease the
rate or change the time of payment of any dividend or distribution on the Series
A Equity Shares, decrease the amount payable upon redemption of the Series A
Equity Shares or upon the voluntary or involuntary liquidation of the
Corporation, or advance the date on which the Series A Equity Shares may be
redeemed by the Corporation, amend the number of shares of Series A Equity
Shares required to effect amendments to these Articles of Incorporation or amend
this Section 4.2A(e), (iii) the affirmative vote of the holders of a majority of
---
the Ranking Preferred Shares of each affected series voting together as a class
shall be required to approve any merger or consolidation of the Corporation and
another entity in which the Corporation is not the surviving corporation and
each holder of such series of Ranking Preferred Shares does not receive shares
of the surviving corporation with substantially similar rights, preferences and
powers in the surviving corporation as the Ranking Preferred Shares have with
respect to the Corporation, (iv) the affirmative vote of the holders of a
--
majority of the Ranking Preferred Shares of each affected series voting together
as a class shall be required to approve any voluntary action by the Board of
Directors intended to cause the Corporation to cease to have the status as a
REIT (as defined in Section 4.5 hereof) and (v) as otherwise required by
-
applicable law.
(f) No Other Rights. The Series A Equity Shares shall not have any
---------------
relative, participating, optional or
12
<PAGE>
other special rights and powers other than as set forth herein.
SECTION 4.3 Common Equity Shares.
--------------------
(a) Common Equity Shares Subject to Terms of Shares. The Common
-----------------------------------------------
Equity Shares shall be subject to the express priorities and limitations of the
Senior Shares.
(b) Dividend Rights. (i) The holders of Common Equity Shares shall
---------------
be entitled to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor.
(ii) Each of the Common Shares, and the Excess Common Shares shall
rank in parity with one another with respect to the declaration and payment of
any dividend or the making of any distribution by, or out of the property and
assets of the Corporation, or the issuance of any rights or warrants to
subscribe for, or purchase securities convertible into, stock or other
securities of the Corporation. No dividend or distribution, whether payable in
cash, securities or other property or assets of the Corporation, shall be
declared or paid or made, and no such rights or warrants shall be issued, in
respect of any of the Common Shares unless an identical dividend or distribution
is concurrently declared and paid or made, or identical rights or warrants are
issued, in respect of each of the Excess Common Shares, nor shall any dividend
or distribution be declared or paid or made, nor any rights or warrants issued,
in respect of any of the Common Shares or any class thereof unless an identical
dividend or distribution is concurrently declared and paid or made, or identical
rights or warrants are issued, in respect of each of the Excess Common Shares,
nor any rights or warrants issued, in respect of any of the Excess Common Shares
unless an identical dividend or distribution is concurrently declared and paid
or made, or identical rights or warrants are issued, in respect of each of the
Common Shares; provided, however, that in the case of any dividend or
-------- -------
distribution payable in, or rights or warrants to subscribe for, or purchase
securities convertible into Common Shares, such dividend or distribution shall
only be payable in, and such rights or warrants shall only provide subscription
or purchase rights relating to securities convertible into, Common Shares to
holders of Common Shares and Excess Common Shares to holders of Excess Common
Shares.
13
<PAGE>
(c) Rights Upon Liquidation. In the event of any voluntary or
-----------------------
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of Common Equity Shares shall be
entitled to receive, ratably with each other holder of Common Equity Shares,
that portion of the assets of the Corporation available for distribution to the
holders of its Common Equity Shares, as the number of Common Equity Shares held
by such holder bears to the total number of Common Equity Shares then
outstanding.
(d) Voting Rights. Except as otherwise provided herein, the holders
-------------
of Common Shares shall vote together as a single class. At all meetings of the
shareholders of the Corporation each holder of Common Shares shall be entitled
to one vote for each Common Share entitled to vote at such meeting. The
affirmative vote of a majority of the holders of Common Shares voting together
as a class shall be required to approve: (1) an election to change the
-
Corporation's status as a REIT, and (2) other matters as required by applicable
-
law.
(e) Election of Directors. (i) The cumulative voting rights set
---------------------
forth in Section 351.245(3) of the GBCL are hereby eliminated.
SECTION 4.4 Preemptive Rights. No holder of Common Equity Shares or
-----------------
of Senior Shares shall be entitled as a matter of right to subscribe for or
purchase, or have any preemptive right with respect to, any part of any new or
additional issue of stock of any class whatsoever, or of securities convertible
into any stock of any class whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration or by way of dividend.
SECTION 4.5 Restrictions on Ownership and Transfer; Exchange For
----------------------------------------------------
Excess Shares.
- -------------
(a) Definitions. As used in these Articles of Incorporation, the
-----------
following terms shall have the following meanings:
"Affiliate" shall mean with respect to any person, any other person
that, directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such person and the term
"Affiliated" has a meaning correlative to the foregoing. As used herein the
term "control" shall mean either (i) having
-
14
<PAGE>
(directly or indirectly through one or more intermediaries) the exclusive power
to direct the management and policies of a person or (ii) having both (A) at
-- -
least fifty percent (50%) of the economic interest in a person and (B) at least
-
fifty percent (50%) of the voting rights with respect to such person with the
full right to exercise such vote, and the term "controlled" has a meaning
correlative to the foregoing. Notwithstanding the foregoing, (i) with respect to
-
Westfield American Investments Pty Limited ("Westfield") only, the term
"Affiliate" shall include any United States real estate investment trust or
foreign trust with shares publicly traded on an internationally recognized
national securities exchange, provided that Westfield and its Affiliates own in
the aggregate at least twenty-five percent (25%) of the economic and voting
interests in such real estate investment trust or foreign trust and Westfield or
one of its Affiliates is the manager of all or substantially all of the
properties in which such real estate investment trust or foreign trust has a
direct or indirect interest and for which such real estate investment trust or
foreign trust has the right to designate the manager thereof or is a manager of
such trust. As used herein the term "person" shall mean an individual,
corporation, partnership, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity that may be treated
as a person under applicable law.
"Beneficial Ownership" shall mean ownership of Shares either directly
or constructively through the application of Section 544 of the Code, as
modified by Section 856(h) of the Code. The terms "Beneficial Owner",
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Beneficiary" shall mean the beneficiary or beneficiaries of the
Special Trust which shall be the United Jewish Appeal and, if necessary to avoid
the Corporation being "closely held" within the meaning of Section 856(h) of the
Code or to assure that the Corporation satisfies the requirement of Section
856(a)(5) of the Code that it has at least 100 shareholders, one or more
additional persons exempt from tax under Section 501(c)(3) of the Code as shall
be designated by the Board of Directors or a duly authorized officer of the
Corporation.
"Closely Held" shall have the meaning prescribed in Section 856(h) of
the Code.
15
<PAGE>
"Closing Date" shall mean the date of the initial closing of the
offerings of Common Shares by the Corporation as described to the registration
statement on Form S-11 as filed with the Securities and Exchange Commission
(Registration No. 333-22731).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and references to sections thereof shall include any appropriate
successor provisions.
"Existing Holder" shall mean Mr. Frank P. Lowy and all of the members
of his family, as such term is defined for purposes of Section 544(a)(2) of the
Code.
"Existing Holder Limit" shall mean,(A) for the period prior to the
-
Closing Date 33% of the value of the total outstanding Shares of the
Corporation, and (B) for the period on and after the Closing Date, 26% of the
-
value of the total outstanding Shares of the Corporation.
"Independent Director" shall mean a director of the Company who (i) is
-
not, and has not for the last 12 months been, an officer, director or employee
of any of the Westfield Group or the WAT Trustee, (ii) is not an affiliate of
--
any of the Westfield Group or the WAT Trustee or an officer or employee of such
an affiliate, (iii) is not a member of the immediate family of any natural
---
person described in clauses (i) and (ii) above, and (iv) is free from any
--
relationship that would interfere with the exercise of independent judgment as a
Director. For purposes of this definition of Independent Director only, an
"Affiliate" shall mean any person directly or indirectly controlling, controlled
by, or under common control with, such other person; "Control" shall mean the
power to exercise a controlling influence over the management or policies of a
company, unless such power is solely the result of an official position with any
of the Westfield Group or the WAT Trustee; and "Member of the Immediate Family"
shall mean any parent, spouse of a parent, child, spouse of a child, spouse,
brother or sister and includes step and adoptive relationships.
"Individual" shall mean any Person that is treated as an individual
for purposes of Section 542(a)(2) of the Code as the application of such Section
may be modified by Section 856(h) of the Code.
16
<PAGE>
"Institutional Investor" shall mean any "qualified institutional
buyer" as defined in Section (a)(1)(i)(A), (a)(1)(i)(D), (a)(1)(i)(E),
(a)(1)(i)(F), (a)(1)(i)(H) (but limited to any organization exempt from tax
under Section 501(c)(3) of the Code), (a)(1)(iv) or (a)(1)(vi) of Rule 144A
under the Securities Act of 1933, as amended. The term Institutional Investor
shall be deemed to include any foreign entity that would otherwise qualify under
the foregoing definition, including, without limitation, a foreign insurance
company.
"Market Price" shall mean, with respect to Shares of the relevant
class or series on the relevant date, the closing sale price regular way on such
day, or, in case no such sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in each case on the New York
Stock Exchange, or, if such Shares are not listed or admitted to trading on such
exchange, on the principal national securities exchange or quotation system on
which such Shares are quoted or listed or admitted to trading, or, if not quoted
or listed on any national securities exchange or quotation system, the average
of the closing bid and asked prices of such Shares on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similarly generally accepted reporting service, or, if not so
available in such manner, the fair market value of such Shares as determined by
a nationally recognized investment banking firm selected by the Board of
Directors.
"Ownership Limit", shall mean, (A) with respect to Shares Beneficially
-
Owned by any Individual (other than an Existing Holder), (i) for the period
-
prior to the Closing Date, 4% of the total value of the outstanding Shares of
all classes and series, and (ii) for the period on and after the Closing Date,
--
5.5% of the total value of the outstanding Shares of all classes and series, and
(B) with respect to the Senior Preferred Shares during the period prior to the
-
Closing Date, one Senior Preferred Share, in each case subject to adjustment as
set forth in Sections 4.5(i) and 4.5(j).
"Ownership Limitation Termination Date" shall mean the first day, if
any, on which holders of Shares determine, in accordance with any class voting
procedures as provided in these Articles that it is no longer in the best
interests of the Corporation to attempt to, or continue to, qualify as a REIT.
17
<PAGE>
"Person" shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under section 401(a) or 501(c)(17) of the
Code), a portion of a trust permanently set aside for or to be used exclusively
for the purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity or any government or agency or political subdivision thereof and
also includes a group as that term is used for purposes of Section 13(d)(3) of
the Exchange Act.
"Purported Beneficial Holder" shall mean, with respect to any event
other than a purported Transfer which results in Shares being automatically
exchanged for Excess Shares, the person for whom the Purported Record Holder of
the Shares that were, pursuant to Section 4.5(c), automatically exchanged for
Excess Shares upon the occurrence of such event held such exchanged Shares.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer which results in Shares being automatically exchanged for
Excess Shares, the purported beneficial transferee for whom the Purported Record
Transferee would have acquired such exchanged Shares, if such Transfer had been
valid under Sections 4.5(b) and 4.5(c).
"Purported Record Holder" shall mean, with respect to any event other
than a purported Transfer which results in Shares being automatically exchanged
for Excess Shares, the record holder of the Shares that were, pursuant to
Section 4.5(c), automatically exchanged for Excess Shares upon the occurrence of
such event.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Shares being automatically exchanged for
Excess Shares, the record holder of such exchanged Shares if such Transfer had
been valid under Sections 4.5(b) and 4.5(c).
"REIT" shall mean a real estate investment trust under Section 856 of
the Code.
"Shares" shall mean Senior Shares or Common Shares (all as defined in
section 4.1).
"Special Trust" shall mean a trust created pursuant to Section 4.7(a).
18
<PAGE>
"Special Trust Transferee" shall mean the ultimate transferee or
transferees of New Shares that are to be transferred from a Special Trust upon
transfer of Excess Shares pursuant to Section 4.7(e) below.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of Shares (including the granting or transfer of any option or
entering into any agreement for the sale, transfer or other disposition of
Shares), whether voluntary or involuntary, whether of record or beneficially and
whether by operation of law or otherwise.
"Trustee" shall mean such person, as trustee of the Special Trust, as
shall be selected from time to time by the Board of Directors.
(b) Restrictions on Ownership and Transfer.
--------------------------------------
(1) Prior to the Ownership Limitation Termination Date, no Individual
(other than an Existing Holder) shall Beneficially Own Shares (and, with respect
to the Senior Preferred Shares, during the period prior to the Closing Date, no
Person shall beneficially own (without reference to any rules of attribution)
Senior Preferred Shares, in each case in excess of the applicable Ownership
Limit.) In addition, prior to the Ownership Limitation Termination Date, no
Existing Holder shall Beneficially Own Shares in excess of the Existing Holder
Limit.
(2) Prior to the Ownership Limitation Termination Date, to the extent
that any Transfer, if effective, would result in any Individual (other than an
Existing Holder) Beneficially Owning Shares in excess of the Ownership Limit,
the Transfer of such Shares which would be otherwise Beneficially Owned by such
Individual in excess of such Ownership Limit shall be void ab initio; and the
-- ------
intended transferee shall acquire no rights to such Shares.
(3) Prior to the Ownership Limitation Termination Date, any Transfer
that, if effective, would result in any Existing Holder Beneficially Owning
Shares in excess of the Existing Holder Limit shall be void ab initio as to the
-- ------
Transfer of such Shares which would be otherwise Beneficially Owned by such
Existing Holder in excess of such Existing Holder Limit; and such Existing
Holder shall acquire no rights to such Shares.
19
<PAGE>
(4) Prior to the earlier of the Closing Date and the Ownership
Limitation Termination Date, any Transfer of Senior Preferred Shares that, if
effective, would result in any Person (determined without reference to any rules
of attribution) beneficially owning Senior Preferred Shares in excess of the
Ownership Limit with respect to Senior Preferred Shares shall be void ab initio
-- ------
as to the Transfer of such Preferred Shares which would be otherwise
beneficially owned by such Person (determined without reference to any rules of
attribution) in excess of such amount; and the intended transferee shall acquire
no rights in such Senior Preferred Shares.
(5) Prior to the Ownership Limitation Termination Date, any Transfer
that, if effective, would result in the Shares being beneficially owned by less
than 100 Persons (determined without reference to any rules of attribution) or
which would otherwise cause the Corporation to fail to satisfy the requirements
for qualification as a REIT, shall be void ab initio as to the Transfer of such
-- ------
Shares which would be otherwise beneficially owned by the transferee (determined
without reference to any rules of attribution); and the intended transferee
shall acquire no rights in such Shares.
(6) Prior to the Ownership Limitation Termination Date, any Transfer
that, if effective, would result in the Corporation being "Closely Held" shall
be void ab initio as to the Transfer of the Shares which would cause the
-- ------
Corporation to be "Closely Held" and the intended transferee shall acquire no
rights in such Shares.
(c) Shares Exchanged for Excess Shares.
----------------------------------
(1) If at any time prior to the Ownership Limitation Termination Date,
there is a purported Transfer such that, notwithstanding the other provisions
contained in this Article Fourth, any Individual (other than an Existing Holder)
would Beneficially Own Shares in excess of the Ownership Limit, such number of
Shares in excess of such Ownership Limit (rounded up to the nearest whole Share)
shall be automatically exchanged for Excess Shares, and shall be subject to the
terms of Section 4.7 hereof.
(2) If at any time prior to the Ownership Limitation Termination Date,
there is a purported Transfer such that, notwithstanding the other provisions
contained in this Article Fourth, an Existing Holder would Beneficially Own
Shares in excess of the applicable Existing Holder
20
<PAGE>
Limit, then such number of Shares in excess of such Existing Holder Limit
(rounded up to the nearest whole Share) shall be automatically exchanged for
Excess Shares, and shall be subject to the terms of Section 4.7 hereof.
(3) If at any time prior to the Ownership Limitation Termination Date,
there is a purported Transfer of Shares which would, notwithstanding the other
provisions contained in this Article Fourth, cause the Corporation to become
Closely Held, then the Shares being Transferred which would cause the
Corporation to be Closely Held (rounded up to the nearest whole Share) shall be
automatically exchanged for Excess Shares, and shall be subject to the terms of
Section 4.7 hereof.
(4) If, at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer such that, notwithstanding the other
provisions contained in this Article Fourth, the total outstanding Shares would
be beneficially owned (without reference to any rules of attribution) by fewer
than 100 Persons, then such number of Shares as would otherwise cause the
Corporation to fail to satisfy the ownership requirements of Section 856(a)(5)
of the Code shall automatically be exchanged for Excess Shares and shall be
subject to the terms of Section 4.7 hereof.
(5) If, at any time prior to the Ownership Limitation Termination
Date, an event other than a purported Transfer (an "Event") occurs which would
(i) cause any Individual (other than an Existing Holder) to Beneficially Own
-
Shares in excess of the Ownership Limit, (ii) cause an Existing Holder to
--
Beneficially Own Shares in excess of the Existing Holder Limit, or (iii) cause
---
the Corporation to be Closely Held, or then outstanding Shares Beneficially
Owned by such Individual or Existing Holder, as the case may be, shall be
automatically exchanged for Excess Shares, and shall be subject to the terms of
Section 4.7 hereof to the extent necessary to eliminate such excess ownership.
In determining which outstanding Shares shall be exchanged for Excess Shares,
outstanding Shares, if any, directly held or Beneficially Owned by any
Individual who caused the Event to occur shall be exchanged for Excess Shares
before any outstanding Shares not so Beneficially Owned are exchanged for Excess
Shares, and to the extent not inconsistent therewith, in such manner as
minimizes the aggregate value of the Shares that are exchanged for Excess Shares
(except to the extent that the Board of Directors determines that the Shares to
be exchanged for Excess Shares are to be those held through a Person that caused
or contributed to the
21
<PAGE>
occurrence of such Event, rather than Shares held through a different chain of
ownership). Where several such Individuals or Persons exist, the outstanding
Shares shall be exchanged for Excess Shares in such manner as minimizes the
aggregate value of the Shares that are exchanged for Excess Shares (except to
the extent that the Board of Directors determines that the Shares to be
exchanged for Excess Shares are to be those held through Persons that caused or
contributed to the occurrence of such Event, rather than Shares held through a
different chain of ownership), and to the extent not inconsistent therewith, on
a pro rata basis. If no Persons or Individuals caused the Event to occur,
outstanding Shares shall be exchanged for Excess Shares in such manner as
minimizes the aggregate value of Shares that are exchanged for Excess Shares.
(6) Any exchange of Shares for Excess Shares pursuant to this Section
4.5(c) and Section 4.7 hereof shall be effective as of the close of business on
the business day prior to the date of the Transfer or other Event that resulted
in such exchange.
(7) A Special Trust that, in accordance with Section 4.7(a) and these
Articles is the holder of any Excess Shares shall, except as otherwise
specifically provided herein, have the same rights hereunder, including without
limitation, voting rights and distribution rights, to which a permitted holder
of the Shares exchanged therefor would be entitled in respect of such Shares had
such Shares not been exchanged for Excess Shares. Such Excess Shares shall be
treated as Shares of the same class or series as the Shares exchanged therefor.
(d) Remedies For Breach. If the Board of Directors or its designees
-------------------
shall at any time determine in good faith that a Transfer has taken place in
violation of Section 4.5(b) or 4.5(c) or that a Person intends to acquire or has
attempted to acquire beneficial ownership (determined without reference to any
rules of attribution) or an Individual intends to acquire or has attempted to
acquire Beneficial Ownership of any Shares in violation of Sections 4.5(b) or
4.5(c), the Board of Directors or its designees shall take such action as it
deems advisable to refuse to give effect to or to prevent such Transfer (or any
Transfer related to such intent), including, but not limited to, refusing to
give effect to such Transfer on the books of the Corporation or instituting
proceedings to prevent such Transfers, provided, however, that nothing contained
in this Section 4.5(d) shall prevent the automatic application and
22
<PAGE>
operation of Section 4.5(b) (regarding certain attempted Transfers of Shares
being void ab initio) and, failing the operation and application of Section
4.5(b) for any reason, the automatic application and operation of Section 4.5(c)
(regarding the exchange of Shares for Excess Shares), in each case without the
need for any further action by the Corporation or the Board of Directors.
(e) Notice of Ownership or Attempted Ownership in Violation of Section
------------------------------------------------------------------
4.5(b). Any Individual or Person who acquires or attempts to acquire Beneficial
- -----
Ownership of Shares in violation of Sections 4.5(b) or 4.5(c), shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such acquisition or attempted acquisition on
the Corporation's status as a REIT.
(f) Owners Required to Provide Information. Prior to the Ownership
--------------------------------------
Limitation Termination Date,
each Person who is a Beneficial Owner of Shares and each Person
(including the shareholder of record) who is holding Shares for a Beneficial
Owner shall provide to the Corporation such information as the Corporation may
request, in good faith, in order to determine the Corporation's status as a REIT
or to comply with regulations promulgated under the REIT provisions of the Code
including, without limitation, Treasury Regulations Section 1.857-8 or any
successor regulation.
(g) Remedies Not Limited. Nothing contained in this Article Fourth
--------------------
shall (i) preclude the settlement of Shares on the New York Stock Exchange or
-
(ii) limit the authority of the Board of Directors to take such other action as
--
it deems necessary or advisable to protect the Corporation and the interests of
its shareholders by preservation of the Corporation's status as a REIT.
(h) Ambiguity. In the case of an ambiguity in the application of any
---------
of the provisions of this Article Fourth, including any definition contained in
Section 4.5(a) and any ambiguity with respect to which Shares are to be
exchanged for Excess Shares in a given situation, the Board of Directors shall
have the power to determine in good faith the application of the provisions of
this Article Fourth with respect to any situation based on the facts known to
it.
23
<PAGE>
(i) Modifications of Ownership Limit. Subject to the limitations
--------------------------------
provided in Section 4.5(j), the Board of Directors may from time to time
increase or decrease the Ownership Limit with respect to any Individual or
Person, or any Shares or class or series thereof.
(j) Limitations on Modifications.
----------------------------
(1) The Ownership Limit may not be increased if, after giving effect
to such increase, five Individuals could Beneficially Own, in the aggregate,
more than 49.9% of the value of the outstanding Shares.
(2) Prior to the modification of any Ownership Limit pursuant to
Section 4.5(i), the Board of Directors may require such opinions of counsel,
affidavits, undertakings or agreements as it may deem necessary or advisable in
order to determine or ensure the Corporation's status as a REIT.
(3) The Ownership Limit may not be increased to a percentage which is
greater than 9.8% of the value of the outstanding Shares of the Corporation of
all classes and series.
SECTION 4.6 Legend. (a) Each certificate issued on or after the
------
Closing Date in respect of Common Shares shall bear the following legend:
"The Common Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended. No Individual may Beneficially
Own Shares in excess of the then applicable Ownership Limit, which may
decrease or increase from time to time, unless such Individual is an
Existing Holder. In general, any Individual who attempts to Beneficially
Own shares in excess of the Ownership Limit must immediately notify the
Corporation. All capitalized terms used in this legend have the meanings
set forth in the Articles of Incorporation, a copy of which, including the
restrictions on ownership and transfer, will be sent without charge to each
shareholder who so requests. If the restrictions on ownership and transfer
are violated, the Common Shares represented hereby may be automatically
exchanged for Excess Shares and deemed transferred to a Special Trust as
provided in the Articles of Incorporation."
24
<PAGE>
(b) Each certificate issued prior to the Closing Date in respect of
Senior Preferred Shares shall bear the following legend:
"The Preferred Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"). No Person may
beneficially own more than one share of the outstanding Preferred Shares.
Any Person who attempts to beneficially own Preferred Shares in excess of
the above limitations must immediately notify the Corporation and any
transfer which would result in ownership of Preferred Shares in excess of
the above limitation shall be void. All capitalized terms used in this
legend have the meanings set forth in the Articles of Incorporation, a copy
of which, including the restrictions on ownership and transfer, will be
sent without charge to each shareholder who so requests."
The stock certificates evidencing any Senior Preferred Shares issued on or after
the Closing Date shall bear a legend in the form as set forth in Section 4.6(c)
hereof, provided, however, that the term "Senior Preferred Shares" shall be
-------- -------
substituted in place of the term "Preferred Shares" in every place in which the
term "Preferred Shares" appears in such legend.
(c) Each certificate issued on or after the Closing Date in respect of
Preferred Shares shall bear the following legend:
"The Preferred Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended. No Individual may Beneficially
Own Shares in excess of the then applicable Ownership Limit, which may
decrease or increase from time to time, unless such Individual is an
Existing Holder. In general, any Individual who attempts to Beneficially
Own Shares in excess of the Ownership Limit must immediately notify the
Corporation. All capitalized terms used in this legend have the meanings
set forth in the Articles of Incorporation, a copy of which, including the
restrictions on ownership and transfer, will be sent
25
<PAGE>
without charge to each shareholder who so requests. If the restrictions on
ownership and transfer are violated, the Preferred Shares represented
hereby may be automatically exchanged for Excess Shares and deemed
transferred to a Special Trust as provided in the Articles of
Incorporation."
SECTION 4.7 Excess Shares.
-------------
(a) Ownership in Trust. Upon any purported Transfer or other Event
------------------
that results in the exchange of Shares for Excess Shares pursuant to Section
4.5(c), such Excess Shares shall be deemed to have been transferred to a
Trustee, as trustee of a Special Trust for the exclusive benefit of a
Beneficiary. Excess Shares of any class or series that are held in trust as
provided in this Section 4.7 shall constitute issued and outstanding Common
Shares or Senior Shares of the Corporation, as the case may be. The Purported
Record Transferee or Purported Record Holder shall have no rights in such Excess
Shares, but shall have the rights provided in Sections 4.7(c) and 4.7(e). Where
a Transfer or other Event results in an automatic exchange of Shares of more
than one class or series for Excess Shares of more than one class or series,
separate Special Trusts shall be deemed to have been established for the Excess
Shares of each such class or series. Each exchange of Shares for Excess Shares
pursuant to Section 4.5(c)(5) hereof (relating to the requirement of Section
856(a)(5) of the Code that the Corporation have at least 100 shareholders)
shall, with respect to each such Transfer that caused such exchange, be effected
through a transfer of Excess Shares to a separate and distinct Special Trust for
the benefit of a separate and distinct Beneficiary.
(b) Dividend Rights. Dividends or other distributions that have been
---------------
declared on any Shares that have been exchanged for Excess Shares pursuant to
Section 4.5(c) shall be paid when due to the appropriate Trustee, as trustee of
the particular Special Trust for the exclusive benefit of the Beneficiary of
such Special Trust until such time as the Trustee shall transfer New Shares in
respect of such Excess Shares pursuant to Section 4.7(e). Any dividend or
distribution paid prior to the discovery by the Corporation that the Shares with
respect to which the dividend or distribution was made had been exchanged for
Excess Shares shall be returned to the Corporation and promptly thereafter paid
over to the Trustee, as trustee of the Special Trust for the exclusive benefit
of the Beneficiary.
26
<PAGE>
(c) Rights Upon Liquidation. In the event of any voluntary or
-----------------------
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, the Trustee of each Special Trust that is the
holder of any Excess Shares shall be entitled to receive a portion of the assets
of the Corporation available for distribution to the holders of that class or
series of Shares for which such Excess Shares were exchanged originally pursuant
to Section 4.5(c) and this Section 4.7. The Trustee shall distribute to the
Purported Record Transferee or Purported Record Holder of the Excess Shares held
in the Special Trust an amount (the "Original Value Amount") not to exceed (A)
-
in the case of a Purported Record Holder or in the case of a Purported Record
Transferee that did not give value for the Shares for which such Excess Shares
were exchanged (through a gift, devise or other transaction), the Market Price
of the Shares for which such Excess Shares were exchanged as of the date of such
exchange or (B) in the case of a Purported Record Transferee that did give value
-
for the Shares for which such Excess Shares were exchanged, the price such
Purported Record Transferee paid for such Shares, out of the assets received by
the Trustee in respect of the Excess Shares held in such Special Trust in
connection with any liquidation, dissolution or winding up of, or any
distribution of the assets of, the Corporation, and the Trustee shall distribute
to the Beneficiary of the particular Special Trust any amounts in excess of the
Original Common Amount.
(d) Voting Rights. Each Trustee, as holder of any Excess Shares and
-------------
as trustee of a Special Trust for the exclusive benefit of a Beneficiary, shall
have the same right to vote any such Excess Shares as the Shares exchanged
therefore would have had if they had not been so exchanged in connection with
any matter on which the holders of Shares are entitled to vote until such time
as the Trustee shall transfer New Shares in respect of such Excess Shares
pursuant to Section 4.7(e).
(e) Transfer of Excess Shares.
-------------------------
(1) Any Excess Shares which were issued in exchange for Shares
pursuant to Section 4.5(c) and are held by a Trustee in a Special Trust for the
benefit of a Beneficiary pursuant to Section 4.7(a) shall be Transferred by the
Trustee only as provided in this Section 4.7(e). Such Trustee shall, within one
hundred eighty (180) days after the date of the purported Transfer or other
Event that resulted in such Excess Shares being issued in exchange for
27
<PAGE>
Shares, or, if later, one hundred eighty (180) days after the date on which the
Corporation first became aware of the issuance of Excess Shares (the "Excess
Shares Exchange Date"), Transfer the Excess Shares held in a Special Trust to a
Special Trust Transferee, provided that (i) simultaneously with such Transfer
-
such Excess Shares shall be automatically exchanged for an equal number of
Shares of the same class or series that had originally been exchanged for such
Excess Shares (the "New Shares"), (ii) such New Shares would not as a result of
--
such Transfer to such Special Trust Transferee be automatically exchanged for
Excess Shares pursuant to Section 4.5(c) and (iii) such Special Trust Transferee
---
is an Institutional Investor or, if designated by the Corporation as provided
below, an Affiliate of a shareholder. The Corporation shall have the right to
designate a Special Trust Transferee within the first ninety (90) days after the
Excess Shares Exchange Date provided that (i) such Special Trust Transferee is
-
either (A) an Affiliate of a shareholder or (B) an Institutional Investor and
- -
(ii) the New Shares would not as a result of a Transfer to such Special Trust
--
Transferee be automatically exchanged for Excess Shares pursuant to Section
4.5(c). Notwithstanding anything to the contrary in this Section 4.7(e), each
Trustee shall Transfer New Shares in respect of the Excess Shares held in each
Special Trust to a Special Trust Transferee designated by the Corporation
pursuant to the immediately preceding sentence and, during the first ninety (90)
days after the relevant Excess Shares Exchange Date, the Trustee shall not
Transfer New Shares in respect of the Excess Shares to a Special Trust
Transferee that has not been designated by the Corporation pursuant to the
immediately preceding sentence.
Each Trustee shall distribute to the particular Purported Record
Transferee or Purported Record Holder of the Excess Shares held in the Special
Trust out of the purchase price received by the Trustee from a Special Trust
Transferee for New Shares in respect of such Excess Shares an amount (the
"Original Transfer Amount") not to exceed (A) in the case of a Purported Record
-
Holder or in the case of a Purported Record Transferee that did not give value
for the Shares for which such Excess Shares were exchanged (through a gift,
devise or other transaction), the lesser of (w) the Market Price of such Shares
-
as of the date such Shares were exchanged for Excess Shares and (x) the purchase
-
price received by the Trustee from the Special Trust Transferee for the New
Shares or (B) in the case of a Purported Record Transferee that did give value
-
for the Shares for which such Excess Shares were exchanged, the lesser of (y)
-
the purchase
28
<PAGE>
price received by the Trustee from the Special Trust Transferee for the New
Shares and (z) the price such Purported Record Transferee paid for such Shares.
-
The Trustee shall distribute to the particular Beneficiary of the Special Trust
any amounts in excess of the Original Transfer Amount.
(2) Notwithstanding the foregoing, if a Purported Record Transferee or
Purported Record Holder receives any amounts in respect of any Excess Shares
held in a Special Trust that exceeds the amounts allowable under Section
4.7(e)(1), such Purported Record Transferee or Purported Record Holder shall pay
such excess to the Trustee for the benefit of the Beneficiary of such Special
Trust.
SECTION 4.8 Severability. If any provision of this Article Fourth or
------------
any application of any such provision is determined to be invalid by any federal
or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
ARTICLE FIFTH
The Corporation shall have perpetual existence.
ARTICLE SIXTH
(a) The Board of Directors shall have the power without the assent or
vote of the stockholders to adopt, amend, alter or repeal the By-Laws of the
Corporation, except to the extent that the By-Laws or these Articles of
Incorporation otherwise provide.
(b) The Corporation may in its By-Laws confer powers upon the Board of
Directors in addition to the powers and authorities expressly conferred upon the
Board of Directors by applicable law.
ARTICLE SEVENTH
(a) The number of directors of the Corporation shall be fixed by the
By-Laws of the Corporation but in no event shall be less than three (3) or more
than fourteen
29
<PAGE>
(14) and may be increased or decreased within such limitations from time to time
in such a manner as may be prescribed by the By-Laws and in accordance with the
terms hereof. In the event that the Board is increased by such a resolution, the
vacancy or vacancies so resulting shall be filled by a vote of the majority of
the directors then in office. No decrease in number in the Board shall shorten
the term of any incumbent directors. Any change shall be reported to the
Secretary of State within thirty (30) calendar days of such change. The Board of
Directors shall be divided into three (3) classes, as nearly equal in number as
possible, with the mode of such classification to be provided for in the By-
Laws. Except as otherwise provided in the By-Laws with respect to the
implementation of this Article 7, directors shall be elected to hold office for
a term of three (3) years, with the term of office of one class expiring each
year. Any director or the entire Board of Directors may be removed, for cause
only, by the holders of 66 2/3 of all shares then entitled to vote at an
election of directors. The provisions of this Section 7(a) shall not be amended,
altered, changed or repealed unless approved by the affirmative vote of the
holders of not less than seventy-five percent of the total voting power of all
outstanding shares of voting stock.
(b) Unless and except to the extent that the By-Laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
(c) Notwithstanding anything contained in these Articles of
Incorporation to the contrary (other than Section 4.3(d) above), the affirmative
vote of the holders of a majority in interest of the then outstanding Common
Shares shall be required to terminate the Corporation's status as a real estate
investment trust.
(d) Any action required or permitted to be taken by the holders of any
class or series of stock of the Corporation, including but not limited to the
election of directors, may be taken by written consent or consents but only if
such consent or consents are signed by all holders of the class or series of
stock entitled to vote on such action.
ARTICLE EIGHTH
(a) The Corporation shall, to the fullest extent permitted by the
GBCL, including the provisions of Section
30
<PAGE>
351.355.7 RSMo, indemnify and advance expenses to any person who was or is a
party or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a Director or Officer of
the Corporation or is or was serving at the request of the Corporation as a
director or officer of any other corporation or enterprise. Such right of
indemnification shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person. The
indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any By-Law, agreement, vote of
shareholders or disinterested directors or otherwise.
(b) The Corporation may, to such extent as it deems appropriate and as
may be permitted by the GBCL, indemnify any other person acting in any of the
other capacities referred to in Section 351.355 of the GBCL against any such
claim by reason of the fact that he is or was serving the Corporation or at the
request of the Corporation in any of such capacities or arising out of his
status in any such capacity.
(c) The Corporation may, but shall not be required to, supplement the
right of indemnification under paragraph (a) above by (1) the purchase of
insurance on behalf of any one or more of such persons, whether or not the
Corporation would be obligated to indemnify such person under paragraph (a)
above, (2) individual or group indemnification agreements with any one or more
of such persons and (3) advances for related expenses of such a person.
ARTICLE NINTH
(a) In addition to any affirmative vote required by law, the Articles
of Incorporation, any agreement with any national securities exchange or
otherwise, any Business Combination (as hereinafter defined) involving the
Corporation shall be subject to approval in the manner set forth in this Article
9.
(b) No Business Combination shall be consummated or effected with an
Interested Shareholder (as hereinafter
31
<PAGE>
defined) during the five-year period after which a person or an entity becomes
an Interested Shareholder unless such Business Combination or the transaction in
which the person or entity becomes an Interested Shareholder is approved by the
Board of Directors on or before the date of the Acquisition Transaction (as
hereinafter defined).
(c) After the five-year period following the Acquisition Transaction,
Business Combinations may occur only if (i) prior to the Acquisition
-
Transaction, the board of directors approved the Acquisition Transaction or
approved the Business Combination in question; (ii) the holders of a majority of
--
the outstanding stock, other than stock owned by the Interested Shareholder,
approve the Business Combination or (iii) the Business Combination meets all of
---
the following conditions:
(A) The aggregate amount of the cash and the market value as of the
consummation date of consideration other than cash to be received per share by
holders of outstanding shares of Common Equity Shares is at least equal to the
higher of the following:
1. The highest per share price paid by such Interested Shareholder
at a time when he was the beneficial owner, directly or indirectly, of five
percent or more of the outstanding voting stock of the Corporation, for any
shares of common stock of the same class or series acquired by it within the
five-year period immediately prior to the announcement date with respect to such
Business Combination, or within the five-year period immediately prior to, or
in, the transaction in which such Interested Shareholder became an Interested
Shareholder, whichever is higher; plus, in either case, interest compounded
annually from the earliest date on which such highest per share acquisition
price was paid through the consummation date at an amount equal to the greater
of (i) the rate for one-year United States treasury obligations from time to
-
time in effect and (ii) 8 1/2%; less the aggregate amount of any cash dividends
--
paid, and the market value of any dividends paid other than in cash, per share
of common stock since such earliest date, up to the amount of such interest; and
2. The market value per share of common stock on the announcement
date with respect to such Business Combination or on such Interested
Shareholder's stock acquisition date, whichever is higher; plus interest
compounded annually from such date through the consummation date at an amount
equal to the greater of (i) the rate for
-
32
<PAGE>
one-year United States treasury obligations from time to time in effect and (ii)
--
8 1/2%; less the aggregate amount of any cash dividend paid, and the market
value of any dividends paid other than in cash, per share of common stock since
such date, up to the amount of such interest;
(B) The aggregate amount of the cash and the market value as of the
consummation date of consideration other than cash to be received per share by
holders of outstanding shares of any class or series of stock other than the
Common Equity Shares is at least equal to the highest of the following, whether
or not such Interested Shareholder has previously acquired any shares of such
class or series of stock:
1. The highest per share price paid by such Interested Shareholder
at a time when he was the beneficial owner, directly or indirectly, of five
percent or more of the outstanding voting stock of the Corporation, for any
shares of such class or series of stock acquired by him within the five-year
period immediately prior to the announcement date with respect to such Business
Combination, or within the five-year period immediately prior to, or in, the
transaction in which such Interested Shareholder became an Interested
Shareholder, whichever is higher; plus, in either case, interest compounded
annually from the earliest date on which such highest per share acquisition
price was paid through the consummation date at an amount equal to the greater
of (i) the rate for one-year United States treasury obligations from time to
-
time in effect and (ii) 8 1/2%; less the aggregate amount of any cash dividends
--
paid, and the market value of any dividends paid other than in cash, per share
of such class or series of stock since such earliest date, up to the amount of
such interest;
2. The highest preferential amount per share to which the holders of
shares of such class or series of stock are entitled in the event of any
voluntary liquidation, dissolution or winding up of the Corporation, plus the
aggregate amount of any dividends declared or due as to which such holders are
entitled prior to payment of dividends on some other class or series of stock,
unless the aggregate amount of such dividends is included in such preferential
amount; and
3. The market value per share of such class or series of stock on
the announcement date with respect to such business combination or on such
Interested Shareholder's stock acquisition date, whichever is higher;
33
<PAGE>
plus interest compounded annually from such date through the consummation date
at an amount equal to the greater of (i) the rate for one-year United States
-
treasury obligations from time to time in effect and (ii) 8 1/2%; less the
--
aggregate amount of any cash dividends paid, and the market value of any
dividends paid other than in cash, per share of such class or series of stock
since such date, up to the amount of such interest;
(C) The consideration to be received by holders of a particular class
or series of outstanding stock, including the Common Equity Shares, of the
Corporation in such Business Combination is in cash or in the same form as the
Interested Shareholder has used to acquire the largest numbers of shares of such
class of series of stock previously acquired by it, and such consideration shall
be distributed promptly;
(D) The holders of all outstanding shares of stock of the Corporation
not beneficially owned by such Interested Shareholder immediately prior to the
consummation of such Business Combination are entitled to receive in such
Business Combination cash or other consideration for such shares in compliance
with paragraphs (A),(B) and (C) of this clause (iii) of this paragraph (c) of
---
this Article Ninth;
(E) After such Interested Shareholder's stock acquisition date and
prior to the consummation date with respect to such Business Combination, such
Interested Shareholder has not become the beneficial owner of any additional
shares of voting stock of the Corporation except:
1. As part of the transaction which resulted in such Interested
Shareholder becoming an Interested Shareholder;
2. Through a Business Combination meeting all of the conditions of
clause (ii) of this paragraph (c) of this Article Ninth and this clause (iii) of
this paragraph (c) of this Article Ninth;
3. Through purchase by such Interested Shareholder at any price
which, if such price had been paid in an otherwise permissible Business
Combination the announcement date and consummation date of which were the date
of such purchase, would have satisfied the requirements of paragraphs (A), (B)
and (C) of this clause (iii) of this paragraph (c) of this Article Ninth.
34
<PAGE>
(e) Definitions. As used in this Article Nine, the following terms
-----------
shall have the following meanings:
"Acquisition Transaction" shall mean any transaction in which any
Person becomes an Interested Shareholder.
"Business Combination" shall mean (i) any merger, consolidation or
-
exchange of shares of capital stock of the Corporation of any of its
subsidiaries with or into an interested Shareholder, in each case irrespective
of which corporation or company is to be the surviving entity; (ii) any sale,
--
lease, exchange, mortgage, pledge, transfer or other disposition to or with an
Interested Shareholder (in a single transaction or a series of related
transactions), other than in the ordinary course of business, of all or a
substantial part of the assets of the Corporation (including without limitation
any securities or assets of a subsidiary of the Corporation) or all or a
substantial part of the assets of any of its subsidiaries; (iii) any sale,
---
lease, exchange, mortgage, pledge, transfer or other disposition to or with the
Corporation or to or with any of its subsidiaries (in a single transaction or a
series of related transactions) other than in the ordinary course of business,
of all or a substantial part of the assets of an Interested Shareholder; (iv)
--
the issuance or transfer by the Corporation or any of its subsidiaries of any
securities of the Corporation or any of its subsidiaries to an Interested
Shareholder (other than an issuance or transfer of securities which is effected
on a pro rata basis to all shareholders of the Corporation); (v) the acquisition
-
by the Corporation or any of its subsidiaries from an Interested Shareholder of
any securities issued by an Interested Shareholder (other than an issuance or
transfer of securities which is effected on a pro rata basis to all shareholders
of the Interested Shareholder); (vi) any recapitalization or reclassification of
--
shares of any class of capital stock of the Corporation or any merger or
consolidation of the Corporation with any of its subsidiaries which would have
the effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of capital stock of the Corporation (or any
securities convertible into any class of such capital stock) owned by any
Interested Shareholder; (vii) any merger or consolidation of the Corporation
---
with any of its subsidiaries after which the provisions of this Article 9 of the
Articles of Incorporation shall not appear in the Articles of Incorporation of
the surviving entity; (viii) a plan of partial or complete liquidation or
----
35
<PAGE>
dissolution of the Corporation or spin-off or sale of a substantial part of the
assets of the Corporation or any of its subsidiaries proposed by or on behalf of
an Interested Shareholder; and (ix) any agreement, contract, plan, proposal or
--
other arrangement providing for any of the foregoing.
"Interested Shareholder" shall mean a Person which beneficially owns
or controls 20% or more of the outstanding voting shares of the Corporation
provided that any Person who would be an Interested Shareholder as of April 15,
- --------
1997 shall be excluded from the definition of Interested Shareholder.
"Person" shall mean any individual, corporation, partnership or other
person or entity.
(f) The provisions of this Article 9 shall not be amended, altered,
changed or repealed nor may any provision inconsistent with any of such
provisions be added to the Articles of Incorporation unless approved by the
affirmative vote of the holders of not less than the greater of (i) seventy-five
-
percent of the total voting power of all outstanding shares of voting stock of
the Corporation, voting as a single class and (ii) a majority of shareholders
--
other than any Interested Shareholder.
ARTICLE TENTH
The Corporation reserves the right at any time and from time to time
to amend, alter, change or repeal any provision contained in these Articles of
Incorporation, and any other provisions authorized by the laws of the State of
Missouri at the time in force may be added or inserted in the manner now or
hereafter prescribed herein or by applicable law, and all rights, preferences
and privileges of whatsoever nature conferred upon shareholders, directors or
any other persons whomsoever by and pursuant to these Articles of Incorporation
in their present form or as hereafter amended are granted subject to the rights
reserved in this Article Ninth; provided, however, that any amendment or repeal
-------- -------
of Article Eighth of these Articles of Incorporation shall not adversely affect
any right or protection existing hereunder immediately prior to such amendment
or repeal.
36
<PAGE>
ARTICLE ELEVENTH
The names of the original incorporators were Morton D. May, David May
and S.B. Butler, all of St. Louis, Missouri.
* * *
37
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES B PREFERRED SHARES
AND FIXING PREFERENCES AND RIGHTS THEREOF"
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
PURSUANT TO THE PROVISIONS OF SECTION 351.180(7) OF THE
GENERAL AND BUSINESS CORPORATION LAW OF THE STATE
OF MISSOURI, AS AMENDED
I, the undersigned, a Co-President of Westfield America, Inc., a Missouri
corporation (hereinafter sometimes referred to as the "Corporation"), hereby
certify as follows:
FIRST: That under the provisions of Article Fourth of the Restated
Articles of Incorporation, as amended, of the Corporation, the total number of
shares of all classes of capital stock which the Corporation may issue is
410,000,200 shares, of which (i) 200 shares shall be non-voting senior preferred
-
stock, par value $1.00 per share (the "Senior Preferred Shares"), (ii) 5,000,000
--
shares shall be Preferred Shares, with par value of $1.00 per share (the
"Preferred Shares"), 940,000 of which have been designated as Series A Preferred
Shares, with a liquidation value of $100 per share (the "Series A Preferred
Shares"), (iii) 200,000,000 shall be shares of common stock, par value $.01 per
---
share (the "Common Shares"), (iv) 200,000,000 shall be shares of excess common
--
stock, par value $.01 per share (the "Excess Common Shares", and together with
the Common Shares, the "Common Equity Shares") and (v) 5,000,000 shares shall be
-
excess preferred stock, par value $1.00 per share (the "Excess Preferred
Shares", and together with the Preferred Shares, the "Preferred Equity Shares"),
and under said Article of Incorporation (as amended, the "Article of In
corporation"), the shares of Preferred Stock are authorized to be issued by the
Board of Directors and the Board of Directors is expressly authorized to
determine in the Resolution, the designation, powers, rights, preferences and
qualifications, limitations or restrictions, not fixed and determined by the
Articles of Incorporation.
<PAGE>
2
SECOND: That the Pricing Committee of the Board of Directors of the
Corporation pursuant to the authority so vested in it by the Board of Directors
and Article Fourth of the Certificate of Incorporation, and in accordance with
the provisions of Section 351.180(7) of the General and Business Corporation Law
of Missouri, as amended, adopted on May 15, 1997 the following resolution
creating a series of Preferred Stock designated as "Series B Preferred Shares",
which resolution has not been amended, modified, rescinded or revoked and is in
full force and effect on the date hereof.
"RESOLUTION OF THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING
'SERIES B PREFERRED SHARES'
AND FIXING PREFERENCES AND RIGHTS THEREOF"
BE IT RESOLVED, that, pursuant to authority expressly granted to and
vested in the Board of Directors of Westfield America, Inc., hereinafter called
the "Corporation", by the provisions of the Articles of Incorporation, as
amended, the Board of Directors of the Corporation hereby fixes the designation,
voting powers, rights on liquidation or dissolution, and other preferences and
rights, and the qualifications, limitations or restrictions thereof, of the
shares of such series (in addition to the designations, preferences and
relative rights, and the qualifications, limitations or restrictions thereof,
set forth in the Articles of Incorporation which are applicable to the Series
B Preferred Shares) as follows:
SECTION 1. DESIGNATION; NUMBER OF SHARES. The number and designation of
-----------------------------
the series of Preferred Stock authorized hereby shall be 400,000 shares of
"Series B Preferred Shares", par value $1.00 per share, and is hereinafter in
this Resolution called the "Series B Preferred Shares."
SECTION 2. RANK. The Series B Preferred Shares shall with respect to
----
dividend rights and rights on liquidation, dissolution and winding up of the
affairs of the Corporation, rank pari passu to the Series A Preferred Shares.
---- -----
Each Series B Preferred Share shall be identical in all respects to each
other Series B Preferred Share. Each Excess Series B Preferred Share shall be
identical in
<PAGE>
3
all respects to each other Excess Series B Preferred Share, and except as
otherwise provided herein, shall be identical in all respects to each Series B
Preferred Share (the Series B Preferred Shares together with the Excess Series B
Preferred Shares being hereinafter referred to as the "Series B Equity Shares").
Series B Preferred Shares that are redeemed or purchased by the Corporation may,
at the election of the Corporation either (i) be reissued by the Corporation or
-
(ii) be canceled and if so canceled shall revert to authorized but unissued
--
Preferred Shares.
SECTION 3. DIVIDEND RIGHTS. (a) The holders of shares of Series B
---------------
Preferred Shares shall be entitled to receive, when and as declared by the Board
of Directors of the Corporation, but only out of funds legally available
therefor, cumulative cash dividends payable to shareholders of record on the
respective date, not exceeding 50 days preceding such dividend payment date,
fixed for the purpose by the Board of Directors in advance of payment of each
particular dividend in an amount equal to the greater of (A) $8.50 per share per
-
annum and (B) an amount per share equal to 6.6667 (subject to proportional
-
adjustment in the case of any subdivision, stock split, stock dividend,
combination or reverse split of the Common Equity Shares or the Preferred Equity
Shares) (as so adjusted from time to time, the "Common Equivalent Factor") times
the dollar amount of dividends declared with respect to each Common Equity Share
(such product, the "Common Equivalent Amount") for the same annual period;
provided, however, that if, as a result of the quarterly dividends paid in
- -------- -------
accordance with the following sentence, the holders of Series B Equity Shares
shall have received for any calendar year more dividends than such Shares shall
be entitled under clauses (A) and (B) above, the dividends payable in respect of
Series B Equity Shares in subsequent calendar years shall be reduced to the
extent of such overpayment. Subject to the proviso of the preceding sentence of
this Section 3(a), the dividend paid in respect of each quarterly period in each
calendar year shall be determined as follows: (1) for the first quarter, the
greater of $2.125 per share and the Common Equivalent Amount for same quarter;
(2) for the second quarter, an amount such that the aggregate amount to be
received per Series B Equity Share in respect of the first two quarters of such
calendar year shall be the greater of $4.250 per share and the Common Equivalent
Amount for the same two quarters; (3) for the third quarter, an amount such that
the
<PAGE>
4
aggregate amount to be received per Series B Equity Share in respect of the
first three quarters of such calendar year shall be the greater of $6.375 per
share and the Common Equivalent Amount for the same three quarters; and (4) for
the fourth quarter, an amount such that the aggregate amount to be received per
Series B Equity Share in respect of such calendar year shall be the amount
provided in the preceding sentence of this Section 3(a). Dividends paid on
shares of Series B Equity Shares in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all Series B Equity Shares as are
outstanding at the time. Accumulated but unpaid dividends for any past quarterly
dividend periods may be declared and paid at any time, without reference to any
regularly scheduled quarterly dividend payment date, to holders of record on
such date, not exceeding 50 days preceding such dividend payment date, fixed for
the purpose by the Board of Directors in advance of payment of each particular
dividend.
(b) So long as any shares of the Series B Equity Shares are outstanding,
no dividend whatever shall be paid or declared and no distribution made on any
Common Equity Shares other than a dividend payable in Common Equity Shares, and
no shares of Common Equity shall be purchased, redeemed, or otherwise acquired
for consideration by the Corporation, directly or indirectly (other than as a
result of a reclassification of Common Equity Shares, or the exchange or
conversion of one Common Equity Share for or into another Common Equity Share,
or other than through the use of proceeds of a substantially contemporaneous
sale of other Common Shares), unless the full dividend thereon for the then
------
current quarterly dividend period and all prior dividend periods shall have been
paid or declared and set apart for payment. Subject to the foregoing, and not
otherwise, such dividends may be declared by the Board of Directors and paid on
any Common Equity Shares from time to time out of any funds legally available
therefor, and the Series B Equity Shares shall not be entitled to participate in
any such dividends, whether payable in cash, stock or otherwise.
SECTION 4. RIGHTS UPON LIQUIDATION. (a) In the event of any voluntary
-----------------------
liquidation, dissolution or winding up of affairs of the Corporation, the
holders of the Series B Equity Shares shall be entitled, before any distribution
<PAGE>
5
or payment is made to the holders of any Common Equity Shares, to be paid in
full an amount per share equal to $100.00 (which amount is hereinafter referred
to as the "Series B Preferred Voluntary Liquidation Amount"), together with (x)
-
all accrued but unpaid dividends through the end date of the calendar quarter
most recently completed prior to the date of liquidation, dissolution or winding
up of the affairs of the Corporation (any such date, a "Series B Voluntary
Liquidation Date") plus (y) 2.125 times a fraction equal to the actual number of
-
days elapsed from the end date of the calendar quarter most recently completed
to the relevant Series B Voluntary Liquidation Date over ninety days. In the
event of any involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, then, before any distribution or payment is made to the
holders of any Common Equity Shares, the holders of the Series B Equity Shares
shall be entitled to be paid in full an amount per share equal to $100.00 (which
amount is hereinafter referred to as the "Series B Preferred Involuntary
Liquidation Amount"), together with (x) all accrued and unpaid dividends through
-
the end date of the calendar quarter most recently completed prior to the
involuntary liquidation (any such date, a "Series B Involuntary Liquidation
Date") plus (y) $2.125 times a fraction equal to the actual number of days
-
elapsed from the date of the calendar quarter most recently completed to the
relevant Series B Involuntary Liquidation Date over ninety days.
(b) Payment shall be made in full to all holders of the Series B Equity
Shares and other shares ranking pari passu on liquidation with the Series B
---- -----
Equity Shares, before any remaining assets of the Corporation shall be
distributed among the holders of Common Equity Shares, according to their
respective numbers of shares. For the purposes of this Section 4, the
consolidation or merger of the Corporation with any other corporation shall not
be deemed to constitute a liquidation, dissolution or winding up of the
Corporation but shall, to the extent appropriate, cause an adjustment to the
Common Equivalent Factor.
SECTION 5. (A) REDEMPTION. The Corporation, at the option of the Board
----------
of Directors, with approval of a majority of the Independent Directors (as
defined in the Articles of Incorporation), may redeem in whole, or in part, the
Series B Equity Shares at the time outstanding at any
<PAGE>
6
time and from time to time from and after May 21, 2004, upon notice given as
hereinafter specified, at a redemption price for each Series B Equity Share
equal to $100.00 together with (i) all accrued and unpaid dividends through the
-
end date of the calendar quarter most recently completed prior to the date of
redemption of the Series B Equity Shares (each a "Series B Redemption Date");
plus (ii) $2.125 times a fraction equal to the actual number of days elapsed
--
from the end date of the calendar quarter most recently completed to the
relevant Series B Equity Date over ninety days (such fraction, the "Pro Rata
Adjustment"); plus (iii) a right to receive on the payment date for dividends
---
declared on the Common Equity Shares with respect to the calendar quarter during
which the relevant Series B Redemption Date occurs (the "Relevant Quarter"), the
excess of (x) the Common Equivalent Factor times (A) the dollar amount of the
- -
per share dividends declared on the Common Equity Shares for the Relevant
Quarter times the Pro Rata Adjustment plus (B) the dollar amount of the per
-
share dividends declared on the Common Equity Shares from the beginning of the
calendar year in which such redemption occurs through the end date of the
calendar quarter prior to the Relevant Quarter over (y) the dollar amount
-
calculated in the preceding clause (ii) plus all other dividends paid on the
Preferred Shares from the beginning of the calendar year during which the
relevant Series B Redemption Date occurs.
(b) If the Corporation shall determine to redeem less than all the Series
B Equity Shares then outstanding, the shares to be redeemed shall be selected
pro rata (as nearly as may be) so that the number of shares redeemed from each
holder shall be the same proportion of all the shares to be redeemed that the
total number of Series B Equity Shares then held by such holder bears to the
total number of Series B Equity Shares then outstanding.
SECTION 6. MANNER AND EFFECT OF REDEMPTIONS. Notice of any proposed
--------------------------------
redemption of shares of Series B Equity Shares shall be mailed by first class
mail, postage prepaid, addressed to the holders of record of the shares to be
redeemed, at their respective last addresses as they shall appear on the books
of the Corporation. Such mailing shall be at least 30 days and not more than 60
days prior to the date fixed for such redemption. Any notice which is mailed in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the
<PAGE>
7
shareholder receives such notice, and failure duly to give such notice by mail,
or any defect in such notice, to any holder of Series B Equity Shares designated
for redemption shall not affect the validity of the proceedings for the
redemption of any other Series B Equity Shares.
The Board of Directors shall have full power and authority, subject to the
provisions herein contained, to prescribe the terms and conditions upon which
Series B Equity Shares shall be redeemed.
If notice of redemption shall have been duly given, and if, on or before
the redemption date specified therein, the Corporation shall deposit all funds
necessary for such redemption with a bank or trust company in an account that is
separate and apart from its other accounts and shall hold such funds in trust
for the pro rata benefit of the holders of the shares called for redemption, so
as to be and continue to be available therefor, then, not withstanding that any
certificate for shares so called for redemption shall not have been surrendered
for cancellation, all shares so called for redemption shall no longer be deemed
outstanding on and after such redemption date, and all rights with respect to
such shares shall forthwith on such redemption date cease and terminate, except
only the right of the holders thereof to receive the amount payable on
redemption thereof, without interest.
Any funds so deposited and unclaimed at the end of two years from such
redemption date shall, to the extent permitted by law, be released or repaid to
the Corporation, after which repayment the holders of the shares so called for
redemption shall look only to the Corporation for payment thereof.
SECTION 7. VOTING RIGHTS. The holders of Series B Equity Shares shall not
-------------
be entitled to any voting rights except (i) in the event that the Board of
-
Directors has not declared a dividend payable to holders of any Series of
Preferred Shares ranking pari passu with the Series B Equity Shares that were
---- -----
authorized prior to the issuance of the Series B Preferred Shares or with the
consent of the holders of a majority of the Series B Equity Shares or were
issued to the original holder of the Series B Equity Shares (all such Preferred
Shares, collectively, the "Ranking Preferred Shares") for four (4) quarterly
dividend periods, the number
<PAGE>
8
of directors constituting the Board of Directors shall, without further action,
be increased by one (1) and the holders of a majority of the Series B Equity
Shares shall have the exclusive right, together with holders of all other series
of Ranking Preferred Shares, to elect one (1) director to fill such newly
created directorship until such time as all such dividends in arrears are made
current and paid in full, at which time the director so elected shall cease to
be a director, the number of directors constituting the Board of Directors shall
be reduced by one (1) and such additional voting rights of the holders of the
Series B Equity Shares shall terminate, subject to revesting in the event of
each and every subsequent event of the character indicated above, (ii) the
--
affirmative vote of the holders of a majority of the Series B Equity Shares
voting together as a class shall be required to approve any amendment to the
Articles of Incorporation that materially and adversely affects the rights,
preferences or powers of the Series B Equity Shares, including, without
limitation, the definition of Ownership Limit with respect to the Series B
Equity Shares, provided, that (x) except as required by clause (y) where the
-------- -
amendment to these Articles of Incorporation for which the vote is required
pursuant to this clause (ii) adversely affects the rights, powers and
preferences of other series of Ranking Preferred Shares, then such amendment
shall be approved by a vote of a majority of the Ranking Preferred Shares
affected thereby, voting together as a class and (y) the unanimous approval of
-
the holders of Series B Equity Shares shall be required for any amendment to
these Articles of Incorporation that would decease the rate or change the time
of payment of any dividend or distribution on the Series B Equity Shares,
decrease the amount payable upon redemption of the Series B Equity Shares or
upon the voluntary or involuntary liquidation of the Corporation, or advance the
date on which the Series B Equity Shares may be redeemed by the Corporation,
amend the number of shares of Series B Equity Shares required to effect
amendments to the Articles of Incorporation, (iii) the affirmative vote of the
---
holders of a majority of the Ranking Preferred Shares of each affected series
voting together as a class shall be required to approve any merger or
consolidation of the Corporation and another entity in which the Corporation is
not the surviving corporation and each holder of such series of Ranking
Preferred Shares does not receive shares of the surviving corporation with
substantially similar rights, preferences and powers in the
<PAGE>
9
surviving corporation as the Ranking Preferred Shares have with respect to the
Corporation, (iv) the affirmative vote of the holders of a majority of the
Preferred Shares voting together as a class shall be required to approve any
voluntary action by the Board of Directors intended to cause the Corporation to
cease to have the status as a REIT (as defined in Section 4.5 of the Articles of
Incorporation) and (v) as otherwise required by applicable law.
-
SECTION 8. TITLE. This resolution shall be known and may be referred to
-----
as "A Resolution of the Board of Directors of Westfield America, Inc.
Designating Series B Preferred Shares and Fixing Preferences and Rights
Thereof".
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized and directed to execute and acknowledge a certificate
setting forth these resolutions and to cause such certificate to be filed and
recorded, all in accordance with the requirements of Section 351.046 of the
General and Business Corporation Law of the State of Missouri, as amended".
<PAGE>
10
IN WITNESS WHEREOF, the undersigned, Co-President has executed this
instrument and its Assistant Secretary has attested to said instrument on the
16th day of May, 1997.
WESTFIELD AMERICA, INC.
ATTEST: By: /s/ Peter Lowy
---------------------------
Co-President
------------
/s/ Barry Mills
- ------------------------
Assistant Secretary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
I, Gail Shulman, a notary public, do hereby certify that on this 16th
day of May, 1997, personally appeared before me Peter S. Lowy, and being first
duly sworn by me, declared that he is the Co-President of Westfield America,
Inc., that he signed the foregoing document as Co-President of the corporation,
and that the statements therein contained are true.
[SEAL] /s/ Gail Shulman
------------------------------
Notary Public
My Commission Expires: February 28, 1998
<PAGE>
EXHIBIT B
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION" DESIGNATING
SERIES C PREFERRED SHARES
AND FIXING PREFERENCES AND RIGHTS THEREOF@
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
PURSUANT TO THE PROVISIONS OF SECTION 351.180 (7) OF THE
GENERAL AND BUSINESS CORPORATION LAW OF THE STATE
OF MISSOURI, AS AMENDED
I, the undersigned, Co-President of Westfield America, Inc., a Missouri
corporation (hereinafter sometimes referred to as the "Corporation") , hereby
-----------
certify as follows:
FIRST: that under the provisions of Article Fourth of the Restated
Articles of Incorporation, as amended, of the Corporation, the total number of
shares of all classes of capital stock which the Corporation may issue is
410,000,200 shares, of which (i) 200 shares shall be non-voting senior preferred
stock, par value $1.00 per share (the "Senior Preferred Shares"), (ii) 5,000,000
-----------------------
shares shall be Preferred Shares, with par value of $1.00 per share (the
"Preferred Shares"), 940,000 of which have been designated as Series A Preferred
- -----------------
Shares, with liquidation value of $100 per share (the "Series A Preferred
------------------
Shares") and 400,000 of which have been designated as Series B Preferred Shares,
with a liquidation value of $100 per share (the "Series B Preferred Shares"),
-------------------------
(iii) 200,000,000 shall be shares of common stock, par value $.01 per share (the
"Common Shares"), (iv) 205,000,000 will be shares of excess stock, par value
-------------
$.01 ("Excess Shares"). Any Excess Shares which are issued with respect to
-------------
Common Stock shall be "Excess Common Shares" and, together with the Common
--------------------
Shares, the "Common Equity Shares" and any Excess Shares which are issued with
--------------------
respect to Preferred Shares shall be "Excess Preferred Shares", and, together
-----------------------
with the Preferred Shares, the "Preferred Equity Shares" and under said Articles
-----------------------
of Incorporation (as amended, the "Articles of Incorporation"), the shares of
-------------------------
Preferred Stock are authorized to be issued by the Board of Directors and the
Board of Directors is expressly authorized to determine in the Resolution, the
designation, powers, rights, preferences and qualifications, limitations or
restrictions, not fixed and determined by the Articles of Incorporation.
SECOND: That the Board of Directors of the Corporation pursuant to the
authority so vested in it by Article Fourth of the Certificate of Incorporation,
and in accordance with the provisions of Section 351,180 (7) of the General and
Business Corporation Law of Missouri, as amended, adopted on July 20, 1998 the
following resolution creating a series of Preferred Stock designated as "Series
C Preferred Shares", which resolution has not been amended, modified, rescinded
or revoked and is in full force and effect on the date hereof.
<PAGE>
2
"RESOLUTION OF THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING
"SERIES C PREFERRED SHARES"
AND FIXING PREFERENCES AND RIGHTS THEREOF"
BE IT RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of Westfield America, Inc., hereinafter called the
"Corporation", by the provisions of the Articles of Incorporation, as amended,
the Board of Directors of the Corporation hereby fixes the designation, voting
powers, rights on liquidation or dissolution, and other preferences and rights,
and the qualifications, limitations or restrictions thereof, of the shares of
such series (in addition to the designations, preferences and relative rights,
and the qualifications, limitations or restrictions thereof set forth in the
Articles of Incorporation which are applicable to the Series C Preferred Shares)
as follows:
Section 1. Number of Shares, Designation and Ranking. This class of
-----------------------------------------
preferred stock shall be designated as Series C Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute such
series shall not be more than 416,667 shares, par value $1.00 per share, which
number may be decreased (but not below the aggregate number thereof then
outstanding and/or which have been reserved for issuance) from time to time by
the Board of Directors and is hereafter in this resolution called the "Series C
Preferred Shares". Each Series C Preferred Share shall be identical in all
respects to each other Series C Preferred Share. Each Excess Series C Preferred
Share shall be identical in all respects to each other Excess Series C Preferred
Share, and except as otherwise provided herein, shall be identical in all
respects to each Series C Preferred Share (the Series C Preferred Shares
together with the Excess Series C Preferred Shares being hereinafter referred to
as the "Series C Equity Shares").
----------------------
Section 2. Definitions. For purposes of the Series C Preferred Shares,
-----------
the following terms shall have the meanings indicated:
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall mean
---------
a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL"), Westfield America Trust, Frank
---
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
----
Family").
- ------
"Base Rate' shall mean an annual dividend per Series C Equity Share equal
---------
to 8.5% of the Liquidation Preference per Series C Equity Share.
"Board of Directors" shall mean the Board of Directors of the Corporation
------------------
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series C Preferred Shares.
<PAGE>
3
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
------------
neither a legal holiday nor a day on which banking institutions in New York
City, New York are authorized or required by law, regulation or executive order
to close.
"Call Date" shall mean the date specified in the notice to holders required
---------
under Section 5(d) as the Call Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Consolidated EBITDA" for any quarter shall mean the consolidated net
-------------------
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the Securities
and Exchange Commission, increased by the sum of the following (without
duplication):
a. the Corporation's pro rata share of EBITDA from unconsolidated real
estate partnerships calculated in a manner consistent with this definition of
Consolidated EBITDA,
b. all income taxes paid or accrued according to GAAP for such quarter
(other than income taxes attributable to extraordinary, unusual or non-
recurring gains or losses except to the extent that such gains were not
included in Consolidated EBITDA),
c. all interest expense paid or accrued in accordance with GAAP for such
quarter (including financing fees and amortization of deferred financing fees
or amortization of original issue discount, but excluding capitalized
interest),
d. depreciation and depletion reflected in such net income,
e. amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only to the
extent that such amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to clause (c) above), goodwill, other intangibles
and management fees, and
f. any other non-cash charges, to the extent deducted from consolidated
net income (including, but not limited to, income allocated to minority
interests).
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
--------------------------
a. the Corporation's pro rata share of fixed charges from unconsolidated
real estate partnerships calculated in a manner consistent with this
definition of Consolidated Fixed Charges,
<PAGE>
4
b. all interest expense paid or accrued in accordance with GAAP for such
quarter (including, without duplication, financing fees and amortization of
deferred financing fees or amortization of original issue discount),
c. dividend and distribution requirements with respect to preferred stock
and any other preferred securities for such quarter (not including any portion
of preferred stock dividends the calculation of which is based on the dividend
paid in such quarter to the holders of Common Shares), whether or not declared
or paid,
d. regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity) and
e. all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e).
------------------
"Conversion Date" shall have the meaning set forth in Section 6(a).
---------------
"Conversion Price" shall mean the conversion price per Common Equity Share
----------------
for which the Series C Equity Share is convertible, as such Conversion Price may
be adjusted pursuant to Section 6. The initial conversion price shall be
$18.00.
"Current Market Price" of publicly traded Common Shares or any other class
--------------------
of stock or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the New York
Stock Exchange ("NYSE") or, if such security is not listed or admitted for
----
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
- --------
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
----
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"Dividend Payment Date" shall mean (i) for any Dividend Period with respect
---------------------
to which the Corporation pays a dividend on the Common Equity Shares, the date
on which such dividend is paid, or (ii) for any Dividend Period with respect to
which the Corporation does not pay a dividend on the Common Equity Shares, a
date to be set by the Board of Directors, which date shall not be later than the
thirtieth calendar day after the end of the applicable Dividend Period.
<PAGE>
5
"Dividend Periods" shall mean quarterly dividend periods commencing on
----------------
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
with respect to any Series C Equity Shares (other than the initial Dividend
Period, which shall commence on the Issue Date for such Series C Equity Shares
and end on and include the last day of the calendar quarter immediately
following such Issue Date, and other than the Dividend Period during which any
Series C Equity Shares shall be redeemed pursuant to Section 5 or converted
pursuant to Section 6, which shall end on and include the Call Date or
Conversion Date with respect to the Series C Equity Shares being redeemed or
converted, as applicable).
"Expiration Time" shall have the meaning set forth in Section 6(d)(iv).
---------------
"Fair Market Value" shall mean the average of the daily Current Market
-----------------
Prices of a Common Share on the five (5) consecutive Trading Days selected by
the Corporation commencing not more than 20 Trading Days before, and ending
not later than, the earlier of the day in question and the day before the "ex
date" with respect to the issuance or distribution requiring such computation.
The term "ex date," when used with respect to any issuance or distribution,
means the first day on which the Common Shares trade regular way, without the
right to receive such issuance or distribution, on the exchange or in the
market, as the case may be, used to determine that day's Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
-------------------------------
Section 3(a).
"Fully Junior Shares" shall mean the Common Shares and any other class or
-------------------
series of stock of the Corporation now or hereafter issued and outstanding over
which the Series C Preferred Shares has preference or priority in both (i) the
payment of dividends and (ii) the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"Funds from Operations" shall mean net income (loss) (computed in
---------------------
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus deprecia-
tion/amortization of assets unique to the real estate industry, all computed in
a manner consistent with the revised definition of Funds From Operations adopted
by the National Association of Real Estate Investment Trusts (NAREIT), in its
White Paper dated March 1995, as such definitions may be modified from time to
time.
"Investor" shall mean Security Capital Preferred Growth Incorporated and
--------
controlled Affiliates thereof.
"Issue Date" shall mean the date on which the Series C Preferred Shares are
----------
issued.
<PAGE>
6
"Junior Shares" shall mean the Common Shares and any other class or series
-------------
of stock of the Corporation now or hereafter issued and outstanding over which
the Series C Preferred Shares has preference or priority in the payment of
dividends or in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
"Non-Electing Share" shall have the meaning set forth in Section 6(e).
------------------
"Operating Partnership" shall mean Westfield America Limited Partnership, a
---------------------
Delaware limited partnership.
"Parity Shares" shall have the meaning set forth in Section 10(b).
-------------
"Person" shall mean any individual, firm, partnership, corporation, limited
------
liability company, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Purchased Shares" shall have the meaning set forth in Section 6(d)(iv).
----------------
"REIT Termination Event" shall mean the earliest to occur of:
----------------------
(i) the filing of a federal income tax return by the Corporation for any
taxable year on which the Corporation does not compute its income as a real
estate investment trust;
(ii) the approval by the shareholders of the Corporation of a proposal
for the Corporation to cease to qualify as a real estate investment trust;
(iii) a determination by the Board of Directors of the Corporation, based
on the advice of counsel, that the Corporation has ceased to qualify as a real
estate investment trust; or
(iv) a "determination" within the meaning of Section 1313(a) of the Code
that the Corporation has ceased to qualify as a real estate investment trust.
"Securities" and "Security" shall have the meanings set forth in Section
---------- --------
6(d)(iii).
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Series C Preferred Shares" shall have the meaning given such term in the
-------------------------
preamble to this Certificate of Designation.
"set apart for payment" shall be deemed to include, without any action
---------------------
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of stock of the
<PAGE>
7
Corporation; provided, however, that if any funds for any class or series of
-------- -------
Junior Shares or any class or series of stock ranking on a parity with the
Series C Preferred Shares as to the payment of dividends are placed in a
separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series C
Preferred Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean any day on which the securities in question are
-----------
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on NASDAQ, or if such securities are not
quoted on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e).
-----------
"Transfer Agent" shall mean the Corporation, or such other agent or agents
--------------
of the Corporation as may be designated by the Board of Directors or their
designee as the transfer agent, registrar and dividend disbursing agent for the
Series C Preferred Shares.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Articles.
Section 3. Dividends.
---------
(a) Subject to the preferential rights of the holders of any Preferred
Stock that ranks senior in the payment of dividends to the Series C Equity
Shares and subject to paragraph (b) of this Section 3, the holders of Series C
Equity Shares shall be entitled to receive, when, as and if declared by the
Board of Directors, but only out of funds legally available for the payment of
dividends, cumulative preferential dividends payable in cash to shareholders of
record on the respective date, not exceeding 50 days preceding such dividend
payment date, fixed for the purpose by the Board of Directors in advance of
payment of each particular dividend in an amount equal to the greater of (A) the
Base Rate per share per annum and (B) an amount per share equal to the
Liquidation Preference of a Series C Equity Share (exclusive of accrued but
unpaid dividends) divided by the Conversion Price (the "Series C Common
---------------
Equivalent Factor") times the dollar amount of cash dividends declared with
- -----------------
respect to each Common Equity Share that does not result in an adjustment to the
Conversion Price pursuant to Subparagraph (d)(iii) of Section 6 (such product,
the "Series C Common Equivalent Amount") for the same annual period; provided,
--------------------------------- --------
however, that if as a result of the quarterly dividends paid in accordance with
- -------
the following sentence, the holders of Series C Equity Shares shall have
received for any calendar year more dividends than such Shares shall be entitled
under clauses (A) and (B) above (as adjusted pursuant to the third and eighth
sentences of this Section 3), the dividends payable in respect of Series C
Equity Shares in subsequent calendar years shall be reduced to the extent of
such overpayment. Subject to the proviso of the preceding sentence of this
Section 3 (a), the dividend paid in respect of each quarterly period in each
calendar year shall be determined as
<PAGE>
8
follows (in each case, excluding any additional payment made pursuant to the
following sentence) : (1) for the first quarter, the greater of 25% of the Base
Rate per share and the Series C Common Equivalent Amount for the same quarter;
(2) for the second quarter, an amount such that the aggregate amount to be
received per Series C Equity Share in respect of the first two quarters of such
calendar year shall be the greater of 50% of the Base Rate per share and the
Series C Common Equivalent Amount for the same two quarters; (3) for the third
quarter, an amount such that the aggregate amount to be received per Series C
Equity Share in respect of the first three quarters of such calendar year shall
be the greater of 75% of the Base Rate per share and the Series C Common
Equivalent Amount for the same three quarters; and (4) for the fourth quarter,
an amount such that the aggregate amount to be received per Series C Equity
Share in respect of such calendar year shall be the amount provided in the
preceding sentence of this Section 3(a). Notwithstanding the foregoing, for any
quarter in which a Fixed Charge Coverage Violation (as defined below) has
occurred, the dividend payable per Series C Equity Share shall be 1.20 times the
-----
amount provided in the preceding sentence. A "Fixed Charge Coverage Violation"
shall occur for any quarter that the ratio of the Corporation's Consolidated
EBITDA to its Consolidated Fixed Charges is below 1.40 to 1. The dividends shall
begin to accrue as set forth above and shall be fully cumulative from the first
day of the applicable Dividend Period, whether or not in any Dividend Period or
Periods there shall be funds of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly, when, as and if
declared by the Board of Directors, in arrears on Dividend Payment Dates.
Accumulated but unpaid dividends for any past quarterly dividend periods may be
declared and paid at any time, without reference to any regularly scheduled
quarterly dividend payment date, to holders of record on such date, not
exceeding 50 days preceding such dividend payment date, fixed for the purpose by
the Board of Directors in advance of payment of each particular dividend. Any
dividend payment made on Series C Equity Shares shall first be credited against
the earliest accrued but unpaid dividend due with respect to Series C Equity
Shares which remains payable. Beginning with the quarter in which a REIT
Termination Event occurs, all dividends payable per Series C Equity Share
pursuant to this Section shall be multiplied by 2.5.
(b) The initial Dividend Period for the Series C Equity Shares will
include a partial dividend for the period from the Issue Date until the last day
of the calendar quarter immediately following such Issue Date. The amount of
dividends payable for such initial period, or any other period shorter than a
full quarterly Dividend Period, on the Series C Equity Shares shall be computed
by dividing the number of days in such period by 90 and multiplying the result
by the Series C Equity dividend determined in accordance with Section 3(a).
Holders of Series C Equity Shares shall not be entitled to any dividends,
whether payable in cash, property or shares, in excess of cumulative dividends,
as herein provided, on the Series C Equity Shares. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series C Equity Shares which may be in arrears.
(c) So long as any Series C Equity Shares remain outstanding, no
dividends, except as described in the immediately following sentence, shall be
declared or paid or set apart for payment on any class or series of Parity
Shares for any period unless full cumulative dividends have been or
<PAGE>
9
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series C Equity Shares for all
Dividend Periods terminating on or prior to the dividend payment date on such
class or series of Parity Shares. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon Series C Equity Shares and all dividends declared upon any other
class or series of Parity Shares shall be declared ratably in proportion to the
respective amounts of dividends accumulated and unpaid on the Series C Equity
Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series C Equity Shares remain outstanding, no dividends
(other than dividends or distributions paid solely in Fully Junior Shares, or
options, warrants or rights to subscribe for or purchase, Fully Junior Shares)
shall be declared or paid or set apart for payment or other distribution shall
be declared or made or set apart for payment upon Junior Shares, nor shall any
Junior Shares be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of Common Shares made for purposes of
an employee incentive or benefit plan of the Corporation or any subsidiary) for
any consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any Junior Shares) by the Corporation, directly or
indirectly (except by conversion into or exchange for Fully Junior Shares),
unless in each case the full cumulative dividends on all outstanding Series C
Equity Shares and any other Parity Shares of the Corporation shall have been or
contemporaneously are declared and paid or declared and set apart for payment
for all Dividend Periods terminating on or prior to the date of declaration or
payment with respect to the Series C Equity Shares and all dividend periods
terminating on or prior to the date of declaration or payment with respect to
such Parity Shares. Subject to the foregoing, and not otherwise, such dividends
and distributions may be declared by the Board of Directors and paid on any
Common Equity Shares from time to time out of any funds legally available
therefor, and the Series C Equity Shares shall not be entitled to participate in
any such dividends, whether payable in cash, stock or otherwise.
(e) No distributions on Series C Equity Shares shall be declared by the
Board of Directors or paid or set apart for payment by the Corporation at such
time as the terms and provisions of any agreement of the Corporation, including
any agreement relating to its indebted ness, prohibits such declaration,
payment or setting apart for payment or provides that such declaration, payment
or setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment shall be restricted or prohibited
by law.
(f) In determining whether a distribution by dividend, redemption or other
acquisition of Shares or otherwise is permitted under Missouri law, no effect
shall be given to amounts that would be needed, if the Corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights on dissolution are
superior to those receiving the distribution.
Section 4. Liquidation Preference.
----------------------
<PAGE>
10
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, subject to the prior preferences
and other rights of any series of stock ranking senior to the Series C Preferred
Shares upon liquidation, distribution or winding up of the Corporation, before
any payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of Junior Shares, the
holders of the Series C Equity Shares shall be entitled to receive One Hundred
Eighty Dollars ($180.00) (the "Liquidation Preference") per share of Series C
----------------------
Equity Shares plus an amount equal to all dividends (whether or not earned or
declared) accrued and unpaid thereon to the date of liquidation, dissolution or
winding up of the affairs of the Corporation (any such date, a "Series C
--------
Liquidation Date") but such holders shall not be entitled to any further
- ----------------
payment; provided, that the dividend payable with respect to the Dividend Period
--------
containing the Series C Liquidation Date shall be equal to the dividend
determined pursuant to Section 3 above for the preceding Dividend Period times a
fraction equal to the actual number of days elapsed from the end date of the
calendar quarter most recently completed to the relevant Series C Liquidation
Date over 90 days. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of the Series C Equity Shares shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Shares, then such assets, or the
proceeds thereof, shall be distributed among the holders of Series C Equity
Shares and any such other Parity Shares ratably in accordance with the
respective amounts that would be payable on such Series C Equity Shares and any
such other Parity Shares if all amounts payable thereon were paid in full. For
the purposes of this Section 4, (i) a consolidation or merger of the Corporation
with one or more corporations, real estate investment trusts or other entities,
(ii) a sale, lease or conveyance of all or substantially all of the
Corporation's property or business or (iii) a statutory share exchange shall not
be deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Corporation.
(b) Subject to the rights of the holders of shares of any series or class
or classes of stock ranking on a parity with or prior to the Series C Equity
Shares upon liquidation, dissolution or winding up, upon any liquidation,
dissolution or winding up of the Corporation, after payment shall have been made
in full to the holders of the Series C Equity Shares, as provided in this
Section 4, the holders of Series C Equity Shares shall have no other claim to
the remaining assets of the Corporation and any other series or class or classes
of Junior Shares shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be paid
or distributed, and the holders of the Series C Equity Shares shall not be
entitled to share therein.
<PAGE>
11
Section 5. Redemption at the Option of the Corporation.
-------------------------------------------
(a) The Series C Equity Shares shall not be redeemable by the Corporation
prior to _____ __, 2008./1/ On and after _________, 2008, the Corporation, at
its option, may redeem the Series C Equity Shares, in whole at any time or from
time to time in part, in minimum increments of $10.0 million of aggregate
Liquidation Preference of such shares, out of funds legally available therefor
at a redemption price payable in cash equal to 100% of the Liquidation
Preference per Series C Equity Shares (plus all accumulated, accrued and unpaid
dividends as provided in paragraph (b) below).
(b) Upon any redemption of Series C Equity Shares pursuant to this Section
5, the Corporation shall pay all accrued and unpaid dividends, if any, thereon
to the Call Date, without interest. If the Call Date falls after a dividend
payment record date and prior to the corresponding Dividend Payment Date, then
each holder of Series C Equity Shares at the close of business on such dividend
payment record date shall be entitled to the dividend payable on such shares on
the corresponding Dividend Payment Date notwithstanding any redemption of such
shares before such Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for unpaid dividends, whether or
not in arrears, on Series C Equity Shares called for redemption.
(c) If full cumulative dividends on the Series C Equity Shares and any
other class or series of Parity Shares of the Corporation have not been declared
and paid or declared and set apart for payment, the Series C Equity Shares may
not be redeemed under this Section 5 in part and the Corporation may not
purchase or acquire Series C Equity Shares, otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of Series C
Equity Shares.
(d) Notice of the redemption of any Series C Equity Shares under this
Section 5 shall be mailed by first-class mail or recognized overnight courier to
each holder of record of Series C Equity Shares to be redeemed at the address of
each such holder as shown on the Corporation's records, not less than 30 nor
more than 90 days prior to the Call Date. Neither the failure to mail any
notice required by this paragraph (d), nor any defect therein or in the mailing
thereof, to any particular holder, shall affect the sufficiency of the notice or
the validity of the proceedings for redemption with respect to the other
holders. Each such mailed notice shall state, as appropriate: (1) the Call
Date; (2) the number of Series C Equity Shares to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of such shares
to be redeemed from such holder; (3) the redemption price; (4) the place or
places at which certificates for such shares are to be surrendered; (5) the
then-current Conversion Price; and (6) that dividends on the shares to be
redeemed shall cease to accrue on such Call Date except as otherwise provided
herein. Notice having been mailed as aforesaid, from and after the Call Date
(unless the Corporation shall fail to make available an amount of cash
necessary to effect such redemption), (i) except
_________________
/1/. This date is the tenth anniversary of the Closing.
<PAGE>
12
as otherwise provided herein, dividends on the Series C Equity Shares so called
for redemption shall cease to accrue, (ii) such shares shall no longer be deemed
to be outstanding, and (iii) all rights of the holders thereof as holders of
Series C Equity Shares shall cease (except the rights to receive the cash
payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required and to receive any dividends
payable thereon). The Corporation's obligation to provide cash in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the Call
Date, the Corporation shall deposit with a bank or trust company that has an
office in the Borough of Manhattan, City of New York, and that has capital and
surplus of at least $150,000,000, necessary for such redemption, in trust, with
irrevocable instructions that such cash be applied to the redemption of the
Series C Equity Shares so called for redemption. No interest shall accrue for
the benefit of the holders of Series C Equity Shares to be redeemed on any cash
so set aside by the Corporation. Subject to applicable escheat laws, any such
cash unclaimed at the end of two years from the Call Date shall revert to the
general funds of the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general funds of the
Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such shares shall be exchanged for any cash (without interest
thereon) for which such shares have been redeemed. If fewer than all the
outstanding Series C Equity Shares are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding Series C Equity Shares not
previously called for redemption pro rata (as nearly as may be), by lot or by
any other method determined by the Corporation in its sole discretion to be
equitable. If fewer than all the Series C Equity Shares evidenced by any
certificate are redeemed, then new certificates evidencing the unredeemed shares
shall be issued without cost to the holder thereof.
Section 6. Conversion. Holders of Series C Equity Shares shall have the
----------
right to convert all or a portion of such shares into Common Equity Shares, as
follows:
(a) Subject to and upon compliance with the provisions of this Section 6,
a holder of Series C Preferred Shares or Excess C Preferred Shares shall have
the right, at his or her option, at any time (such time being, the "Conversion
----------
Date"), to convert all or any portion of such shares into the number of fully
- ----
paid and non-assessable Common Shares or Excess Common Shares, respectively
obtained by dividing the aggregate Liquidation Preference of such shares
(inclusive of accrued but unpaid dividends) by the Conversion Price (as in
effect at the time and on the date provided for in the last paragraph of
paragraph (b) of this Section 6) by surrendering such shares to be converted,
such surrender to be made in the manner provided in paragraph (b) of this
Section 6; provided, however, that the right to convert shares called for
-------- -------
redemption pursuant to Section 5 shall terminate at the close of business on the
fifth Business Day prior to the Call Date fixed for such redemption, unless the
Corporation shall default in making payment of the cash payable upon such
redemption under Section 5.
<PAGE>
13
(b) In order to exercise the conversion right, the holder of each share of
Series C Equity Shares to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof irrevocably elects to convert such Series C
Equity Shares. Unless the shares issuable on conversion are to be issued in the
same name as the name in which such Series C Equity Shares are registered, each
share surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the holder
or such holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).
Holders of Series C Equity Shares at the close of business on a dividend
payment record date shall be entitled to receive the dividend payable on such
shares on the corresponding Dividend Payment Date notwithstanding the conversion
thereof following such dividend payment record date and prior to such Dividend
Payment Date. However, Series C Equity Shares surrendered for conversion during
the period between the close of business on any dividend payment record date and
the opening of business on the corresponding Dividend Payment Date (except
shares converted after the issuance of notice of redemption with respect to a
Call Date during such period, such Series C Equity Shares being entitled to such
dividend on the Dividend Payment Date) must be accompanied by payment of an
amount equal to the dividend payable on such shares on such Dividend Payment
Date. A holder of Series C Equity Shares on a dividend payment record date who
(or whose transferee) tenders any such shares for conversion into Common Equity
Shares on the corresponding Dividend Payment Date will receive the dividend
payable by the Corporation on such Series C Equity Shares on such date, and the
converting holder need not include payment of the amount of such dividend upon
surrender of Series C Equity Shares for conversion. Except as provided above,
the Corporation shall make no payment or allowance for unpaid dividends, whether
or not in arrears, on converted shares or for dividends on the Common Equity
Shares issued upon such conversion.
As promptly as practicable after the surrender of certificates for Series C
Equity Shares as aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or on his or her written order, a certificate or
certificates for the number of full Common Equity Shares issuable upon the
conversion of such shares in accordance with provisions of this Section 6, and
any fractional interest in respect of a Common Equity Share arising upon such
conversion shall be settled as provided in paragraph (c) of this Section 6.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for Series C Equity
Shares shall have been surrendered and such notice shall have been received by
the Corporation as aforesaid (and if applicable, payment of an amount equal to
the dividend payable on such shares shall have been received by the Corporation
as described above), and the Person or Persons in whose name or names any
certificate or certificates for Common Equity Shares shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time
<PAGE>
14
on such date and such conversion shall be at the Conversion Price in effect at
such time on such date unless the share transfer books of the Corporation shall
be closed on that date, in which event such Person or Persons shall be deemed to
have become such holder or holders of record at the close of business on the
next succeeding day on which such share transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date on which such
shares shall have been surrendered and such notice received by the Corporation.
(c) No fractional shares or scrip representing fractions of Common Equity
Shares shall be issued upon conversion of the Series C Equity Shares. Instead
of any fractional interest in a Common Equity Share that would otherwise be
deliverable upon the conversion of a Series C Equity Share, the Corporation
shall pay to the holder of such share an amount in cash based upon the Current
Market Price of the Common Shares on the Trading Day immediately preceding the
date of conversion. If more than one share shall be surrendered for conversion
at one time by the same holder, the number of full Common Equity Shares issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of Series C Equity Shares so surrendered.
(d) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Corporation shall after the Issue Date (A) pay a dividend or
make a distribution on its Common Equity Shares in Common Equity Shares, (B)
subdivide its outstanding Common Equity Shares into a greater number of
shares, (C) combine its outstanding Common Equity Shares into a smaller number
of shares or (D) issue any shares of stock by reclassification of its Common
Equity Shares, the Conversion Price in effect at the opening of business on
the day following the date fixed for the determination of shareholders
entitled to receive such dividend or distribution or at the opening of
business on the Business Day next following the day on which such subdivision,
combination or reclassification becomes effective, as the case may be, shall
be adjusted so that the holder of any Series C Equity Shares thereafter
surrendered for conversion shall be entitled to receive the number of Common
Equity Shares that such holder would have owned or have been entitled to
receive after the happening of any of the events described above as if such
Series C Equity Shares had been converted immediately prior to the record date
in the case of a dividend or distribution or the effective date in the case
of a subdivision, combination or reclassification. An adjustment made pursuant
to this subparagraph (i) shall become effective immediately after the opening
of business on the Business Day next following the record date (except as
provided in paragraph (h) below) in the case of a dividend or distribution and
shall become effective immediately after the opening of business on the
Business Day next following the effective date in the case of a subdivision,
combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights, options or
warrants to all holders of Common Equity Shares entitling them (for a period
expiring within 45 days after the record date mentioned below) to subscribe
for or purchase Common Equity Shares at a price per share less than 95% (100%
if a stand-by underwriter is used and charges the Corporation a commission) of
the Fair Market Value per Common Share on the record date for the
determination of shareholders entitled to receive such rights, options or
warrants, then
<PAGE>
15
the Conversion Price in effect at the opening of business on the Business Day
next following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately prior
to the opening of business on the Business Day next following the date fixed
for such determination by (B) a fraction, the numerator of which shall be the
sum of (x) the number of Common Equity Shares outstanding on the close of
business on the date fixed for such determination and (y) the number of shares
that the aggregate proceeds to the Corporation from the exercise of such
rights, options or warrants for Common Equity Shares would purchase at 95% of
such Fair Market Value (or 100% in the case of a stand-by underwriting), and
the denominator of which shall be the sum of (x) the number of Common Equity
Shares outstanding on the close of business on the date fixed for such
determination and (y) the number of additional Common Equity Shares offered
for subscription or purchase pursuant to such rights, options or warrants.
Such adjustment shall become effective immediately after the opening of
business on the day next following such record date (except as provided in
paragraph (h) below). In determining whether any rights, options or warrants
entitle the holders of Common Equity Shares to subscribe for or purchase
Common Equity Shares at less than 95% of such Fair Market Value (or 100% in
the case of a stand-by underwriting), there shall be taken into account any
consideration received by the Corporation upon issuance and upon exercise of
such rights, options or warrants, the value of such consideration, if other
than cash, to be determined by the Board of Directors whose determination
shall be conclusive. To the extent that Common Equity Shares are not delivered
pursuant to such rights, options or warrants, upon the expiration or
termination of such rights, options or warrants, the Conversion Price shall be
readjusted to the Conversion Price which would then be in effect had the
adjustments made upon the issuance of such rights, options or warrants been
made on the basis of delivery of only the number of Common Equity Shares
actually delivered. In the event that such rights, options or warrants are not
so issued, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such date fixed for the determination
of stockholders entitled to receive such rights, options or warrants had not
been fixed.
(iii) If the Corporation shall distribute to all holders of its Common
Equity Shares any securities of the Corporation (other than Common Equity
Shares) or evidence of its indebtedness or assets (excluding cumulative cash
dividends or distributions paid with respect to the Common Equity Shares after
December 31, 1997 which are not in excess of the following: the sum of (A) the
Corporation's cumulative undistributed Funds from Operations at December 31,
1997, plus (B) the cumulative amount of Funds from Operations, as determined
by the Board of Directors, after December 31, 1997, minus (C) the cumulative
amount of dividends accrued or paid in respect of the Series C Equity Shares
or any other class or series of preferred stock of the Corporation after the
Issue Date) or rights, options or warrants to subscribe for or purchase any of
its securities (excluding those rights, options and warrants issued to all
holders of Common Equity Shares entitling them for a period expiring within 45
days after the record date referred to in subparagraph (ii) above to subscribe
for or purchase Common Equity Shares, which rights and warrants are referred
to in and treated under subparagraph (ii) above) (any of the foregoing being
hereinafter in this subparagraph
<PAGE>
16
(iii) collectively called the "Securities" and individually a "Security"),
---------- ---------
then in each such case the Conversion Price shall be adjusted so that it shall
equal the price determined by multiplying (x) the Conversion Price in effect
immediately prior to the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution by (y) a
fraction, the numerator of which shall be the Fair Market Value per Common
Share on the record date mentioned below less the then fair market value (as
determined by the Board of Directors, whose determination shall be conclusive)
of the portion of the Securities or assets or evidences of indebtedness so
distributed or of such rights, options or warrants applicable to one Common
Equity Share, and the denominator of which shall be the Fair Market Value per
Common Share on the record date mentioned below. Such adjustment shall become
effective on the date of distribution retroactive to the opening of business
on the Business Day next following (except as provided in paragraph (h) below)
the record date for the determination of shareholders entitled to receive such
distribution. For the purposes of this subparagraph (iii), the distribution of
a Security, which is distributed not only to the holders of the Common Equity
Shares on the date fixed for the determination of shareholders entitled to
such distribution of such Security, but also is distributed with each Common
Equity Share delivered to a Person converting a share of Series C Equity
Shares after such determination date, shall not require an adjustment of the
Conversion Price pursuant to this subparagraph (iii); provided that on the
--------
date, if any, on which a Person converting a share of Series C Equity Shares
would no longer be entitled to receive such Security with a Common Equity
Share (other than as a result of the termination of all such Securities), a
distribution of such Securities shall be deemed to have occurred and the
Conversion Price shall be adjusted as provided in this subparagraph (iii) (and
such day shall be deemed to be "the date fixed for the determination of the
shareholders entitled to receive such distribution" and "the record date"
within the meaning of the two preceding sentences). If any dividend or
distribution of the type described in this paragraph (iii) is declared but not
so paid or made, the Conversion Price shall again be adjusted to the
Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
Rights or warrants distributed by the Corporation to all holders of Common
Equity Shares entitling the holders thereof to subscribe for or purchase
shares of the Corporation's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger Event"): (i) are deemed to be transferred with such
-------------
shares of Common Equity Shares; (ii) are not exercisable; and (iii) are also
issued in respect of future issuances of Common Equity Shares, shall be deemed
not to have been distributed for purposes of this subparagraph (iii) (and no
adjustment to the Conversion Price under this subparagraph (iii) will be
required) until the occurrence of the earliest Trigger Event. If such right or
warrant is subject to subsequent events, upon the occurrence of which such
right or warrant shall become exercisable to purchase different securities,
evidences of indebtedness or other assets or entitle the holder to purchase a
different number or amount of the foregoing or to purchase any of the
foregoing at a different purchase price, then the occurrence of each such
event shall be deemed to be the date of issuance and record date with respect
to a new right or warrant (and a termination or
<PAGE>
17
expiration of the existing right or warrant without exercise by the holder
thereof to the extent not exercised). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto, that resulted in an adjustment to the Conversion Price under
this Subparagraph (iii), (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final redemption
or repurchase to give effect to such distribution or Trigger Event, as the
case may be, as though it were a cash distribution (but not a distribution
paid exclusively in cash), equal to the per share redemption or repurchase
price received by a holder of Common Equity Shares with respect to such rights
or warrants (assuming such holder had retained such rights or warrants), made
to all holders of Common Equity Shares as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants all of which shall
have expired or been terminated without exercise, the Conversion Price shall
be readjusted as if such rights and warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not include open
market repurchases by the Corporation) made by the Corporation or any
subsidiary or controlled Affiliate of the Corporation for all or any portion
of the Common Equity Shares shall expire and such tender or exchange offer
shall require the payment by the Corporation or such subsidiary or controlled
Affiliate of consideration per Common Equity Share having a fair market value
(as determined in good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors),
at the last time (the "Expiration Time") tenders or exchanges may be made
---------------
pursuant to such tender or exchange offer, that exceeds the Current Market
Price per Common Share on the Trading Day next succeeding the Expiration Time,
the Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subparagraph, by a fraction of which the numerator shall be the number of
Common Equity Shares outstanding (including any tendered or exchanged shares)
at the Expiration Time, multiplied by the Current Market Price per Common
Share on the Trading Day next succeeding the Expiration Time, and the
denominator shall be the sum of (A) the fair market value (determined as
aforesaid) of the aggregate consideration payable to shareholders based upon
the acceptance (up to any maximum specified in the terms of the tender or
exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any maximum,
being referred to as the "Purchased Shares") and (B) the product of the
----------------
number of Common Equity Shares outstanding (less any Purchased Shares) at the
Expiration Time and the Current Market Price per Common Share on the Trading
Day next succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the
Expiration Time. In the event the Corporation or any subsidiary or controlled
Affiliate is obligated to purchase shares pursuant to any such tender offer,
but the Corporation or such subsidiary or controlled Affiliate is permanently
prevented by applicable law from effecting any such purchases, or all such
purchases are rescinded, the Conversion Price shall again be
<PAGE>
18
adjusted to be the Conversion Price which would then be in effect if such
tender offer had not been made.
(v) No adjustment in the Conversion Price shall be required unless such
adjustment would require a cumulative increase or decrease of at least 1% in
such price; provided, however, that any adjustments that by reason of this
-------- -------
subparagraph (v) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment until made; and provided,
--------
further, that any adjustment shall be required and made in accordance with
-------
the provisions of this Section 6 (other than this subparagraph (v)) not later
than such time as may be required in order to preserve the tax-free nature of
a distribution to the holders of Common Shares. Notwithstanding any other
provisions of this Section 6, the Corporation shall not be required to make
any adjustment of the Conversion Price for the issuance of any Common Equity
Shares pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in Common Equity Shares under such plan. All
calculations under this Section 6 shall be made to the nearest cent (with
$.005 being rounded upward) or to the nearest one-hundredth of a share (with
.005 of a share being rounded upward), as the case may be. Anything in this
paragraph (d) to the contrary notwithstanding, the Corporation shall be
entitled, to the extent permitted by law, to make such reductions in the
Conversion Price, in addition to those required by this paragraph (d), as it
in its discretion shall determine to be advisable in order that any share
dividends, subdivision of shares, reclassification or combination of shares,
distribution of rights or warrants to purchase shares or securities, or
distribution of other assets (other than cash dividends) hereafter made by the
Corporation to its shareholders shall not be taxable. To the extent permitted
by applicable law, the Corpora tion from time to time may reduce the
Conversion Price by any amount for any period of time if the period is at
least 20 days, the reduction is irrevocable during the period and the Board of
Directors shall have made a determination that such reduction would be in the
best interests of the Corporation, which determination shall be conclusive.
Whenever the Conversion Price is reduced pursuant to the preceding sentence,
the Corporation shall mail to the holder of each Series C Equity Share at his
or her last address appearing on the share register a notice of reduction
prior to the date the reduced Conversion Price takes effect and such notice
shall state the reduced Conversion Price and the period during which it will
be in effect.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, self
tender offer for 40% or more of its Common Equity Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Equity Shares and excluding any transaction as to which subparagraph (d)(i) of
this Section 6 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which all or substantially all of
-----------
the Common Equity Shares are converted into the right to receive different
securities or other property (including cash or any combination thereof), each
Series C Equity Share which is not redeemed or converted into the right to
receive different securities or other property prior to such Transaction shall
thereafter be convertible, in lieu of
<PAGE>
19
Common Equity Shares into the kind and amount of different securities and other
property (including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of Common Equity
Shares into which one Series C Equity Share was convertible immediately prior to
such Transaction, assuming such holder of Common Equity Shares (i) is not a
Person with which the Corporation consolidated or into which the Corporation
merged or which merged into the Corporation or to which such sale or transfer
was made, as the case may be ("Constituent Person"), or an Affiliate of a
--------------------
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of shares, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or amount of
shares, securities and other property (including cash) receivable upon such
Transaction is not the same for each Common Share held immediately prior to such
Transaction by other than a Constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised ("Non-
-----
Electing Share"), then for the purpose of this paragraph (e) the kind and
- --------------
amount of shares, securities and other property (including cash) receivable upon
such Transaction by each Non-Electing Share shall be deemed to be the kind and
amount so receivable per share by holders of a plurality of the Non-Electing
Shares). The Corporation shall not be a party to any Transaction unless the
terms of such Transaction are consistent with the provisions of this paragraph
(e), and it shall not consent or agree to the occurrence of any Transaction
until the Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the holders of the
Series C Equity Shares that will contain provisions enabling the holders of the
Series C Equity Shares that remain outstanding after such Transaction to convert
into the consideration received by holders of Common Shares at the Conversion
Price in effect immediately prior to such Transaction. The provisions of this
paragraph (e) shall similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any other distribution)
on its Common Equity Shares (other than cash dividends or distributions paid
with respect to the Common Equity Shares after December 31, 1997 not in excess
of the sum of the Corporation's cumulative undistributed Funds from Operations
at December 31, 1997, plus the cumulative amount of Funds from Operations, as
determined by the Board of Directors, after December 31, 1997, minus the
cumulative amount of dividends accrued or paid in respect of the Series C
Equity Shares or any other class or series of preferred stock of the
Corporation after the Issue Date); or
(ii) the Corporation shall authorize the granting to all holders of Common
Equity Shares of rights, options or warrants to subscribe for or purchase any
shares of any class or any other rights, options or warrants; or
(iii) there shall be any reclassification of the Common Equity Shares
(other than an event to which subparagraph (d)(i) of this Section 6 applies)
or any consolidation or merger to which the Corporation is a party (other than
a merger in which the Corporation is the
<PAGE>
20
surviving entity) and for which approval of any shareholders of the
Corporation is required, or a statutory share exchange, or a self tender offer
by the Corporation for all or substantially all of its outstanding Common
Shares or the sale or transfer of all or substantially all of the assets of
the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series C Equity Shares at their addresses
as shown on the records of the Corporation, as promptly as possible, but at
least 10 days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Equity
Shares of record to be entitled to such dividend, distribution or rights,
options or warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common
Equity Shares of record shall be entitled to exchange their Common Equity
Shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up. Failure to give or receive
such notice or any defect therein shall not affect the legality or validity of
the proceedings described in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment and shall
mail such notice of such adjustment of the Conversion Price to the holder of
each share of Series C Equity Shares at such holder's last address as shown on
the records of the Corporation.
(h) In any case in which paragraph (d) of this Section 6 provides that an
adjustment shall become effective on the day next following the record date for
an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any share of Series C Equity Shares converted after
such record date and before the occurrence of such event the additional Common
Equity Shares issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Equity Shares issuable upon such
conversion before giving effect to such adjustment and (B) paying to such holder
any amount of cash in lieu of any fraction pursuant to paragraph (c) of this
Section 6.
<PAGE>
21
(i) There shall be no adjustment of the Conversion Price in case of the
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common Equity
Shares, other than action described in this Section 6, that in the opinion of
the Board of Directors would materially and adversely affect the conversion
rights of the holders of the Series C Equity Shares, the Conversion Price for
the Series C Equity Shares may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors, in its sole
discretion, may determine to be equitable in the circumstances.
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Equity Shares, for the purpose of effecting conversion of
the Series C Equity Shares, the full number of Common Equity Shares deliverable
upon the conversion of all outstanding Series C Equity Shares not theretofore
converted. For purposes of this paragraph (k), the number of Common Shares that
shall be deliverable upon the conversion of all outstanding Series C Preferred
Shares shall be computed as if at the time of computation all such outstanding
shares were held by a single holder.
Any Common Equity Shares issued upon conversion of the Series C Equity
Shares shall be validly issued, fully paid and non-assessable. Before taking
any action that would cause an adjustment reducing the Conversion Price below
the then-par value of the Common Equity Shares deliverable upon conversion of
the Series C Equity Shares, the Corporation will take any action that, in the
opinion of its counsel, may be necessary in order that the Corporation may
validly and legally issue fully paid and (subject to any customary qualification
based upon the nature of a real estate investment trust) non-assessable Common
Equity Shares at such adjusted Conversion Price.
The Corporation shall use its best efforts to list the Common Shares
required to be delivered upon conversion of the Series C Equity Shares, prior to
such delivery, upon each national securities exchange, if any, upon which the
outstanding Common Shares are listed at the time of such delivery.
The Corporation shall use its best efforts to comply with all federal and
state securities laws and regulations thereunder in connection with the issuance
of any securities that the Corporation shall be obligated to deliver upon
conversion of the Series C Equity Shares. The certificates evidencing such
securities shall bear such legends restricting transfer thereof in the absence
of registration under applicable securities laws or an exemption therefrom as
the Corporation may in good faith deem appropriate.
<PAGE>
22
(l) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of Common
Equity Shares or other securities or property on conversion of the Series C
Equity Shares pursuant hereto; provided, however, that the Corporation shall not
-------- -------
be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of Common Shares or other securities or
property in a name other than that of the holder of the Series C Preferred
Shares to be converted, and no such issue or delivery shall be made unless and
until the Person requesting such issue or delivery has paid to the Corporation
the amount of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
Section 7. Change of Control.
-----------------
(a) If a Change of Control (as defined below) occurs (a "Change of Control
-----------------
Repurchase Event"), the holders of Series C Equity Shares shall have the right
- ----------------
to require the Corporation, to the extent the Corporation shall have funds
legally available therefor, to redeem any or all of the Series C Equity Shares
held by such holder at a repurchase price payable in cash (the "Change of
---------
Control Repurchase Payment") in an amount equal to 105% of the Liquidation
- --------------------------
Preference thereof, plus accrued and unpaid dividends whether or not declared,
if any, to the date of repurchase or the date payment is made available (the
"Change of Control Date") pursuant to the offer described in subsection (b)
- ----------------------- --------------
below (the "Change of Control-Repurchase Offer").
----------------------------------
(b) Within 15 days following the Corporation becoming aware that a Change
of Control Repurchase Event has occurred, the Corporation shall mail by first
class mail or recognized overnight courier a notice to the each holder of Series
C Equity Shares stating (A) that a Change of Control Repurchase Event has
occurred and that such holder has the right to require the Corporation to
repurchase any or all of the Series C Equity Shares then held by such holder,
(B) the date of repurchase (which shall be a Business Day, no earlier than 30
days and no later than 60 days from the date such notice is mailed, or such
later date as may be necessary to comply with the requirements of the Exchange
Act), (C) the repurchase price and (D) the instructions determined by the
Corporation, consistent with this subsection, that such investor must follow in
order to have the Series C Equity Shares repurchased.
(c) On the Change of Control Repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series C Equity Shares or portions
thereof tendered by such holder pursuant to the Change of Control Repurchase
Offer and promptly by wire transfer of immediately available funds to such
holder, as directed by such holder, send an amount equal to the Change of
Control Repurchase Payment in respect of all Series C Equity Shares or portions
thereof so tendered.
(d) Notwithstanding anything else herein, to the extent they are
applicable to any Change of Control Repurchase Offer, the Corporation will
comply with any federal and state
<PAGE>
23
securities laws, rules and regulations and all time periods and requirements
shall be adjusted accordingly.
(e) For purposes hereof, "Change of Control" means the occurrence of any of
the following: (i) the first acquisition, directly or indirectly, by any
individual or entity or group (as such term is used in Section 13(d)(3) of the
Exchange Act) of beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act, except that such individual or entity shall be deemed to have
beneficial ownership of all shares that any such individual or entity has the
right to acquire, whether such right is exercisable immediately or only after
passage of time) of more than 25% of the Corporation's or Westfield America
Trust=s outstanding equity securities with voting power, under ordinary
circumstances, to elect Directors of the Corporation; (ii) other than with
respect to the election, resignation or replacement of any Director designated,
appointed or elected by the holders of any Series of Preferred Shares (each a
"Preferred Director"), during any period of two consecutive years, individuals
- -------------------
who at the beginning of such period constituted the Board of Directors of the
Corporation (together with any new Directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Corporation was approved by a vote of 66 2/3% of the Directors of the
Corporation (excluding Preferred Directors) then still in office who were
Directors at the beginning of such period, or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office of the Corporation; and (iii)
(A) Any of the Corporation or Westfield America Trust consolidating with or
merging into another entity or conveying, transferring or leasing all or
substantially all of its assets (including, but not limited to, real property
investments) to any individual or entity, or (B) any entity consolidating with
or merging into the any of the Corporation or Westfield America Trust, which in
either event (A) or (B) is pursuant to a transaction in which the outstanding
voting securities of the Corporation or Westfield America Trust is reclassified
or changed into or exchanged for cash, securities or other property; provided,
however, that the events described in clauses (i), (ii) and (iii) shall not be
deemed to be a Change of Control (a) in the case of the event described in
clause (iii), if the sole purpose of such event is that the Corporation or
Westfield America Trust is seeking to change its domicile or to convert from a
corporation to a trust or vice versa; (b) in the case of the event described in
clause (iii), if the holders of the exchanged securities of the Corporation or
Westfield America Trust immediately after such transaction beneficially own at
least a majority of the securities of the merged or consolidated entity normally
entitled to vote in elections of Directors of the Corporation or Westfield
America Trust; (c) if any of Westfield Holdings Limited or its wholly-owned
subsidiaries remains as manager of the Corporation=s properties and as adviser
of the Corporation, in each case, in a manner substantially similar to that on
the date hereof; or (d) if the Change of Control results solely from the
purchase or other acquisition of equity securities by Westfield Holdings
Limited, Westfield America Trust, the Lowy Family or the Investor.
Section 8. Redemption at the Option of the Holder.
--------------------------------------
<PAGE>
24
(a) At any time after _________, 2008/2/, the holders of Series C Equity
Shares shall have the right at any time that the Corporation=s common stock has
a Current Market Price at or below the Conversion Price per share, to require
the Corporation, to the extent the Corporation shall have funds legally
available therefor, to redeem any or all of the Series C Equity Shares held by
such holder at a repurchase price payable, at the option of the Corporation, in
either (i) cash, or (ii) such number of Common Equity Shares as shall have a
Current Market Price in the aggregate on the day prior to the day such holder
gives notice pursuant to Section 8(b) of its intention to redeem, equal to in
either case, 100% of the liquidation preference thereof plus accrued and unpaid
dividends whether or not declared, if any, to the date of repurchase or the date
payment is made available (in the aggregate, the "Redemption Payment").
------------------
(b) For purposes of this Section 8, redemption at the option of the holder
shall be deemed to occur upon receipt by the Corporation of written notice that
the holder of Series C Equity Shares wishes to tender shares to be redeemed.
The holders of such shares to be redeemed shall then have 30 days from the date
of such notice to deliver such shares to the Transfer Agent. Upon the surrender
of the certificate or certificates of Series C Preferred Shares to be redeemed,
duly endorsed or assigned to the Corporation or in blank, at the office of the
Transfer Agent, the Corporation shall promptly, either (i) by wire transfer of
immediately available funds to such holder, as directed by such holder, send an
amount equal to the Redemption Payment in respect of all Series C Equity
Shares or portions thereof so tendered or (ii) issue and deliver to such holder,
or on his or her written order, a certificate or certificates for the number of
full Common Equity Shares issuable in respect of all Series C Equity Shares or
portions thereof so tendered.
Section 9. Shares To Be Retired. All Series C Equity Shares which shall
--------------------
have been issued and reacquired in any manner by the Corporation shall be
restored to the status of authorized but unissued preferred stock, without
discretion as to class or series, and subject to applicable limitations set
forth in the Articles may thereafter be reissued as shares of any series of
preferred stock.
Section 10. Ranking. Any class or series of stock of the Corporation
-------
shall be deemed to rank:
(a) prior to the Series C Preferred Shares, as to the payment of dividends
and as to distribution of assets upon liquidation, dissolution or winding up,
if the holders of such class or series shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of Series C
Preferred Shares, which shall expressly include the Corporation's non-voting
senior preferred stock, par value $1.00 per share;
_______________________
/2/. This date is the tenth anniversary of the Closing hereunder.
<PAGE>
25
(b) on a parity with the Series C Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof shall be different from
those of the Series C Preferred Shares, if the holders of such class or
series and the Series C Preferred Shares shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or
priority one over the other ("Parity Shares"), which shall expressly include
-------------
the Corporation's Series A Cumulative Redeemable Preferred Shares, Series B
Cumulative Redeemable Preferred Shares and Series D Cumulative Convertible
Redeemable Preferred Shares;
(c) junior to the Series C Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series C Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Fully Junior Shares.
Section 11. Voting. (a) Except as expressly provided in this Certificate
------
of Designation, the holders of Series C Equity Shares shall have no voting
rights. If and whenever (i) for two consecutive quarterly Dividend Periods the
Corporation fails to pay dividends on the Series C Equity Shares (which shall,
with respect to any such quarterly dividend, mean that any such dividend has not
been paid in full), then the number of directors then constituting the Board of
Directors shall be increased by two and the holders of Series C Equity Shares,
voting as a single class, shall be entitled to elect the two additional
directors to serve on the Board of Directors or (ii) for two consecutive
quarterly Dividend Periods the Corporation fails to pay dividends on the Common
Shares in an amount per share at least equal to $0.32 (subject to adjustment
consistent with any adjustment of the Conversion Price pursuant to Section 6(a)
of this Article), then the number of directors then constituting the Board of
Directors shall be increased by one and the holders of Series C Equity Shares,
voting as a single class, shall be entitled to elect the one additional director
to serve on the Board of Directors, in either case, at any annual meeting of
shareholders or special meeting held in place thereof, or at a special meeting
of the holders of the Series C Equity Shares called as hereinafter provided;
provided, however, that except as set forth in the next sentence hereto, the
- -------- -------
holders of Series C Equity Shares shall not have the right to elect more than
two directors. If, other than through the operation of this Section 11(a) or
pursuant to the provisions of the Articles of Incorporation relating to the
Corporation=s Series A and B Preferred Shares (but only with respect to one
director elected by the holders of the Series A and B Preferred Shares), the
Board of Directors shall be increased at any time to more than ten directors,
then, upon the occurrence or continuance of any of the events described in this
Section 11(a), the Board of Directors shall be increased by such number of
additional directors, and the holders of Series C Equity Shares shall be
entitled to elect such number of additional
<PAGE>
26
directors, as shall be necessary to maintain the ratio of directors elected by
the holders of the Series C Shares to the directors otherwise elected, as nearly
as possible (rounding to the next larger whole number), equal to the ratio that
would have existed if the holders of the Series C Equity Shares were able to
elect the full number of directors then permitted to be elected by them under
this Section 11 and the directors otherwise elected numbered only ten. Whenever,
as the case may be, (i) all arrears in dividends on the Series C Equity Shares
then outstanding shall have been paid and the Corporation has paid dividends
thereon for two consecutive quarters and (ii) the Corporation has paid dividends
on the Common Shares in an amount per share at least equal to $0.32 (subject to
adjustment consistent with any adjustment of the Conversion Price pursuant to
Section 6(a) of this Article) for two consecutive quarters, then the right of
the holders of the Series C Equity Shares to elect such additional directors
shall cease (but subject always to the same provision for the vesting of such
voting rights in the case of any similar future arrearage in quarterly
dividends), and the terms of office of all persons elected as Directors by the
holders of the Series C Equity Shares shall forthwith terminate and the number
of the Board of Directors shall be reduced accordingly. At any time after such
voting power shall have been so vested in the holders of Series C Equity Shares,
the Secretary of the Corporation may, and upon the written request of any
holders of 5% of the outstanding Series C Equity Shares (addressed to the
Secretary at the principal office of the Corporation) shall, call a special
meeting of the holders of the Series C Equity Shares for the election of the
Directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the shareholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 20 days after receipt of any such request, then any holder of Series C
Equity Shares may call such meeting, upon the notice above provided, and for
that purpose shall have access to the records of the Corporation. The directors
elected at any such special meeting shall hold office until the next annual
meeting of the shareholders or special meeting held in lieu thereof if such
office shall not have previously terminated as above provided. If any vacancy
shall occur among the Directors elected by the holders of the Series C Equity
Shares, a successor shall be elected by the Board of Directors, upon the
nomination of the then-remaining Director elected by the holders of the Series C
Equity Shares or the successor of such remaining Director (or, if there are then
no such Directors or Director elected by the holders of Series C Equity Shares,
such Director shall be elected by the holders of Series C Equity Shares as
described above), to serve until the next annual meeting of the shareholders or
special meeting held in place thereof if the term of such director shall not
have previously terminated as provided above.
(b) The holders of the Series C Equity Shares, voting together with the
holders of the Common Shares as a single class, shall be entitled to vote on any
matter involving any transaction between the Corporation and any Affiliate of
the Corporation which is brought to a vote of the holders of the Common Shares
(other than any vote on the conversion of the Series D Preferred Shares into
Common Shares). In any matter for which a holder of Series C Equity Shares is
permitted to vote under this Section 11(b), such holder shall have the number of
votes equal to the number of Common Shares into which the Series C Equity Shares
of such holder is convertible on the record date for such vote.
<PAGE>
27
(c) So long as any Series C Equity Shares are outstanding, in addition to
any other vote or consent of shareholders required by law or by the Articles,
the affirmative vote of the holders of a majority of the Series C Equity Shares,
voting together as a class, given in person or by proxy, either in writing
without a meeting or by vote at any meeting called for the purpose, shall be
necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions of the
Articles of Incorporation or this Certificate of Designation that materially
and adversely affects the voting powers, rights or preferences of the holders
of the Series C Equity Shares; or
(ii) Any merger or consolidation of the Corporation and another entity in
which the Corporation is not the surviving corporation and each holder of
Series C Equity Shares does not receive shares of the surviving corporation
with substantially similar rights, preferences and powers in the surviving
corporation as the Series C Equity Shares have with respect to the
Corporation (except for changes that do not materially and adversely affect
the holders of the Series C Equity Stock).
provided, however, that no such vote of the holders of Series C Equity Shares
- -------- -------
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such prior shares or
convertible security is to be made, as the case may be, provision is made for
the redemption of all Series C Equity Shares at the time outstanding to the
extent such redemption is authorized by Section 5 of this Certificate of
Designation.
(iii) For purposes of the foregoing provisions of this Section 11(c), each
share of Series C Equity Shares shall have one (1) vote per share, except
that when any other series of Equity Shares shall have the right to vote with
the Series C Equity Shares as a single class on any matter, then the Series C
Equity Shares and such other series shall have with respect to such matters
one (1) vote per $180.00 (or less pursuant to Section 4(a)) of stated
liquidation preference. Except as otherwise required by applicable law or as
set forth herein, the Series C Equity Shares shall not have any relative,
participating, optional or other special voting rights and powers other than
as set forth herein, and the consent of the holders thereof shall not be
required for the taking of any corporate action.
Section 12. Record Holders. The Corporation and the Transfer Agent may
--------------
deem and treat the record holder of any Series C Preferred Shares as the true
and lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
Section 13. Title. This resolution shall be known and may be referred to
-----
as "A Resolution of the Board of Directors of Westfield America, Inc.
Designating Series C Preferred Shares and Fixing Preferences and Rights
Thereof".
<PAGE>
28
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized and directed to execute and acknowledge a certificate setting
forth these resolutions and to cause such certificate to be filed and recorded,
all in accordance with the requirements of Section 351.046 of the General and
Business Corporation Law of the State of Missouri, as amended.
<PAGE>
29
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President this 10 day of August, 1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
-----------------
Name: Peter S. Lowy
Title: Co-President
<PAGE>
30
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA)
) SS:
COUNTY OF LOS ANGELES)
I, Annie M. Gary, a notary public, do hereby certify that on this 6 day of
August, 1998, personally appeared before me Peter Lowy, and being first duly
sworn by me, declared that he is the Co-President of Westfield America, Inc.,
that he signed the foregoing document as Co-President of the corporation, and
that the statements therein contained are true.
[SEAL] /s/ Annie M. Gary
------------------------------
Notary Public
My Commission Expires: March 31, 2000
<PAGE>
EXHIBIT C
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES D PREFERRED SHARES
AND FIXING PREFERENCES AND RIGHTS THEREOF"
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
<PAGE>
Pursuant to the Provisions of Section 351.180 (7) of the
General and Business Corporation Law of the State
of Missouri, as amended,
I, the undersigned, Co-President of Westfield America, Inc., a Missouri
corporation (hereinafter sometimes referred to as the "Corporation"), hereby
-----------
certify as follows:
FIRST: that under the provisions of Article Fourth of the Restated Articles
of Incorporation, as amended, of the Corporation, the total number of shares of
all classes of capital stock which the Corporation may issue is 410,000,200
shares, of which (i) 200 shares shall be non-voting senior preferred stock, par
value $1.00 per share (the "Senior Preferred Shares"), (ii) 5,000,000 shares
-----------------------
shall be Preferred Shares, with par value of $1.00 per share (the "Preferred
---------
Shares"), 940,000 of which have been designated as Series A Preferred Shares,
- ------
with a liquidation value of $100 per share (the "Series A Preferred Shares") and
-------------------------
400,000 of which have been designated as Series B Preferred Shares, with a
liquidation value of $100 per share (the "Series B Preferred Shares"), (iii)
-------------------------
200,000,000 shall be shares of common stock, par value $.01 per share (the
"Common Shares"), (iv) 205,000,000 will be shares of excess stock, par value
$.01 ("Excess Shares"). Any Excess Shares which are issued with respect to
-------------
Common Stock shall be "Excess Common Shares" and, together with the Common
--------------------
Shares, the "Common Equity Shares" and any Excess Shares which are issued with
--------------------
respect to Preferred Shares shall be "Excess Preferred Shares", and, together
-----------------------
with the Preferred Shares, the "Preferred Equity Shares" and under said Articles
-----------------------
of Incorporation (as amended, the "Articles of Incorporation"), the shares of
-------------------------
Preferred Stock are authorized to be issued by the Board of Directors and the
Board of Directors is expressly authorized to determine in the Resolution, the
designation, powers, rights, preferences and qualifications, limitations or
restrictions, not fixed and determined by the Articles of Incorporation.
<PAGE>
SECOND: That the Board of Directors of the Corporation pursuant to the
authority so vested in it by Article Fourth of the Certificate of Incorporation,
and in accordance with the provisions of Section 351.180 (7) of the General and
Business Corporation Law of the State of Missouri, as amended, adopted on July
20, 1998 the following resolution creating a series of Preferred Stock
designated as "Series D Preferred Shares," which resolution has not been
amended, modified, rescinded or revoked and is in full force and effect on the
date hereof.
"RESOLUTION OF THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING
'SERIES D PREFERRED SHARES'
AND FIXING PREFERENCES AND RIGHTS THEREOF"
BE IT RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of Westfield America, Inc., hereinafter called the
"Corporation," by the provisions of the Articles of Incorporation, as amended,
-----------
the Board of Directors of the Corporation hereby fixes the designation, voting
powers, rights on liquidation or dissolution and other preferences and rights,
and the qualifications, limitations or restrictions thereof, of the shares of
such series (in addition to the designations, preferences and relative rights,
and the qualifications, limitations or restrictions thereof set forth in the
Articles of Incorporation which are applicable to the Series D Preferred Shares)
as follows:
Section 1. Number of Shares, Designation and Ranking. This class of
-----------------------------------------
preferred stock shall be designated as Series D Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute such
series shall not be more than 694,445 shares, par value $1.00 per share, which
number may be decreased (but not below the aggregate number thereof then
outstanding and/or which have been reserved for issuance) from time to time by
the Board of Directors and is hereafter in this resolution called the "Series D
--------
Preferred Shares." Each Series D Preferred Share shall be identical in all
- ----------------
respects to each other Series D Preferred Share, and except as otherwise
provided herein, shall be identical in all respects to each Series D Preferred
Share (the Series D Preferred Shares together with the Excess Series D Preferred
Shares being hereinafter referred to as the "Series D Equity Shares").
----------------------
Section 2. Definitions. For purposes of the Series D Preferred Shares, the
-----------
following terms shall have the meanings indicated:
<PAGE>
3
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall mean
--------- ----------
a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL"), Westfield America Trust, Frank
---
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
----
Family").
- ------
"Base Rate" shall mean an annual dividend per Series D Equity Share equal
---------
to 8.5% of the Liquidation Preference per Series D Equity Share.
"Board of Directors" shall mean the Board of Directors of the Corporation
------------------
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series D Preferred Shares.
"Business Day "shall mean any day, other than a Saturday or Sunday, that is
------------
neither a legal holiday nor a day on which banking institutions in New York
City, New York are authorized or required by law, regulation or executive order
to close.
"Call Date" shall mean the date specified in the notice to holders required
---------
under Section 5(d) as the Call Date.
"Code "shall mean the Internal Revenue Code of 1986, as amended.
----
"Consolidated EBITDA" for any quarter shall mean the consolidated net
-------------------
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the Securities
and Exchange Commission, increased by the sum of the following (without
duplication):
a. the Corporation's pro rata share of EBITDA from unconsolidated real
estate partnerships calculated in a manner consistent with this
definition of Consolidated EBITDA,
b. all income taxes paid or accrued according to GAAP for such quarter
(other than income taxes attributable to extraordinary, unusual or
non-recurring
<PAGE>
4
gains or losses except to the extent that such gains were not included
in Consolidated EBITDA),
c. all interest expense paid or accrued in accordance with GAAP for such
quarter (including financing fees and amortization of deferred
financing fees or amortization of original issue discount, but
excluding capitalized interest),
d. depreciation and depletion reflected in such net income,
e. amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only to
the extent that such amounts have not been previously included in the
amount of Consolidated EBITDA pursuant to clause (c) above), goodwill,
other intangibles and management fees, and
f. any other non-cash charges, to the extent deducted from consolidated
net income (including, but not limited to, income allocated to
minority interests).
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
--------------------------
a. the Corporation's pro rata share of fixed charges from unconsolidated
real estate partnerships calculated in a manner consistent with this
definition of Consolidated Fixed Charges,
b. all interest expense paid or accrued in accordance with GAAP for such
quarter including, without duplication, financing fees and
amortization of deferred financing fees or amortization of original
issue discount),
c. dividend and distribution requirements with respect to preferred stock
(not including any portion of preferred stock dividends the
calculation of which is based on the dividend paid in such quarter to
the holders of common shares) whether or not declared or paid,
d. regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity), and
<PAGE>
5
e. all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e).
------------------
"Conversion Date" shall have the meaning set forth in Section 6(a).
---------------
"Conversion Price" shall mean the conversion price per Common Equity Share
----------------
for which the Series D Equity Share is convertible, as such Conversion Price may
be adjusted pursuant to Section 6. The initial conversion price shall be
$18.00.
"Current Market Price" of publicly traded Common Shares or any other class
--------------------
of stock or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the New York
Stock Exchange ("NYSE") or, if such security is not listed or admitted for
----
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
------
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
----
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"Dividend Payment Date" shall mean (i) for any Dividend Period with respect
---------------------
to which the Corporation pays a dividend on the Common Equity Shares, the date
on which such dividend is paid, or (ii) for any Dividend Period with respect to
which the Corporation does not pay a dividend on the Common Equity Shares, a
date to be set by the Board of Directors, which date shall not be later than the
thirtieth calendar day after the end of the applicable Dividend Period.
"Dividend Period" shall mean quarterly dividend periods commencing on
---------------
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
with respect to any Series D Equity Shares (other than the initial Dividend
Period, which shall commence on the
<PAGE>
6
Issue Date for such Series D Equity Shares and end on and include the last day
of the calendar quarter immediately following such Issue Date, and other than
the Dividend Period during which any Series D Equity Shares shall be redeemed
pursuant to Section 5 or converted pursuant to Section 6, which shall end on and
include the Call Date or Conversion Date with respect to the Series D Equity
Shares being redeemed or converted, as applicable).
"Expiration Time" shall have the meaning set forth in Section 6(d)(iv).
---------------
"Fair Market Value" shall mean the average of the daily Current Market
-----------------
Prices of a Common Share on the five (5) consecutive Trading Days selected by
the Corporation commencing not more than 20 Trading Days before, and ending not
later than, the earlier of the day in question and the day before the "ex date"
with respect to the issuance or distribution requiring such computation. The
term "ex date," when used with respect to any issuance or distribution, means
the first day on which the Common Shares trade regular way, without the right to
receive such issuance or distribution on the exchange or in the market, as the
case may be, used to determine that day's Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
-------------------------------
Section 3(a).
"Fully Junior Shares" shall mean the Common Shares and any other class or
-------------------
series of stock of the Corporation now or hereafter issued and outstanding over
which the Series D Preferred Shares preference or priority in both (i) the
payment of dividends and (ii) the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"Funds from Operations" shall mean net income (loss) (computed in
---------------------
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment Trusts
(NAREIT), in its White Paper dated March 1995, as such definitions may be
modified from time to time.
<PAGE>
7
"Investor" shall mean Security Capital Preferred Growth Incorporated and
--------
controlled affiliates thereof.
"Issue Date" shall mean the date on which Series D Preferred Stock is issued.
----------
"Junior Shares" shall mean the Common Shares and any other class or series of
-------------
stock of the Corporation now or hereafter issued and outstanding over which the
Series D Preferred Shares have preference or priority in the payment of
dividends or in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
"Non-Electing Share" shall have the meaning set forth in Section 6(e).
------------------
"Operating Partnership" shall mean Westfield America Limited Partnership, a
---------------------
Delaware limited partnership.
"Parity Shares" shall have the meaning set forth in Section 11(b).
-------------
"Person" shall mean any individual, firm, partnership, corporation, limited
------
liability company, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Purchased Shares" shall have the meaning set forth in Section 6(d)(iv).
----------------
"REIT Termination Event" shall mean the earliest to occur of:
----------------------
(i) the filing of a federal income tax return by the Corporation for any
taxable year on which the Corporation does not compute its income as a
real estate investment trust,
(ii) the approval by the shareholders of the Corporation of a proposal for
the Corporation to cease to qualify as a real estate investment trust,
(iii) a determination by the Board of Directors of the Corporation, based on
the advice of counsel, that the Corporation has ceased to qualify as a
real estate investment trust, or
<PAGE>
8
(iv) a "determination" within the meaning of Section 1313(a) of the Code
that the Corporation has ceased to qualify as a real estate investment
trust.
"Securities" and "Security" shall have the meanings set forth in Section
---------- --------
6(d)(iii).
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Series D Preferred Shares" shall have the meaning given such term in the
-------------------------
preamble to the Certificate of Designation.
"set apart for payment" shall be deemed to include, without any action other
---------------------
than the following, the recording by the Corporation in its accounting ledgers
of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of stock of the
Corporation; provided, however, that if any funds for any class or series of
-------- -------
Junior Shares or any class or series of stock ranking on a parity with the
Series D Preferred Shares as to the payment of dividends are placed in a
separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series D
Preferred Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean any day on which the securities in question are
-----------
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on NASDAQ, or if such securities are not
quoted on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e).
-----------
"Transfer Agent" shall mean the Corporation, or such other agent or agents of
--------------
the Corporation as may be designated by the Board of Directors or their designee
as the transfer agent, registrar and dividend disbursing agent for Series D
Preferred Shares and notified to the holders of the Series D Preferred Stock.
<PAGE>
9
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Articles.
Section 3. Dividends. (a) Subject to the preferential rights of the
---------
holders of any Preferred Stock that ranks senior in the payment of dividends to
the Series D Equity Shares and subject to paragraph (b) of this Section 3, the
holders of Series D Equity Shares shall be entitled to receive, when, as and if
declared by the Board of Directors, but only out of funds legally available for
the payment of dividends, cumulative preferential dividends payable in cash to
shareholders of record on the respective date, not exceeding 50 days preceding
such dividend payment date, fixed for the purpose by the Board of Directors in
advance of payment of each particular dividend in an amount equal to the greater
of (A) the Base Rate per share per annum and (B) an amount per share equal to
the Liquidation Preference of a Series D Equity Share (exclusive of accrued but
unpaid dividends) divided by the Conversion Price (the "Series D Common
---------------
Equivalent Factor") times the dollar amount of cash dividends declared with
- -----------------
respect to each Common Equity Share that does not result in an adjustment to the
Conversion Price pursuant to subparagraph (d)(iii) of Section 6 (such product,
the "Series D Common Equivalent Amount") for the same annual period; provided,
--------------------------------- --------
however, that if as a result of the quarterly dividends paid in accordance with
- -------
the following sentence, the holders of Series D Equity Shares shall have
received for any calendar year more dividends than such Shares shall be entitled
under clauses (A) and (B) above (as adjusted pursuant to the third and eighth
sentences of this Section 3), the dividends payable in respect of Series D
Equity Shares in subsequent calendar years shall be reduced to the extent of
such overpayment. Subject to the proviso of the preceding sentence of this
Section 3(a), the dividend paid in respect of each quarterly period in each
calendar year shall be determined as follows (in each case, excluding any
additional payment made pursuant to the following sentence): (1) for the first
quarter, the greater of 25% of the Base Rate per share and the Series D Common
Equivalent Amount for the same quarter; (2) for the second quarter, an amount
such that the aggregate amount to be received per Series D Equity Share in
respect of the first two quarters of such calendar year shall be the greater of
50% of the Base Rate per share and the Series D Common Equivalent Amount for the
same two quarters; (3) for the third quarter, an amount such that the aggregate
amount to be received per Series D Equity Share in respect of the first three
quarters of such calendar year shall be the greater of 75% of the Base Rate per
share and the Series D Common Equivalent Amount for the same three quarters; and
(4) for the fourth quarter, an amount such that the aggregate amount to be
received per Series D Equity Share in respect of such calendar year shall be the
amount provided in the preceding sentence of
<PAGE>
10
this Section 3(a). Notwithstanding the foregoing, for any quarter in which a
Fixed Charge Coverage Violation (as defined below) has occurred, the dividend
payable per Series D Equity Share shall be 1.20 times the amount provided in the
-----
preceding sentence. A "Fixed Charge Coverage Violation" shall occur for any
quarter that the ratio of the Corporation's Consolidated EBITDA to its
Consolidated Fixed Charges is below 1.40 to 1. The dividends shall begin to
accrue as set forth above and shall be fully cumulative from the first day of
the applicable Dividend Period, whether or not in any Dividend Period or Periods
there shall be funds of the Corporation legally available for the payment of
such dividends, and shall be payable quarterly, when, as and if declared by the
Board of Directors, in arrears on Dividend Payment Dates. Accumulated but unpaid
dividends for any past quarterly dividend periods may be declared and paid at
any time, without reference to any regularly scheduled quarterly dividend
payment date, to holders of record on such date, not exceeding 50 days preceding
such payment date, fixed for the purpose by the Board of Directors in advance of
payment of each particular dividend. Any dividend payment made on Series D
Equity Shares shall first be credited against the earliest accrued but unpaid
dividend due with respect to Series D Equity Shares which remains payable.
Beginning with the quarter in which a REIT Termination Event occurs, all
dividends payable per Series D Equity Share pursuant to this Section shall be
multiplied by 2.5.
(b) The initial Dividend Period for the Series D Equity Shares will
include a partial dividend for the period from the Issue Date until the last day
of the calendar quarter immediately following such Issue Date. The amount of
dividends payable for such initial period, or any other period shorter than a
full quarterly Dividend Period, on the Series D Equity Shares shall be computed
by dividing the number of days in such period by 90 and multiplying the result
by the Series D Equity dividend determined in accordance with Section 3(a).
Holders of Series D Equity Shares shall not be entitled to any dividends,
whether payable in cash, property or shares, in excess of cumulative dividends,
as herein provided, on the Series D Equity Shares. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series D Equity Shares which may be in arrears.
(c) So long as any Series D Equity Shares remain outstanding, no
dividends, except as described in the immediately following sentence, shall be
declared or paid or set apart for payment on any class or series of Parity
Shares for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series D
<PAGE>
11
Equity Shares for all Dividend Periods terminating on or prior to the dividend
payment date on such class or series of Parity Shares. When dividends are not
paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon Series D Equity Shares and all dividends
declared upon any other class or series of Parity Shares shall be declared
ratably in proportion to the respective amounts of dividends accumulated and
unpaid on the Series D Equity Shares and accumulated and unpaid on such Parity
Shares.
(d) So long as any Series D Equity Shares remain outstanding, no dividends
(other than dividends or distributions paid solely in Fully Junior Shares, or
options, warrants or rights to subscribe for or purchase, Fully Junior Shares)
shall be declared or paid or set apart for payment or other distribution shall
be declared or made or set apart for payment upon Junior Shares, nor shall any
Junior Shares be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of Common Shares made for purposes of
an employee incentive or benefit plan of the Corporation or any subsidiary) for
any consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any Junior Shares) by the Corporation, directly or
indirectly (except by conversion into or exchange for Fully Junior Shares),
unless in each case the full cumulative dividends on all outstanding Series D
Equity Shares and any other Parity Shares of the Corporation shall have been or
contemporaneously are declared and paid or declared and set apart for payment
for all Dividend Periods terminating on or prior to the date of declaration or
payment with respect to the Series D Equity Shares and all dividend periods
terminating on or prior to the date of declaration or payment with respect to
such Parity Shares. Subject to the foregoing, and not otherwise, such dividends
and distributions may be declared by the Board of Directors and paid on any
Common Equity Shares from time to time out of any funds legally available
therefor, and the Series D Equity Shares shall not be entitled to participate in
any such dividends, whether payable in cash, stock or otherwise.
(e) No distributions on Series D Equity Shares shall be declared by the
Board of Directors or paid or set apart for payment by the Corporation at such
time as the terms and provisions of any agreement of the Corporation, including
any agreement relating to its indebtedness, prohibits such declaration, payment
or setting apart for payment or provides that such declaration, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment shall be restricted or prohibited
by law.
<PAGE>
12
(f) In determining whether a distribution by dividend, redemption or other
acquisition of Shares or otherwise is permitted under Missouri law, no effect
shall be given to amounts that would be needed, if the Corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights on dissolution are
superior to those receiving the distribution.
Section 4. Liquidation Preference. (a) In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, whether voluntary or involuntary,
subject to the prior preferences and other rights of any series of stock ranking
senior to the Series D Preferred Shares upon liquidation, distribution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for the holders of Junior Shares, the holders of the Series D Equity Shares
shall be entitled to receive One Hundred Eighty Dollars ($180.00) (the
"Liquidation Preference") per Series D Equity Share plus an amount equal to all
- -----------------------
dividends (whether or not earned or declared) accrued and unpaid thereon to the
date of liquidation, dissolution or winding up of the affairs of the Corporation
(any such date, a "Series D Liquidation Date") but such holders shall not be
-------------------------
entitled to any further payment; provided, that the dividend payable with
--------
respect to the Dividend Period containing the Series D Liquidation Date shall be
equal to the dividend determined pursuant to Section 3 above for the preceding
Dividend Period times a fraction equal to the actual number of days elapsed from
the end date of the calendar quarter most recently completed to the relevant
Series D Liquidation Date over ninety days. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the Series D Equity Shares
shall be insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any other shares of any class or series of Parity
Shares, then such assets, or the proceeds thereof, shall be distributed among
the holders of Series D Equity Shares and any such other Parity Shares ratably
in accordance with the respective amounts that would be payable on such Series D
Equity Shares and any such other Parity Shares if all amounts payable thereon
were paid in full. For the purposes of this Section 4, (i) a consolidation or
merger of the Corporation with one or more corporations, real estate investment
trusts or other entities, (ii) a sale, lease or conveyance of all or
substantially all of the Corporation's property or business or (iii) a statutory
share exchange shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, of the Corporation.
<PAGE>
13
(b) Subject to the rights of the holders of shares of any series or class or
classes of stock ranking on a parity with or prior to the Series D Equity Shares
upon liquidation, dissolution or winding up, upon any liquidation, dissolution
or winding up of the Corporation, after payment shall have been made in full to
the holders of the Series D Equity Shares, as provided in this Section 4, the
holders of Series D Equity Shares shall have no other claim to the remaining
assets of the Corporation and any other series or class or classes of Junior
Shares shall, subject to the respective terms and provisions (if any) applying
thereto, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Series D Equity Shares shall not be entitled
to share therein.
Section 5. Redemption at the Option of the Corporation. (a) The Series D
-------------------------------------------
Equity Shares shall not be redeemable by the Corporation prior to ________ __,
2008./1/ On and after ________ __, 2008, the Corporation, at its option, may
redeem the Series D Equity Shares, in whole at any time or from time to time in
part, in minimum increments of $10.0 million of aggregate Liquidation Preference
of such shares, out of funds legally available therefor at a redemption price
payable in cash equal to 100% of the Liquidation Preference per Series D Equity
Share (plus all accumulated, accrued and unpaid dividends as provided in
paragraph (d) below).
(b) In the event that WHL and its subsidiaries and the trustee of Westfield
America Trust on behalf of Westfield America Trust do not vote to approve the
conversion of the Series D Equity Shares into Common Equity Shares at the
Corporation's 1999 Annual Shareholder Meeting or at any other meeting of the
Corporation's shareholders at which such proposal is raised, the Corporation
shall have the right to redeem the Series D Equity Shares, in whole or in part,
out of funds legally available therefor at a redemption price payable in cash
equal to 100% of the Liquidation Preference per Series D Equity Share (plus all
accumulated, accrued and unpaid dividends as provided in paragraph (c) below).
(c) Upon any redemption of Series D Equity Shares pursuant to this Section
5, the Corporation shall pay all accrued and unpaid dividends, if any, thereon
to the Call Date, without interest. If the Call Date falls after a dividend
payment record date and prior to the corresponding Dividend Payment Date, then
each holder of Series D Equity Shares at the close of business on such dividend
payment record date shall be entitled to the dividend payable on such shares on
the corresponding Dividend Payment Date
_________________________
/1/ This date is the tenth anniversary of the Closing.
<PAGE>
14
notwithstanding any redemption of such shares before such Dividend Payment Date.
Except as provided above, the Corporation shall make no payment or allowance for
unpaid dividends, whether or not in arrears, on Series D Equity Shares called
for redemption.
(d) If full cumulative dividends on the Series D Equity Shares and any other
class or series of Parity Shares of the Corporation have not been declared and
paid or declared and set apart for payment, the Series D Equity Shares may not
be redeemed under this Section 5 in part and the Corporation may not purchase or
acquire Series D Equity Shares, otherwise than pursuant to a purchase or
exchange offer made on the same terms to all holders of Series D Equity Shares.
(e) Notice of the redemption of any Series D Equity Shares under this
Section 5 shall be mailed by first-class mail or recognized overnight courier to
each holder of record of Series D Equity Shares to be redeemed at the address of
each such holder as shown on the Corporation's records, not less than 30 nor
more than 90 days prior to the Call Date. Neither the failure to mail any notice
required by this paragraph (e), nor any defect therein or in the mailing
thereof, to any particular holder, shall affect the sufficiency of the notice or
the validity of the proceedings for redemption with respect to the other
holders. Each such mailed notice shall state, as appropriate: (1) the Call
Date; (2) the number of Series D Equity Shares to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of such shares
to be redeemed from such holder; (3) the redemption price; (4) the place or
places at which certificates for such shares are to be surrendered; (5) the
then-current Conversion Price; and (6) that dividends on the shares to be
redeemed shall cease to accrue on such Call Date except as otherwise provided
herein. Notice having been mailed as aforesaid, from and after the Call Date
(unless the Corporation shall fail to make available an amount of cash necessary
to effect such redemption), (i) except as otherwise provided herein, dividends
on the Series D Equity Shares so called for redemption shall cease to accrue,
(ii) such shares shall no longer be deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of Series D Equity Shares shall cease
(except the rights to receive the cash payable upon such redemption, without
interest thereon, upon surrender and endorsement of their certificates if so
required and to receive any dividends payable thereon). The Corporation's
obligation to provide cash in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the Call Date, the Corporation shall deposit
with a bank or trust company that has an office in the Borough of Manhattan,
City of New York, and that has capital and surplus of at least $150,000,000,
necessary for
<PAGE>
15
such redemption, in trust, with irrevocable instructions that such cash be
applied to the redemption of the Series D Equity Shares so called for
redemption. Notwithstanding the foregoing the Corporation shall, in the first
instance, send the money to any holder of Series D Equity Shares that has
notified the Corporation in writing of the location of delivery of funds. No
interest shall accrue for the benefit of the holders of Series D Equity Shares
to be redeemed on any cash so set aside by the Corporation. Subject to
applicable escheat laws, any such cash unclaimed at the end of two years from
the Call Date shall revert to the general funds of the Corporation, after which
reversion the holders of such shares so called for redemption shall look only to
the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such notice
of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such shares shall be exchanged for any cash (without interest
thereon) for which such shares have been redeemed. If fewer than all the
outstanding Series D Equity Shares are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding Series D Equity Shares not
previously called for redemption pro rata (as nearly as may be), by lot or by
any other method determined by the Corporation in its sole discretion to be
equitable. If fewer than all the Series D Equity Shares evidenced by any
certificate are redeemed, then new certificates evidencing the unredeemed shares
shall be issued without cost to the holder thereof.
Section 6. Conversion. The Series D Equity Shares shall not be convertible
----------
into Common Equity Shares prior to (i) a vote of the shareholders of the
Corporation approving the conversion of Series D Equity Shares into Common
Equity Shares or (ii) the transfer of the Series D Equity Shares to an
individual to whom the Corporation is permitted to issue Common Equity Shares
without shareholder approval, in accordance with the rules of the NYSE. Subject
to the foregoing, holders of Series D Equity Shares shall have the right to
convert all or a portion of such shares into Common Equity Shares, as follows:
(a) Subject to and upon compliance with the provisions of this Section 6, a
holder of Series D Preferred Shares or Excess Series D Preferred Shares shall
have the right, at his or her option, at any time (such time being, the
"Conversion Date"), to convert all or any portion of such shares into the number
---------------
of fully paid and non-assessable Common Shares or Excess Common Shares,
respectively, obtained by dividing the aggregate Liquidation
<PAGE>
Preference of such shares (inclusive of accrued but unpaid dividends) by the
Conversion Price (as in effect at the time and on the date provided for in the
last paragraph of paragraph (b) of this Section 6) by surrendering such shares
to be converted, such surrender to be made in the manner provided in paragraph
(b) of this Section 6; provided, however, that the right to convert shares
-------- -------
called for redemption pursuant to Section 5 shall terminate at the close of
business on the fifth Business Day prior to the Call Date fixed for such
redemption, unless the Corporation shall default in making payment of the cash
payable upon such redemption under Section 5.
(b) In order to exercise the conversion right, the holder of each share of
Series D Equity Shares to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof irrevocably elects to convert such Series D
Equity Shares. Unless the shares issuable on conversion are to be issued in the
same name as the name in which such Series D Equity Shares are registered, each
share surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the holder
or such holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).
Holders of Series D Equity Shares at the close of business on a dividend
payment record date shall be entitled to receive the dividend payable on such
shares on the corresponding Dividend Payment Date notwithstanding the conversion
thereof following such dividend payment record date and prior to such Dividend
Payment Date. However, Series D Equity Shares surrendered for conversion during
the period between the close of business on any dividend payment record date and
the opening of business on the corresponding Dividend Payment Date (except
shares converted after the issuance of notice of redemption with respect to a
Call Date during such period, such Series D Equity Shares being entitled to such
dividend on the Dividend Payment Date) must be accompanied by payment of an
amount equal to the dividend payable on such shares on such Dividend Payment
Date. A holder of Series D Equity Shares on a dividend payment record date who
(or whose transferee) tenders any such shares for conversion into Common Equity
Shares on the corresponding Dividend Payment Date will receive the dividend
payable by the Corporation on such Series D Equity Shares on such date, and the
converting holder need not include payment of the amount of such dividend upon
surrender of Series D Equity Shares for conversion. Except as provided above,
the
<PAGE>
17
Corporation shall make no payment or allowance for unpaid dividends, whether
or not in arrears, on converted shares or for dividends on the Common Equity
Shares issued upon such conversion.
As promptly as practicable after the surrender of certificates for Series D
Equity Shares as aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or on his or her written order, a certificate or
certificates for the number of full Common Equity Shares issuable upon the
conversion of such shares in accordance with provisions of this Section 6, and
any fractional interest in respect of a Common Equity Share arising upon such
conversion shall be settled as provided in paragraph (c) of this Section 6.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for Series D Equity
Shares shall have been surrendered and such notice shall have been received by
the Corporation as aforesaid (and if applicable, payment of an amount equal to
the dividend payable on such shares shall have been received by the Corporation
as described above), and the Person or Persons in whose name or names any
certificate or certificates for Common Equity Shares shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date and such conversion shall
be at the Conversion Price in effect at such time on such date unless the share
transfer books of the Corporation shall be closed on that date, in which event
such Person or Persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such share
transfer books are open, but such conversion shall be at the Conversion Price in
effect on the date on which such shares shall have been surrendered and such
notice received by the Corporation.
(c) No fractional shares or scrip representing fractions of Common Equity
Shares shall be issued upon conversion of the Series D Equity Shares. Instead
of any fractional interest in a Common Equity Share that would otherwise be
deliverable upon the conversion of a Series D Equity Share, the Corporation
shall pay to the holder of such share an amount in cash based upon the Current
Market Price of the Common Shares on the Trading Day immediately preceding the
date of conversion. If more than one share shall be surrendered for conversion
at one time by the same holder, the number of full Common Equity Shares issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of Series D Equity Shares so surrendered.
<PAGE>
18
(d) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Corporation shall after the Issue Date (A) pay a dividend
or make a distribution on its Common Equity Shares in Common Equity Shares, (B)
subdivide its outstanding Common Equity Shares into a greater number of shares,
(C) combine its outstanding Common Equity Shares into a smaller number of shares
or (D) issue any shares of stock by reclassification of its Common Equity
Shares, the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of shareholders entitled to
receive such dividend or distribution or at the opening of business on the
Business Day next following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted so
that the holder of any Series D Equity Shares thereafter surrendered for
conversion shall be entitled to receive the number of Common Equity Shares that
such holder would have owned or have been entitled to receive after the
happening of any of the events described above as if such Series D Equity Shares
had been converted immediately prior to the record date in the case of a
dividend or distribution or the effective date in the case of a subdivision,
combination or reclassification. An adjustment made pursuant to this
subparagraph (i) shall become effective immediately after the opening of
business on the Business Day next following the record date (except as provided
in paragraph (h) below) in the case of a dividend or distribution and shall
become effective immediately after the opening of business on the Business Day
next following the effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Equity Shares entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Equity Shares at a price per share less than
95% (100% if a stand-by underwriter is used and charges the Corporation a
commission) of the Fair Market Value per Common Share on the record date for the
determination of shareholders entitled to receive such rights, options or
warrants, then the Conversion Price in effect at the opening of business on the
Business Day next following such record date shall be adjusted to equal the
price determined by multiplying (A) the Conversion Price in effect immediately
prior to the opening of business on the Business Day next following the date
fixed for such determination by (B) a fraction, the numerator of which shall be
the sum of (x) the number of Common Equity Shares outstanding on the close of
business on the date fixed for such determination and (y) the number of shares
that the aggregate proceeds to the Corporation from the exercise of such rights,
options or warrants for Common Equity Shares would purchase at 95% of such Fair
Market Value (or 100% in the case of a stand-by underwriting), and the
denominator of which shall be the sum of (x) the number of
<PAGE>
19
Common Equity Shares outstanding on the close of business on the date fixed for
such determination and (y) the number of additional Common Equity Shares offered
for subscription or purchase pursuant to such rights, options or warrants. Such
adjustment shall become effective immediately after the opening of business on
the day next following such record date (except as provided in paragraph (h)
below). In determining whether any rights, options or warrants entitle the
holders of Common Equity Shares to subscribe for or purchase Common Equity
Shares at less than 95% of such Fair Market Value (or 100% in the case of a
stand-by underwriting), there shall be taken into account any consideration
received by the Corporation upon issuance and upon exercise of such rights,
options or warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors whose determination shall be conclusive. To
the extent that Common Equity Shares are not delivered pursuant to such rights,
options or warrants, upon the expiration or termination of such rights, options
or warrants, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect had the adjustments made upon the issuance of such
rights, options or warrants be made on the basis of delivery of only the number
of Common Equity Shares actually delivered. In the event that such rights,
options or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights,
options or warrants had not been fixed.
(iii) If the Corporation shall distribute to all holders of its Common
Equity Shares any securities of the Corporation (other than Common Equity
Shares) or evidence of its indebtedness or assets (excluding cumulative cash
dividends or distributions paid with respect to the Common Equity Shares after
December 31, 1997) which are not in excess of the following: the sum of (A) the
Corporation's cumulative undistributed Funds from Operations at December 31,
1997, plus (B) the cumulative amount of Funds from Operations, as determined by
the Board of Directors, after December 31, 1997, minus (C) the cumulative amount
of dividends accrued or paid in respect of the Series D Equity Shares or any
other
<PAGE>
20
class or series of preferred stock of the Corporation after the Issue Date)
or rights, options or warrants to subscribe for or purchase any of its
securities (excluding those rights, options and warrants issued to all
holders of Common Equity Shares entitling them for a period expiring within
45 days after the record date referred to in subparagraph (ii) above to
subscribe for or purchase Common Equity Shares, which rights and warrants
are referred to in and treated under subparagraph (ii) above) (any of the
foregoing being hereinafter in this subparagraph (iii) collectively called
the "Securities" and individually a "Security"), then in each such case the
---------- --------
Conversion Price shall be adjusted so that it shall equal the price
determined by multiplying (x) the Conversion Price in effect immediately
prior to the close of business on the date fixed for the determination of
shareholders entitled to receive such distribution by (y) a fraction, the
numerator of which shall be the Fair Market Value per Common Share on the
record date mentioned below less the then fair market value (as determined
by the Board of Directors, whose determination shall be conclusive) of the
portion of the Securities or assets or evidences of indebtedness so
distributed or of such rights, options or warrants applicable to one Common
Equity Share, and the denominator of which shall be the Fair Market Value
per Common Share on the record date mentioned below. Such adjustment shall
become effective on the date of distribution retroactive to the opening of
business on the Business Day next following (except as provided in
paragraph (h) below) the record date for the determination of shareholders
entitled to receive such distribution. For the purposes of this
subparagraph (iii), the distribution of a Security, which is distributed
not only to the holders of the Common Equity Shares on the date fixed for
the determination of shareholders entitled to such distribution of such
Security, but also is distributed with each Common Equity Share delivered
to a Person converting a share of Series D Equity Shares after such
determination date, shall not require an adjustment of the Conversion Price
pursuant to this subparagraph (iii); provided that on the date, if any, on
--------
which a Person converting a Series D Equity Share would no longer be
entitled to receive such Security with a Common Equity Share (other than as
a result of the termination of all such Securities), a distribution of such
Securities shall be deemed to have occurred and the Conversion Price shall
be adjusted as provided in this subparagraph (iii) (and such day shall be
deemed to be "the date fixed for the determination of the shareholders
entitled to receive such distribution" and "the record date" within the
meaning of the two preceding sentences). If any dividend or distribution of
the type described in this paragraph (iii) is declared but not so paid or
made, the Conversion Price shall again be
<PAGE>
21
adjusted to the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
Rights or warrants distributed by the Corporation to all holders of
Common Equity Shares entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are deemed
-------------
to be transferred with such shares of Common Equity Shares; (ii) are not
exercisable; and (iii) are also issued in respect of future issuances of
Common Equity Shares, shall be deemed not to have been distributed for
purposes of this subparagraph (iii) (and no adjustment to the Conversion
Price under this subparagraph (iii) will be required) until the occurrence
of the earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant shall
become exercisable to purchase different securities, evidences of
indebtedness or other assets or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to a new
right or warrant (and a termination or expiration of the existing right or
warrant without exercise by the holder thereof to the extent not
exercised). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto,
that resulted in an adjustment to the Conversion Price under this
subparagraph (iii), (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution (but not a
distribution paid exclusively in cash), equal to the per share redemption
or repurchase price received by a holder of Common Equity Shares with
respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Common Equity Shares as of the
date of such redemption or repurchase, and (2) in the case of such rights
or warrants all of which shall have expired or been terminated without
exercise, the Conversion Price shall be readjusted as if such rights and
warrants had never been issued.
<PAGE>
22
(iv) In case a tender or exchange offer (which term shall not include
open market repurchases by the Corporation) made by the Corporation or any
subsidiary or controlled Affiliate of the Corporation for all or any
portion of the Common Equity Shares shall expire and such tender or
exchange offer shall require the payment by the Corporation or such
subsidiary or controlled Affiliate of consideration per Common Equity Share
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), at the last time (the "Expiration
----------
Time") tenders or exchanges may be made pursuant to such tender or exchange
----
offer, that exceeds the Current Market Price per Common Share on the
Trading Day next succeeding the Expiration Time, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately prior to the effectiveness of
the Conversion Price reduction contemplated by this subparagraph, by a
fraction of which the numerator shall be the number of Common Equity Shares
outstanding (including any tendered or exchanged shares) at the Expiration
Time, multiplied by the Current Market Price per Common Share on the
Trading Day next succeeding the Expiration Time, and the denominator shall
be the sum of (A) the fair market value (determined as aforesaid) of the
aggregate consideration payable to shareholders based upon the acceptance
(up to any maximum specified in the terms of the tender or exchange offer)
of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any maximum, being
referred to as the "Purchased Shares") and (B) the product of the number of
----------------
Common Equity Shares outstanding (less any Purchased Shares) at the
Expiration Time and the Current Market Price per Common Share on the
Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following
the Expiration Time. In the event the Corporation or any subsidiary or
controlled Affiliate is obligated to purchase shares pursuant to any such
tender offer, but the Corporation or such subsidiary or controlled
Affiliate is permanently prevented by applicable law from effecting any
such purchases, or all such purchases are rescinded, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such tender offer had not been made.
(v) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least
1% in such
<PAGE>
23
price; provided, however, that any adjustments that by reason of this
-------- -------
subparagraph (v) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment until made; and provided,
--------
further, that any adjustment shall be required and made in accordance with
-------
the provisions of this Section 6 (other than this subparagraph (v)) not
later than such time as may be required in order to preserve the tax-free
nature of a distribution to the holders of Common Shares. Notwithstanding
any other provisions of this Section 6, the Corporation shall not be
required to make any adjustment of the Conversion Price for the issuance of
any Common Equity Shares pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the
Corporation and the investment of additional optional amounts in Common
Equity Shares under such plan. All calculations under this Section 6 shall
be made to the nearest cent (with $.005 being rounded upward) or to the
nearest one-hundredth of a share (with .005 of a share being rounded
upward), as the case may be. Anything in this paragraph (d) to the contrary
notwithstanding, the Corporation shall be entitled, to the extent permitted
by law, to make such reductions in the Conversion Price, in addition to
those required by this paragraph (d), as it in its discretion shall
determine to be advisable in order that any share dividends, subdivision of
shares, reclassification or combination of shares, distribution of rights
or warrants to purchase shares or securities, or distribution of other
assets (other than cash dividends) hereafter made by the Corporation to its
shareholders shall not be taxable. To the extent permitted by applicable
law, the Corporation from time to time may reduce the Conversion Price by
any amount for any period of time if the period is at least 20 days, the
reduction is irrevocable during the period and the Board of Directors shall
have made a determination that such reduction would be in the best
interests of the Corporation, which determination shall be conclusive.
Whenever the Conversion Price is reduced pursuant to the preceding
sentence, the Corporation shall mail to the holder of each Series D Equity
Share at his or her last address appearing on the share register a notice
of reduction prior to the date the reduced Conversion Price takes effect
and such notice shall state the reduced Conversion Price and the period
during which it will be in effect.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, self
tender offer for 40% or more of its Common Equity Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Equity Shares and excluding any transaction as to which subparagraph (d)(i) of
this Section 6 applies) (each of the foregoing being
<PAGE>
24
referred to herein as a "Transaction"), in each case as a result of which all or
------------
substantially all of the Common Equity Shares are converted into the right to
receive different securities or other property (including cash or any
combination thereof), each Series D Equity Share which is not redeemed or
converted into the right to receive different securities or other property prior
to such Transaction shall thereafter be convertible, in lieu of Common Equity
Shares into the kind and amount of different securities and other property
(including cash or any combination thereof) receivable upon the consummation of
such Transaction by a holder of that number of Common Equity Shares into which
one Series D Equity Share was convertible immediately prior to such Transaction,
assuming such holder of Common Equity Shares (i) is not a Person with which the
Corporation consolidated or into which the Corporation merged or which merged
into the Corporation or to which such sale or transfer was made, as the case may
be ("Constituent Person"), or an Affiliate of a Constituent Person and (ii)
------------------
failed to exercise his rights of election, if any, as to the kind or amount of
shares, securities and other property (including cash) receivable upon such
Transaction (provided that if the kind or amount of shares, securities and other
property (including cash) receivable upon such Transaction is not the same for
each Common Share held immediately prior to such Transaction by other than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-Electing Share"), then for the
------------------
purpose of this paragraph (e) the kind and amount of shares, securities and
other property (including cash) receivable upon such Transaction by each Non-
Electing Share shall be deemed to be the kind and amount so receivable per share
by holders of a plurality of the Non-Electing Shares). The Corporation shall
not be a party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this paragraph (e), and it shall not consent
or agree to the occurrence of any Transaction until the Corporation has entered
into an agreement with the successor or purchasing entity, as the case may be,
for the benefit of the holders of the Series D Equity Shares that will contain
provisions enabling the holders of the Series D Equity Shares that remain
outstanding after such Transaction to convert into the consideration received by
holders of Common Equity Shares at the Conversion Price in effect immediately
prior to such Transaction. The provisions of this paragraph (e) shall similarly
apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Equity Shares (other than cash dividends or
distributions paid with respect to the Common Equity Shares after December
31, 1997 not in excess of
<PAGE>
25
the sum of the Corporation's cumulative undistributed Funds from Operations
at December 31, 1997, plus the cumulative amount of Funds from Operations,
as determined by the Board of Directors, after December 31, 1997, minus the
cumulative amount of dividends accrued or paid in respect of the Series D
Equity Shares or any other class or series of preferred stock of the
Corporation after the Issue Date); or
(ii) the Corporation shall authorize the granting to all holders of
Common Equity Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or warrants;
or
(iii) there shall be any reclassification of the Common Equity Shares
(other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or merger to which the Corporation is a party
(other than a merger in which the Corporation is the surviving entity) and
for which approval of any shareholders of the Corporation is required, or a
statutory share exchange, or a self tender offer by the Corporation for all
or substantially all of its outstanding Common Shares or the sale or
transfer of all or substantially all of the assets of the Corporation as an
entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series D Equity Shares at their addresses
as shown on the records of the Corporation, as promptly as possible, but at
least 10 days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Equity
Shares of record to be entitled to such dividend, distribution or rights,
options or warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Equity
Shares of record shall be entitled to exchange their Common Equity Shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, statutory share exchange, sale, transfer, liquidation,
dissolution or winding up.
<PAGE>
26
Failure to give or receive such notice or any defect therein shall not affect
the legality or validity of the proceedings described in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment and shall
mail such notice of such adjustment of the Conversion Price to the holder of
each share of Series D Equity Shares at such holder's last address as shown on
the records of the Corporation.
(h) In any case in which paragraph (d) of this Section 6 provides that an
adjustment shall become effective on the day next following the record date for
an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any share of Series D Equity Shares converted after
such record date and before the occurrence of such event the additional Common
Equity Shares issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Equity Shares issuable upon such
conversion before giving effect to such adjustment and (B) paying to such holder
any amount of cash in lieu of any fraction pursuant to paragraph (c) of this
Section 6.
(i) There shall be no adjustment of the Conversion Price in case of
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6. If
any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common Equity
Shares, other than action described in this Section 6, that in the opinion of
the Board of Directors would materially and adversely affect the conversion
rights of the holders of the Series D Equity Shares, the Conversion Price for
the Series D Equity Shares may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors, in its sole
discretion, may determine to be equitable in the circumstances.
<PAGE>
27
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Equity Shares, for the purpose of effecting conversion of
the Series D Equity Shares, the full number of Common Equity Shares deliverable
upon the conversion of all outstanding Series D Equity Shares not theretofore
converted. For purposes of this paragraph (k), the number of Common Shares that
shall be deliverable upon the conversion of all outstanding Series D Preferred
Shares shall be computed as if at the time of computation all such outstanding
shares were held by a single holder.
Any Common Equity Shares issued upon conversion of the Series D Equity Shares
shall be validly issued, fully paid and non-assessable. Before taking any
action that would cause an adjustment reducing the Conversion Price below the
then-par value of the Common Equity Shares deliverable upon conversion of the
Series D Equity Shares, the Corporation will take any action that, in the
opinion of its counsel, may be necessary in order that the Corporation may
validly and legally issue fully paid and (subject to any customary qualification
based upon the nature of a real estate investment trust) non assessable Common
Equity Shares at such adjusted Conversion Price.
The Corporation shall use its best efforts to list the Common Shares required
to be delivered upon conversion of the Series D Preferred Shares, prior to such
delivery, upon each national securities exchange, if any, upon which the
outstanding Common Shares are listed at the time of such delivery.
The Corporation shall use its best efforts to comply with all federal and
state securities laws and regulations thereunder in connection with the issuance
of any securities that the Corporation shall be obligated to deliver upon
conversion of the Series D Equity Shares. The certificates evidencing such
securities shall bear such legends restricting transfer thereof in the absence
of registration under applicable securities laws or an exemption therefrom as
the Corporation may in good faith deem appropriate.
(l) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of Common Equity
Shares or other securities or property on conversion of the Series D Equity
Shares pursuant hereto; provided, however, that the Corporation shall not be
-------- -------
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of Common Shares or other securities or property in a
name other than that of the holder of the Series D Equity Shares
<PAGE>
28
to be converted, and no such issue or delivery shall be made unless and until
the Person requesting such issue or delivery has paid to the Corporation the
amount of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
Section 7. Change of Control. (a) If a Change of Control (as defined
-----------------
below) occurs (a "Change of Control Repurchase Event"), the holders of Series D
----------------------------------
Equity Shares shall have the right to require the Corporation, to the extent the
Corporation shall have funds legally available therefor, to redeem any or all of
the Series D Equity Shares held by such holder at a repurchase price payable in
cash (the "Change of Control Repurchase Payment") in an amount equal to 105% of
------------------------------------
the Liquidation Preference thereof, plus accrued and unpaid dividends whether or
not declared, if any, to the date of repurchase or the date payment is made
available (the "Change of Control Date"), pursuant to the offer described in
----------------------
subsection (b) below (the "Change of Control Repurchase Offer").
- -------------- ----------------------------------
(b) Within 15 days following the Corporation becoming aware that a Change of
Control Repurchase Event has occurred, the Corporation shall mail by first class
mail or recognized overnight courier a notice to the each holder of Series D
Equity Shares stating (A) that a Change of Control Repurchase Event has occurred
and that such holder has the right to require the Corporation to repurchase any
or all of the Series D Equity Shares then held by such bolder, (B) the date of
repurchase (which shall be a Business Day, no earlier than 30 days and no later
than 60 days from the date such notice is mailed, or such later date as may be
necessary to comply with the requirements of the Exchange Act), (C) the
repurchase price and (D) the instructions determined by the Corporation,
consistent with this subsection, that such investor must follow in order to have
the Series D Equity Shares repurchased.
(c) On the Change of Control Repurchase Date, the Corporation, to the extent
lawful, shall accept for payment Series D Equity Shares or portions thereof
tendered by such holder pursuant to the Change of Control Repurchase Offer and
promptly by wire transfer of immediately available funds to such holder, as
directed by such holder, send an amount equal to the Change of Control
Repurchase Payment in respect of all Series D Equity Shares or portions thereof
so tendered.
(d) Notwithstanding anything else herein, to the extent they are applicable
to any Change of Control Repurchase Offer, the Corporation will comply with any
federal and
<PAGE>
29
state securities laws, rules and regulations and all time periods and
requirements shall be adjusted accordingly.
(e) For purposes hereof, "Change of Control" means the occurrence of any of
-----------------
the following: (i) the first acquisition, directly or indirectly, by any
individual or entity or group (as such term is used in Section 13(d)(3) of the
Exchange Act) of beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act, except that such individual or entity shall be deemed to have
beneficial ownership of all shares that any such individual or entity has the
right to acquire, whether such right is exercisable immediately or only after
passage of time) of more than 25% of the Corporation's outstanding stock with
voting power, under ordinary circumstances, to elect Directors of the
Corporation, (ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Corporation (together with any new Directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Corporation was approved by a vote of 66 2/3% of the Directors of the
Corporation then still in office who were either Directors at the beginning of
such period, or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office of the Corporation; and (iii) (A) the Corporation
consolidating with or merging into another entity or conveying, transferring or
leasing all or substantially all of its assets (including, but not limited to,
real property investments) to any individual or entity, or (B) any entity
consolidating with or merging into the Corporation, which in either event (A) or
(B) is pursuant to a transaction in which the outstanding voting stock of the
Corporation is reclassified or changed into or exchanged for cash, securities or
other property; provided, however, that the events described in clauses (i)(ii)
-------- -------
and (iii) shall not be deemed to be a Change of Control (a) in the case of an
event described in clause (iii), if the sole purpose of such event is that the
Corporation is seeking to change its domicile or to convert from a corporation
to a trust or vice versa; (b) in the case of an event described in clause (iii),
if the holders of the exchanged securities of the Corporation immediately after
such transaction beneficially own at least a majority of the securities of the
merged or consolidated entity normally entitled to vote in elections of
Directors of the Corporation; (c) if any of WHL or its wholly-owned subsidiaries
remain as manager of the Corporation's properties and remains as adviser of the
Corporation, in each case, in a manner substantially similar to that on date
hereof; or (d) if the Change of Control results solely from the purchase or
other acquisition of equity securities by WHL or its wholly-owned subsidiaries,
Westfield America Trust, the Lowy Family or the Investor or the sale
<PAGE>
30
of equity securities by WHL or any of its wholly-owned subsidiaries or Westfield
America Trust.
Section 8. Redemption at the Option of the Holder. (a) At any time after
--------------------------------------
__________, 2008,/2/ the holders of Series D Equity Shares thereof shall have
the right at any time that the Corporation's Common Shares has a Current Market
Price at or below and the Conversion Price per share, to require the
Corporation, to the extent the Corporation shall have funds legally available
therefor, to redeem any or all of the Series D Equity Shares held by such holder
at a repurchase price payable, at the option of the Corporation, in either (i)
cash, or (ii) such number of Common Equity Shares as shall have a Current Market
Price in the aggregate on the day prior to the day such holder gives notice
pursuant to Section 8(b) of its intention to redeem, equal to in either case,
100% of the Liquidation Preference thereof plus accrued and unpaid dividends
whether or not declared, if any, to the date of repurchase or the date payment
is made available (in the aggregate, the "Redemption Payment").
------------------
(b) Notwithstanding paragraph (a) of this Section 8, in the event that WHL
and its subsidiaries and the trustee of Westfield America Trust on behalf of
Westfield America Trust vote to approve the conversion of the Series D Equity
Shares into Common Equity Shares at a meeting of shareholders at which such
proposal is raised, but the shareholders of the Corporation as a whole reject
the foregoing proposal, then from and after the later of such rejection date and
the second anniversary of the Issue Date, the Series D Equity Stock shall be
redeemable at the option of the holder, to the extent that the Corporation shall
have funds legally available therefor, at a redemption price payable in cash
equal to the product of (a) the Series D Common Equivalent Factor times (b) the
Current Market Price on the date of the notice provided pursuant to paragraph
(c) below, plus all accumulated, accrued and unpaid dividends whether or not
declared, if any, to the date of repurchase or the date payment is made
available.
(c) For purposes of this Section 8, redemption at the option of the holder
shall be deemed to occur upon receipt by the Corporation of written notice that
the holder of Series D Equity Shares wishes to tender shares to be redeemed.
The holders of such shares to be redeemed shall then have 30 days from the date
of such notice to deliver such shares to the Transfer Agent. Upon the surrender
of the certificate or certificates of Series D Equity Shares to be redeemed,
duly endorsed or assigned to the Corporation or in blank, at the office of the
Transfer Agent, the Corporation shall promptly, either (i) by
- ----------------------------
/2/. This date is the tenth anniversary of the Closing hereunder.
<PAGE>
31
wire transfer of immediately available funds to such holder, as directed by such
holder, send an amount equal to the Redemption Payment in respect of all Series
D Equity Shares or portions thereof so tendered or (ii) issue and deliver to
such holder, or on his or her written order, a certificate or certificates for
the number of full Common Equity Shares issuable in respect of all Series D
Equity Shares or portions thereof so tendered.
Section 9. Shares To Be Retired. All Series D Equity Shares which shall
--------------------
have been issued and reacquired in any manner by the Corporation shall be
restored to the status of authorized but unissued preferred stock, without
discretion as to class or series, and subject to applicable limitations set
forth in the Articles may thereafter be reissued as shares of any series of
preferred stock.
Section 10. Ranking. Any class or series of stock of the Corporation shall
-------
be deemed to rank:
(a) prior to the Series D Preferred Shares, as to the payment of dividends
and as to distribution of assets upon liquidation, dissolution or winding up,
if the holders of such class or series shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of Series D
Preferred Shares, which shall expressly include the Corporation's non-voting
senior preferred stock, par value $1.00 per share;
(b) on a parity with the Series D Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof shall be different from
those of the Series D Preferred Shares, if the holders of such class or series
and the Series D Preferred Shares shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or priority
one over the other ("Parity Shares"), which shall expressly include the
-------------
Corporation's Series A Cumulative Redeemable Preferred Shares, Series B
Cumulative Redeemable Preferred Shares and Series C Cumulative Convertible
Preferred Stock;
<PAGE>
32
(c) junior to the Series D Preferred Shares, as to the payment of dividends
or as to the distribution of assets upon liquidation, dissolution or winding
up, if such class or series shall be Junior Shares; and
(d) junior to the Series D Preferred Shares, as to the payment of dividends
and as to the distribution of assets upon liquidation, dissolution or winding
up, if such class or series shall be Fully Junior Shares.
Section 11. Voting. So long as any Series D Equity Shares are outstanding,
------
in addition to any other vote or consent of shareholders required by law or by
the Articles, the affirmative vote of the holders of a majority of the Series D
Equity Shares, voting together as a class, given in person or by proxy, either
in writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions of the
Articles of Incorporation or this Certificate of Designation that materially
and adversely affects the voting powers, rights or preferences of the holders
of the Series D Equity Shares; or
(ii) Any merger or consolidation of the Corporation and another entity in
which the Corporation is not the surviving corporation and each holder of
Series D Equity Shares does not receive shares of the surviving corporation
with substantially similar rights, preferences and powers in the surviving
corporation as the Series D Equity Shares have with respect to the Corporation
(except for changes that do not materially and adversely affect the holders of
the Series D Equity Stock).
provided, however, that no such vote of the holders of Series D Equity Shares
-------- -------
shall be required if, at or prior to the time when such amendment, alteration
or repeal is to take effect, or when the issuance of any such prior shares or
convertible security is to be made, as the case may be, provision is made for
the redemption of all Series D Equity Shares at the time outstanding to the
extent such redemption is authorized by Section 5 of this Certificate of
Designation.
(iii) For purposes of the foregoing provisions of this Section 13, each
share of Series D Equity Shares shall have one (1) vote per share, except that
when any other series of Equity Shares shall have the right to vote with the
Series D Equity
<PAGE>
33
Shares as a single class on any matter, then the Series D Equity Shares and
such other series shall have with respect to such matters one (1) vote per
$180.00 (or less pursuant to Section 4(a)) of stated Liquidation Preference.
Except as otherwise required by applicable law or as set forth herein, the
Series D Equity Shares shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of
any corporate action.
Section 12. Record Holders. The Corporation and the Transfer Agent may deem
--------------
and treat the record holder of any Series D Preferred Shares as the true and
lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
Section 13. Title. This resolution shall be known and may be referred to as
-----
"A Resolution of the Board of Directors of Westfield America, Inc. Designating
Series D Preferred Shares and Fixing Preferences and Rights Thereof."
FURTHER RESOLVED, that the appropriate officers of the Corporation are hereby
authorized and directed to execute and acknowledge a certificate setting forth
these resolutions and to cause such certificate to be filed and recorded, all in
accordance with the requirements of Section 351.046 of the General and Business
Corporation Law of the State of Missouri, as amended.
<PAGE>
34
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President this 10 day of August, 1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
--------------------
Name: Peter S. Lowy
Title: Co-President
<PAGE>
35
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
I, Annie M. Gary, a notary public, do hereby certify that on this 6 day of
August, 1998, personally appeared before me Peter Lowy, and being first duly
sworn by me, declared that he is the Co-President of Westfield America, Inc.,
that he signed the foregoing document as Co-President of the corporation, and
that the statements therein contained are true.
[SEAL] /s/ Annie M. Gary
---------------------------------------
Notary Public
My Commission Expires: March 31, 2000
<PAGE>
EXHIBIT D
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES C-1 PREFERRED SHARES
AND FIXING PREFERENCES AND RIGHTS THEREOF"
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
Pursuant to the Provisions of Section 351.180 (7) of the
General and Business corporation Law of the State
of Missouri, as amended
I, the undersigned, Co-President of Westfield America, Inc., a Missouri
corporation (hereinafter sometimes referred to as the "Corporation"), hereby
-----------
certify as follows:
FIRST: that under the provisions of Article Fourth of the Restated
Articles of Incorporation, as amended, of the Corporation, the total number of
shares of all classes of capital stock which the Corporation may issue is
410,000,200 shares, of which (i) 200 shares shall be non-voting senior preferred
stock, par value $1.00 per share (the "Senior Preferred Shares"), (ii) 5,000,000
-----------------------
shares shall be Preferred Shares, with par value of $1.00 per share (the
"Preferred Shares"), 940,000 of which have been designated as Series A Preferred
- -----------------
Shares, with liquidation value of $100 per share (the "Series A Preferred
------------------
Shares"), 400,000 of which have been designated as Series B Preferred Shares,
with a liquidation value of $100 per share (the "Series B Preferred Shares"),
-------------------------
416,667 of which have been designated as Series C Preferred Shares, with a
Liquidation value of $180 per share (the "Series C Preferred Shares") and
-------------------------
694,445 of which have been designated as Series D Preferred Shares, with a
liquidation value of $180 per share (the "Series D Preferred Shares"), (iii)
-------------------------
200,000,000 shall be shares of common stock, par value $.01 per share (the
"Common Shares"), (iv) 205,000,000 shall be shares of excess stock, par value
- --------------
$.01 per share (the "Excess Shares"). Any Excess Shares which are issued with
-------------
respect to Common Stock shall be "Excess Common Shares" and, together with the
--------------------
Common Shares, the "Common Equity Shares" and any Excess Shares which are issued
--------------------
with respect to the Preferred Shares shall be "Excess Preferred Shares" and,
-----------------------
together with the Preferred Shares, the "Preferred Equity Shares" and under said
-----------------------
Articles of Incorporation (as amended, the "Articles of Incorporation"), the
-------------------------
shares of Preferred Stock are authorized to be issued by the Board of Directors
and the Board of Directors is expressly authorized to
<PAGE>
determine in the Resolution, the designation, powers, rights, preferences and
qualifications, limitations or restrictions, not fixed and determined by the
Articles of Incorporation.
SECOND: That the Board of Directors of the Corporation pursuant to
the authority so vested in it by Article Fourth of the Certificate of
Incorporation, and in accordance with the provisions of Section 351.180 (7) of
the General and Business Corporation Law of Missouri, as amended, adopted on
December 14, 1998 the following resolution creating a series of Preferred Stock
designated as "Series C-1 Preferred Shares", which resolution has not been
amended, modified, rescinded or revoked and is in full force and effect on the
date hereof.
"RESOLUTION OF BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING 'SERIES C-1 PREFERRED
SHARES' AND FIXING PREFERENCES AND RIGHTS THEREOF"
BE IT RESOLVED, that pursuant to authority expressly granted to and
vested in the Board of Directors of Westfield America, Inc., hereinafter called
the "Corporation", by the provisions of the Articles of Incorporation, as
amended, the Board of Directors of the Corporation hereby fixes the designation,
voting powers, rights on liquidation or dissolution, and other preferences and
rights, and the qualifications, limitations or restrictions thereof, of the
shares of such series (in addition to the designations, preferences and relative
rights, and the qualifications, limitations or restrictions thereof set forth in
the Articles of Incorporation which are applicable to the Series C-1 Preferred
Shares) as follows:
Section 1. Number of Shares, Designation and Ranking. This class of
-----------------------------------------
preferred stock shall be designated as Series C-1 Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute such
series shall not be more than 138,889 shares, par value $1.00 per share, which
number may be decreased (but not below the aggregate number thereof then
outstanding and/or which have been reserved for issuance) from time to time by
the Board of Directors and is hereafter in this resolution called the "Series C-
--------
l Preferred Shares". Each Series C-1 Preferred Share shall be identical in all
- ------------------
respects to each other Series C-1 Preferred Share. Each Excess Series C-1
Preferred Share shall be identical in all respects to each other Excess Series
C-1 Preferred Share, and except as otherwise provided herein, shall be identical
in all respects to each Series C-1 Preferred Share (the Series C-1 Preferred
Shares together with the Excess Series C-1 Preferred Shares being hereinafter
referred to as the "Series C-1 Equity Shares").
------------------------
2
<PAGE>
Section 2. Definitions. For purposes of the Series C-1 Preferred
-----------
Shares, the following terms shall have the meanings indicated:
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall
---------
mean a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL") Westfield America Trust, Frank
---
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
----
Family").
- ------
"Base Rate" shall mean an annual dividend per Series C-1 Equity Share
---------
equal to 8.5% of the Liquidation Preference per Series C-1 Equity Share.
"Board of Directors" shall mean the Board of Directors of the
------------------
Corporation or any committee authorized by such Board of Directors to perform
any of its responsibilities with respect to the Series C-1 Preferred Shares.
"Business Day" shall mean any day, other than a Saturday or Sunday,
------------
that is neither a legal holiday nor a day on which banking institutions in New
York City, New York are authorized or required by Law, regulation or executive
order to close.
"Call Date" shall mean the date specified in the notice to holders
---------
required under Section 5(d) as the Call Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Common Shares" shall mean the Corporation's common stock, par value
-------------
$0.01 per share.
"Consolidated EBITDA" for any quarter shall mean the consolidated net
-------------------
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the
Securities and Exchange Commission, increased by the sum of the following
(without duplication):
a. the Corporation's pro rata share of EBITDA from unconsolidated
real estate partnerships calculated in a manner consistent with
this definition of Consolidated EBITDA,
3
<PAGE>
b. all income taxes paid or accrued according to GAAP for such
quarter (other than income taxes attributable to extraordinary,
usual or non-recurring gains or losses except to the extent that
such gains were not included in Consolidated EBITDA),
c. all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of
deferred financing fees or amortization of original issue
discount, but excluding capitalized interest),
d. depreciation and depletion reflected in such net income,
e. amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only
to the extent that such amounts have not been previously included
in the amount of Consolidated EBITDA pursuant to clause (c)
above) goodwill, other intangibles and management fees, and
f. any other non-cash charges, to the extent deducted from
consolidated net income (including, but not limited to, income
allocated to minority interests).
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
--------------------------
a. the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner
consistent with this definition of Consolidated Fixed Charges,
b. all interest expense paid or accrued in accordance with GAAP for
such quarter (including, without duplication, financing fees and
amortization of deferred financing fees or amortization of
original issue discount),
c. dividend and distribution requirements with respect to preferred
stock and any other preferred securities for such quarter (not
including any portion of preferred stock dividends the
calculation of which is based on the dividend paid in such
quarter to the holders of Common Shares), whether or not declared
or paid,
4
<PAGE>
d. regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity) and
e. all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e).
------------------
"Conversion Date" shall have the meaning set forth in Section 6(a).
---------------
"Conversation Price" shall mean the conversion price per Common Share
------------------
for which the Series C-1 Preferred Shares is convertible, as such Conversion
Price may be adjusted pursuant to Section 6. The initial conversion price shall
be $18.00.
"Current Market Price" of publicly traded Common Shares or any other
--------------------
class of Stock or other security of the Corporation or any other issuer for any
day shall mean the last reported sales price, regular way, on such day, or, if
no sale takes place on such day, the average of the reported closing bid and
asked prices on such day, regular way, in either case as reported on the New
York Stock Exchange ("NYSE") or, if such security is not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
- ---------
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member after regularly making a market in such security
selected for such purpose by the Board of Directors.
"Dividend Payment Date" shall mean (i) for any Dividend Period with
---------------------
respect to which the Corporation pays a dividend on the Common Equity Shares,
the date on which such dividend is paid, or (ii) for any Dividend Period with
respect to which the Corporation does not pay a dividend on the Common Equity
Shares, a date to be set by the Board of Directors, which date shall not be
later than the thirtieth calendar day after the end of the applicable Dividend
Period.
"Dividend Periods" shall mean quarterly dividend periods commencing on
----------------
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
with respect to
5
<PAGE>
any Series C-1 Equity Shares (other than the initial Dividend Period, which
shall commence on the Issue Date for such Series C-1 Equity Shares and end on
and include the last day of the calendar quarter immediately following such
Issue Date, and other than the Dividend Period during which any Series C-1
Equity Shares shall be redeemed pursuant to Section 5 or converted pursuant to
Section 6, which shall end on and include the Call Date or Conversion Date with
respect to the Series C-1 Equity Shares being redeemed or converted, as
applicable).
"Expiration Time" shall have the meaning set forth in Section
---------------
6(d)(iv).
"Fair Market Value" shall mean the average of the daily Current Market
-----------------
Prices of a Common Share on the five (5) consecutive Trading Days selected by
the Corporation commencing not more than 20 Trading Days before, and ending not
later than, the earlier of the day in question and the day before the "ex date"
with respect to the issuance or distribution requiring such computation. The
term "ex date," when used with respect to any issuance or distribution, means
the first day on which the Common Shares trade regular way, without the right to
receive such issuance or distribution, on the exchange or in the market, as the
case may be, used to determine that day's Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
-------------------------------
Section 3(a).
"Fully Junior Shares" shall mean the Common Shares and any other class
-------------------
or series of stock of the Corporation now or hereafter issued and outstanding
over which the Series C-1 Preferred Shares has preference or priority in both
(i) the payment of dividends and (ii) the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
"Funds from Operations" shall mean net income (loss) (computed in
---------------------
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment
Trusts (NAREIT), in its White Paper dated March 1995, as such definitions may be
modified from time to time.
6
<PAGE>
"Investor" shall mean Security Capital Preferred Growth Incorporated
--------
and controlled Affiliates thereof.
"Issue Date" shall mean the date on which the Series C-1 Preferred
----------
Shares are issued.
"Junior Shares" shall mean the Common Shares and any other class or
-------------
series of stock of the Corporation now or hereafter issued and outstanding over
which the Series C-1 Preferred Shares has preference or priority in the payment
of dividends or in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
"Non-Electing Shares" shall have the meaning set forth in Section
-------------------
6(e).
"Operating Partnership" shall mean Westfield America Limited
---------------------
Partnership, a Delaware limited partnership.
"Parity Shares" shall have the meaning set forth in Section 10(b).
-------------
"Person" shall mean any individual, firm, partnership, corporation,
------
limited liability company, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Purchased Shares" shall have the meaning set forth in Section
----------------
6(d)(iv).
"REIT Termination Event" shall mean the earliest to occur of:
----------------------
(i) the filing of a federal income tax return by the Corporation
for any taxable year on which the Corporation does not compute
its income as a real estate investment trust;
(ii) the approval by the shareholders of the Corporation of a
proposal for the Corporation to cease to qualify as a real
estate investment trust;
(iii) a determination by the Board of Directors of the Corporation,
based on the advice of counsel, that the Corporation has ceased
to qualify as a real estate investment trust; or
7
<PAGE>
(iv) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real
estate investment trust.
"Securities" and "Security" shall have the meanings set forth in
---------- --------
Section 6(d)(iii).
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Series C-1 Preferred Shares" shall have the meaning given such term
---------------------------
in the preamble to this Certificate of Designation.
"set apart for payment" shall be deemed to include, without any action
---------------------
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of stock of the
Corporation; provided, however, that if any funds for any class or series of
-------- -------
Junior Shares or any class or series of stock ranking on a parity with the
Series C-1 Preferred Shares as to the payment of dividends are placed in a
separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series C-1
Preferred Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean any day on which the securities in question
-----------
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange on NASDAQ, or if such securities are not quoted
on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e).
-----------
"Transfer Agent" shall mean the Corporation, or such other agent or
--------------
agents of the Corporation as may be designated by the Board of Directors or
their designee as the transfer agent, registrar and dividend disbursing agent
for the Series C-1 Preferred Shares.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Articles.
8
<PAGE>
Section 3. Dividends.
---------
(a) Subject to the preferential rights of the holders of any Senior
Preferred Stock or Preferred Shares that rank senior in the payment of dividends
to the Series C-1 Equity Shares and subject to paragraph (b) of this Section 3,
the holders of Series C-1 Equity Shares shall be entitled to receive, when, as
and if declared by the Board of Directors, but only out of funds legally
available for the payment of dividends, cumulative preferential dividends
payable in cash to shareholders of record on the respective date, not exceeding
50 days preceding such dividend payment date, fixed for the purpose by the Board
of Directors in advance of payment of each particular dividend in an amount
equal to the greater of (A) the Base Rate per share per annuum and (B) an amount
per share equal to the Liquidation Preference of a Series C-1 Equity Share
(exclusive of accrued but unpaid dividends) divided by the Conversion Price (the
"Series C-1 Common Equivalent Factor") times the dollar amount of cash
-----------------------------------
dividends declared with respect to each Common Equity Share that does not result
in an adjustment to the Conversion Price pursuant to Subparagraph (d)(iii) of
Section 6 (such product, the "Series C-1 Common Equivalent Amount") for the same
-----------------------------------
annual period; provided, however, that if as a result of the quarterly dividends
-------- -------
paid in accordance with the following sentence, the holders of Series C-1 Equity
Shares shall have received for any calendar year more dividends than such Series
C-1 Equity Shares shall be entitled under clauses (A) and (B) above (as
adjusted pursuant to the third and eighth sentences of this Section 3), the
dividends payable in respect of Series C-1 equity Shares in subsequent calendar
years shall be reduced to the extent of such overpayment. Subject to the
proviso of the preceding sentence of this Section 3 (a), the dividend paid in
respect of each quarterly period in each calendar year shall be determined as
follows (in each case, excluding any additional payment made pursuant to the
following sentence): (1) for the first quarter, the greater of 25 % of the Base
Rate per share and the Series C-1 Common Equivalent Amount for the same quarter;
(2) for the second quarter, an amount such that the aggregate amount to be
received per Series C-1 Equity Share in respect of the first two quarters of
such calendar year shall be the greater of 50% of the Base Rate per share and
the Series C-1 Common Equivalent Amount for the same two quarters; (3) for the
third quarter, an amount such that the aggregate amount to be received per
Series C-1 Equity Share in respect of the first three quarters of such calendar
year shall be the greater of 75 % of the Base Rate per share and the Series C-1
Common Equivalent Amount for the same three quarters; and (4) for the fourth
quarter, an amount such that the aggregate amount to be received per Series C-1
Equity Share in respect of such calendar year shall be the amount provided in
the preceding sentence of this Section 3(a). Notwithstanding the foregoing,
for any quarter in which a Fixed Charge Coverage Violation
9
<PAGE>
(as defined below) has occurred, the dividend payable per Series C-1 Equity
Share shall be 1.20 times the amount provided in the preceding sentence. A
-----
"Fixed Charge Coverage Violation" shall occur for any quarter that the ratio of
the Corporation's Consolidated EBITDA to its Consolidated Fixed Charges is below
1.40 to 1. The dividends shall begin to accrue as set forth above and shall be
fully cumulative from the first day of the applicable Dividend Period, whether
or not in any Dividend Period or Periods there shall be funds of the Corporation
legally available for the payment of such dividends, and shall be payable
quarterly, when, as and if declared by the Board of Directors, in arrears on
Dividend Payment Dates. Accumulated but unpaid dividends for any past quarterly
dividend periods may be declared and paid at any time, without reference to any
regularly scheduled quarterly dividend payment date, to holders of record on
such date, not exceeding 50 days preceding such dividend payment date, fixed for
the purpose by the Board of Directors in advance of payment of each particular
dividend. Any dividend payment made on Series C-1 Equity Shares shall first be
credited against the earliest accrued but unpaid dividend due with respect to
Series C-1 Equity Shares which remains payable. Beginning with the quarter in
which a REIT Termination Event occurs, all dividends payable per Series C-1
Equity Share pursuant to this Section shall be multiplied by 2.5.
(b) The initial Dividend Period for the Series C-1 Equity Shares will
include a partial dividend for the period from the Issue Date until the last day
of the calendar quarter immediately following such Issue Date. The amount of
dividends payable for such initial period, or any other period shorter than a
full quarterly Dividend Period, on the Series C-1 Equity Shares shall be
computed by dividing the number of days in such period by 90 and multiplying the
result by the Series C-1 Preferred dividend determined in accordance with
Section 3(a). Holders of Series C-1 Equity Shares shall not be entitled to any
dividends, whether payable in cash, property or shares, in excess of cumulative
dividends, as herein provided, on the Series C-1 Equity Shares. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the Series C-1 Equity Shares which may be in arrears.
(c) So long as any Series C-1 Equity Shares remain outstanding, no
dividends, except as described in the immediately following sentence, shall be
declared or paid or set apart for payment on any class or series of Parity
Shares for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series C-1 Equity Shares for
all Dividend Periods terminating on or prior to the dividend payment date on
such class or series of Parity Shares. When dividends are not paid in full or a
sum sufficient for such payment is not set
10
<PAGE>
apart, as aforesaid, all dividends declared upon Series C-1 Equity Shares and
all dividends declared upon any other class or series of Parity Shares shall be
declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series C-1 Equity Shares and accumulated and
unpaid on such Parity Shares.
(d) So long as any Series C-1 Equity Shares remain outstanding, no
dividends (other than dividends or distributions paid solely in Fully Junior
Shares, or options, warrants or rights to subscribe for or purchase, Fully
Junior Shares) shall be declared or paid or set apart for payment or other
distribution shall be declared or made or set apart for payment upon Junior
Shares, nor shall any Junior Shares be redeemed, purchased or otherwise acquired
(other than a redemption, purchase or other acquisition of Common Shares made
for purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking for the redemption of any Junior Shares) by the Corporation,
directly or indirectly (except by conversion into or exchange for Fully Junior
Shares), unless in each case the full cumulative dividends on all outstanding
Series C-1 Equity Shares and any other Parity Shares of the Corporation shall
have been or contemporaneously are declared and paid or declared and set apart
for payment for all Dividend Periods terminating on or prior to the date of
declaration or payment with respect to the Series C-1 Equity Shares and all
dividend periods terminating on or prior to the date of declaration or payment
with respect to such Parity Shares. Subject to the foregoing, and not
otherwise, such dividends and distributions may be declared by the Board of
Directors and paid on any Common Equity Shares from time to time out of any
funds legally available therefor, and the Series C-1 Equity Shares shall not be
entitled to participate in any such dividends, whether payable in cash stock or
otherwise.
(e) No distributions on Series C-1 Equity Shares shall be declared by the
Board of Directors or paid or set apart for payment by the Corporation at such
time as the terms and provisions of any agreement of the Corporation, including
any agreement relating to its indebtedness, prohibits such declaration, payment
or setting apart for payment or provides that such declaration, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment shall be restricted or
prohibited by law.
(f) In determining whether a distribution by dividend, redemption or other
acquisition of Shares or otherwise is permitted under Missouri law, no effect
shall be given to amounts that would be needed, if the Corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders
11
<PAGE>
whose preferential rights on dissolution are superior to those receiving the
distribution.
Section 4. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, subject to the prior preferences
and other rights of any series of stock ranking senior to the Series C-1
Preferred Shares upon liquidation, distribution or winding up of the
Corporation, before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
Junior Shares, the holders of the Series C-1 Equity Shares shall be entitled to
receive One Hundred Eighty Dollars ($180.00) (the "Liquidation Preference") per
----------------------
share of Series C-1 Equity Shares plus an amount equal to all dividends (whether
or not earned or declared) accrued and unpaid thereon to the date of
liquidation, dissolution or winding up of the affairs of the Corporation (any
such date, a "Series C-1 Liquidation Date") but such holders shall not be
---------------------------
entitled to any further payment; provided, that the dividend payable with
--------
respect to the Dividend Period containing the Series C-1 Liquidation Date shall
be equal to the dividend determined pursuant to Section 3 above for the
preceding Dividend Period times a fraction equal to the actual number of days
elapsed from the end date of the calendar quarter most recently contemplated to
the relevant Series C-1 Liquidation Date over 90 days. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of the Series
C-1 Equity Shares shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Shares, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series C-1 Equity Shares and any such other Parity Shares
ratably in accordance with the respective amounts that would be payable on such
Series C-1 Equity Shares and any such other Parity Shares if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, real
estate investment trusts or other entities, (ii) a sale, lease or conveyance of
all or substantially all of the Corporation's property or business or (iii) a
statutory share exchange shall not be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of shares of any series or class
or classes of stock ranking on a parity with (including the Parity Shares) or
prior to the Series C-1 Equity Shares upon Liquidation, dissolution or winding
up, upon any liquidation, dissolution or winding up of the Corporation, after
payment shall have
12
<PAGE>
been made in full to the holders of the Series C-1 Equity Shares, as provided in
this Section 4, the holders of Series C-1 Equity Shares shall have no other
claim to the remaining assets of the Corporation and any other series or class
or classes of Junior Shares shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the Series C-1 Equity
Shares shall not be entitled to share therein.
Section 5. Redemption at the Option of the Corporation.
-------------------------------------------
(a) The Series C-1 Equity Shares shall not be redeemable by the
Corporation prior to August 12, 2008. On and after August 12, 2008, the
Corporation, at its option, may redeem the Series C-1 Equity Shares, in whole at
any time or from time to time in part, in minimum increments of $10.0 million of
aggregate Liquidation Preference of such shares, out of funds legally available
therefor at a redemption price payable in cash equal to 100% of the Liquidation
Preference per Series C-1 Equity Shares (plus all accumulated, accrued and
unpaid dividends as provided in paragraph (b) below).
(b) Upon any redemption of Series C-1 Equity Shares pursuant to this
Section 5, the Corporation shall pay all accrued and unpaid dividends, if any,
thereon to the Call Date, without interest. If the Call Date falls after a
dividend payment record date and prior to the corresponding Dividend Payment
Date, then each holder of Series C-1 Equity Shares at the close of business on
such dividend payment record date shall be entitled to the dividend payable on
such shares on the corresponding Dividend Payment Date notwithstanding any
redemption of such shares before such Dividend Payment Date. Except as
provided above, the Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on Series C-1 Equity Shares called for
redemption.
(c) If full cumulative dividends on the Series C-1 Equity Shares and any
other class or series of Parity Shares of the Corporation have not been declared
and paid or declared and set apart for payment, the Series C-1 Equity Shares may
not be redeemed under this Section 5 in part and may not be redeemed unless the
Series C Equity Shares and Series C-2 Equity Shares (as defined below), if any,
are also redeemed in whole and the Corporation may not purchase or acquire
Series C Equity Shares, Series C-1 Equity Shares or Series C-2 Equity Shares, if
any, otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of Series C Equity Shares, Series C-1 Equity Shares and
Series C-2 Equity Shares, if any.
13
<PAGE>
(d) Notice of the redemption of any Series C-1 Equity Shares under this
Section 5 shall be mailed by first-class mail or recognized overnight courier to
each holder of record of Series C-1 Equity Shares to be redeemed at the address
of each such holder as shown on the Corporation's records, not less than 30 nor
more than 90 days prior to the Call Date. Neither the failure to mail any
notice required by this paragraph (d), nor any defect therein or in the mailing
thereof, to any particular holder, shall affect the sufficiency of the notice or
the validity of the proceedings for redemption with respect to the other
holders. Each such mailed notice shall state, as appropriate: (1) the Call
Date; (2) the number of Series C-1 Equity Shares to be redeemed and, if fewer
than all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (3) the redemption price; (4) the place
or places at which certificates for such shares are to be surrendered; (5) the
then-current Conversion Price; and (6) that dividends on the shares to be
redeemed shall cease to accrue on such Call Date except as otherwise provided
herein. Notice having been mailed as aforesaid, from and after the Call Date
(unless the Corporation shall fail to make available an amount of cash necessary
to effect such redemption), (i) except as otherwise provided herein, dividends
on the Series C-1 Equity Shares so called for redemption shall cease to accrue,
(ii) such shares shall no longer he deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of Series C-1 Equity Shares shall cease
(except the rights to receive the cash payable upon such redemption, without
interest thereon, upon surrender and endorsement of their certificates if so
required and to receive any dividends payable thereon). The Corporation's
obligation to provide cash in accordance with the preceding sentence shall he
deemed fulfilled if, on or before the Call Date, the Corporation shall deposit
with a bank or trust company that has an office in the Borough of Manhattan,
City of New York, and that has capital and surplus of at least $150,000,000,
necessary for such redemption, in trust, with irrevocable instructions that such
cash be applied to the redemption of the Series C-1 Equity Shares so called for
redemption. No interest shall accrue for the benefit of the holders of Series
C-1 Equity Shares to be redeemed on any cash so set aside by the Corporation.
Subject to applicable escheat laws, any such cash unclaimed at the end of two
years from the Call Date shall revert to the general funds of the Corporation,
after which reversion the holders of such shares so called for redemption shall
look only to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such shares shall be exchanged for any cash (without interest
thereon) for which such shares have been redeemed. If fewer than all the
outstanding Series C-1 Equity Shares
14
<PAGE>
are to be redeemed, shares to be redeemed shall be selected by the Corporation
from outstanding Series C-1 Equity Shares not previously called for redemption
pro rata (as nearly as may be), by lot or by any other method determined by the
Corporation in its sole discretion to be equitable. If fewer than all the Series
C-1 Equity Shares evidenced by any certificate are redeemed, then new
certificates evidencing the unredeemed shares shall be issued without cost to
the holder thereof.
Section 6. Conversion. Holders of Series C-1 Equity Shares shall have
----------
the right to convert all or a portion of such shares into Common Equity Shares,
as follows:
(a) Subject to and upon compliance with the provisions of this Section 6, a
holder of Series C-1 Preferred Shares or Excess Preferred Shares shall have the
right, at his or her option, at any time (such time being, the "Conversion
----------
Date"), to convert all or any portion of such shares into the number of fully
- ----
paid and non-assessable Common Shares or excess Common Shares obtained by
dividing the aggregate Liquidation Preference of such shares (inclusive of
accrued but unpaid dividends) by the Conversion Price (as in effect at the time
and on the date provided for in the last paragraph of paragraph (b) of this
Section 6) by surrendering such shares to be converted, such surrender to be
made in the manner provided in paragraph (b) of this Section 6; provided,
--------
however, that the right to convert shares called for redemption pursuant to
- -------
Section 5 shall terminate at the close of business on the fifth Business Day
prior to the Call Date fixed for such redemption, unless the Corporation shall
default in making payment of the cash payable upon such redemption under
Section 5.
(b) In order to exercise the conversion right, the holder of each share of
Series C-1 Equity Shares to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof irrevocably elects to convert such Series C-
1 Equity Shares. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such Series C-1 Equity Shares are registered,
each share surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the holder
or such holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).
Holders of Series C-1 Equity Shares at the close of business on a dividend
payment record date shall be entitled to receive the dividend payable on such
shares
15
<PAGE>
on the corresponding Dividend Payment Date notwithstanding the conversion
thereof following such dividend payment record date and prior to such Dividend
Payment Date. However, Series C-1 Equity Shares surrendered for conversion
during the period between the close of business on any dividend payment record
date and the opening of business on the corresponding Dividend Payment Date
(except shares converted after the issuance of notice of redemption with respect
to a Call Date during such period, such Series C-1 Equity Shares being entitled
to such dividend on the Dividend Payment Date) must be accompanied by payment of
an amount equal to the dividend payable on such shares on such Dividend Payment
Date. A holder of Series C-1 Equity Shares on a dividend payment record date who
(or whose transferee) tenders any such shares for conversion into Common Equity
Shares on the corresponding Dividend Payment Date will receive the dividend
payable by the Corporation on such Series C-1 Equity Shares on such date, and
the converting holder need not include payment of the amount of such dividend
upon surrender of Series C-1 Equity Shares for conversion. Except as provided
above, the Corporation shall make no payment or allowance for unpaid dividends,
whether or not in arrears, on converted shares or for dividends on the Common
Equity Shares issued upon such conversion.
As promptly as practicable after the surrender of certificates for Series
C-1 Equity Shares as aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, on his or her written order, a certificate or
certificates for the number of full Common Equity Shares issuable upon the
conversion of such shares in accordance with provisions of this Section 6, and
any fractional interest in respect of a Common Share arising upon such
conversion shall be settled as provided in paragraph (c) of this Section 6.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for Series C-1
Equity Shares shall have been surrendered and such notice shall have been
received by the Corporation as aforesaid (and if applicable, payment of an
amount equal to the dividend payable on such shares shall have been received by
the Corporation as described above), and the Person or Persons in whose name or
names any certificate or certificates for Common Equity Shares shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at such time on such date
unless the share transfer books of the Corporation shall be closed on that date,
in which event such Person or Persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such share transfer books are open, but such
16
<PAGE>
conversion shall be at the Conversion Price in effect on the date on which such
shares shall have been surrendered and such notice received by the Corporation.
(c) No fractional shares or scrip representing fractions of Common Equity
Shares shall be issued upon conversion of the Series C-1 Equity Shares. Instead
of any fractional interest in a Common Share that would otherwise be deliverable
upon the conversion of a Series C-1 Equity Share, the Corporation shall pay to
the holder of such share an amount in cash based upon the Current Market Price
of the Common Equity Shares of the Trading Day immediately preceding the date of
conversion. If more than one share shall be surrendered for conversion at one
time by the same holder, the number of full Common Equity Shares issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
Series C-1 Equity Shares so surrendered.
(d) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Corporation shall after the Issue Date (A) pay a dividend
or make a distribution on its Common Equity Shares in Common Equity Shares, (B)
subdivide its outstanding Common Equity Shares into a greater number of shares,
(C) combine its outstanding Common Equity Shares into a smaller number of shares
or (D) issue any shares of stock by reclassification of its Common Equity
Shares, the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of shareholders entitled to
receive such dividend or distribution or at the opening of business on the
Business Day next following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted so
that the holder of any Series C-1 Equity Shares thereafter surrendered for
conversion shall be entitled to receive the number of Common Equity Shares that
such holder would have owned or have been entitled to receive after the
happening of any of the events described above as if such Series C-1 Equity
Shares had been converted immediately prior to the record date in the case of a
dividend or distribution or the effective date in the case of a subdivisions
combination or reclassification. An adjustment made pursuant to this
subparagraph (i) shall become effective immediately after the opening of
business on the Business Day next following the record date (except as provided
in paragraph (h) below) in the case of a dividend or distribution and shall
become effective immediately after the opening of business on the Business Day
next following the effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Equity Shares entitling them (for a
17
<PAGE>
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Equity Shares at a price per share less than
95% (100% if a stand-by underwriter is used and charges the Corporation a
commission) of the Fair Market Value per Common Share on the record date for the
determination of shareholders entitled to receive such rights, options or
warrants, then the Conversion Price in effect at the opening of business on the
Business Day next following such record date shall be adjusted to equal the
price determined by multiplying (A) the Conversion Price in effect immediately
prior to the opening of business on the Business Day next following the date
fixed for such determination by (B) a fraction, the numerator of which shall be
the sum of (x) the number of Common Equity Shares outstanding on the close of
business on the date fixed for such determination and (y) the number of shares
that the aggregate proceeds to the Corporation from the exercise of such rights,
options or warrants for Common Equity Shares would purchase at 95 % of such Fair
Market Value (or 100% in the case of a stand-by underwriting), and the
denominator of which shall be the sum of (x) the number of Common Equity Shares
outstanding on the close of business on the date fixed for such determination
and (y) the number of additional Common Equity Shares offered for subscription
or purchase pursuant to such rights, options or warrants. Such adjustment shall
become effective immediately after the opening of business on the day next
following such record date (except as provided in paragraph (h) below). In
determining whether any rights, options or warrants entitle the holders of
Common Equity Shares to subscribe for or purchase Common Equity Shares at less
than 95% of such Fair Market Value (or 100% in the case of a stand-by
underwriting), there shall be taken into account any consideration received by
the Corporation upon issuance and upon exercise of such rights, options or
warrants, the value of such consideration, if other than cash, to be determined
by the Board of Directors whose determination shall be conclusive. To the
extent that Common Equity Shares are not delivered pursuant to such rights,
options or warrants, upon the expiration or termination of such rights,
options or warrants, the Conversion Price shall be readjusted to the Conversion
Price which would then be in effect had the adjustments made upon the issuance
of such rights, options or warrants been made on the basis of delivery of only
the number of Common Equity Shares actually delivered. In the event that such
rights, options or warrants are not so issued, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
date fixed for the determination of stockholders entitled to receive such
rights, options or warrants had not been fixed.
(iii) If the Corporation shall distribute to all holders of its Common
Equity Shares any securities of the Corporation (other than Common Equity
Shares) or evidence of its indebtedness or assets (excluding cumulative cash
dividends or
18
<PAGE>
distributions paid with respect to the Common Equity Shares after December 31,
1997 which are not in excess of the following: the sum of (A) the Corporation's
cumulative undistributed Funds from Operations at December 31, 1997, plus (B)
the cumulative amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1997, minus (C) the cumulative amount of
dividends accrued or paid in respect of the Series C-1 Equity Shares or any
other class or series of preferred stock of the Corporation after the Issue
Date) or rights, options or warrants to subscribe for or purchase any of its
securities (excluding those rights, options and warrants issued to all holders
of Common Equity Shares entitling them for a period expiring within 45 days
after the record date referred to in subparagraph (ii) above to subscribe for or
purchase Common Equity Shares, which rights and warrants are referred to in and
treated under subparagraph (ii) above) (any of the foregoing being hereinafter
in this subparagraph (iii) collectively called the "Securities" and individually
----------
a "Securities"), then in each such case the Conversion Price shall be adjusted
so that it shall equal the price determined by multiplying (x) the Conversion
Price in effect immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to receive such distribution by (y)
a fraction, the numerator of which shall be the Fair Market Value per Common
Share on the record date mentioned below less the then fair market value (as
determined by the Board of Directors, whose determination shall be conclusive)
of the portion of the Securities or assets or evidences of indebtedness so
distributed or of such rights, options or warrants applicable to one Common
Share, and the denominator of which shall be the Fair Market Value per Common
Share on the record date mentioned below. Such adjustment shall become effective
on the date of distribution retroactive to the opening of business on the
Business Day next following (except as provided in paragraph (h) below) the
record date for the determination of shareholders entitled to receive such
distribution. For the purposes of this subparagraph (iii), the distribution of a
Security, which is distributed not only to the holders of the Common Equity
Shares on the date fixed for the determination of shareholders entitled to such
distribution of such Security, but also is distributed with each Common Share
delivered to a Person converting a share of Series C-1 Equity Shares after such
determination date, shall not require an adjustment of the Conversion Price
pursuant to this subparagraph (iii); provided that on the date, if any, on
--------
which a Person converting a share of Series C-1 Equity Shares would no longer be
entitled to receive such Security with a Common Share (other than as a result of
the termination of all such Securities), a distribution of such Securities shall
be deemed to have occurred and the Conversion Price shall be adjusted as
provided in this subparagraph (iii) (and such day shall be deemed to be "the
date fixed for the determination of the shareholders entitled to receive such
distribution" and "the record date" within the meaning of the two preceding
sentences). If any dividend or distribution of the type described in
19
<PAGE>
this paragraph (iii) is declared but not so paid or made, the Conversion Price
shall again be adjusted to the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.
Rights or warrants distributed by the Corporation to all holders of Common
Equity Shares entitling the holders thereof to subscribe for or purchase shares
of the Corporation's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger Event"): (i) are deemed to be transferred with such
-------------
shares of Common Equity Shares; (ii) are not exercisable; and (iii) are also
issued in respect of future issuances of Common Equity Shares, shall be deemed
not to have been distributed for purposes of this subparagraph (iii) (and no
adjustment to the Conversion Price under this subparagraph (iii) will be
required) until the occurrence of the earliest Trigger Event. If such right or
warrant is subject to subsequent events, upon the occurrence of which such right
or warrant shall become exercisable to purchase different securities, evidences
of indebtedness or other assets entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be deemed
to be the date of issuance and record date with respect to a new right or
warrant (and a termination or expiration of the existing right or warrant
without exercise by the holder thereof to the extent not exercised). In
addition, in the event of any distribution (or deemed distribution) of rights or
warrants, or any Trigger Event or other event (of the type described in the
preceding sentence) with respect thereto, that resulted in an adjustment to
the Conversion Price under this Subparagraph (iii), (1) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution (but not a
distribution paid exclusively in cash), equal to the per share redemption or
repurchase price received by a holder of Common Equity Shares with respect to
such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Equity Shares as of the date of such
redemption or repurchase, and (2) in the case of such rights or warrants all of
which shall have expired or been terminated without exercise, the Conversion
Price shall be readjusted as if such rights and warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not include open
market repurchases by the Corporation) made by the Corporation or any subsidiary
or controlled Affiliate of the Corporation for all or any portion of the Common
Equity Shares shall expire and such tender or exchange offer shall require the
payment by the
20
<PAGE>
Corporation or such subsidiary or controlled Affiliate of consideration per
Common Share having a fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and described in a
resolution of the board of Directors), at the last time (the "Expiration Time")
-----------------
tenders or exchanges may be made pursuant to such tender or exchange offer, that
exceeds the Current Market Price per Common Share on the Trading Day next
succeeding the Expiration Time, the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph, by a fraction of which the numerator shall be
the number of Common Equity Shares outstanding (including any tendered or
exchanged shares) at the Expiration Time, multiplied by the Current Market Price
per Common Share on the Trading Day next succeeding the Expiration Time, and the
denominator shall be the sum of (A) the fair market value (determined as
aforesaid) of the aggregate consideration payable to shareholders based upon the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any maximum, being
referred to as the "Purchased Shares") and (B) the product of the number of
-----------------
Common Equity Shares outstanding (less any Purchased Shares) at the Expiration
Time and the Current Market Price per Common Share on the Trading Day next
succeeding the Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Time. In
the event the Corporation or any subsidiary or controlled Affiliate is obligated
to purchase shares pursuant to any such tender offer, but the Corporation or
such subsidiary or controlled Affiliate is permanently prevented by applicable
law from effecting any such purchases, or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender offer had not been made.
(v) No adjustment in the Conversion Price shall be required unless such
adjustment would require a cumulative increase or decrease of at least 1% in
such price; provided, however, that any adjustments that by reason of this
-------- -------
subparagraph (v) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment until made; and provided, further,
-------- -------
that any adjustment shall be required and made in accordance with the provisions
of this Section 6 (other than this subparagraph (v)) not later than such time as
may be required in order to preserve the tax-free nature of a distribution to
the holders of Common Shares. Notwithstanding any other provisions of this
Section 6, the Corporation shall not be required to make any adjustment of the
Conversion Price for the issuance of any Common Equity Shares pursuant to any
plan providing for the reinvestment of dividends or interest
21
<PAGE>
payable on securities of the Corporation and the investment of additional
optional amounts in Common Equity Shares under such plan. All calculations under
this Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-hundredth of a share (with .005 of a share being
rounded upward), as the case may be. Anything in this paragraph (d) to the
contrary notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in addition
to those required by this paragraph (d), as it in its discretion shall determine
to be advisable in order that any share dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or warrants to
rights of election shall not have been exercised ("Non-Electing Share"), then
------------------
for the purpose of this paragraph (e) the kind and amount of shares, securities
and other property (including cash) receivable upon such Transaction by each
Non-Electing Share shall be deemed to be the kind and amount so receivable per
share by holders of a plurality of the Non-Electing Shares). The Corporation
shall not be a party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this paragraph (e), and it shall not consent
or agree to the occurrence of any Transaction until the Corporation has entered
into an agreement with the successor or purchasing entity, as the case may be,
for the benefit of the holders of the Series C-1 Equity Shares that will contain
provisions enabling the holders of the Series C-1 Equity Shares that remain
outstanding after such Transaction to convert into the consideration received by
holders of Common Shares at the Conversion Price in effect immediately prior to
such Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any other distribution)
on its Common Equity Shares (other than cash dividends or distributions paid
with respect to the Common Equity Shares after December 31, 1997 not in excess
of the sum of the Corporation's cumulative undistributed Funds from Operations
at December 31, 1997, plus the cumulative amount of Funds from Operations, as
determined by the Board of Directors, after December 31, 1997, minus the
cumulative amount of dividends accrued or paid in respect of the Series C-1
Equity Shares or any other class or series of preferred stock of the Corporation
after the Issue Date); or
(ii) the Corporation shall authorize the granting to all holders of Common
Equity Shares of rights, options or warrants to subscribe for or purchase any
shares of any class or any other rights, options or warrants; or
22
<PAGE>
(iii) there shall be any reclassification of the Common Equity Shares
(other than an event to which subparagraph (d)(i) of this Section 6 applies) or
any consolidation or merger to which the Corporation is a party (other than a
merger in which the Corporation is the surviving entity) and for which approval
of any shareholders of the Corporation is required, or a statutory share
exchange, or a self tender offer by the Corporation for all or substantially all
of its outstanding Common Shares or the sale or transfer of all or substantially
all of the assets of the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series C-1 Equity Shares at their addresses
as shown on the records of the Corporation, as promptly as possible, but at
least 10 days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Equity
Shares of record to be entitled to such dividend, distribution or rights,
options or warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Equity
Shares of record shall be entitled to exchange their Common Equity Shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, statutory share exchange, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings described
in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment and shall
mail such notice of such adjustment of the Conversion Price to the holder of
each share of Series C-1 Equity Shares at such holder's last address as shown on
the records of the Corporation.
23
<PAGE>
(h) In any case in which paragraph (d) of this Section 6 provides that an
adjustment shall become effective on the day next following the record date for
an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any share of Series C-1 Equity Shares converted after
such record date and before the occurrence of such event the additional Common
Equity Shares issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Equity Shares issuable upon such
conversion before giving effect to such adjustment and (B) paying to such holder
any amount of cash in lieu of any fraction pursuant to paragraph (c) of this
Section 6.
(i) There shall be no adjustment of the Conversion Price in case of the
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common Equity
Shares, other than action described in this Section 6, that in the opinion of
the Board of Directors would materially and adversely affect the conversion
rights of the holders of the Series C-1 Equity Shares, the Conversion Price for
the Series C-1 Equity Shares may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors, in its sole
discretion, may determine to be equitable in the circumstances.
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Equity Shares, for the purpose of effecting conversion of
the Series C-1 Equity Shares, the full number of Common Equity Shares
deliverable upon the conversion of all outstanding Series C-1 Equity Shares not
theretofore converted. For purposes of this paragraph (k), the number of Common
Shares that shall be deliverable upon the conversion of all outstanding Series
C-1 Preferred Shares shall be computed as if at the time of computation all such
outstanding shares were held by a single holder.
Any Common Equity Shares issued upon conversion of the Series C-1 Equity
Shares shall be validly issued, fully paid and non-assessable. Before taking
any action that would cause an adjustment reducing the Conversion Price below
the then-par value of the Common Equity Shares deliverable upon conversion of
the Series C-1
24
<PAGE>
Equity Shares, the Corporation will take any action that, in the
opinion of its counsel, may be necessary in order that the Corporation may
validly and legally issue fully paid and (subject to any customary qualification
based upon the nature of a real estate investment trust) non-assessable Common
Equity Shares at such adjusted Conversion Price.
The Corporation shall use its best efforts to list the Common Shares
required to be delivered upon conversion of the Series C-1 Equity Shares, prior
to such delivery, upon each national securities exchange, if any, upon which the
outstanding Common Shares are listed at the time of such delivery.
The Corporation shall use its best efforts to comply with all federal and
state securities laws and regulations thereunder in connection with the issuance
of any securities that the Corporation shall be obligated to deliver upon
conversion of the Series C-1 Equity Shares. The certificates evidencing such
securities shall bear such legends restricting transfer thereof in the absence
of registration under applicable securities laws or an exemption therefrom as
the Corporation may in good faith deem appropriate.
(l) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of Common Equity
Shares or other securities or property on conversion of the Series C-1 Equity
Shares pursuant hereto; provided, however, that the Corporation shall not be
-------- -------
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of Common Shares or other securities or property in a
name other than that of the holder of the Series C-1 Equity Shares to be
converted, and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Corporation the amount
of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
Section 7. Change of Control.
-----------------
(a) If a Change of Control (as defined below) occurs (a "Change of Control
-----------------
Repurchase Event"), the holders of Series C-1 Equity Shares shall have the
- ----------------
right to require the Corporation, to the extent the Corporation shall have funds
legally available therefor, to redeem any or all of the Series C-1 Equity Shares
held by such holder at a repurchase price payable in cash (the "Change of
---------
Control Repurchase Payment") in an amount equal to 105% of the Liquidation
- --------------------------
Preference thereof, plus accrued and unpaid dividends whether or not declared,
if any, to the date of repurchase or the date payment is made available (the
"Change of Control Date") pursuant
----------------------
25
<PAGE>
to the offer described in subsection (b) below (the "Change of Control-
--------------
Repurchase Offer" ).
(b) Within 15 days following the Corporation becoming aware that a Change
of Control Repurchase Event has occurred, the Corporation shall mail by first
class mail or recognized overnight courier a notice to each holder of Series C-1
Equity Shares stating (A) that a Change of Control Repurchase Event has occurred
and that such holder has the right to require the Corporation to repurchase any
or all of the Series C-1 Equity Shares then held by such holder, (B) the date of
repurchase (which shall be a Business Day, no earlier than 30 days and no later
than 60 days from the date such notice is mailed, or such later date as may be
necessary to comply with the requirements of the Exchange Act), (C) the
repurchase price and (D) the instructions determined by the Corporation,
consistent with this subsection, that such investor must follow in order to have
the Series C-1 Equity Shares repurchased.
(c) On the Change of Control repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series C-1 Equity Shares or portions
thereof tendered by such holder pursuant to the Change of Control Repurchase
Offer and promptly by wire transfer of immediately available funds to such
holder, as directed by such holder, send an amount equal to the Change of
Control Repurchase Payment in respect of all Series C-1 Equity Shares or
portions thereof so tendered.
(d) Notwithstanding anything else herein, to the extent they are applicable
to any Change of Control Repurchase Offer, the Corporation will comply with any
federal and state securities laws, rules and regulations and all time periods
and requirements shall be adjusted accordingly.
(e) For purposes hereof, "Change of Control" means the occurrence of any of
the following: (i) the first acquisition, directly or indirectly, by any
individual or entity or group (as such term is used in Section 13(d)(3) of the
Exchange Act) of beneficial ownership (as defined in Rule 1 3d-3 under the
Exchange Act, except that such individual or entity shall be deemed to have
beneficial ownership of all shares that any such individual or entity has the
right to acquire, whether such right is exercisable immediately or only after
passage of time) of more than 25% of the Corporation's or Westfield America
Trust's outstanding equity securities with voting power, under ordinary
circumstances, to elect Directors of the Corporation; (ii) other than with
respect to the election, resignation or replacement of any Director designated,
appointed or elected by the holders of any Series of Preferred Shares (each a
"Preferred Director"), during any period of two consecutive years, individuals
------------------
who at the beginning of such period constituted the Board of Directors of the
Corporation
26
<PAGE>
(together with any new Directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Corporation was
approved by a vote of 66 2/3% of the Directors of the Corporation (excluding
Preferred Directors) then still in office who were Directors at the beginning of
such period, or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office of the Corporation; and (iii) (A) any of the
Corporation or Westfield America Trust consolidating with or merging into
another entity or conveying, transferring or leasing all or substantially all of
its assets (including, but not limited to, real property investments) to any
individual or entity, or (B) any entity consolidating with or merging into any
of the Corporation or Westfield America Trust, which in either event (A) or (B)
is pursuant to a transaction in which the outstanding voting securities of the
Corporation or Westfield America Trust is reclassified or changed into or
exchanged for cash, securities or other property; provided, however, that the
events described in clauses (i), (ii) and (iii) shall not be deemed to be a
Change of Control (a) in the case of the event described in clause (iii), if the
sole purpose of such event is that the Corporation or Westfield America Trust is
seeking to change its domicile or to convert from a corporation to a trust or
vice versa; (b) in the case of the event described in clause (iii), if the
holders of the exchanged securities of the Corporation or Westfield America
Trust immediately after such transaction beneficially own at least a majority of
the securities of the merged or consolidated entity normally entitled to vote in
elections of Directors of the Corporation or Westfield America Trust; (c) if
any of Westfield holdings Limited or its wholly-owned subsidiaries remains as
manager of the Corporation's properties and as adviser of the Corporation, in
each case, in a manner substantially similar to that on the date hereof, or (d)
if the Change of Control results solely from the purchase or other acquisition
of equity securities by Westfield Holdings Limited, Westfield America Trust the
Lowy Family or the Investor.
Section 8. Redemption at the Option of the Holder.
--------------------------------------
(a) At any time after August 12, 2008, the holders of Series C-1 Equity
Shares shall have the right at any time that the Corporation's common stock has
a Current Market Price at or below the Conversion Price per share, to require
the Corporation, to the extent the Corporation shall have funds legally
available therefor, to redeem any or all of the Series C-1 Equity Shares held by
such holder at a repurchase price payable, at the option of the Corporation,
in either (i) cash, or (ii) such number of Common Equity Shares as shall have a
Current Market Price in the aggregate on the day prior to the day such holder
gives notice pursuant to Section 8(b) of its intention to redeem, equal to in
either case, 100% of the liquidation preference thereof plus accrued and unpaid
dividends whether or not declared, if any, to the date
27
<PAGE>
of repurchase or the date payment is made available (in the aggregate, the
"Redemption Payment").
------------------
(b) For purposes of this Section 8, redemption at the option of the holder
shall be deemed to occur upon receipt by the Corporation of written notice that
the holder of Series C-1 Equity Shares wishes to tender shares to be redeemed.
The holders of such shares to be redeemed shall then have 30 days from the date
of such notice to deliver such shares to the Transfer Agent. Upon the surrender
of the certificate or certificates of Series C-1 Preferred Shares to be
redeemed, duly endorsed or assigned to the Corporation or in blank, at the
office of the Transfer Agent, the Corporation shall promptly, either (i) by wire
transfer of immediately available funds to such holder, as directed by such
holder, send an amount equal to the Redemption Payment in respect of all Series
C-1 Equity Shares or portions thereof so tendered, or (ii) issue and deliver to
such holder, or on his or her written order, a certificate or certificates for
the number of full Common Equity Shares issuable in respect of all Series C-1
Equity Shares or portions thereof so tendered.
Section 9. Shares To Be Retired. All Series C-1 Equity Shares which
--------------------
shall have been issued and reacquired in any manner by the Corporation shall be
restored to the status of authorized but unissued preferred stock, without
discretion as to class or series, and subject to applicable limitations set
forth in the Articles may thereafter be reissued as shares of any series of
preferred stock.
Section 10. Ranking. Any class or series of stock of the Corporation
-------
shall be deemed to rank:
(a) prior to the Series C-1 Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Series C-1 Preferred Shares, which shall expressly include the Corporation's
non-voting senior preferred stock, par value $1.00 per share;
(b) on a parity with the Series C-1 Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof shall be different from those
of the Series C-1 Preferred Shares, if the holders of such class or series and
the Series C-1 Preferred Shares shall be entitled to the receipt of dividends
and of amounts distributable upon liquidation,
28
<PAGE>
dissolution or winding up in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation preferences, without preference or
priority one over the other ("Parity Shares"), which shall expressly include the
-------------
Corporation's Series A Preferred Shares, Series B Preferred Shares, Series C
Preferred Shares, Series C-2 Preferred Shares (as defined below), if any, Series
D Preferred Shares and Series D-1 Cumulative Convertible Redeemable Preferred
Shares;
(c) junior to the Series C-1 Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series C-1 Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, if such class or series shall be Fully Junior Shares.
Section 11. Voting.
------
(a) Except as expressly provided in this Certificate of Designation, the
holders of Series C-1 Equity Shares shall have no voting rights. If the
Corporation has obtained shareholder approval and made the amendments as
described in Section 11(b) below, and if and whenever (i) for two consecutive
quarterly Dividend Periods the Corporation fails to pay dividends on the Series
C Equity Shares, the Series C-1 Equity Shares or, if any Series C-2 Cumulative
Convertible Redeemable Preferred Shares, par value $1.00 per share (the "Series
C-2 Preferred Shares"), shall have been authorized and initially issued by the
Corporation to Security Capital Preferred Growth Incorporated, the Series C-2
Equity Shares (which shall, with respect to any such quarterly dividend, mean
that any such dividend has not been paid in full), then the number of directors
then constituting the Board of Directors shall be increased by two and the
holders of Series C Equity Shares, the Series C-1 Equity Shares and the Series
C-2 Equity Shares, if any, voting together as a single class, shall be entitled
to elect the two additional directors to serve on the Board of Directors or (ii)
for two consecutive quarterly Dividend Periods the Corporation fails to pay
dividends on the Common Shares in an amount per share at least equal to $0.32
(subject to adjustment consistent with any adjustment of the Conversion Price
pursuant to Section 6(a) of this Article), then the number of directors then
constituting the Board of Directors shall be increased by one and the holders
of Series C Equity Shares, the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, voting together as a single class, shall be entitled to
elect the one additional director to serve on the Board of Directors, in either
case, at any annual meeting of shareholders or special meeting held in place
thereof, or at a special meeting of the holders of the Series C Equity Shares,
the Series
29
<PAGE>
C-1 Equity Shares and the Series C-2 Equity Shares, if any, called as
hereinafter provided; provided, however, that except as set forth below, the
-------- -------
holders of the Series C Equity Shares, the Series C-1 Equity Shares and the
Series C-2 Equity Shares, if any, shall not have the right to elect more than
two directors. For purposes hereof, "Series C-2 Equity Shares" shall mean
------------------------
Series C-2 Preferred Shares together with the Excess Series C-2 Preferred
Shares. If, other than through the operation of this Section 11 or pursuant to
the provisions of the Articles of Incorporation relating to the Corporation's
Series A and B Preferred Shares (but only with respect to one director elected
by the holders of the Series A and B Preferred Shares), the Board of Directors
shall be increased at any time to more than ten directors, then, upon the
occurrence or continuance of any of the events described in this Section 11, the
Board of Directors shall be increased by such number of additional directors,
and the holders of the Series C Equity Shares, the Series C-1 Equity Shares and
the Series C-2 Equity Shares, if any, voting together as a single class, shall
be entitled to elect such number of additional directors, as shall be
necessary to maintain the ratio of directors elected by the holders of the
Series C Equity Shares, the Series C-1 Equity Shares and the Series C-2 Equity
Shares, if any, to the directors otherwise elected, as nearly as possible
(rounding to the next larger whole number), equal to the ratio that would have
existed if the holders of the Series C Equity Shares, the Series C-1 Equity
Shares and the Series C-2 Equity Shares, if any, were able to elect the full
number of directors then permitted to be elected by them under this Section 11
and the directors otherwise elected numbered only ten. Whenever, as the case may
be, (i) all arrears in dividends on the Series C Equity Shares, the Series C-1
Equity Shares and the Series C-2 Equity Shares, if any, then outstanding shall
have been paid and the Corporation has paid dividends thereon for two
consecutive quarters and (ii) the Corporation has paid dividends on the Common
Shares in an amount per share at least equal to $0.32 (subject to adjustment
consistent with any adjustment of the Conversion Price pursuant to Section 6(a)
of this Article) for two consecutive quarters, then the right of the holders of
the Series C Equity Shares, the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, to elect such additional directors shall cease (but
subject always to the same provision for the vesting of such voting rights in
the case of any similar future arrearage in quarterly dividends), and the terms
of office of all persons elected as Directors by the holders of the Series C
Equity Shares, the Series C-1 Equity Shares and the Series C-2 Equity Shares, if
any, shall forthwith terminate and the number of the Board of Directors shall be
reduced accordingly. At any time after such voting power shall have been so
vested in the holders of Series C Equity Shares, the Series C-1 Equity Shares
and the Series C-2 Equity Shares, if any, the Secretary of the Corporation may,
and upon the written request of any holders of 5% of the outstanding Series C
Equity Shares, the Series C-1 Equity Shares and the Series C-2 Equity Shares, if
any (addressed to the Secretary at the principal office of the Corporation),
shall, call a special
30
<PAGE>
meeting of the holders of the Series C Equity Shares, the Series C-1 Equity
Shares and the Series C-2 Equity Shares, if any, for the election of the
Directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the shareholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 20 days after receipt of any such request, then any holder of Series C
Equity Shares, Series C-1 Equity Shares or the Series C-2 Equity Shares, if any,
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the records of the Corporation. The directors elected at
any such special meeting shall hold office until the next annual meeting of the
share holders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the Directors elected by the holders of the Series C Equity Shares, the C-1
Equity Shares and the Series C-2 Equity Shares, if any, a successor shall be
elected by the Board of Directors, upon the nomination of the then-remaining
Director elected by the holders of the Series C Equity Shares, the Series C-1
Equity Shares and the Series C-2 Equity Shares, if any, or the successor of such
remaining Director (or, if there are then no such Directors or Director elected
by the holders of Series C Equity Shares, the Series C-1 Equity Shares and the
Series C-2 Equity Shares, if any, such Director shall be elected by the holders
of the Series C Equity Shares, the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, as described above), to serve until the next annual
meeting of the shareholders or special meeting held in place thereof if the term
of such director shall not have previously terminated as provided above.
(b) Notwithstanding anything to the contrary contained in this Section 11,
if the Corporation shall fail to obtain the required shareholder approval and
amend its Certificate of Designation for the Series C Preferred Shares so that
the holders of Series C Equity Shares vote together as a single class with the
holders of Series C-1 Equity Shares and the Series C-2 Equity Shares, if any,
with respect to the election of directors for which such holders are entitled to
vote, as provided above, then the voting rights of the holders of Series C-1
Preferred Shares shall automatically be altered to be as follows:
if and whenever (i) for two consecutive quarterly Dividend Periods the
Corporation fails to pay dividends on the Series C-1 Equity Shares (which
shall, with respect to any such quarterly dividend, mean that any such
dividend has not been paid in full), then the number of directors then
constituting the Board of Directors shall be increased by two and the
holders of Series C-1 Equity Shares and the Series C-2 Equity Shares, if
any, voting together as a single class, shall be entitled to elect the two
additional directors to serve on the Board of
31
<PAGE>
Directors or (ii) for two consecutive quarterly Dividend Periods the
Corporation fails to pay dividends on the Common Shares in an amount per
share at least equal to $0.32 (subject to adjustment consistent with any
adjustment of the Conversion Price pursuant to Section 6(a) of this
Article), then the number of directors then constituting the Board of
Directors shall be increased by one and the holders of Series C-1 Equity
Shares and the Series C-2 Equity Shares, if any, voting together as a
single class, shall be entitled to elect the one additional director to
serve on the Board of Directors, in either case, at any annual meeting of
shareholders or special meeting held in place thereof, or at a special
meeting of the holders of the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, called as hereinafter provided; provided, however,
-------- -------
that except as set forth below, the holders of Series C-1 Equity Shares and
the Series C-2 Equity Shares, if any, shall not have the right to elect
more than two directors. If, other than through the operation of this
Section 11 or pursuant to the provisions of the Articles of Incorporation
relating to the Corporation's Series A and B Preferred Shares (but only
with respect to one director elected by the holders of the Series A and B
Preferred Shares), the Board of Directors shall be increased at any time to
more than ten directors, then, upon the occurrence or continuance of any of
the events described in this Section 11, the Board of Directors shall be
increased by such number of additional directors, and the holders of Series
C-1 Equity Shares and the Series C-2 Equity Shares, if any, voting together
as a single class, shall be entitled to elect such number of additional
directors, as shall be necessary to maintain the ratio of directors elected
by the holders of the Series C-1 Shares and the Series C-2 Equity Shares,
if any, to the directors otherwise elected, as nearly as possible (rounding
to the next larger whole number), equal to the ratio that would have
existed if the holders of the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, were able to elect the full number of directors then
permitted to be elected by them under this Section 11 and the directors
otherwise elected numbered only ten. Whenever, as the case may be, (i) all
arrears in dividends on the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, then outstanding shall have been paid and the
Corporation has paid dividends thereon for two consecutive quarters and
(ii) the Corporation has paid dividends on the Common Shares in an amount
per share at least equal to $0.32 (subject to adjustment consistent with
any adjustment of the Conversion Price pursuant to Section 6(a) of this
Article) for two consecutive quarters, then the right of the holders of the
Series C-1 Equity Shares and the Series C-2 Equity Shares, if any, to elect
such additional directors shall cease (but subject always to the same
provision for the vesting of such voting rights in the case of any similar
future arrearage in quarterly dividends), and the terms of office of all
32
<PAGE>
persons elected as Directors by the holders of the Series C-1 Equity Shares
and the Series C-2 Equity Shares, if any, shall forthwith terminate and the
number of the Board of Directors shall be reduced accordingly. At any time
after such voting power shall have been so vested in the holders of Series
C-1 Equity Shares and the Series C-2 Equity Shares, if any, the Secretary
of the Corporation may, and upon the written request of any holders of 5%
of the outstanding Series C-1 Equity Shares and the Series C-2 Equity
Shares, if any (addressed to the Secretary at the principal office of the
Corporation), shall, call a special meeting of the holders of the Series C-
1 Equity Shares and the Series C-2 Equity Shares, if any, for the election
of the Directors to be elected by them as herein provided, such call to be
made by notice similar to that provided in the Bylaws of the Corporation
for a special meeting of the shareholders or as required by law. If any
such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request,
then any holder of Series C-1 Equity Shares or the Series C-2 Equity
Shares, if any, may call such meeting, upon the notice above provided, and
for that purpose shall have access to the records of the Corporation. The
directors elected at any such special meeting shall hold office until the
next annual meeting of the shareholders or special meeting held in lieu
thereof if such office shall not have previously terminated as above
provided. If any vacancy shall occur among the Directors elected by the
holders of the Series C-1 Equity Shares and the Series C-2 Equity Shares,
if any, a successor shall be elected by the Board of Directors, upon the
nomination of the then-remaining Director elected by the holders of the
Series C-1 Equity Shares and the Series C-2 Equity Shares, if any, or the
successor of such remaining Director (or, if there are then no such
Directors or Director elected by the holders of the Series C-1 Equity
Shares and the Series C-2 Equity Shares, if any, such Director shall be
elected by the holders of the Series C-1 Equity Shares and the Series C-2
Equity Shares, if any, as described above), to serve until the next annual
meeting of the shareholders or special meeting held in place thereof if the
term of such director shall not have previously terminated as provided
above.
(c) The holders of the Series C-1 Equity Shares, voting together with the
holders of the Common Shares as a single class shall be entitled to vote on any
matter involving any transaction between the Corporation and any Affiliate of
the Corporation which is brought to a vote of the holders of the Common Shares
(other than any vote on the conversion of the Series D Preferred Shares or the
Series D-1 Preferred Shares into Common Shares). In any matter for which a
holder of Series C-1 Equity Shares is permitted to vote under this Section
11(c), such holder shall have the number
33
<PAGE>
of votes equal to the number of Common Shares into which the Series C-1 Equity
Shares of such holder is convertible on the record date for such vote.
(d) So long as any Series C-1 Equity Shares are outstanding, in addition to
any other vote or consent of shareholders requested by law or by the Articles,
the affirmative vote of the holders of a majority of the Series C-1 Equity
Shares, voting together as a class, given in person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions of
the Articles of Incorporation or this Certificate of Designation that
materially and adversely affects the voting powers, rights or preferences
of the holders of the Series C-1 Equity Shares; or
(ii) Any merger or consolidation of the Corporation and another entity
in which the Corporation is not the surviving corporation and each holder
of Series C-1 Equity Shares does not receive shares of the surviving
corporation with substantially similar rights, preferences and powers in
the surviving corporation as the Series C-1 Equity Shares have with respect
to the Corporation (except for changes that do not materially and adversely
affect the holders of the Series C-1 Preferred Stock).
provided, however, that no such vote of the holders of Series C-1 Equity Shares
- -------- -------
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such prior shares or
convertible security is to be made, as the case may be, provision is made for
the redemption of all Series C-1 Equity Shares at the time outstanding to the
extent such redemption is authorized by Section 5 of this Certificate of
Designation.
(iii) For purposes of the foregoing provisions of this Section 11(d),
each share of Series C-1 Equity Shares shall have one (1) vote per share,
except that when any other series of Equity Shares shall have the right to
vote with the Series C-1 Equity Shares as a single class on any matter,
then the Series C-1 Equity Shares and such other series shall have with
respect to such matters one (1) vote per $180.00 (or less pursuant to
Section 4(a)) of stated liquidation preference. Except as otherwise
required by applicable law or as set forth herein, the Series C-1 Equity
Shares shall not have any relative, participating, optional or other
special voting rights and powers other than as
34
<PAGE>
set forth herein, and the consent of the holders thereof shall not be
required for the taking of any corporate action.
Section 12. Record Holders. The Corporation and the Transfer Agent may
--------------
deem and treat the record holder of any Series C-1 Preferred Shares as the true
and lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
Section 13. Title. This resolution shall be known and may be referred
-----
to as "A Resolution of the Board of Directors of Westfield America, Inc.
Designating Series C-1 Preferred Shares and Fixing Preferences and Rights
Thereof".
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized and directed to execute and acknowledge a certificate setting
forth these resolutions and to cause such certificate to be filed and recorded,
all in accordance with the requirements of Section 351.046 of the General and
Business Corporation Law of the State of Missouri, as amended.
35
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President and attested by its
Secretary this 15th day of December, 1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter Lowy
--------------------
Its: Co-President
Attest:
/s/ Irv Hepner
- --------------------
Its Secretary
36
<PAGE>
CORPORATION ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
On the 15th day of December, 1998, before me personally appeared Peter
Lowy, known to me or proved to me on the basis of satisfactory evidence to be
the Co-President of Westfield America, Inc., the corporation that executed the
foregoing instrument, who, being duly sworn, acknowledged that he resides at Los
Angeles; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by the order of
the Board of Directors of said corporation; and that he signed his name thereto
by like order.
/s/ Leesa A. Ashley
--------------------
Notary Public
My commission expires: April 30, 2001
37
<PAGE>
EXHIBIT E
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES C-2 PREFERRED SHARES
AND FIXING PREFERENCES AND RIGHTS THEREOF"
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
Pursuant to the Provisions of Section 351.180 (7) of the
General and Business corporation Law of the State
of Missouri, as amended
I, the undersigned, Co-President of Westfield America, Inc., a
Missouri Corporation (hereinafter sometimes referred to as the "Corporation"),
-----------
hereby certify as follows:
FIRST: that under the provisions of Article Fourth of the Restated
Articles of Incorporation, as amended, of the Corporation, the total number of
shares of all classes of capital stock which the Corporation may issue is
410,000,200 shares, of which (i) 200 shares shall be nonvoting senior preferred
stock, par value $1.00 per share (the "Senior Preferred Shares"), (ii) 5,000,000
-----------------------
shares shall be Preferred Shares, with par value of $1.00 per share (the
"Preferred Shares"), 940,000 of which have been designated as Series A Preferred
- -----------------
Shares, with liquidation value of $100 per share (the "Series A Preferred
------------------
Shares"), 400,000 of which have been designated as Series B Preferred Shares,
with a liquidation value of $100 per share (the "Series B Preferred Shares"),
-------------------------
416,667 of which have been designated as Series C Preferred Shares, with a
liquidation value of $180 per share (the "Series C Preferred Shares"), 138,889
-------------------------
of which have been designated as Series C-1 Preferred Shares, with a liquidation
value of $180 per share (the "Series C-1 Preferred Shares"), 694,445 of which
---------------------------
have been designated as Series D Preferred Shares, with a liquidation value of
$180 per share (the "Series D Preferred Shares") and 138,889 of which have been
-------------------------
designated as Series D-1 Preferred Shares, with a liquidation value of $180 per
share (the "Series D-1 Preferred Shares"), (iii) 200,000,000 shall be shares of
---------------------------
common stock, par value $.01 per share (the "Common Stock"), (iv) 205,000,000
------------
shall be shares of excess stock, par value $.01 per share (the "Excess Shares").
-------------
Any Excess Shares which are issued with respect to Common Stock shall be "Excess
------
Common Shares" and, together with the Common Shares, the "Common Equity Shares"
- ------------- --------------------
and any Excess Shares which are issued with respect to the Preferred Shares
shall be "Excess Preferred
----------------
<PAGE>
Shares," and, together with the Preferred Shares, (the "Preferred Equity Shares"
- ------ -----------------------
and under said Articles of Incorporation (as amended, the "Articles of
-----------
Incorporation") the shares of Preferred Stock are authorized to be issued by the
- -------------
Board of Directors and the Board of Directors is expressly authorized to
determine in the Resolution, the designation, powers, rights, preferences and
qualifications, limitations or restrictions, not fixed and determined by the
Articles of Incorporation.
SECOND: That the board of Directors of the Corporation pursuant to
the authority so vested in it by Article Fourth of the Certificate of
Incorporation, and in accordance with the provisions of Section 351.180 (7) of
the General and Business Corporation Law of Missouri, as amended, adopted on
December __, 1998 the following resolution creating a series of Preferred Stock
designated as "Series C-2 Preferred Shares," which resolution has not been
amended, modified, rescinded or revoked and is in full force and effect on the
date hereof.
"RESOLUTION OF THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING
'SERIES C-2 PREFERRED SHARES'
AND FIXING PREFERENCES AND RIGHTS THEREOF"
BE IT RESOLVED, that pursuant to authority expressly granted to and
vested in the Board of Directors of Westfield America, Inc., hereinafter called
the "Corporation," by the provisions of the Articles of Incorporation, as
amended, the Board of Directors of the Corporation hereby fixes the designation,
voting powers, rights on liquidation or dissolution, and other preferences and
rights, and the qualifications, limitations or restrictions thereof, of the
shares of such series (in addition to the designations, preferences and relative
rights, and the qualifications, 1imitations or restrictions thereof set forth in
the Articles of Incorporation which are applicable to the Series C-2 Preferred
Shares) as follows:
Section 1. Number of Shares, Designation. This class of preferred
-----------------------------
stock shall be designated as Series C-2 Cumulative Convertible Redeemable
Preferred Stock and the number of shares which shall constitute such series
shall not be more than 138,889 shares, par value $1.00 per share, which number
may be decreased (but not below the aggregate number thereof then outstanding
and/or which have been reserved for issuance) from time to time by the Board of
Directors and is hereafter in this resolution called the "Series C-2 Preferred
--------------------
Shares". Each Series C-2 Preferred Share shall be identical in all respects to
- ------
each other Series C-2 Preferred Share. Each Excess Series C-2 Preferred Share
shall be identical in all respects to each other Excess Series C-2 Preferred
Share, and except as otherwise provided herein, shall be
2
<PAGE>
identical in all respects to each Series C-2 Preferred Share (the Series C-2
Preferred Shares together with the Excess Series C-2 Preferred Shares being
hereinafter referred to as the "Series C-2 Equity Shares").
------------------------
Section 2. Definitions. For purposes of the Series C-2 Preferred
-----------
Shares, the following terms shall have the meanings indicated:
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall
---------
mean a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL") Westfield America Trust, Frank
---
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
----
Family").
- ------
"Base Rate" shall mean an annual dividend per Series C-2 Equity Share
---------
equal to 8.5% of the Liquidation Preference per Series C-2 Equity Share.
"Board of Directors" shall mean the Board of Directors of the
------------------
Corporation or any committee authorized by such Board of Directors to perform
any of its responsibilities with respect to the Series C-2 Preferred Shares.
"Business Day" shall mean any day, other than a Saturday or Sunday,
------------
that is neither a legal holiday nor a day on which banking institutions in New
York City, New York are authorized or required by law, regulation or executive
order to close.
"Call Date" shall mean the date specified in the notice to holders
---------
required under Section 5(d) as the Call Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Common Shares" shall mean the Corporation's common stock, par value
-------------
$0.01 per share.
"Consolidated EBITDA" for any quarter shall mean the consolidated net
-------------------
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the
Securities and Exchange Commission, increased by the sum of the following
(without duplication):
3
<PAGE>
a. the Corporation's pro rata share of EBITDA from unconsolidated
real estate partnerships calculated in a manner consistent with
this definition of Consolidated EBITDA,
b. all income taxes paid or accrued according to GAAP for such
quarter (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses except to the extent that
such gains were not included in Consolidated EBITDA),
c. all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of
deferred financing fees or amortization of original issue
discount, but excluding capitalized interest),
d. depreciation and depletion reflected in such net income,
e. amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only
to the extent that such amounts have not been previously included
in the amount of Consolidated EBITDA pursuant to clause (c)
above), goodwill, other intangibles and management fees, and
f. any other noncash charges, to the extent deducted from
consolidated net income (including, but not limited to, income
allocated to minority interests).
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
--------------------------
a. the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner
consistent with this definition of Consolidated Fixed Charges,
b. all interest expense paid or accrued in accordance with GAAP for
such quarter (including, without duplication, financing fees and
amortization of deferred fees or amortization of original issue
discount),
c. dividend and distribution requirements with respect to preferred
stock and any other preferred securities for such quarter
4
<PAGE>
(not including any portion of preferred stock dividends the
calculation of which is based on the dividend paid in such
quarter to the holders of Common Shares), whether or not declared
or paid,
d. regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity) and
e. all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e).
------------------
"Conversion Date" shall have the meaning set forth in Section 6(a).
---------------
"Conversion Price" shall mean the conversion price per Common Share
----------------
for which the Series C-2 Preferred Shares is convertible, as such Conversion
Price may be adjusted pursuant to Section 6. The initial conversion price shall
be $18.00.
"Current Market Price" of publicly traded Common Shares or any other
--------------------
class of stock or other security of the Corporation or any other issuer for any
day shall mean the last reported sales price, regular way, on such day, or, if
no sale takes place on such day, the average of the reported closing bid and
asked prices on such day, regular way, in either case as reported on the New
York Stock Exchange ("NYSE") or, if such security is not listed or admitted for
----
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
------
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
----
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"Dividend Payment Date" shall mean (i) for any Dividend Period with
---------------------
respect to which the Corporation pays a dividend on the Common Equity Shares,
the date on which such dividend is paid, or (ii) for any Dividend Period with
respect to which the Corporation does not pay a dividend on the Common Equity
Shares, a date
5
<PAGE>
to be set by the Board of Directors, which date shall not be later than the
thirtieth calendar day after the end of the applicable Dividend Period.
"Dividend Periods" shall mean quarterly dividend periods commencing on
----------------
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
with respect to any Series C-2 Equity Shares (other than the initial Dividend
Period, which shall commence on the Issue Date for such Series C-2 Equity Shares
and end on and include the last day of the calendar quarter immediately
following such Issue Date, and other than the Dividend Period during which any
Series C-2 Equity Shares shall be redeemed pursuant to Section 5 or converted
pursuant to Section 6, which shall end on and include the Call Date or
Conversion Date with respect to the Series C-2 Equity Shares being redeemed or
converted, as applicable).
"Expiration Time" shall have the meaning set forth in Section6(d)(iv).
---------------
"Fair Market Value" shall mean the average of the daily Current Market
-----------------
Prices of a Common Share on the five (5) consecutive Trading Days selected by
the Corporation commencing not more than 20 Trading Days before, and ending not
later than, the earlier of the day in question and the day before the "ex date"
with respect to the issuance or distribution requiring such computation. The
term "ex date," when used with respect to any issuance or distribution, means
the first day on which the Common Shares trade regular way, without the right to
receive such issuance or distribution, on the exchange or in the market, as the
case may be, used to determine that day's Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
-------------------------------
Section 3(a).
"Fully Junior Shares" shall mean the Common Shares and any other class
-------------------
or series of stock of the Corporation now or hereafter issued and outstanding
over which the Series C-2 Preferred Shares has preference or priority in both
(i) the payment of dividends and (ii) the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
"Funds from Operations" shall mean net income (loss) (computed in
---------------------
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the
6
<PAGE>
real estate industry, all computed in a manner consistent with the revised
definition of Funds From Operations adopted by the National Association of Real
Estate Investment Trusts (NAREIT), in its White Paper dated March 1995, as such
definitions may be modified from time to time.
"Investor" shall mean Security Capital Preferred Growth Incorporated
--------
and controlled Affiliates thereof.
"Issue Date" shall mean the date on which the Series C-2 Preferred
----------
Shares are issued.
"Junior Shares" shall mean the Common Shares and any other class or
-------------
series of stock of the Corporation now or hereafter issued and outstanding over
which the Series C-2 Preferred Shares has preference or priority in the payment
of dividends or in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
"Non-Electing Share" shall have the meaning set forth in Section 6(e).
------------------
"Operating Partnership" shall mean Westfield America Limited
---------------------
Partnership, a Delaware limited partnership.
"Parity Shares" shall have the meaning set forth in Section 10(b).
-------------
"Person" shall mean any individual, firm, partnership, corporation,
------
limited liability company, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Purchased Shares" shall have the meaning set forth in Section 6
----------------
(d)(iv).
"REIT Termination Event" shall mean the earliest to occur of:
----------------------
(i) the filing of a federal income tax return by the Corporation for
any taxable year on which the Corporation does not compute its
income as a real estate investment trust;
(ii) the approval by the shareholders of the Corporation of a
proposal for the Corporation to cease to qualify as a real
estate investment trust;
7
<PAGE>
(iii) a determination by the Board of Directors of the
Corporation, based on the advice of counsel, that the
Corporation has ceased to qualify as a real estate investment
trust; or
(iv) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real estate
investment trust.
"Securities" and "Security" shall have the meanings set forth in
---------- --------
Section 6(d)(iii).
"Securities Act" shall mean the Securities Act of 1933, as amended,
--------------
"Series C-2 Preferred Shares" shall have the meaning given such term
---------------------------
in the preamble to this Certificate of Designation.
"set apart for payment" shall be deemed to include, without any action
---------------------
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of stock of the
Corporation; provided, however, that if any funds for any class or series of
-------- -------
Junior Shares or any class or series of stock ranking on a parity with the
Series C-2 Preferred Shares as to the payment of dividends are placed in a
separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series C-2
Preferred Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Days" shall mean any day on which the securities in question
------------
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on NASDAQ, or if such securities are not
quoted on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e).
-----------
"Transfer Agent" shall mean the Corporation, or such other agent or
--------------
agents of the Corporation as may be designated by the Board of Directors or
their
8
<PAGE>
designee as the transfer agent, registrar and dividend disbursing agent for the
Series C-2 Preferred Shares.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Articles.
Section 3. Dividends.
---------
(a) Subject to the preferential rights of the holders of any Senior
Preferred Stock or Preferred Shares that rank senior in the payment of dividends
to the Series C-2 Equity Shares and subject to paragraph (b) of this Section 3,
the holders of Series C-2 Equity Shares shall be entitled to receive, when, as
and if declared by the Board of Directors, but only out of funds legally
available for the payment of dividends, cumulative preferential dividends
payable in cash to shareholders of record on the respective date, not
exceeding 50 days preceding such dividend payment date, fixed for the purpose by
the Board of Directors in advance of payment of each particular dividend in an
amount equal to the greater of (A) the Base Rate per share per annum and (B) an
amount per share equal to the Liquidation Preference of a Series C-2 Equity
Share (exclusive of accrued but unpaid dividends) divided by the Conversion
Price (the "Series C-2 Common Equivalent Factor") times the dollar amount of
-----------------------------------
cash dividends declared with respect to each Common Equity Share that does not
result in an adjustment to the Conversion Price pursuant to Subparagraph
(d)(iii) of Section 6 (such product, the "Series C-2 Common Equivalent Amount")
-----------------------------------
for the same annual period; provided, however, that if as a result of the
-------- -------
quarterly dividends paid in accordance with the following sentence, the holders
of Series C-2 Equity Shares shall have received for any calendar year more
dividends than such Series C-2 Equity Shares shall be entitled under clauses (A)
and (B) above (as adjusted pursuant to the third and eighth sentences of this
Section 3), the dividends payable in respect of Series C-2 Equity Shares in
subsequent calendar years shall be reduced to the extent of such overpayment.
Subject to the provisio of the preceding sentence of this Section 3(a), the
dividend paid in respect of each quarterly period in each calendar year shall be
determined as follows (in each case, including any additional payment made
pursuant to the following sentence): (1) for the first quarter, the greater of
25% of the Base Rate per share and the Series C-2 Common Equivalent Amount for
the same quarter; (2) for the second quarter, an amount such that the aggregate
amount to be received per Series C-2 Equity Share in respect of the first two
quarters of such calendar year
9
<PAGE>
shall be the greater of 50% of the Base Rate per share and the Series C-2 Common
Equivalent Amount for the same two quarters; (3) for the third quarter, an
amount such that the aggregate amount to be received per Series C-2 Equity Share
in respect of the first three quarters of such calendar year shall be the
greater of 75% of the Base Rate per share and the Series C-2 Common Equivalent
Amount for the same three quarters; and (4) for the fourth quarter, an amount
such that the aggregate amount to be received per Series C-2 Equity Share in
respect of such calendar year shall be the amount provided in the preceding
sentence of this Section 3(a). Notwithstanding the foregoing, for any quarter in
which a Fixed Charge Coverage Violation (as defined below) has occurred, the
dividend payable per Series C-2 Equity Share shall be 1.20 times the amount
-----
provided in the preceding sentence. A "Fixed Charge Coverage Violation" shall
occur for any quarter that the ratio of the Corporation's Consolidated EBITDA to
its Consolidated Fixed Charges is below 1.40 to 1. The dividends shall begin to
accrue as set forth above and shall be fully cumulative from the first day of
the applicable Dividend Period, whether or not in any Dividend Period or Periods
there shall be funds of the Corporation legally available for the payment of
such dividends, and shall be payable quarterly, when, as and if declared by the
Board of Directors, in arrears on Dividend Payment Dates. Accumulated but unpaid
dividends for any past quarterly dividend periods may be declared and paid at
any time, without reference to any regularly scheduled quarterly dividend
payment date, to holders of record on such date, not exceeding 50 days preceding
such dividend payment date, fixed for the purpose by the Board of Directors in
advance of payment of each particular dividend. Any dividend payment made on
Series C-2 Equity Shares shall first be credited against the earliest accrued
but unpaid dividend due with respect to Series C-2 Equity Shares which remains
payable. Beginning with the quarter in which a REIT Termination Event occurs,
all dividends payable per Series C-2 Equity Share pursuant to this Section shall
be multiplied by 2.5.
(b) The initial Dividend Period for the Series C-2 Equity Shares will
include a partial dividend for the period from the Issue Date until the last day
of the calendar quarter immediately following such Issue Date. The amount of
dividends payable for such initial period, or any other period shorter than a
full quarterly Dividend Period, on the Series C-2 Equity Shares shall be
computed by dividing the number of days in such period by 90 and multiplying the
result by the Series C-2 Preferred dividend determined in accordance with
Section 3(a). Holders of Series C-2 Equity Shares shall not be entitled to any
dividends, whether payable in cash, property or shares, in excess of cumulative
dividends, as herein provided, on the Series C-2 Equity Shares. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the Series C-2 Equity Shares which may be in arrears.
(c) So long as any Series C-2 Equity Shares remain outstanding, no
dividends, except as described in the immediately following sentence, shall be
10
<PAGE>
declared or paid or set apart for payment on any class or series of Parity
Shares for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series C-2 Equity Shares for
all Dividend Periods terminating on or prior to the dividend payment date on
such class or series of Parity Shares. When dividends are not paid in fu1l or a
sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon Series C-2 Equity Shares and all dividends declared upon any other
class or series of Parity Shares shall be declared ratably in proportion to the
respective amounts of dividends accumulated and unpaid on the Series C-2 Equity
Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series C-2 Equity Shares remain outstanding, no
dividends (other than dividends or distributions paid solely in Fully Junior
Shares, or options, warrants or rights to subscribe for or purchase, Fully
Junior Shares) shall be declared or paid or set apart for payment or other
distribution shall be declared or made or set apart for payment upon Junior
Shares, nor shall any Junior Shares be redeemed, purchased or otherwise acquired
(other than a redemption, purchase or other acquisition of Common Shares made
for purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any Junior Shares) by the Corporation,
directly or indirectly (except by conversion into or exchange for Fully Junior
Shares), unless in each case the full cumulative dividends on all outstanding
Series C-2 Equity Shares and any other Parity Shares of the Corporation shall
have been or contemporaneously are declared and paid or declared and set apart
for payment for all Dividend Periods terminating on or prior to the date of
declaration or payment with respect to the Series C-2 Equity Shares and all
dividend periods terminating on or prior to the date of declaration or payment
with respect to such Parity Shares. Subject to the foregoing, and not otherwise,
such dividends and distributions may be declared by the Board of Directors and
paid on any Common Equity Shares from time to time out of any funds legally
available therefor, and the Series C-2 Equity Shares shall not be entitled to
participate in any such dividends, whether payable in cash, stock or otherwise.
(e) No distributions on Series C-2 Equity Shares shall be declared by
the Board of Directors or paid or set apart for payment by the Corporation at
such time as the terms and provisions of any agreement of the Corporation,
including any agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
11
<PAGE>
(f) In determining whether a distribution by dividend, redemption or
other acquisition of Shares or otherwise is permitted under Missouri law, no
effect shall be given to amounts that would be needed, if the Corporation were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights on
dissolution are superior to those receiving the distribution.
Section 4. Liquidation Preference.
-----------------------
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, subject to the prior preferences
and other rights of any series of stock ranking senior to the Series C-2
Preferred Shares upon liquidation, distribution or winding up of the
Corporation, before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
Junior Shares, the holders of the Series C-2 Equity Shares shall be entitled to
receive One Hundred Eighty Dollars ($180.00) (the "Liquidation Preference") per
----------------------
share of Series C-2 Equity Shares plus an amount equal to all dividends (whether
or not earned or declared) accrued and unpaid thereon to the date of
liquidation, dissolution or winding up of the affairs of the Corporation (any
such date, a "Series C-2 Liquidation Date") but such holders shall not be
---------------------------
entitled to any further payment; provided, that the dividend payable with
--------
respect to the Dividend Period containing the Series C-2 Liquidation Date shall
be equal to the dividend determined pursuant to Section 3 above for the
preceding Dividend Period times a fraction equal to the actual number of days
elapsed from the end date of the calendar quarter most recently completed to the
relevant Series C-2 Liquidation Date over 90 days. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the Series C-2 Equity
Shares shall be insufficient to pay in full the preferential amount aforesaid
and liquidating payments on any other shares of any class or series of Parity
Shares, then such assets, or the proceeds thereof, shall be distributed among
the holders of Series C-2 Equity Shares and any such other Parity Shares ratably
in accordance with the respective amount that would be payable on such Series C-
2 Equity Shares and any such other Parity Shares if all amounts payable thereon
were paid in full. For the purposes of this Section 4, (i) a consolidation or
merger of the Corporation with one or more corporations, real estate investment
trusts or other entities, (ii) a sale, lease or conveyance of all or
substantially all of the Corporation's Property or business or (iii) a statutory
share exchange shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, of the Corporation.
12
<PAGE>
(b) Subject to the rights of the holders of shares of any series or
class or classes of stock ranking on a parity with (including the Parity Shares)
or prior to the Series C-2 Equity Shares upon liquidation, dissolution or
winding up, upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the holders of the Series C-2
Equity Shares, as provided in this Section 4, the holders of Series C-2 Equity
Shares shall have no other claim to the remaining assets of the Corporation and
any other series or class or classes of Junior Shares shall, subject to the
respective terms and provisions (if any) applying thereto, he entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series C-2 Equity Shares shall not be entitled to share therein.
Section 5. Redemption at the Option of the Corporation.
-------------------------------------------
(a) The Series C-2 Equity Shares shall not be redeemable by the
Corporation prior to August 12, 2008. On and after August 12, 2008, the
Corporation, at its option, may redeem the Series C-2 Equity Shares, in whole at
any time or from time to time in part, in minimum increments of $10.0 million of
aggregate Liquidation Preference of such shares, out of funds legally available
therefor at a redemption price payable in cash equal to 100% of the Liquidation
Preference per Series C-2 Equity Shares (plus all accumulated, accrued and
unpaid dividends as provided in paragraph (b) below).
(b) Upon any redemption of Series C-2 Equity Shares pursuant to this
Section 5, the Corporation shall pay all accrued and unpaid dividends, if any,
thereon to the Call Date, without interest. If the Call Date falls after a
dividend payment record date and prior to the corresponding Dividend Payment
Date, then each holder of Series C-2 Equity Shares at the close of business on
such dividend payment record date shall be entitled to the dividend payable on
such shares on the corresponding Dividend Payment Date notwithstanding any
redemption of such shares before such Dividend Payment Date. Except as provided
above, the Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on Series C-2 Equity Shares called for
redemption.
(c) If full cumulative dividends on the Series C-2 Equity Shares and
any other class or series of Parity Shares of the Corporation have not been
declared and paid or declared and set apart for payment, the Series C-2 Equity
Shares may not be redeemed under this Section 5 in part and may not be redeemed
unless the Series C Equity Shares and Series C-l Equity Shares are also redeemed
in whole and the Corporation may not purchase or acquire Series C Equity Shares,
Series C-1 Equity Shares or Series C-2 Equity Shares otherwise than pursuant to
a purchase or
13
<PAGE>
exchange offer made on the same terms to all holders of Series C Equity Shares,
Series C-1 Equity Shares and Series C-2 Equity Shares.
(d) Notice of the redemption of any Series C-2 Equity Shares under
this Section 5 shall he mailed by first class mail or recognized overnight
courier to each holder of record of Series C-2 Equity Shares to be redeemed at
the address of each such holder as shown on the Corporation's records, not less
than 30 nor more than 90 days prior to the Call Date. Neither the failure to
mail any notice required by this paragraph (d), nor any defect therein or in the
mailing thereof, to any particular holder, shall affect the sufficiency of the
notice or the validity of the proceedings for redemption with respect to the
other holders. Each such mailed notice shall state, as appropriate: (1) the
Call Date; (2) the number of Series C-2 Equity Shares to be redeemed and, if
fewer than all the shares held by such holder are to be redeemed, the number of
such shares to be redeemed from such holder; (3) the redemption price; (4) the
place or places at which certificates for such shares are to be surrendered; (5)
the then-current Conversion Price; and (6) that dividends on the shares to be
redeemed shall cease to accrue on such Call Date except as otherwise provided
herein. Notice having been mailed as aforesaid, from and after the Call Date
(unless the Corporation fail to make available an amount of cash necessary to
effect such redemption), (i) except as otherwise provided herein, dividends on
the Series C-2 Equity Shares so called for redemption shall cease to accrue,
(ii) such shares shall no longer be deemed to be, outstanding, and (iii) all
rights of the holders thereof as holders of Series C-2 Equity Shares shall cease
(except the rights to receive the cash payable upon such redemption, without
interest thereon, upon surrender and endorsement of their certificates if so
required and to receive any dividends payable thereon). The Corporation's
obligation to provide cash in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the Call Date, the Corporation shall deposit
with a bank or trust company that has an office in the borough of Manhattan,
City of New York, and that has capital and surplus of at least $150,000,000,
necessary for such redemption, in trust, with irrevocable instructions that such
cash be applied to the redemption of the Series C-2 Equity Shares so called for
redemption. No interest shall accrue for the benefit of the holders of Series
C-2 Equity Shares to be redeemed on any cash so set aside by the Corporation.
Subject to applicable escheat laws, any such cash unclaimed at the end of two
years from the Call Date shall revert to the general finds of the Corporation,
after which reversion the holders of such shares so called for redemption shall
look only to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for
14
<PAGE>
transfer, if the Corporation shall so require and if the notice shall so state),
such shares shall be exchanged for any cash (without interest thereon) for which
such shares have been redeemed. If fewer than all the outstanding Series C-2
Equity Shares are to be redeemed, shares to be redeemed shall be selected by the
Corporation from outstanding Series C-2 Equity Shares not previously called for
redemption pro rata (as nearly as may be), by lot or by any other method
determined by the Corporation in its sole discretion to be equitable. If fewer
than all the Series C-2 Equity Shares evidenced by any certificate are redeemed,
then new certificates evidencing the unredeemed shares shall be issued without
cost to the holder thereof.
Section 6. Conversion. Holders of Series C-2 Equity Shares shall have
----------
the right to convert all or a portion of such shares into Common Equity Shares,
as follows:
(a) Subject to and upon compliance with the provisions of this Section
6, a holder of Series C-2 Preferred Shares or Excess Preferred Shares shall have
the right, at his or her option, at any time (such time being, the "Conversion
----------
Date"), to convert all or any portion of such shares into the number of fully
- ----
paid and nonassessable Common Shares or Excess Common Shares obtained by
dividing the aggregate Liquidation Preference of such shares (inclusive of
accrued but unpaid dividends) by the Conversion Price (as in effect at the time
and on the date provided for in the last paragraph of paragraph (b) of this
Section 6) by surrendering such shares to be converted, such surrender to be
made in the manner provided in para graph (b) of this Section 6; provided,
--------
however, that the right to convert shares called for redemption pursuant to
- -------
Section 5 shall terminate at the close of business on the fifth Business Day
prior to the Call Date fixed for such redemption, unless the Corporation shall
default in making payment of the cash payable upon such redemption under
Section 5.
(b) In order to exercise the conversion right, the holder of each
share of C-2 Equity Shares to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof irrevocably elects to convert such Series C-
2 Equity Shares. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such Series C-2 Equity Shares are registered,
each share surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the holder
or such holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid).
15
<PAGE>
Holders of Series C-2 Equity Shares at the close of business on a dividend
payment record date shall be entitled to receive the dividend payable on such
shares on the correspondence Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to such
Dividend Payment Date. However, Series C-2 Equity Shares surrendered for
conversion during the period between the close of business on any dividend
payment record date and the opening of business on the corresponding Dividend
Payment Date (except shares converted after the issuance of notice of redemption
with respect to a Call Date during such period, such Series C-2 Equity Shares
being entitled to such dividend on the Dividend Payment Date) must be
accompanied by payment of an amount equal to the dividend payable on such shares
on such Dividend Payment Date. A holder of Series C-2 Equity Shares on a
dividend payment record date who (or whose transferee) tenders any such shares
for conversion into Common Equity Shares on the corresponding Dividend Payment
Date will receive the dividend payable by the Corporation on such Series C-2
Equity Shares on such date, and the converting holder need not include payment
of the amount of such dividend upon surrender of Series C-2 Equity Shares for
conversion. Except as provided above, the Corporation shall make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
or for dividends on the Common Equity Shares issued upon such conversion.
As promptly as practicable after the surrender of certificates for Series
C-2 Equity Shares as aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or on his or her written order, a certificate or
certificates for the number of full Common Equity Shares issuable upon the
conversion of such shares in accordance with provisions of this Section 6, and
any fractional interest in respect of a Common Share arising upon such
conversion shall be settled as provided in paragraph (c) of this Section 6.
Each conversion should be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for Series C-2
Equity Shares shall have been surrendered and such notice shall have been
received by the Corporation as aforesaid (and if applicable, payment of an
amount equal to the dividend payable on such shares shall have been received by
the Corporation as described above), and the Person or Persons in whose name or
names any certificate or certificates for Common Equity Shares shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at such time on such date
unless the share transfer books of the Corporation shall be closed on that date,
in which event such Person or Persons shall
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<PAGE>
be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such share transfer books are open,
but such conversion shall be at the Conversion Price in effect on the date on
which such shares shall have been surrendered and such notice received by the
Corporation.
(c) No fractional shares or scrip representing fractions of Common
Equity Shares shall be issued upon conversion of the Series C-2 Equity Shares.
Instead of any fractional interest in a Common Share that would otherwise be
deliverable upon the conversion of a Series C-2 Equity Share, the Corporation
shall pay to the holder of such share an amount in cash based upon the Current
Market Price of the Common Equity Shares on the Trading Day immediately
preceding the date of conversion. If more than one share shall be surrendered
for conversion at one time by the same holder, the number of full Common Equity
Shares issuable upon conversion thereof shall be computed on the basis of the
aggregate number of Series C-2 Equity Shares so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its Common Equity Shares in Common
Equity Shares, (B) subdivide its outstanding Common Equity Shares into a
greater number of shares, (C) combine its outstanding Common Equity Shares
into a smaller number of shares or (D) issue any shares of stock by
reclassification of its Common Equity Shares, the Conversion Price in
effect at the opening of business on the day following the date fixed for
the determination of shareholders entitled to receive such dividend or
distribution or at the opening of business on the Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any Series C-2 Equity Shares thereafter surrendered
for conversion shall be entitled to receive the number of Common Equity
Shares that such holder would have owned or have been entitled to receive
after the happening of any of the events described above as if such Series
C-2 Equity Shares had been converted immediately prior to the record date
in the cases of a dividend or distribution or the effective date in the
case of a subdivision, combination or reclassification. An adjustment made
pursuant to this subparagraph (i) shall become effective immediately after
the opening of business on the Business Day next following the record date
(except as provided in paragraph (h) below) in the case of a dividend or
distribution and shall become effective immediately after the opening of
17
<PAGE>
business on the Business Day next following the effective date in the case
of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Equity Shares entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Equity Shares at a price per
share less than 95% (100% if a stand-by underwriter is used and charges the
Corporation a commission) of the Fair Market Value per Common Share on the
record date for the determination of shareholders entitled to receive such
rights, options or warrants, then the Conversion Price in effect at the
opening of business on the Business Day next following such record date
shall be adjusted to equal the price determined by multiplying (A) the
Conversion Price in effect immediately prior to the opening of business on
the Business Day next following the date fixed for such determination by
(B) a fraction, the numerator of which shall be the sum of (x) the number
of Common Equity Shares outstanding on the close of business on the date
fixed for such determination and (y) the number of shares that the
aggregate proceeds to the Corporation from the exercise of such rights,
options or warrants for Common Equity Shares would purchase at 95 % of such
Fair Market Value (or 100% in the case of a stand-by underwriting), and the
denominator of which shall be the sum of (x) the number of Common Equity
Shares outstanding on the close of business on the date fixed for such
determination and (y) the number of additional Common Equity Shares offered
for subscription or purchase pursuant to such rights, options or warrants.
Such adjustment shall become effective immediately after the opening of
business on the day next following such record date (except as provided in
paragraph (h) below). In determining whether any rights, options or
warrants entitle the holders of Common Equity Shares to subscribe for or
purchase Common Equity Shares at less than 95% of such Fair Market Value
(or 100% in the case of a stand-by underwriting), there shall be taken into
account any consideration received by the Corporation upon issuance and
upon exercise of such rights, options or warrants, the value of such
consideration, if other than cash, to be determined by the Board of
Directors whose determination shall be conclusive. To the extent that
Common Equity Shares are not delivered pursuant to such rights, options or
warrants, upon the expiration or termination of such rights, options or
warrants, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect had the adjustments made upon the issuance of
such rights, options or warrants been made on the basis of delivery of only
the number of Common Equity Shares actually delivered. In the event that
such
18
<PAGE>
rights, options or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such date fixed for the determination of stockholders entitled to
receive such rights, options or warrants had not been fixed.
(iii) If the Corporation shall distribute to all holders of its
Common Equity Shares any securities of the Corporation (other than Common
Equity Shares) or evidence of its indebtedness or assets (excluding
cumulative cash dividends or distributions paid with respect to the Common
Equity Shares after December 31, 1997 which are not in excess of the
following: the sum of (A) the Corporation's cumulative undistributed Funds
from Operations at December 31, 1997, plus (B) the cumulative amount of
Funds from Operations, as determined by the Board of Directors, after
December 31, 1997, minus (C) the cumulative amount of dividends accrued or
paid in respect of the Series C-2 Equity Shares or any other class or
series of preferred stock of the Corporation after the Issue Date) or
rights, options or warrants to subscribe for or purchase any of its
securities (excluding those rights, options and warrants issued to all
holders of Common Equity Shares entitling them for a period expiring within
45 days after the record date referred to in subparagraph (ii) above to
subscribe for or purchase Common Equity Shares, which rights and warrants
are referred to in and treated under subparagraph (ii) above) (any of the
foregoing being hereinafter in this subparagraph (iii) collectively called
the "Securities" and individually a "Security"), then in each such case the
---------- --------
Conversion Price shall be adjusted so that it shall equal the price
determined by multiplying (x) the Conversion Price in effect immediately
prior to the close of business on the date fixed for the determination of
shareholders entitled to receive such distribution by (y) a fraction, the
numerator of which shall be the Fair Market Value per Common Share on the
record date mentioned below less the then fair market value (as determined
by the Board of Directors, whose determination shall be conclusive) of the
portion of the Securities or assets or evidences of indebtedness so
distributed or of such rights, options or warrants applicable to one Common
Share, and the denominator of which shall be the Fair Market Value per
Common Share on the record date mentioned below. Such adjustment shall
become effective on the date of distribution retroactive to the opening of
business on the Business Day next following (except as provided in
paragraph (h) below) the record date for the determination of shareholders
entitled to receive such distribution. For the purposes of this
subparagraph (iii), the distribution of a Security, which is distributed
not only to the owners of the Common Equity Shares on the date fixed for
the determination of shareholders
19
<PAGE>
entitled to such distribution of such Security, but also is distributed
with each Common Share delivered to a Person converting a share of Series
C-2 Equity Shares after such determination date, shall not require an
adjustment of the Conversion Price pursuant to this subparagraph (iii);
provided that on the date, if any, on which a Person converting a
--------
share of Series C-2 Equity Shares would no longer be entitled to receive
such Security with a Common Share (other than as a result of the
termination of all such Securities), a distribution of such Securities
shall be deemed to have occurred and the Conversion Price shall be adjusted
as worded in this subparagraph (iii) (and such day shall be deemed to be
"the date fixed for the determination of the shareholders entitled to
receive such distribution" and "the record date" within the meaning of the
two preceding sentences). If any dividend or distribution of the type
described in this paragraph (iii) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price which
would then be in effect if such dividend or distribution had not been
declared.
Rights or warrants distributed by the Corporation to all holders of
Common Equity Shares entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are
-------------
deemed to be transferred with such shares of Common Equity Shares; (ii) are
not exercisable; and (iii) are also issued in respect of future issuances
of Common Equity Shares, shall be deemed not to have been distributed for
purposes of this subparagraph (iii) (and no adjustment to the Conversion
Price under this subparagraph (iii) will be required) until the occurrence
of the earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant shall
become exercisable to purchase different securities, evidences of
indebtedness or other assets or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at
a different purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to a new
right or warrant (and a termination or expiration of the existing right or
warrant without exercise by the holder thereof to the extent not
exercised). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto,
that resulted in an adjustment to the Conversion Price under this
Subparagraph (iii), (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon
20
<PAGE>
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution
(but not a distribution paid exclusively in cash), equal to the per share
redemption or repurchase price received by a holder of Common Equity Shares
with respect to such rights or warrants (assuming such holder had retained
such rights or warrants), made to all holders of Common Equity Shares as of
the date of such redemption or repurchase, and (2) in the case of such
rights or warrants all of which shall have expired or been terminated
without exercise, the Conversion Price shall be readjusted as if such
rights and warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the Corporation
or any subsidiary or controlled Affiliate of the Corporation for all or any
portion of the Common Equity Shares shall expire and such tender or
exchange offer shall require the payment by the Corporation or such
subsidiary or controlled Affiliate of consideration per Common Share having
a fair market value (as determined in good faith by the Board of Directors
whose determination shall be conclusive and described in a resolution of
the Board of Directors), at the last time (the "Expiration Time") tenders
---------------
or exchanges may be made pursuant to such tender or exchange offer, that
exceeds the Current Market Price per Common Share on the Trading Day next
succeeding the Expiration Time, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph, by a fraction
of which the numerator shall be the number of Common Equity Shares
outstanding (including any tendered or exchanged shares) at the Expiration
Time, multiplied by the Current Market Price per Common Share on the
Trading Day next succeeding the Expiration Time, and the denominator shall
be the sum of (A) the fair market value (determined as aforesaid) of the
aggregate consideration payable to shareholders based upon the acceptance
(up to any maximum specified in the terms of the tender or exchange offer)
of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any maximum, being
referred to as the "Purchased Shares") and (B) the product of the number of
----------------
Common Equity Shares outstanding (less any Purchased Shares) at the
Expiration Time and the Current Market Price per Common Share on the
Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following
the Expiration Time. In the event the Corporation
21
<PAGE>
or any subsidiary or controlled Affiliate is obligated to purchase shares
pursuant to any such tender offer, but the Corporation or such subsidiary
or controlled Affiliate is permanently prevented by applicable law from
effecting any such purchases, or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which
would then be if effect if such tender offer had not been made.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease of
at least 1% in such price; provided, however, that any adjustments that by
-------- -------
reason of this subparagraph (v) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and
-------- -------
made in accordance with the provisions of this Section 6 (other than this
subparagraph (v)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of Common
Shares. Notwithstanding any other provisions of this Section 6, the
Corporation shall not be required to make any adjustment of the Conversion
Price for the issuance of any Common Equity Shares pursuant to any plan
providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional
amounts in Common Equity Shares under such plan. All calculations under
this Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-hundredth of a share (with $.005 of a share
being rounded upward), as the case may be. Anything in this paragraph (d)
to the contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such reductions in the Conversion Price,
in addition to those required by this paragraph (d), as it in its
discretion shall determine to be advisable in order that any share
dividends, subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase shares or
securities, or distribution of other assets (other than cash dividends)
hereafter made by the Corporation to its shareholders shall not be taxable.
To the extent permitted by applicable law, the Corporation from time to
time may reduce the Conversion Price by any amount for any period of time
if the period is at least 20 days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interest of the Corporation, which
determination shall be conclusive. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Corporation shall mail to
the holder of each Series C-2 Preferred Share at his or her last address
appearing on the share register a notice of reduction prior to the date the
22
<PAGE>
reduced Conversion Price takes effect and such notice shall state the
reduced Conversion Price and the period during which it will be in effect.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, self
tender offer for 40% or more of its Common Equity Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Equity Shares and excluding any transaction as to which subparagraph (d)(i) of
this Section 6 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which all or substantially all of
- ------------
the Common Equity Shares are converted into the right to receive different
securities or other property (including cash or any combination thereof), each
Series C-2 Equity Share which is not redeemed or converted into the right to
receive different securities or other property prior to such Transaction shall
thereafter be convertible, in lieu of Common Equity Shares into the kind and
amount of different securities and other property (including cash or any
combination thereof) receivable upon the consummation of such Transaction by a
holder of that number of Common Equity Shares into which one Series C-2 Equity
Share was convertible immediately prior to such Transaction, assuming such
holder of Common Equity Shares (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be
("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed
- --------------------
to exercise his rights of election, if any, as to the kind or amount of shares,
securities and other property (including cash) receivable upon such Transaction
(provided that if the kind or amount of shares, securities and other property
(including cash) receivable upon such Transaction is not the same for each
Common Share held immediately prior to such Transaction by other than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-Electing Share"), then for the
------------------
purpose of this paragraph (e) the kind and amount of shares, securities and
other property (including cash) receivable upon such Transaction by each Non-
Electing Share shall be deemed to be the kind and amount so receivable per share
by holders of a plurality of the Non-Electing Shares). The Corporation shall
not be a party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this paragraph (e), and it shall not consent
or agree to the occurrence of any Transaction until the Corporation has entered
into an agreement with the successor or purchasing entity, as the case may be,
for the benefit of the holders of the Series C-2 Equity Shares that will contain
provisions enabling the holders of the Series C-2 Equity Shares that remain
outstanding after such Transaction to convert into the consideration received
by holders of Common Shares at the Conversion Price in effect
23
<PAGE>
immediately prior to such Transaction. The provisions of this paragraph (e)
shall similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Equity Shares (other than cash dividends or
distributions paid with respect to the Common Equity Shares after December
31, 1997 not in excess of the sum of the Corporation's cumulative
undistributed Funds from Operations at December 31, 1997, plus the
cumulative amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1997, minus the cumulative amount of
dividends accrued or paid in respect of the Series C-2 Equity Shares or any
other class or series of preferred stock of the Corporation after the Issue
Date); or
(ii) the Corporation shall authorize the granting to all holders
of Common Equity Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or war
rants; or
(iii) there shall be any reclassification of the Common
Equity Shares (other than an event to which subparagraph (d)(i) of this
Section 6 applies) or any consolidation or merger to which the
Corporation is a party (other than a merger in which the Corporation is the
surviving entity) and for which approval of any shareholders of the
Corporation is required, or a statutory share exchange, or a self tender
offer by the Corporation for all or substantially all of its outstanding
Common Shares or the sale or transfer of all or substantially all of the
assets of the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series C-2 Equity Shares at their addresses
as shown on the records of the Corporation, as promptly as possible, but at
least 10 days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Equity
Shares of record to be entitled to such dividend, distribution
24
<PAGE>
or rights, options or warrants are to be determined or (B) the date on which
such reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Equity
Shares of record shall be entitled to exchange their Common Equity Shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, statutory share exchange, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings described
in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment and shall
mail such notice of such adjustment of the Conversion Price to the holder of
each share of Series C-2 Equity Shares at such holder's last address as shown on
the records of the Corporation.
(h) In any case in which paragraph (d) of this Section 6 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any share of Series C-2 Equity Shares converted after
such record date and before the occurrence of such event the additional Common
Equity Shares issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Equity Shares issuable upon such
conversion before giving effect to such adjustment and (B) paying to such holder
any amount of cash in lieu of any fraction pursuant to paragraph (c) of this
Section 6.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
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<PAGE>
(j) If the Corporation shall take any action affecting the Common
Equity Shares, other than action described in this Section 6, that in the
opinion of the Board of Directors would materially and adversely affect the
conversion rights of the holders of the Series C-2 Equity Shares, the Conversion
Price for the Series C-2 Equity Shares may be adjusted, to the extent permitted
by law, in such manner, if any, and at such time, as the Board of Directors, in
its sole discretion, may determine to be equitable in the circumstances.
(k) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Equity Shares, for the purpose of effecting
conversion of the Series C-2 Equity Shares, the full number of Common Equity
Shares deliverable upon the conversion of all outstanding Series C-2 Equity
Shares not theretofore converted. For purposes of this paragraph (k), the number
of Common Shares that shall be deliverable upon the conversion of all
outstanding Series C-2 Preferred Shares shall be computed as if at the time of
computation all such outstanding shares were held by a single holder.
Any Common Equity Shares issued upon conversion of the Series C-2 Equity
Shares shall be validly issued, fully paid and nonassessable. Before taking any
action that would cause an adjustment reducing the Conversion Price below the
then-par value of the Common Equity Shares deliverable upon conversion of the
Series C-2 Equity Shares, the Corporation will take any action that, in the
opinion of its counsel, may be necessary in order that the Corporation may
validly and legally issue fully paid and (subject to any customary qualification
based upon the nature of a real estate investment trust) nonassessable Common
Equity Shares at such adjusted Conversion Price.
The Corporation shall use its best efforts to list the Common Shares
required to be delivered upon conversion of the Series C-2 Equity Shares, prior
to such delivery, upon each national securities exchange, if any, upon which the
outstanding Common Shares are listed at the time of such delivery.
The Corporation shall use its best efforts to comply with all federal and
state securities laws and regulations thereunder in connection with the issuance
of any securities that the Corporation shall be obligated to deliver upon
conversion of the Series C-2 Equity Shares. The certificates evidencing such
securities shall bear such legends restricting transfer thereof in the absence
of registration under applicable securities laws or an exemption therefrom as
the Corporation may in good faith deem appropriate.
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<PAGE>
(l) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of Common
Equity Shares or other securities or property on conversion of the Series C-2
Equity Shares pursuant hereto; provided, however, that the Corporation shall not
-------- -------
be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of Common Shares or other securities or
property in a name other than that of the holder of the Series C-2 Equity Shares
to be converted, and no such issue or delivery shall be made unless and until
the Person requesting such issue or delivery has paid to the Corporation the
amount of any such tax or established, to the reason able satisfaction of the
Corporation, that such tax has been paid.
Section 7. Change of Control.
(a) If a Change of Control (as defined below) occurs (a "Change of
---------
Control Repurchase Event"), the holders of Series C-2 Equity Shares shall have
- ------------------------
the right to require the Corporation, to the extent the Corporation shall have
funds legally available therefor, to redeem any or all of the Series C-2 Equity
Shares held by such holder at a repurchase price payable in cash (the "Change of
---------
Control Repurchase Payment") in an amount equal to 105% of the Liquidation
- --------------------------
Preference thereof plus accrued and unpaid dividends whether or not declared, if
any, to the date of repurchase or the date payment is made available (the
"Change of Control Date") pursuant to the offer described in subsection (b)
- -----------------------
below (the "Change of Control-Repurchase Offer").
----------------------------------
(b) Within 15 days following the Corporation becoming aware that a
Change of Control Repurchase Event has occurred, the Corporation shall mail by
first class mail or recognized overnight courier a notice to each holder of
Series C-2 Equity Shares stating (A) that a Change of Control Repurchase Event
has occurred and that such holder has the right to require the Corporation to
repurchase any or all of the Series C-2 Equity Shares then held by such holder,
(B) the date of repurchase (which shall be a Business Day, no earlier than 30
days and no later than 60 days from the date such notice is mailed, or such
later date as may be necessary to comply with the requirements of the Exchange
Act), (C) the repurchase price and (D) the instructions determined by the
Corporation, consistent with this subsection, that such investor must follow in
order to have the Series C-2 Equity Shares repurchased.
(c) On the Change of Control Repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series C-2 Equity Shares or portions
thereof tendered by such holder pursuant to the Change of Control Repurchase
Offer and promptly by wire transfer of immediately available funds to such
holder, as
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<PAGE>
directed by such holder, send an amount equal to the Change of Control
Repurchase Payment in respect of all Series C-2 Equity Shares or portions
thereof so tendered.
(d) Notwithstanding anything else herein, to the extent they are
applicable to any Change of Control Repurchase Offer, the Corporation will
comply with any federal and state securities laws, rules and regulations and all
time periods and requirements shall be adjusted accordingly
(e) For purposes hereof, "Change of Control" means the occurrence of
any of the following: (i) the first acquisition, directly or indirectly, by any
individual or entity or group (as such term is used in Section l3(d)(3) of the
Exchange Act) of beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act, except that such individual or entity shall be deemed to have
beneficial ownership of all shares that any such individual or entity has the
right to acquire, whether such right is exercisable immediately or only after
passage of time) of more than 25% of the Corporation's or Westfield America
Trust's outstanding equity securities with voting power, under ordinary
circumstances, to elect Directors of the Corporation; (ii) other than with
respect to the election, resignation or replacement of any Director designated,
appointed or elected by the holders of any Series of Preferred Shares (each a
"Preferred Director"), during any period of two consecutive years,
------------------
individuals who at the beginning of such period constituted the Board of
Directors of the Corporation (together with any new Directors whose election by
such Board of Directors or whose nomination for election by the shareholders of
the Corporation was approved by a vote of 66 2/3% of the Directors of the
Corporation (excluding Preferred Directors) then still in office who were
Directors at the beginning of such period, or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office of the Corporation; and
(iii) (A) any of the Corporation or Westfield America Trust consolidating with
or merging into another entity or conveying, transferring or leasing all or
substantially all of its assets (including, but not limited to, real property
investments) to any individual or entity, or (B) any entity consolidating with
or merging into any of the Corporation or Westfield America Trust, which in
either event (A) or (B) is pursuant to a transaction in which the outstanding
voting securities of the Corporation or Westfield America Trust is reclassified
or changed into or exchanged for cash, securities or other property; provided,
however, that the events described in clauses (i), (ii) and (iii) shall not be
deemed to be a Change of Control (a) in the case of the event described in
clause (iii), if the sole purpose of such event is that the Corporation or
Westfield America Trust is seeking to change its domicile or to convert from a
corporation to a trust or vice versa; (b) in the case of the event described in
clause (iii), if the holders of the exchanged securities of the Corporation or
Westfield
28
<PAGE>
America Trust immediately after such transaction beneficially own at least a
majority of the securities of the merged or consolidated entity normally
entitled to vote in elections of Directors of the Corporation or Westfield
America Trust; (c) if any of Westfield Holdings Limited or its wholly owned
subsidiaries remains as manager of the Corporation's properties and as adviser
of the Corporation, in each case, in a manner substantially similar to that on
the date hereof; or (d) if the Change of Control results solely from the
purchase or other acquisition of equity securities by Westfield Holdings
Limited, Westfield America Trust, the Lowy Family or the Investor.
Section 8. Redemption at the Option of the Holder.
--------------------------------------
(a) At any time after August 12, 2008, the holders of Series C-2
Equity Shares shall have the right at any time that the Corporation's common
stock has a Current Market Price at or below the Conversion Price per share, to
require the Corporation, to the extent the Corporation shall have funds legally
available therefor, to redeem any or all of the Series C-2 Equity Shares held by
such holder at a repurchase price payable, at the option of the Corporation,
in either (i) cash, or (ii) such number of Common Equity Shares as shall have a
Current Market Price in the aggregate on the day prior to the day such holder
gives notice pursuant to Section 8(b) of its intention to redeem, equal to in
either case, 100% of the liquidation preference thereof plus accrued and unpaid
dividends whether or not declared, if any, to the date of repurchase or the date
payment is made available (in the aggregate, the "Redemption Payment").
------------------
(b) For purposes of this Section 8, redemption at the option of the
holder shall be deemed to occur upon receipt by the Corporation of written
notice that the holder of Series C-2 Equity Shares wishes to tender shares to be
redeemed. The holders of such shares to be redeemed shall then have 30 days from
the date of such notice to deliver such shares to the Transfer Agent. Upon the
surrender of the certificate or certificates of Series C-2 Preferred Shares to
be redeemed, duly endorsed or assigned to the Corporation or in blank, at the
office of the Transfer Agent, the Corporation shall promptly, either (i) by wire
transfer of immediately available funds to such holder, as directed by such
holder, send an amount equal to the Redemption Payment in respect of all
Series C-2 Equity Shares or portions thereof so tendered or (ii) issue and
deliver to such holder, or on his or her written order, a certificate or
certificates for the number of full Common Equity Shares issuable in respect of
all Series C-2 Equity Shares or portions thereof so tendered.
Section 9. Shares To Be Retired. All Series C-2 Equity Shares which
--------------------
shall have been issued and reacquired in any manner by the Corporation shall be
29
<PAGE>
restored to the status of authorized but unissued preferred stock, without
discretion as to class or series, and subject to applicable limitations set
forth in the Articles may thereafter be reissued as shares of any series of
preferred stock.
Section 10. Ranking. Any class or series of stock of the Corporation
-------
shall be deemed to rank:
(a) prior to the Series C-2 Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Series C-2 Preferred Shares, which shall expressly include the Corporation's
nonvoting senior preferred stock, par value $1.00 per share;
(b) on a parity with the Series C-2 Preferred Shares, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof shall be different
from those of the Series C-2 Preferred Shares, if the holders of such class or
series and the Series C-2 Preferred Shares shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation preferences, without preference or priority one over the
other ("Parity Shares"), which shall expressly include the Corporation's Series
-------------
A Preferred Shares, Series B Preferred Shares, Series C Pre ferred Shares,
Series C-l Preferred Shares, Series D Preferred Shares and Series D-l Preferred
Shares;
(c) junior to the Series C-2 Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series C-2 Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, if such class or series shall be Fully Junior Shares.
Section 11. Voting.
------
(a) Except as expressly provided in this Certificate of Designation,
the holders of Series C-2 Equity Shares shall have no voting rights. If the
Corporation
30
<PAGE>
has obtained shareholder approval and made the amendments as described in
Section 11(b) below, and if and whenever (i) for two consecutive quarterly
Dividend Periods the Corporation fails to pay dividends on the Series C Equity
Shares, the Series C-1 Equity Shares or the Series C-2 Equity Shares (which
shall, with respect to any such quarterly dividend, mean that any such dividend
has not been paid in full), then the number of directors then constituting the
Board of Directors shall be increased by two and the holders of Series C Equity
Shares, the Series C-1 Equity Shares and the Series C-2 Equity Shares, voting
together as a single class, shall be entitled to elect the two additional
directors to serve on the Board of Directors or (ii) for two consecutive
quarterly Dividend Periods the Corporation fails to pay dividends on the Common
Shares in an amount per share at least equal to $0.32 (subject to adjustment
consistent tent with any adjustment of the Conversion Price pursuant to Section
6(a) of this Article), then the number of directors then constituting the Board
of Directors shall be increased by one and the holders of Series C Equity
Shares, the Series C-1 Equity Shares and the Series C-2 Equity Shares, voting
together as a single class, shall be entitled to elect the one additional
director to serve on the Board of Directors, in either case, at any annual
meeting of shareholders or special meeting held in place thereof, or at a
special meeting of the holders of the Series C Equity Shares, the Series C-1
Equity Shares and the Series C-2 Equity Shares called as hereinafter provided;
provided, however, that except as set forth below, the holders of the Series C
- -------- -------
Equity Shares, the Series C-1 Equity Shares and the Series C-2 Equity Shares
shall not have the right to elect more than two directors. If, other than
through the operation of this Section 11 or pursuant to the provisions of the
Articles of Incorporation relating to the Corporation's Series A and B Preferred
Shares (but only with respect to one director elected by the holders of the
Series A and B Preferred Shares), the Board of Directors shall be increased at
any time to more than ten directors, then, upon the occurrence or continuance of
any of the events described in this Section 11, the Board of Directors shall be
increased by such number of additional directors, and the holders of the Series
C Equity Shares, the Series C-i Equity Shares and the Series C-2 Equity Shares,
voting together as a single class, shall be entitled to elect such number of
additional directors, as shall be necessary to maintain the ratio of directors
elected by the holders of the Series C Equity Shares, the Series C-1 Equity
Shares and the Series C-2 Equity Shares to the directors otherwise elected, as
nearly as possible (rounding to the next larger whole number), equal to the
ratio that would have existed if the holders of the Series C Equity Shares, the
Series C-1 Equity Shares and the Series C-2 Equity Shares were able to elect the
full number of directors then permitted to be elected by them under this Section
11 and the directors otherwise elected numbered only ten. Whenever, as the case
may be, (i) all arrears in dividends on the Series C Equity Shares, the Series
C-1 Equity Shares and the Series C-2 Equity Shares then outstanding shall have
been paid and the Corporation has paid dividends
31
<PAGE>
thereon for two consecutive quarters and (ii) the Corporation has paid dividends
on the Common Shares in an amount per share at least equal to $0.32 (subject to
adjustment consistent with any adjustment of the Conversion Price pursuant to
Section 6(a) of this Article) for two consecutive quarters, then the right of
the holders of the Series C Equity Shares, the Series C-1 Equity Shares and the
Series C-2 Equity Shares to elect such additional directors shall cease (but
subject always to the same provision for the vesting of such voting rights in
the case of any similar future arrearage in quarterly dividends), and the terms
of once of all persons elected as Directors by the holders of the Series C
Equity Shares, the Series C-i Equity Shares and the Series C-2 Equity Shares
shall forthwith terminate and the number of the Board of Directors shall be
reduced accordingly. At any time after such voting power shall have been so
vested in the holders of Series C Equity Shares, the Series C-1 Equity Shares
and the Series C-2 Equity Shares, the Secretary of the Corporation may, and upon
the written request of any holders of 5% of the outstanding Series C Equity
Shares, the Series C-1 Equity Shares and the Series C-2 Equity Shares (ad
dressed to the Secretary at the principal office of the Corporation) shall, call
a special meeting of the holders of the Series C Equity Shares, the Series C-i
Equity Shares and the Series C-2 Equity Shares for the election of the Directors
to be elected by them as herein provided, such call to be made by notice similar
to that provided in the Bylaws of the Corporation for a special meeting of the
shareholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Series C Equity Shares,
Series C-1 Equity Shares or the Series C-2 Equity Shares may call such meeting,
upon the notice above provided, and for that purpose shall have access to the
records of the Corporation. The directors elected at any such special meeting
shall hold office until the next annual meeting of the shareholders or special
meeting held in lieu thereof if such office shall not have previously terminated
as above provided. If any vacancy shall occur among the Directors elected by
the holders of the Series C Equity Shares, the C-1 Equity Shares and the Series
C-2 Equity Shares a successor shall be elected by the Board of Directors, upon
the nomination of the then-remaining Director elected by the holders of the
Series C Equity Shares, the Series C-1 Equity Shares and the Series C-2 Equity
Shares or the successor of such remaining Director (or, if there are then no
such Directors or Director elected by the holders of Series C Equity Shares, the
Series C-1 Equity Shares and the Series C-2 Equity Shares, such Director shall
be elected by the holders of the Series C Equity Shares, the Series C-1 Equity
Shares and the Series C-2 Equity Shares as described above), to serve until the
next annual meeting of the shareholders or special meeting held in place thereof
if the term of such director shall not have previously terminated as provided
above.
32
<PAGE>
(b) Notwithstanding anything to the contrary contained in this Section
11, if the Corporation shall fail to obtain the required shareholder approval
and amend its Certificate of Designation for the Series C Preferred Shares so
that the holders of Series C Equity Shares vote together as a single class with
the holders of Series C-1 Equity Shares and the Series C-2 Equity Shares with
respect to the election of directors for which such holders are entitled to
vote, as provided above, then the voting rights of the holders of Series C-2
Preferred Shares shall automatically be altered to be as follows:
if and whenever (i) for two consecutive quarterly Dividend Periods the
Corporation fails to pay dividends on the Series C-2 Equity Shares
(which shall, with respect to any such quarterly dividend, mean that
any such dividend has not been paid in full), then the number of
directors then constituting the Board of Directors shall be
increased by two and the holders of Series C-1 Equity Shares and the
Series C-2 Equity Shares, voting together as a single class, shall be
entitled to elect the two additional directors to serve on the Board
of Directors or (ii) for two consecutive quarterly Dividend Periods
the Corporation fails to pay dividends on the Common Shares in an
amount per share at least equal to $0.32 (subject to adjustment
consistent with any adjustment of the Conversion Price pursuant to
Section 6(a) of this Article), then the number of directors then
constituting the Board of Directors shall be increased by one and the
holders of Series C-1 Equity Shares and the Series C-2 Equity Shares,
voting together as a single class, shall be entitled to elect the one
additional director to serve on the Board of Directors, in either
case, at any annual meeting of shareholders or special meeting held in
place thereof, or at a special meeting of the holders of the Series C-
1 Equity Shares and the Series C-2 Equity Shares called as hereinafter
provided; provided, however, that except as set forth below, the
holders of
-------- -------
Series C-1 Equity Shares and the Series C-2 Equity Shares shall not
have the right to elect more than two directors. If, other than
through the operation of this Section 11 or pursuant to the provisions
of the Articles of Incorporation relating to the Corporation's Series
A and B Preferred Shares (but only with respect to one director
elected by the holders of the Series A and B Preferred Shares), the
Board of Directors shall be increased at any time to more than ten
directors, then, upon the occurrence or continuance of any of the
events described in this Section 11, the Board of Directors shall be
increased by such number of additional directors, and the holders of
Series C-1 Equity Shares and the Series C-2 Equity
33
<PAGE>
Shares, voting together as a single class, shall be entitled to elect
such number of additional directors, as shall be necessary to maintain
the ratio of directors elected by the holders of the Series C-1 Shares
and the Series C-2 Equity Shares to the directors otherwise elected,
as nearly as possible (rounding to the next larger whole number),
equal to the ratio that would have existed if the holders of the
Series C-1 Equity Shares and the Series C-2 Equity Shares were able to
elect the full number of directors then permitted to be elected by
them under this Section 11 and the directors otherwise elected
numbered only ten. Whenever, as the case may be, (i) all arrears in
dividends on the Series C-1 Equity Shares and the Series C-2 Equity
Shares then outstanding shall have been paid and the Corporation has
paid dividends thereon for two consecutive quarters and (ii) the
Corporation has paid dividends on the Common Shares in an amount per
share at least equal to $0.32 (subject to adjustment consistent with
any adjustment of the Conversion Price pursuant to Section 6(a) of
this Article) for two consecutive quarters, then the right of the
holders of the Series C-l Equity Shares and the Series C-2 Equity
Shares to elect such additional directors shall cease (but subject
always to the same provision for the vesting of such voting rights in
the case of any similar future arrearage in quarterly dividends), and
the terms of office of all persons elected as Directors by the holders
of the Series C-1 Equity Shares and the Series C-2 Equity Shares shall
forthwith terminate and the number of the Board of Directors shall be
reduced accordingly. At any time after such voting power shall have
been so vested in the holders of Series C-1 Equity Shares and the
Series C-2 Equity Shares, the Secretary of the Corporation may, and
upon the written request of any holders of 5% of the outstanding
Series C-1 Equity Shares and the Series C-2 Equity Shares (addressed
to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Series C-1 Equity Shares
and the Series C-2 Equity Shares for the election of the Directors to
be elected by them as herein provided, such call to be made by notice
similar to that provided in the Bylaws of the Corporation for a
special meeting of the shareholders or as required by law. If any
such special meeting required to be called as above provided shall not
be called by the Secretary within 20 days after receipt of any such
request, then any holder of Series C-1 Equity Shares or Series C-2
Equity Shares may call such meeting, upon the notice above provided,
and for that purpose shall have access to the records of the
Corporation. The directors elected at any such special
34
<PAGE>
meeting shall hold office until the next annual meeting of the
shareholders or special meeting held in lieu thereof if such office
shall not have previously terminated as above provided. If any vacancy
shall occur among the Directors elected by the holders of the Series
C-1 Equity Shares and the Series C-2 Equity Shares, a successor shall
be elected by the Board of Directors, upon the nomination of the then-
remaining Director elected by the holders of the Series C-1 Equity
Shares and the Series C-2 Equity Shares or the successor of such
remaining Director (or, if there are then no such Directors or
Director elected by the holders of the Series C-1 Equity Shares and
the Series C-2 Equity Shares, such Director shall be elected by the
holders of the Series C-1 Equity Shares and the Series C-2 Equity
Shares as described above), to serve until the next annual meeting of
the shareholders or special meeting held in place thereof if the term
of such director shall not have previously terminated as provided
above.
(c) The holders of the Series C-2 Equity Shares, voting together with
the holders of the Common Shares as a single class, shall be entitled to vote on
any matter involving any transaction between the Corporation and any Affiliate
of the Corporation which is brought to a vote of the holders of the Common
Shares (other than any vote on the conversion of the Series D Preferred Shares
or the Series D-1 Preferred Shares into Common Shares). In any matter for which
a holder of Series C-2 Equity Shares is permitted to vote under this Section
11(c), such holder shall have the number of votes equal to the number of Common
Shares into which the Series C-2 Equity Shares of such holder is convertible on
the record date for such vote.
(d) So long as any Series C-2 Equity Shares are outstanding, in
addition to any other vote or consent of shareholders required by law or by the
Articles, the affirmative vote of the holders of a majority of the Series C-2
Equity Shares, voting together as a class, given in person or by proxy, either
in writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions
of the Articles of Incorporation or this Certificate of Designation that
materially and adversely affects the voting powers, rights or preferences
of the holders of the Series C-2 Equity shares; or
35
<PAGE>
(ii) Any merger or consolidation of the Corporation and another
entity in which the Corporation is not the surviving corporation and each
holder of Series C-2 Equity Shares does not receive shares of the surviving
corporation with substantially similar rights, preferences and powers
in the surviving corporation as the Series C-2 Equity Shares have with
respect to the Corporation (except for changes that do not materially and
adversely affect the holders of the Series C-2 Preferred Stock).
provided, however, that no such vote of the holders of Series C-2 Equity Shares
- -------- -------
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such prior shares or
convertible securities to be made, as the case may be, provision is made for the
redemption of all Series C-2 Equity Shares at the time outstanding to the extent
such redemption is authorized by Section 5 of this Certificate of Designation.
(iii) For purposes of the foregoing provisions of this Section
11(d), each share of Series C-2 Equity Shares shall have one (1) vote per
share, except that when any other series of Equity Shares shall have the
right to vote with the Series C-2 Equity Shares as a single class on any
matter, then the Series C-2 Equity Shares and such other series shall have
with respect to such matters one (1) vote per $180.00 (or less pursuant to
Section 4(a)) of stated liquidation preference. Except as otherwise
required by applicable law or as set forth herein, the Series C-2 Equity
Shares shall not have any relative, participating, optional or other
special voting rights and powers other than as set forth herein, and the
consent of the holders thereof shall not be required for the taking of any
corporate action.
Section 12. Record Holders. The Corporation and the Transfer Agent may
--------------
deem and treat the record holder of any Series C-2 Preferred Shares as the true
and lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
Section 13. Title. This resolution shall be known and may be referred
-----
to as "A Resolution of the Board of Directors of Westfield America, Inc.
Designating Series C-2 Preferred Shares and Fixing Preferences and Rights
Thereof."
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized and directed to execute and acknowledge a certificate setting
forth these resolutions and to cause such certificate to be filed and recorded,
all in accordance
36
<PAGE>
with the requirements of Section 351.046 of the General and Business
Corporation Law of the State of Missouri, as amended.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President and attested by its
Secretary this 18th day of December, 1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter Lowy
--------------------------
Its: Co-President
Attest:
/s/ Irv Hepner
- --------------------------
Its: Secretary
37
<PAGE>
CORPORATION ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
On the 18th day of December 1998, before me personally appeared
Peter Lowy known to me or proved to me on the basis of satisfactory evidence to
be the Co-President of Westfield America, Inc. , the corporation that executed
the foregoing instrument, who, being duly sworn, acknowledged that he resides at
Los Angeles; that he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by the order
of the Board of Directors of said corporation; and that he signed his name
thereto by like order.
/s/ Leesa A. Ashley
-----------------------------------------------------
Notary Public
My commission expires: April 30, 2001
38
<PAGE>
EXHIBIT F
CERTIFICATE OF DESIGNATION
SETTING FORTH "RESOLUTION DESIGNATING
SERIES D-1 PREFERRED SHARES
AND FIXING PREFERENCES AND RIGHTS THEREOF"
ADOPTED BY THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC.
<PAGE>
Pursuant to the Provisions of Section 351.180 (7) of the
General and Business Corporation Law of the State
of Missouri, as amended,
I, the undersigned, Co-President of Westfield America, Inc., a
Missouri corporation (hereinafter sometimes referred to as the "Corporation"),
-----------
hereby certify as follows:
FIRST: that under the provisions of Article Fourth of the Restated
Articles of Incorporation, as amended, of the Corporation, the total number of
shares of all classes of capital stock which the Corporation may issue is
410,000,200 shares, of which (i) 200 shares shall be non-voting senior preferred
stock, par value $1.00 per share (the "Senior Preferred Shares"), (ii) 5,000,000
-----------------------
shares shall be Preferred Shares, with par value of $1.00 per share (the
"Preferred Shares"), 940,000 of which have been designated as Series A Preferred
- -----------------
Shares, with a liquidation value of $100 per share (the "Series A Preferred
------------------
Shares") and 400,000 of which have been designated as Series B Preferred Shares,
- ------
with a liquidation value of $100 per share (the "Series B Preferred Shares"),
-------------------------
416,667 of which have been designated as Series C Preferred Shares, with a
liquidation value of $180 per share (the "Series C Preferred Shares") and
-------------------------
694,445 of which have been designated as Series D Preferred Shares, with a
liquidation value of $180 per share (the "Series D Preferred Shares") (iii)
-------------------------
200,000,000 shall be shares of common stock, par value $.01 per share (the
"Common Shares"), (iv) 205,000,000 will be shares of excess stock, par value
$.01 ("Excess Shares"). Any Excess Shares which are issued with respect to
-------------
Common Stock shall be "Excess Common Shares" and, together with the Common
--------------------
Shares, the "Common Equity Shares" and any Excess Shares which are issued with
--------------------
respect to Preferred Shares shall be "Excess Preferred Shares", and, together
-----------------------
with the Preferred Shares, the "Preferred Equity Shares" and under said Articles
-----------------------
of Incorporation (as amended, the "Articles of Incorporation"), the shares of
-------------------------
Preferred Stock are authorized to be issued by the Board of Directors and the
Board of Directors is expressly authorized to determine in the Resolution, the
designation, powers, rights, preferences and qualifications, limitations or
restrictions, not fixed and determined by the Articles of Incorporation.
SECOND: That the Board of Directors of the Corporation pursuant to
the authority so vested in it by Article Fourth of the Certificate of
Incorporation, and in accordance with the provisions of Section 351.180 (7) of
the General and Business Corporation Law of the State of Missouri, as amended,
adopted on December 14, 1998 the following resolution creating a series of
Preferred Stock designated as "Series D-1 Preferred Shares," which resolution
has not been amended, modified, rescinded or revoked and is in full force and
effect on the date hereof.
2
<PAGE>
"RESOLUTION OF THE BOARD OF DIRECTORS OF
WESTFIELD AMERICA, INC. DESIGNATING
'SERIES D-1 PREFERRED SHARES'
AND FIXING PREFERENCES AND RIGHTS THEREOF"
BE IT RESOLVED, that pursuant to authority expressly granted to and
vested in the Board of Directors of Westfield America, Inc., hereinafter called
the "Corporation," by the provisions of the Articles of Incorporation, as
-----------
amended, the Board of Directors of the Corporation hereby fixes the designation,
voting powers, rights on liquidation or dissolution and other preferences and
rights, and the qualifications, limitations or restrictions thereof, of the
shares of such series (in addition to the designations, preferences and relative
rights, and the qualifications, limitations or restrictions thereof set forth in
the Articles of Incorporation which are applicable to the Series D-1 Preferred
Shares) as follows:
Section 1. Number of Shares, Designation and Ranking. This class of
-----------------------------------------
preferred stock shall be designated as Series D-1 Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute such
series shall not be more than 138,889 shares, par value $1.00 per share, which
number may be decreased (but not below the aggregate number thereof then
outstanding and/or which have been reserved for issuance) from time to time by
the Board of Directors and is hereafter in this resolution called the "Series D-
--------
1 Preferred Shares." Each Series D-1 Preferred Share shall be identical in all
- ------------------
respects to each other Series D Preferred Share. Each Excess Series D-1
Preferred Share shall be identical in all respects to each other Excess Series
D-1 Preferred Share, and except as otherwise provided herein, shall be identical
in all respects to each Series D-1 Preferred Share (the Series D-1 Preferred
Shares together with the Excess Series D-1 Preferred Shares being hereinafter
referred to as the "Series D-1 Equity Shares").
------------------------
Section 2. Definitions. For purposes of the Series D-1 Preferred
-----------
Shares, the following terms shall have the meanings indicated:
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall
--------- ----------
mean a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL"), Westfield America Trust, Frank
---
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
----
Family").
- ------
"Base Rate" shall mean an annual dividend per Series D-1 Equity Share
---------
equal to 8.5% of the Liquidation Preference per Series D-1 Equity Share.
"Board of Directors" shall mean the Board of Directors of the
------------------
Corporation or any committee authorized by such Board of Directors to perform
any of its responsibilities with respect to the Series D-1 Preferred Shares.
3
<PAGE>
"Business Day "shall mean any day, other than a Saturday or Sunday,
------------
that is neither a legal holiday nor a day on which banking institutions in New
York City, New York are authorized or required by law, regulation or executive
order to close.
"Call Date" shall mean the date specified in the notice to holders
---------
required under Section 5(d) as the Call Date.
"Code "shall mean the Internal Revenue Code of 1986, as amended.
----
"Consolidated EBITDA" for any quarter shall mean the consolidated net
-------------------
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the Securities
and Exchange Commission, increased by the sum of the following (without
duplication):
a. the Corporation's pro rata share of EBITDA from unconsolidated real
estate partnerships calculated in a manner consistent with this
definition of Consolidated EBITDA,
b. all income taxes paid or accrued according to GAAP for such quarter
(other than income taxes attributable to extraordinary. unusual or
non-recurring gains or losses except to the extent that such gains
were not included in Consolidated EBITDA),
c. all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of deferred
financing fees or amortization of original issue discount, but
excluding capitalized interest),
d. depreciation and depletion reflected in such net income,
e. amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only
to the extent that such amounts have not been previously included
in the amount of Consolidated EBITDA pursuant to clause (c) above),
goodwill, other intangibles and management fees, and
f. any other non-cash charges, to the extent deducted from
consolidated net income (including, but not limited to, income
allocated to minority interests).
4
<PAGE>
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
--------------------------
a. the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner
consistent with this definition of Consolidated Fixed Charges,
b. all interest expense paid or accrued in accordance with GAAP for
such quarter including, without duplication, financing fees and
amortization of deferred financing fees or amortization of original
issue discount),
c. dividend and distribution requirements with respect to preferred
stock (not including any portion of preferred stock dividends the
calculation of which is based on the dividend paid in such quarter
to the holders of common shares) whether or not declared or paid,
d. regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity), and
e. all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e).
------------------
"Conversion Date" shall have the meaning set forth in Section 6(a).
---------------
"Conversion Price" shall mean the conversion price per Common Equity
----------------
Share for which the Series D-1 Equity Share is convertible, as such Conversion
Price may be adjusted pursuant to Section 6. The initial conversion price shall
be $18.00.
"Current Market Price" of publicly traded Common Shares or any other
--------------------
class of stock or other security of the Corporation or any other issuer for any
day shall mean the last reported sales price, regular way, on such day, or, if
no sale takes place on such day, the average of the reported closing bid and
asked prices on such day, regular way, in either case as reported on the New
York Stock Exchange ("NYSE") or, if such security is not listed or admitted for
----
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
- --------
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
----
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
5
<PAGE>
"Dividend Payment Date" shall mean (i) for any Dividend Period with
---------------------
respect to which the Corporation pays a dividend on the Common Equity Shares,
the date on which such dividend is paid, or (ii) for any Dividend Period with
respect to which the Corporation does not pay a dividend on the Common Equity
Shares, a date to be set by the Board of Directors, which date shall not be
later than the thirtieth calendar day after the end of the applicable Dividend
Period.
"Dividend Period" shall mean quarterly dividend periods commencing on
---------------
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
with respect to any Series D-1 Equity Shares (other than the initial Dividend
Period, which shall commence on the Issue Date for such Series D-1 Equity Shares
and end on and include the last day of the calendar quarter immediately
following such Issue Date, and other than the Dividend Period during which any
Series D-1 Equity Shares shall be redeemed pursuant to Section 5 or converted
pursuant to Section 6, which shall end on and include the Call Date or
Conversion Date with respect to the Series D-1 Equity Shares being redeemed or
converted, as applicable).
"Expiration Time" shall have the meaning set forth in Section
---------------
6(d)(iv).
"Fair Market Value" shall mean the average of the daily Current Market
-----------------
Prices of a Common Share on the five (5) consecutive Trading Days selected by
the Corporation commencing not more than 20 Trading Days before, and ending not
later than, the earlier of the day in question and the day before the "ex date"
with respect to the issuance or distribution requiring such computation. The
term "ex date," when used with respect to any issuance or distribution, means
the first day on which the Common Shares trade regular way, without the right to
receive such issuance or distribution on the exchange or in the market, as the
case may be, used to determine that day's Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
-------------------------------
Section 3(a).
"Fully Junior Shares" shall mean the Common Shares and any other class
-------------------
or series of stock of the Corporation now or hereafter issued and outstanding
over which the Series D-1 Preferred Shares preference or priority in both (i)
the payment of dividends and (ii) the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"Funds from Operations" shall mean net income (loss) (computed in
---------------------
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment Trusts
(NAREIT), in its White Paper dated March 1995, as such definitions may be
modified from time to time.
6
<PAGE>
"Investor" shall mean Security Capital Preferred Growth Incorporated
--------
and controlled affiliates thereof.
"Issue Date" shall mean the date on which Series D-1 Preferred Stock
----------
is issued.
"Junior Shares" shall mean the Common Shares and any other class or
-------------
series of stock of the Corporation now or hereafter issued and outstanding over
which the Series D-1 Preferred Shares have preference or priority in the payment
of dividends or in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
"Non-Electing Share" shall have the meaning set forth in Section 6(e).
------------------
"Operating Partnership" shall mean Westfield America Limited
---------------------
Partnership, a Delaware limited partnership.
"Parity Shares" shall have the meaning set forth in Section 10(b).
-------------
"Person" shall mean any individual, firm, partnership, corporation,
------
limited liability company, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Purchased Shares" shall have the meaning set forth in Section
----------------
6(d)(iv).
"REIT Termination Event" shall mean the earliest to occur of:
----------------------
(i) the filing of a federal income tax return by the Corporation
for any taxable year on which the Corporation does not compute
its income as a real estate investment trust,
(ii) the approval by the shareholders of the Corporation of a
proposal for the Corporation to cease to qualify as a real
estate investment trust,
(iii) a determination by the Board of Directors of the Corporation,
based on the advice of counsel, that the Corporation has ceased
to qualify as a real estate investment trust, or
(iv) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real
estate investment trust.
"Securities" and "Security" shall have the meanings set forth in
---------- --------
Section 6(d)(iii).
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
7
<PAGE>
"Series D-1 Preferred Shares" shall have the meaning given such term
---------------------------
in Section 1of the Certificate of Designation.
"set apart for payment" shall be deemed to include, without any action
---------------------
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of stock of the
Corporation; provided, however, that if any funds for any class or series of
-------- -------
Junior Shares or any class or series of stock ranking on a parity with the
Series D-1 Preferred Shares as to the payment of dividends are placed in a
separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series D-1
Preferred Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean any day on which the securities in question
-----------
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on NASDAQ, or if such securities are not
quoted on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e).
-----------
"Transfer Agent" shall mean the Corporation, or such other agent or
--------------
agents of the Corporation as may be designated by the Board of Directors or
their designee as the transfer agent, registrar and dividend disbursing agent
for Series D-1 Preferred Shares and notified to the holders of the Series D-1
Preferred Stock.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Articles.
Section 3. Dividends. (a) Subject to the preferential rights of the
---------
holders of any Senior Preferred Stock or Preferred Shares that rank senior in
the payment of dividends to the Series D-1 Equity Shares and subject to
paragraph (b) of this Section 3, the holders of Series D-1 Equity Shares shall
be entitled to receive, when, as and if declared by the Board of Directors, but
only out of funds legally available for the payment of dividends, cumulative
preferential dividends payable in cash to shareholders of record on the
respective date, not exceeding 50 days preceding such dividend payment date,
fixed for the purpose by the Board of Directors in advance of payment of each
particular dividend in an amount equal to the greater of (A) the Base Rate per
share per annum and (B) an amount per share equal to the Liquidation Preference
of a Series D-1 Equity Share (exclusive of accrued but unpaid dividends) divided
by the Conversion Price (the "Series D-1 Common Equivalent Factor") times the
-----------------------------------
dollar amount of cash dividends declared with respect to each Common Equity
Share
8
<PAGE>
that does not result in an adjustment to the Conversion Price pursuant to
subparagraph (d)(iii) of Section 6 (such product, the "Series D Common
---------------
Equivalent Amount") for the same annual period; provided, however, that if as a
- ----------------- -------- -------
result of the quarterly dividends paid in accordance with the following
sentence, the holders of Series D-1 Equity Shares shall have received for any
calendar year more dividends than such Series D-1 Equity Shares shall be
entitled under clauses (A) and (B) above (as adjusted pursuant to the third and
eighth sentences of this Section 3), the dividends payable in respect of Series
D-1 Equity Shares in subsequent calendar years shall be reduced to the extent of
such overpayment. Subject to the proviso of the preceding sentence of this
Section 3(a), the dividend paid in respect of each quarterly period in each
calendar year shall be determined as follows (in each case, excluding any
additional payment made pursuant to the following sentence): (1) for the first
quarter, the greater of 25% of the Base Rate per share and the Series D-1 Common
Equivalent Amount for the same quarter; (2) for the second quarter, an amount
such that the aggregate amount to be received per Series D-1 Equity Share in
respect of the first two quarters of such calendar year shall be the greater of
50% of the Base Rate per share and the Series D-1 Common Equivalent Amount for
the same two quarters; (3) for the third quarter, an amount such that the
aggregate amount to be received per Series D-1 Equity Share in respect of the
first three quarters of such calendar year shall be the greater of 75% of the
Base Rate per share and the Series D-1 Common Equivalent Amount for the same
three quarters; and (4) for the fourth quarter, an amount such that the
aggregate amount to be received per Series D-1 Equity Share in respect of such
calendar year shall be the amount provided in the preceding sentence of this
Section 3(a). Notwithstanding the foregoing, for any quarter in which a Fixed
Charge Coverage Violation (as defined below) has occurred, the dividend payable
per Series D-1 Equity Share shall be 1.20 times the amount provided in the
-----
preceding sentence. A "Fixed Charge Coverage Violation" shall occur for any
quarter that the ratio of the Corporation's Consolidated EBITDA to its
Consolidated Fixed Charges is below 1.40 to 1. The dividends shall begin to
accrue as set forth above and shall be fully cumulative from the first day of
the applicable Dividend Period, whether or not in any Dividend Period or Periods
there shall be funds of the Corporation legally available for the payment of
such dividends, and shall be payable quarterly, when, as and if declared by the
Board of Directors, in arrears on Dividend Payment Dates. Accumulated but
unpaid dividends for any past quarterly dividend periods may be declared and
paid at any time, without reference to any regularly scheduled quarterly
dividend payment date, to holders of record on such date, not exceeding 50 days
preceding such payment date, fixed for the purpose by the Board of Directors in
advance of payment of each particular dividend. Any dividend payment made on
Series D-1 Equity Shares shall first be credited against the earliest accrued
but unpaid dividend due with respect to Series D-1 Equity Shares which remains
payable. Beginning with the quarter in which a REIT Termination Event occurs,
all dividends payable per Series D-1 Equity Share pursuant to this Section shall
be multiplied by 2.5.
(b) The initial Dividend Period for the Series D-1 Equity Shares will
include a partial dividend for the period from the Issue Date until the last day
of the calendar quarter immediately following such Issue Date. The amount of
dividends payable for such initial
9
<PAGE>
period, or any other period shorter than a full quarterly Dividend Period, on
the Series D-1 Equity Shares shall be computed by dividing the number of days in
such period by 90 and multiplying the result by the Series D-1 Equity dividend
determined in accordance with Section 3(a). Holders of Series D-1 Equity Shares
shall not be entitled to any dividends, whether payable in cash, property or
shares, in excess of cumulative dividends, as herein provided, on the Series D-1
Equity Shares. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series D-1 Equity
Shares which may be in arrears.
(c) So long as any Series D-1 Equity Shares remain outstanding, no
dividends, except as described in the immediately following sentence, shall be
declared or paid or set apart for payment on any class or series of Parity
Shares for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series D-1 Equity Shares for
all Dividend Periods terminating on or prior to the dividend payment date on
such class or series of Parity Shares. When dividends are not paid in full or a
sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon Series D-1 Equity Shares and all dividends declared upon any other
class or series of Parity Shares shall be declared ratably in proportion to the
respective amounts of dividends accumulated and unpaid on the Series D-1 Equity
Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series D-1 Equity Shares remain outstanding, no
dividends (other than dividends or distributions paid solely in Fully Junior
Shares, or options, warrants or rights to subscribe for or purchase, Fully
Junior Shares) shall be declared or paid or set apart for payment or other
distribution shall be declared or made or set apart for payment upon Junior
Shares, nor shall any Junior Shares be redeemed, purchased or otherwise acquired
(other than a redemption, purchase or other acquisition of Common Shares made
for purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any Junior Shares) by the Corporation,
directly or indirectly (except by conversion into or exchange for Fully Junior
Shares), unless in each case the full cumulative dividends on all outstanding
Series D-1 Equity Shares and any other Parity Shares of the Corporation shall
have been or contemporaneously are declared and paid or declared and set apart
for payment for all Dividend Periods terminating on or prior to the date of
declaration or payment with respect to the Series D-1 Equity Shares and all
dividend periods terminating on or prior to the date of declaration or payment
with respect to such Parity Shares. Subject to the foregoing, and not
otherwise, such dividends and distributions may be declared by the Board of
Directors and paid on any Common Equity Shares from time to time out of any
funds legally available therefor, and the Series D-1 Equity Shares shall not be
entitled to participate in any such dividends, whether payable in cash, stock or
otherwise.
(e) No distributions on Series D-1 Equity Shares shall be declared by
the Board of Directors or paid or set apart for payment by the Corporation at
such time as the terms and
10
<PAGE>
provisions of any agreement of the Corporation, including any agreement relating
to its indebtedness, prohibits such declaration, payment or setting apart for
payment or provides that such declaration, payment or setting apart for payment
would constitute a breach thereof or a default thereunder, or if such
declaration or payment shall be restricted or prohibited by law.
(f) In determining whether a distribution by dividend, redemption or
other acquisition of Shares or otherwise is permitted under Missouri law, no
effect shall be given to amounts that would be needed, if the Corporation were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights on dissolution
are superior to those receiving the distribution.
Section 4. Liquidation Preference. (a) In the event of any
----------------------
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, subject to the prior preferences and other rights of any series of
stock ranking senior to the Series D-1 Preferred Shares upon liquidation,
distribution or winding up of the Corporation, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Junior Shares, the holders of the
Series D-1 Equity Shares shall be entitled to receive One Hundred Eighty Dollars
($180.00) (the "Liquidation Preference") per Series D-1 Equity Share plus an
----------------------
amount equal to all dividends (whether or not earned or declared) accrued and
unpaid thereon to the date of liquidation, dissolution or winding up of the
affairs of the Corporation (any such date, a "Series D-1 Liquidation Date") but
---------------------------
such holders shall not be entitled to any further payment; provided, that the
--------
dividend payable with respect to the Dividend Period containing the Series D-1
Liquidation Date shall be equal to the dividend determined pursuant to Section 3
above for the preceding Dividend Period times a fraction equal to the actual
number of days elapsed from the end date of the calendar quarter most recently
completed to the relevant Series D-1 Liquidation Date over ninety days. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the
Series D-1 Equity Shares shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Shares, then such assets, or the proceeds thereof, shall be
distributed among the holders of Series D-1 Equity Shares and any such other
Parity Shares ratably in accordance with the respective amounts that would be
payable on such Series D-1 Equity Shares and any such other Parity Shares if all
amounts payable thereon were paid in full. For the purposes of this Section 4,
(i) a consolidation or merger of the Corporation with one or more corporations,
real estate investment trusts or other entities, (ii) a sale, lease or
conveyance of all or substantially all of the Corporation's property or business
or (iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of shares of any series or
class or classes of stock ranking on a parity with (including the Parity Shares)
or prior to the Series D-1 Equity Shares upon liquidation, dissolution or
winding up, upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the holders of the
11
<PAGE>
Series D-1 Equity Shares, as provided in this Section 4, the holders of
Series D-1 Equity Shares shall have no other claim to the remaining assets of
the Corporation and any other series or class or classes of Junior Shares shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series D-1 Equity Shares shall not be entitled to share
therein.
Section 5. Redemption at the Option of the Corporation. (a) The
-------------------------------------------
Series D-1 Equity Shares shall not be redeemable by the Corporation prior to
August 12, 2008. On and after August 12, 2008, the Corporation, at its option,
may redeem the Series D-1 Equity Shares, in whole at any time or from time to
time in part, in minimum increments of $10.0 million of aggregate Liquidation
Preference of such shares, out of funds legally available therefor at a
redemption price payable in cash equal to 100% of the Liquidation Preference per
Series D-1 Equity Share (plus all accumulated, accrued and unpaid dividends as
provided in paragraph (d) below).
(b) In the event that WHL and its subsidiaries and the trustee of
Westfield America Trust on behalf of Westfield America Trust do not vote to
approve the conversion of the Series D-1 Equity Shares into Common Equity Shares
at the Corporation's 1999 Annual Shareholder Meeting or at any other meeting of
the Corporation's shareholders at which such proposal is raised, the Corporation
shall have the right to redeem the Series D-1 Equity Shares, in whole or in
part, out of funds legally available therefor at a redemption price payable in
cash equal to 100% of the Liquidation Preference per Series D-1 Equity Share
(plus all accumulated, accrued and unpaid dividends as provided in paragraph (c)
below).
(c) Upon any redemption of Series D-1 Equity Shares pursuant to this
Section 5, the Corporation shall pay all accrued and unpaid dividends, if any,
thereon to the Call Date, without interest. If the Call Date falls after a
dividend payment record date and prior to the corresponding Dividend Payment
Date, then each holder of Series D-1 Equity Shares at the close of business on
such dividend payment record date shall be entitled to the dividend payable on
such shares on the corresponding Dividend Payment Date notwithstanding any
redemption of such shares before such Dividend Payment Date. Except as provided
above, the Corporation shall make no payment or allowance for unpaid dividends,
whether or not in arrears, on Series D-1 Equity Shares called for redemption.
(d) If full cumulative dividends on the Series D-1 Equity Shares and
any other class or series of Parity Shares of the Corporation have not been
declared and paid or declared and set apart for payment, the Series D-1 Equity
Shares may not be redeemed under this Section 5 in part and may not be redeemed
unless the Series D Equity Shares are also redeemed in whole and the Corporation
may not purchase or acquire Series D Equity Shares or Series D-1 Equity Shares,
otherwise than pursuant to a purchase or exchange offer made on the same terms
to all holders of Series D Equity Shares and Series D-1 Equity Shares.
12
<PAGE>
(e) Notice of the redemption of any Series D-1 Equity Shares under
this Section 5 shall be mailed by first-class mail or recognized overnight
courier to each holder of record of Series D-1 Equity Shares to be redeemed at
the address of each such holder as shown on the Corporation's records, not less
than 30 nor more than 90 days prior to the Call Date. Neither the failure to
mail any notice required by this paragraph (e), nor any defect therein or in the
mailing thereof, to any particular holder, shall affect the sufficiency of the
notice or the validity of the proceedings for redemption with respect to the
other holders. Each such mailed notice shall state, as appropriate: (1) the
Call Date; (2) the number of Series D-1 Equity Shares to be redeemed and, if
fewer than all the shares held by such holder are to be redeemed, the number of
such shares to be redeemed from such holder; (3) the redemption price; (4) the
place or places at which certificates for such shares are to be surrendered; (5)
the then-current Conversion Price; and (6) that dividends on the shares to be
redeemed shall cease to accrue on such Call Date except as otherwise provided
herein. Notice having been mailed as aforesaid, from and after the Call Date
(unless the Corporation shall fail to make available an amount of cash necessary
to effect such redemption), (i) except as otherwise provided herein, dividends
on the Series D-1 Equity Shares so called for redemption shall cease to accrue,
(ii) such shares shall no longer be deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of Series D-1 Equity Shares shall cease
(except the rights to receive the cash payable upon such redemption, without
interest thereon, upon surrender and endorsement of their certificates if so
required and to receive any dividends payable thereon). The Corporation's
obligation to provide cash in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the Call Date, the Corporation shall deposit
with a bank or trust company that has an office in the Borough of Manhattan,
City of New York, and that has capital and surplus of at least $150,000,000,
necessary for such redemption, in trust, with irrevocable instructions that such
cash be applied to the redemption of the Series D-1 Equity Shares so called for
redemption. Notwithstanding the foregoing the Corporation shall, in the first
instance, send the money to any holder of Series D-1 Equity Shares that has
notified the Corporation in writing of the location of delivery of funds. No
interest shall accrue for the benefit of the holders of Series D-1 Equity Shares
to be redeemed on any cash so set aside by the Corporation. Subject to
applicable escheat laws, any such cash unclaimed at the end of two years from
the Call Date shall revert to the general funds of the Corporation, after which
reversion the holders of such shares so called for redemption shall look only to
the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such shares shall be exchanged for any cash (without interest
thereon) for which such shares have been redeemed. If fewer than all the
outstanding Series D-1 Equity Shares are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding Series D-1 Equity Shares
not previously called for redemption pro rata (as nearly as may be), by lot or
by any other method determined by the Corporation in its sole discretion to be
equitable. If fewer than all the Series D-1
13
<PAGE>
Equity Shares evidenced by any certificate are redeemed, then new certificates
evidencing the unredeemed shares shall be issued without cost to the holder
thereof.
Section 6. Conversion. The Series D-1 Equity Shares shall not be
----------
convertible into Common Equity Shares prior to (i) a vote of the shareholders of
the Corporation approving the conversion of Series D-1 Equity Shares into Common
Equity Shares or (ii) the transfer of the Series D-1 Equity Shares to an
individual to whom the Corporation is permitted to issue Common Equity Shares
without shareholder approval, in accordance with the rules of the NYSE. Subject
to the foregoing, holders of Series D-1 Equity Shares shall have the right to
convert all or a portion of such shares into Common Equity Shares, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 6, a holder of Series D-1 Preferred Shares or Excess Series D-1
Preferred Shares shall have the right, at his or her option, at any time (such
time being, the "Conversion Date"), to convert all or any portion of such shares
---------------
into the number of fully paid and non-assessable Common Shares or Excess Common
Shares, respectively, obtained by dividing the aggregate Liquidation Preference
of such shares (inclusive of accrued but unpaid dividends) by the Conversion
Price (as in effect at the time and on the date provided for in the last
paragraph of paragraph (b) of this Section 6) by surrendering such shares to be
converted, such surrender to be made in the manner provided in paragraph (b) of
this Section 6; provided, however, that the right to convert shares called for
-------- -------
redemption pursuant to Section 5 shall terminate at the close of business on the
fifth Business Day prior to the Call Date fixed for such redemption, unless the
Corporation shall default in making payment of the cash payable upon such
redemption under Section 5.
(b) In order to exercise the conversion right, the holder of each
share of Series D-1 Equity Shares to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof irrevocably elects to
convert such Series D-1 Equity Shares. Unless the shares issuable on conversion
are to be issued in the same name as the name in which such Series D-1 Equity
Shares are registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
Holders of Series D-1 Equity Shares at the close of business on a
dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to such
Dividend Payment Date. However, Series D-1 Equity Shares surrendered for
conversion during the period between the close of business on any dividend
payment record date and the opening of business on the corresponding Dividend
Payment Date (except shares converted after the issuance of notice of redemption
with respect
14
<PAGE>
to a Call Date during such period, such Series D-1 Equity Shares being entitled
to such dividend on the Dividend Payment Date) must be accompanied by payment of
an amount equal to the dividend payable on such shares on such Dividend Payment
Date. A holder of Series D-1 Equity Shares on a dividend payment record date who
(or whose transferee) tenders any such shares for conversion into Common Equity
Shares on the corresponding Dividend Payment Date will receive the dividend
payable by the Corporation on such Series D-1 Equity Shares on such date, and
the converting holder need not include payment of the amount of such dividend
upon surrender of Series D-1 Equity Shares for conversion. Except as provided
above, the Corporation shall make no payment or allowance for unpaid dividends,
whether or not in arrears, on converted shares or for dividends on the Common
Equity Shares issued upon such conversion.
As promptly as practicable after the surrender of certificates for
Series D-1 Equity Shares as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full Common Equity Shares issuable
upon the conversion of such shares in accordance with provisions of this Section
6, and any fractional interest in respect of a Common Equity Share arising upon
such conversion shall be settled as provided in paragraph (c) of this Section 6.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for Series
D-1 Equity Shares shall have been surrendered and such notice shall have been
received by the Corporation as aforesaid (and if applicable, payment of an
amount equal to the dividend payable on such shares shall have been received by
the Corporation as described above), and the Person or Persons in whose name or
names any certificate or certificates for Common Equity Shares shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at such time on such date
unless the share transfer books of the Corporation shall be closed on that date,
in which event such Person or Persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such share transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation.
(c) No fractional shares or scrip representing fractions of Common
Equity Shares shall be issued upon conversion of the Series D-1 Equity Shares.
Instead of any fractional interest in a Common Equity Share that would otherwise
be deliverable upon the conversion of a Series D-1 Equity Share, the Corporation
shall pay to the holder of such share an amount in cash based upon the Current
Market Price of the Common Shares on the Trading Day immediately preceding the
date of conversion. If more than one share shall be surrendered for conversion
at one time by the same holder, the number of full Common Equity Shares issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of Series D-1 Equity Shares so surrendered.
15
<PAGE>
(d) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its Common Equity Shares in Common
Equity Shares, (B) subdivide its outstanding Common Equity Shares into a
greater number of shares, (C) combine its outstanding Common Equity Shares
into a smaller number of shares or (D) issue any shares of stock by
reclassification of its Common Equity Shares, the Conversion Price in
effect at the opening of business on the day following the date fixed for
the determination of shareholders entitled to receive such dividend or
distribution or at the opening of business on the Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any Series D-1 Equity Shares thereafter surrendered
for conversion shall be entitled to receive the number of Common Equity
Shares that such holder would have owned or have been entitled to receive
after the happening of any of the events described above as if such Series
D-1 Equity Shares had been converted immediately prior to the record date
in the case of a dividend or distribution or the effective date in the
case of a subdivision, combination or reclassification. An adjustment
made pursuant to this subparagraph (i) shall become effective immediately
after the opening of business on the Business Day next following the
record date (except as provided in paragraph (h) below) in the case of a
dividend or distribution and shall become effective immediately after the
opening of business on the Business Day next following the effective date
in the case of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Equity Shares entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Equity Shares at a price per
share less than 95% (100% if a stand-by underwriter is used and charges
the Corporation a commission) of the Fair Market Value per Common Share on
the record date for the determination of shareholders entitled to receive
such rights, options or warrants, then the Conversion Price in effect at
the opening of business on the Business Day next following such record
date shall be adjusted to equal the price determined by multiplying (A)
the Conversion Price in effect immediately prior to the opening of
business on the Business Day next following the date fixed for such
determination by (B) a fraction, the numerator of which shall be the sum
of (x) the number of Common Equity Shares outstanding on the close of
business on the date fixed for such determination and (y) the number of
shares that the aggregate proceeds to the Corporation from the exercise of
such rights, options or warrants for Common Equity Shares would purchase
at 95% of such Fair Market Value (or 100% in the case of a stand-by
underwriting), and the denominator of which shall be the sum of (x) the
number of Common Equity Shares outstanding on the close of business on the
date fixed for such determination and (y) the number of additional Common
Equity Shares offered for subscription or purchase pursuant to such
rights,
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<PAGE>
options or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record date
(except as provided in paragraph (h) below). In determining whether any
rights, options or warrants entitle the holders of Common Equity Shares to
subscribe for or purchase Common Equity Shares at less than 95% of such
Fair Market Value (or 100% in the case of a stand-by underwriting), there
shall be taken into account any consideration received by the Corporation
upon issuance and upon exercise of such rights, options or warrants, the
value of such consideration, if other than cash, to be determined by the
Board of Directors whose determination shall be conclusive. To the extent
that Common Equity Shares are not delivered pursuant to such rights,
options or warrants, upon the expiration or termination of such rights,
options or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made
upon the issuance of such rights, options or warrants be made on the basis
of delivery of only the number of Common Equity Shares actually delivered.
In the event that such rights, options or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such date fixed for the determination of
stockholders entitled to receive such rights, options or warrants had not
been fixed.
(iii) If the Corporation shall distribute to all holders of its
Common Equity Shares any securities of the Corporation (other than Common
Equity Shares) or evidence of its indebtedness or assets (excluding
cumulative cash dividends or distributions paid with respect to the Common
Equity Shares after December 31, 1997) which are not in excess of the
following: the sum of (A) the Corporation's cumulative undistributed
Funds from Operations at December 31, 1997, plus (B) the cumulative amount
of Funds from Operations, as determined by the Board of Directors, after
December 31, 1997, minus (C) the cumulative amount of dividends accrued or
paid in respect of the Series D-1 Equity Shares or any other class or
series of preferred stock of the Corporation after the Issue Date) or
rights, options or warrants to subscribe for or purchase any of its
securities (excluding those rights, options and warrants issued to all
holders of Common Equity Shares entitling them for a period expiring
within 45 days after the record date referred to in subparagraph (ii)
above to subscribe for or purchase Common Equity Shares, which rights and
warrants are referred to in and treated under subparagraph (ii) above)
(any of the foregoing being hereinafter in this subparagraph (iii)
collectively called the "Securities" and individually a "Security"), then
---------- --------
in each such case the Conversion Price shall be adjusted so that it shall
equal the price determined by multiplying (x) the Conversion Price in
effect immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to receive such distribution by
(y) a fraction, the numerator of which shall be the Fair Market Value per
Common Share on the record date mentioned below less the then fair market
value (as determined by the Board of Directors, whose determination shall
be conclusive) of the portion of the Securities or assets or evidences of
indebtedness so distributed or of such rights, options or warrants
applicable to one Common Equity
17
<PAGE>
Share, and the denominator of which shall be the Fair Market Value per
Common Share on the record date mentioned below. Such adjustment shall
become effective on the date of distribution retroactive to the opening of
business on the Business Day next following (except as provided in
paragraph (h) below) the record date for the determination of shareholders
entitled to receive such distribution. For the purposes of this
subparagraph (iii), the distribution of a Security, which is distributed
not only to the holders of the Common Equity Shares on the date fixed for
the determination of shareholders entitled to such distribution of such
Security, but also is distributed with each Common Equity Share delivered
to a Person converting a share of Series D-1 Equity Shares after such
determination date, shall not require an adjustment of the Conversion
Price pursuant to this subparagraph (iii); provided that on the date, if
--------
any, on which a Person converting a Series D-1 Equity Share would no
longer be entitled to receive such Security with a Common Equity Share
(other than as a result of the termination of all such Securities), a
distribution of such Securities shall be deemed to have occurred and the
Conversion Price shall be adjusted as provided in this subparagraph (iii)
(and such day shall be deemed to be "the date fixed for the determination
of the shareholders entitled to receive such distribution" and "the record
date" within the meaning of the two preceding sentences). If any dividend
or distribution of the type described in this paragraph (iii) is declared
but not so paid or made, the Conversion Price shall again be adjusted to
the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
Rights or warrants distributed by the Corporation to all holders
of Common Equity Shares entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are
-------------
deemed to be transferred with such shares of Common Equity Shares; (ii)
are not exercisable; and (iii) are also issued in respect of future
issuances of Common Equity Shares, shall be deemed not to have been
distributed for purposes of this subparagraph (iii) (and no adjustment to
the Conversion Price under this subparagraph (iii) will be required) until
the occurrence of the earliest Trigger Event. If such right or warrant is
subject to subsequent events, upon the occurrence of which such right or
warrant shall become exercisable to purchase different securities,
evidences of indebtedness or other assets or entitle the holder to
purchase a different number or amount of the foregoing or to purchase any
of the foregoing at a different purchase price, then the occurrence of
each such event shall be deemed to be the date of issuance and record date
with respect to a new right or warrant (and a termination or expiration of
the existing right or warrant without exercise by the holder thereof to
the extent not exercised). In addition, in the event of any distribution
(or deemed distribution) of rights or warrants, or any Trigger Event or
other event (of the type described in the preceding sentence) with respect
thereto, that resulted in an adjustment to the Conversion Price under this
subparagraph (iii), (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any
18
<PAGE>
holders thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution (but not
a distribution paid exclusively in cash), equal to the per share
redemption or repurchase price received by a holder of Common Equity
Shares with respect to such rights or warrants (assuming such holder had
retained such rights or warrants), made to all holders of Common Equity
Shares as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants all of which shall have expired or been
terminated without exercise, the Conversion Price shall be readjusted as
if such rights and warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the
Corporation or any subsidiary or controlled Affiliate of the Corporation
for all or any portion of the Common Equity Shares shall expire and such
tender or exchange offer shall require the payment by the Corporation or
such subsidiary or controlled Affiliate of consideration per Common Equity
Share having a fair market value (as determined in good faith by the Board
of Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), at the last time (the "Expiration
----------
Time") tenders or exchanges may be made pursuant to such tender or
----
exchange offer, that exceeds the Current Market Price per Common Share on
the Trading Day next succeeding the Expiration Time, the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this
subparagraph, by a fraction of which the numerator shall be the number of
Common Equity Shares outstanding (including any tendered or exchanged
shares) at the Expiration Time, multiplied by the Current Market Price per
Common Share on the Trading Day next succeeding the Expiration Time, and
the denominator shall be the sum of (A) the fair market value (determined
as aforesaid) of the aggregate consideration payable to shareholders based
upon the acceptance (up to any maximum specified in the terms of the
tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up
to any maximum, being referred to as the "Purchased Shares") and (B) the
----------------
product of the number of Common Equity Shares outstanding (less any
Purchased Shares) at the Expiration Time and the Current Market Price per
Common Share on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business
on the day following the Expiration Time. In the event the Corporation or
any subsidiary or controlled Affiliate is obligated to purchase shares
pursuant to any such tender offer, but the Corporation or such subsidiary
or controlled Affiliate is permanently prevented by applicable law from
effecting any such purchases, or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such tender offer had not been made.
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<PAGE>
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease of
at least 1% in such price; provided, however, that any adjustments that by
-------- -------
reason of this subparagraph (v) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and
-------- -------
made in accordance with the provisions of this Section 6 (other than this
subparagraph (v)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of Common
Shares. Notwithstanding any other provisions of this Section 6, the
Corporation shall not be required to make any adjustment of the Conversion
Price for the issuance of any Common Equity Shares pursuant to any plan
providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional
amounts in Common Equity Shares under such plan. All calculations under
this Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-hundredth of a share (with .005 of a share
being rounded upward), as the case may be. Anything in this paragraph (d)
to the contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such reductions in the Conversion Price,
in addition to those required by this paragraph (d), as it in its
discretion shall determine to be advisable in order that any share
dividends, subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase shares or
securities, or distribution of other assets (other than cash dividends)
hereafter made by the Corporation to its shareholders shall not be
taxable. To the extent permitted by applicable law, the Corporation from
time to time may reduce the Conversion Price by any amount for any period
of time if the period is at least 20 days, the reduction is irrevocable
during the period and the Board of Directors shall have made a
determination that such reduction would be in the best interests of the
Corporation, which determination shall be conclusive. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, the
Corporation shall mail to the holder of each Series D-1 Equity Share at
his or her last address appearing on the share register a notice of
reduction prior to the date the reduced Conversion Price takes effect and
such notice shall state the reduced Conversion Price and the period during
which it will be in effect.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, self
tender offer for 40% or more of its Common Equity Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Equity Shares and excluding any transaction as to which subparagraph (d)(i) of
this Section 6 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which all or substantially all of
- ------------
the Common Equity Shares are converted into the right to receive different
securities or other property (including cash or any combination thereof), each
Series D-1 Equity Share which is not redeemed or converted into the right to
receive different securities or other property prior to such Transaction shall
thereafter be convertible, in lieu of Common Equity Shares into the
20
<PAGE>
kind and amount of different securities and other property (including cash or
any combination thereof) receivable upon the consummation of such Transaction by
a holder of that number of Common Equity Shares into which one Series D-1 Equity
Share was convertible immediately prior to such Transaction, assuming such
holder of Common Equity Shares (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be
("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed
- --------------------
to exercise his rights of election, if any, as to the kind or amount of shares,
securities and other property (including cash) receivable upon such Transaction
(provided that if the kind or amount of shares, securities and other property
(including cash) receivable upon such Transaction is not the same for each
Common Share held immediately prior to such Transaction by other than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-Electing Share"), then for the
------------------
purpose of this paragraph (e) the kind and amount of shares, securities and
other property (including cash) receivable upon such Transaction by each Non-
Electing Share shall be deemed to be the kind and amount so receivable per share
by holders of a plurality of the Non-Electing Shares). The Corporation shall
not be a party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this paragraph (e), and it shall not consent
or agree to the occurrence of any Transaction until the Corporation has entered
into an agreement with the successor or purchasing entity, as the case may be,
for the benefit of the holders of the Series D-1 Equity Shares that will contain
provisions enabling the holders of the Series D-1 Equity Shares that remain
outstanding after such Transaction to convert into the consideration received by
holders of Common Equity Shares at the Conversion Price in effect immediately
prior to such Transaction. The provisions of this paragraph (e) shall similarly
apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Equity Shares (other than cash dividends or
distributions paid with respect to the Common Equity Shares after December
31, 1997 not in excess of the sum of the Corporation's cumulative
undistributed Funds from Operations at December 31, 1997, plus the
cumulative amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1997, minus the cumulative amount of
dividends accrued or paid in respect of the Series D-1 Equity Shares or
any other class or series of preferred stock of the Corporation after the
Issue Date); or
(ii) the Corporation shall authorize the granting to all holders
of Common Equity Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or warrants;
or
(iii) there shall be any reclassification of the Common Equity
Shares (other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or
21
<PAGE>
merger to which the Corporation is a party (other than a merger in
which the Corporation is the surviving entity) and for which approval
of any shareholders of the Corporation is required, or a statutory
share exchange, or a self tender offer by the Corporation for all or
substantially all of its outstanding Common Shares or the sale or
transfer of all or substantially all of the assets of the Corporation
as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;f
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series D-1 Equity Shares at their addresses
as shown on the records of the Corporation, as promptly as possible, but at
least 10 days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Equity
Shares of record to be entitled to such dividend, distribution or rights,
options or warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Equity
Shares of record shall be entitled to exchange their Common Equity Shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, statutory share exchange, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings described
in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment and shall
mail such notice of such adjustment of the Conversion Price to the holder of
each share of Series D-1 Equity Shares at such holder's last address as shown on
the records of the Corporation.
(h) In any case in which paragraph (d) of this Section 6 provides
that an adjustment shall become effective on the day next following the record
date for an event, the Corporation may defer until the occurrence of such event
(A) issuing to the holder of any share of Series D-1 Equity Shares converted
after such record date and before the occurrence of such event the additional
Common Equity Shares issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Equity Shares issuable upon
such conversion before giving effect to such adjustment and (B) paying to such
holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of
this Section 6.
22
<PAGE>
(i) There shall be no adjustment of the Conversion Price in case of
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Equity Shares, other than action described in this Section 6, that in the
opinion of the Board of Directors would materially and adversely affect the
conversion rights of the holders of the Series D-1 Equity Shares, the Conversion
Price for the Series D-1 Equity Shares may be adjusted, to the extent permitted
by law, in such manner, if any, and at such time, as the Board of Directors, in
its sole discretion, may determine to be equitable in the circumstances.
(k) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Equity Shares, for the purpose of effecting
conversion of the Series D-1 Equity Shares, the full number of Common Equity
Shares deliverable upon the conversion of all outstanding Series D-1 Equity
Shares not theretofore converted. For purposes of this paragraph (k), the
number of Common Shares that shall be deliverable upon the conversion of all
outstanding Series D-1 Preferred Shares shall be computed as if at the time of
computation all such outstanding shares were held by a single holder.
Any Common Equity Shares issued upon conversion of the Series D-1
Equity Shares shall be validly issued, fully paid and non-assessable. Before
taking any action that would cause an adjustment reducing the Conversion Price
below the then-par value of the Common Equity Shares deliverable upon conversion
of the Series D-1 Equity Shares, the Corporation will take any action that, in
the opinion of its counsel, may be necessary in order that the Corporation may
validly and legally issue fully paid and (subject to any customary qualification
based upon the nature of a real estate investment trust) nonassessable Common
Equity Shares at such adjusted Conversion Price.
The Corporation shall use its best efforts to list the Common Shares
required to be delivered upon conversion of the Series D-1 Preferred Shares,
prior to such delivery, upon each national securities exchange, if any, upon
which the outstanding Common Shares are listed at the time of such delivery.
The Corporation shall use its best efforts to comply with all federal
and state securities laws and regulations thereunder in connection with the
issuance of any securities that the Corporation shall be obligated to deliver
upon conversion of the Series D-1 Equity Shares. The certificates evidencing
such securities shall bear such legends restricting transfer thereof in the
absence of registration under applicable securities laws or an exemption
therefrom as the Corporation may in good faith deem appropriate.
23
<PAGE>
(l) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of Common
Equity Shares or other securities or property on conversion of the Series D-1
Equity Shares pursuant hereto; provided, however, that the Corporation shall not
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be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of Common Shares or other securities or
property in a name other than that of the holder of the Series D-1 Equity Shares
to be converted, and no such issue or delivery shall be made unless and until
the Person requesting such issue or delivery has paid to the Corporation the
amount of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
Section 7. Change of Control. (a) If a Change of Control (as
-----------------
defined below) occurs (a "Change of Control Repurchase Event"), the holders of
----------------------------------
Series D-1 Equity Shares shall have the right to require the Corporation, to the
extent the Corporation shall have funds legally available therefor, to redeem
any or all of the Series D-1 Equity Shares held by such holder at a repurchase
price payable in cash (the "Change of Control Repurchase Payment") in an amount
------------------------------------
equal to 105% of the Liquidation Preference thereof, plus accrued and unpaid
dividends whether or not declared, if any, to the date of repurchase or the date
payment is made available (the "Change of Control Date"), pursuant to the offer
----------------------
described in subsection (b) below (the "Change of Control Repurchase Offer").
-------------- ----------------------------------
(b) Within 15 days following the Corporation becoming aware that a
Change of Control Repurchase Event has occurred, the Corporation shall mail by
first class mail or recognized overnight courier a notice to the each holder of
Series D-1 Equity Shares stating (A) that a Change of Control Repurchase Event
has occurred and that such holder has the right to require the Corporation to
repurchase any or all of the Series D-1 Equity Shares then held by such bolder,
(B) the date of repurchase (which shall be a Business Day, no earlier than 30
days and no later than 60 days from the date such notice is mailed, or such
later date as may be necessary to comply with the requirements of the Exchange
Act), (C) the repurchase price and (D) the instructions determined by the
Corporation, consistent with this subsection, that such investor must follow in
order to have the Series D-1 Equity Shares repurchased.
(c) On the Change of Control Repurchase Date, the Corporation, to the
extent lawful, shall accept for payment Series D-1 Equity Shares or portions
thereof tendered by such holder pursuant to the Change of Control Repurchase
Offer and promptly by wire transfer of immediately available funds to such
holder, as directed by such holder, send an amount equal to the Change of
Control Repurchase Payment in respect of all Series D-1 Equity Shares or
portions thereof so tendered.
(d) Notwithstanding anything else herein, to the extent they are
applicable to any Change of Control Repurchase Offer, the Corporation will
comply with any federal and state securities laws, rules and regulations and all
time periods and requirements shall be adjusted accordingly.
24
<PAGE>
(e) For purposes hereof, "Change of Control" means the occurrence of
-----------------
any of the following: (i) the first acquisition, directly or indirectly, by any
individual or entity or group (as such term is used in Section 13(d)(3) of the
Exchange Act) of beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act, except that such individual or entity shall be deemed to have
beneficial ownership of all shares that any such individual or entity has the
right to acquire, whether such right is exercisable immediately or only after
passage of time) of more than 25% of the Corporation's outstanding stock with
voting power, under ordinary circumstances, to elect Directors of the
Corporation, (ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Corporation (together with any new Directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Corporation was approved by a vote of 66 2/3% of the Directors of the
Corporation then still in office who were either Directors at the beginning of
such period, or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office of the Corporation; and (iii) (A) the Corporation
consolidating with or merging into another entity or conveying, transferring or
leasing all or substantially all of its assets (including, but not limited to,
real property investments) to any individual or entity, or (B) any entity
consolidating with or merging into the Corporation, which in either event (A) or
(B) is pursuant to a transaction in which the outstanding voting stock of the
Corporation is reclassified or changed into or exchanged for cash, securities or
other property; provided, however, that the events described in clauses (i)(ii)
-------- -------
and (iii) shall not be deemed to be a Change of Control (a) in the case of an
event described in clause (iii), if the sole purpose of such event is that the
Corporation is seeking to change its domicile or to convert from a corporation
to a trust or vice versa; (b) in the case of an event described in clause (iii),
if the holders of the exchanged securities of the Corporation immediately after
such transaction beneficially own at least a majority of the securities of the
merged or consolidated entity normally entitled to vote in elections of
Directors of the Corporation; (c) if any of WHL or its wholly-owned subsidiaries
remain as manager of the Corporation's properties and remains as adviser of the
Corporation, in each case, in a manner substantially similar to that on date
hereof; or (d) if the Change of Control results solely from the purchase or
other acquisition of equity securities by WHL or its wholly-owned subsidiaries,
Westfield America Trust, the Lowy Family or the Investor or the sale of equity
securities by WHL or any of its wholly-owned subsidiaries or Westfield America
Trust.
Section 8. Redemption at the Option of the Holder. (a) At any time
--------------------------------------
after August 12, 2008, the holders of Series D-1 Equity Shares thereof shall
have the right at any time that the Corporation's Common Shares has a Current
Market Price at or below and the Conversion Price per share, to require the
Corporation, to the extent the Corporation shall have funds legally available
therefor, to redeem any or all of the Series D-1 Equity Shares held by such
holder at a repurchase price payable, at the option of the Corporation, in
either (i) cash, or (ii) such number of Common Equity Shares as shall have a
Current Market Price in the aggregate on the day prior to the day such holder
gives notice pursuant to Section 8(b) of its intention to redeem, equal to in
either case, 100% of the Liquidation Preference thereof plus accrued and
25
<PAGE>
unpaid dividends whether or not declared, if any, to the date of repurchase or
the date payment is made available (in the aggregate, the "Redemption Payment").
------------------
(b) Notwithstanding paragraph (a) of this Section 8, in the event
that WHL and its subsidiaries and the trustee of Westfield America Trust on
behalf of Westfield America Trust vote to approve the conversion of the Series
D-1 Equity Shares into Common Equity Shares at a meeting of shareholders at
which such proposal is raised, but the shareholders of the Corporation as a
whole reject the foregoing proposal, then from and after the later of such
rejection date and the second anniversary of the Issue Date, the Series D-1
Equity Stock shall be redeemable at the option of the holder, to the extent that
the Corporation shall have funds legally available therefor, at a redemption
price payable in cash equal to the product of (a) the Series D-1 Common
Equivalent Factor times (b) the Current Market Price on the date of the notice
provided pursuant to paragraph (c) below, plus all accumulated, accrued and
unpaid dividends whether or not declared, if any, to the date of repurchase or
the date payment is made available.
(c) For purposes of this Section 8, redemption at the option of the
holder shall be deemed to occur upon receipt by the Corporation of written
notice that the holder of Series D-1 Equity Shares wishes to tender shares to be
redeemed. The holders of such shares to be redeemed shall then have 30 days
from the date of such notice to deliver such shares to the Transfer Agent. Upon
the surrender of the certificate or certificates of Series D-1 Equity Shares to
be redeemed, duly endorsed or assigned to the Corporation or in blank, at the
office of the Transfer Agent, the Corporation shall promptly, either (i) by wire
transfer of immediately available funds to such holder, as directed by such
holder, send an amount equal to the Redemption Payment in respect of all Series
D-1 Equity Shares or portions thereof so tendered or (ii) issue and deliver to
such holder, or on his or her written order, a certificate or certificates for
the number of full Common Equity Shares issuable in respect of all Series D-1
Equity Shares or portions thereof so tendered.
Section 9. Shares To Be Retired. All Series D-1 Equity Shares which
--------------------
shall have been issued and reacquired in any manner by the Corporation shall be
restored to the status of authorized but unissued preferred stock, without
discretion as to class or series, and subject to applicable limitations set
forth in the Articles may thereafter be reissued as shares of any series of
preferred stock.
Section 10. Ranking. Any class or series of stock of the
-------
Corporation shall be deemed to rank:
(a) prior to the Series D-1 Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to
the
26
<PAGE>
holders of Series D-1 Preferred Shares, which shall expressly include the
Corporation's non-voting senior preferred stock, par value $1.00 per share;
(b) on a parity with the Series D-1 Preferred Shares, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof shall be
different from those of the Series D-1 Preferred Shares, if the holders of
such class or series and the Series D-1 Preferred Shares shall be entitled to
the receipt of dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of
accrued and unpaid dividends per share or liquidation preferences, without
preference or priority one over the other ("Parity Shares"), which shall
-------------
expressly include the Corporation's Series A Cumulative Redeemable Preferred
Shares, Series B Cumulative Redeemable Preferred Shares, Series C Cumulative
Convertible Preferred Stock, Series C-1 Cumulative Convertible Preferred
Stock, Series C-2 Cumulative Convertible Preferred Stock, if any shall have
been authorized and issued, and Series D Cumulative Convertible Preferred
Stock;
(c) junior to the Series D-1 Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series D-1 Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Fully Junior Shares.
Section 11. Series D Preferred Shares. The Company shall be entitled
-------------------------
to treat the Series D Preferred Shares and the Series D-1 Preferred Shares as
one class for accounting purposes.
Section 12. Voting. So long as any Series D-1 Equity Shares are
------
outstanding, in addition to any other vote or consent of shareholders required
by law or by the Articles, the affirmative vote of the holders of a majority of
the Series D Equity Shares and the Series D-1 Equity Shares, voting together as
a class, given in person or by proxy, either in writing without a meeting or by
vote at any meeting called for the purpose, shall be necessary for effecting or
validating:
(i) Any amendment, alteration or repeal of any of the provisions
of the Articles of Incorporation or this Certificate of Designation that
materially and adversely affects the voting powers, rights or preferences
of the holders of the Series D Equity Shares or the Series D-1 Equity
Shares; or
(ii) Any merger or consolidation of the Corporation and another
entity in which the Corporation is not the surviving corporation and each
holder of Series D Equity
27
<PAGE>
Shares and Series D-1 Equity Shares does not receive shares of the
surviving corporation with substantially similar rights, preferences and
powers in the surviving corporation as the Series D Equity Shares and
Series D-1 Equity Shares have with respect to the Corporation (except for
changes that do not materially and adversely affect the holders of the
Series D Equity Shares or Series D-1 Equity Shares).
provided, however, that no such vote of the holders of the Series D Equity
-------- -------
Shares and Series D-1 Equity Shares shall be required if, at or prior to
the time when such amendment, alteration or repeal is to take effect, or
when the issuance of any such prior shares or convertible security is to
be made, as the case may be, provision is made for the redemption of all
Series D Equity Shares and Series D-1 Equity Shares at the time
outstanding to the extent such redemption is authorized by Section 5 of
this Certificate of Designation.
(iii) For purposes of the foregoing provisions of this Section
13, each share of Series D-1 Equity Shares shall have one (1) vote per
share, except that when any other series of Equity Shares shall have the
right to vote with the Series D-1 Equity Shares as a single class on any
matter, then the Series D-1 Equity Shares and such other series shall have
with respect to such matters one (1) vote per $180.00 (or less pursuant to
Section 4(a)) of stated Liquidation Preference. Except as otherwise
required by applicable law or as set forth herein, the Series D-1 Equity
Shares shall not have any relative, participating, optional or other
special voting rights and powers other than as set forth herein, and the
consent of the holders thereof shall not be required for the taking of any
corporate action.
Section 13. Record Holders. The Corporation and the Transfer Agent
--------------
may deem and treat the record holder of any Series D-1 Preferred Shares as the
true and lawful owner thereof for all purposes, and neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
Section 14. Title. This resolution shall be known and may be
-----
referred to as "A Resolution of the Board of Directors of Westfield America,
Inc. Designating Series D-1 Preferred Shares and Fixing Preferences and Rights
Thereof."
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized and directed to execute and acknowledge a certificate setting
forth these resolutions and to cause such certificate to be filed and recorded,
all in accordance with the requirements of Section 351.046 of the General and
Business Corporation Law of the State of Missouri, as amended.
28
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Co-President this 15th day of December,
1998.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
----------------------------------
Name: Peter S. Lowy
Title: Co-President
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
)SS:
COUNTY OF LOS ANGELES)
I, Leesa A. Ashley, a notary public, do hereby certify that on this 15/th/
day of December, 1998, personally appeared before me Peter S. Lowy, and being
first duly sworn by me, declared that he is the Co-President of Westfield
America, Inc., that he signed the foregoing document as Co-President of the
corporation, and that the statements therein contained are true.
[SEAL] /s/ Lessa A. Ashley
---------------------------------
Notary Public
My Commission Expires:
April 30, 2001
<PAGE>
EXHIBIT 3.2
SECOND AMENDED AND RESTATED
BY-LAWS
OF
Westfield America, Inc.
(formerly, Centermark Properties, Inc.)
ARTICLE I
Shareholders
------------
Section 1.1 Annual Meetings. An annual meeting of shareholders of
---------------
the Corporation for the election of directors and for the transaction of such
other business as properly may come before such meeting shall be held on the
second Tuesday in May (or if such day is a legal holiday, then on the next
succeeding business day) at such time and place either within or without the
State of Missouri as may be designated by the Board of Directors from time to
time, or on such other date as may be fixed by the Board of Directors from time
to time, and as set forth in the notice or waiver of notice of the meeting. Any
previously scheduled annual meeting of the shareholders may be postponed by
resolution of the Board of Directors upon public announcement made on or prior
to the date previously scheduled for such annual meeting of shareholders.
To be properly brought before an annual meeting, business must be (A)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (C) otherwise
properly brought before the meeting by a shareholder of the Corporation who was
a shareholder of record at the time of giving of the notice provided for in
Section 1.3, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 1.1. For business to be properly
brought before an annual meeting by a shareholder, if such business is related
to the election of directors of the Corporation, the procedures in Section 1.4
must be complied with. If such business relates to any other matter, the
shareholder must have given timely notice thereof in writing to the Secretary of
the corporation. To be timely, a shareholder's notice must be delivered to or
mailed to and received at the principal executive offices of the corporation not
less than 60 days nor
<PAGE>
more than 90 days prior to the meeting; provided, however, that in the event
-------- -------
that less than 70 days notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be timely
must be so delivered not later than the 10th day after the first public notice
or disclosure of the date of such annual meeting. Such shareholder's notice
shall set forth in writing as to each matter the shareholder proposes to bring
before the annual meeting (I) a brief description of the business desired to be
brought before the annual meeting, the reasons for conducting such business at
the annual meeting, and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (II) as to the shareholder giving the notice and the beneficial owner,
if any, on whose behalf the proposal is made (A) the name and address of such
shareholder, as they appear on the corporation's books, and of such beneficial
owner and (B) the class and number of shares of the corporation which are owned
beneficially and of record by such shareholder and such beneficial owner.
Notwithstanding anything in these By-Laws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this Section 1.1. The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this Section
1.1, and if he should so determine, such chairman shall declare to the meeting
that any such business not properly brought before the meeting shall not be
transacted.
For the purposes of this Section 1.1 and Sections 1.2 and 1.4,
"public notice or disclosure" shall mean disclosure in a press release reported
by the Dow Jones News Service, Associated Press or comparable national news
service or in a document publicly filed by the corporation with the Securities
and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In addition to the
provisions of this Section 1.1, a shareholder shall also comply with all
applicable requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth herein. Nothing in these By-
Laws shall be deemed to affect any rights of shareholders to request inclusion
of proposals in the corporation's proxy statement pursuant to Rule 14a-8 under
the Exchange Act.
Section 1.2. Special Meetings. Unless otherwise provided by law or
----------------
in the Articles of Incorporation, special meetings of shareholders may be called
only by the Chairman of
2
<PAGE>
the Board, the Vice Chairman of the Board, any President or the Board of
Directors, to be held at such date, time and place either within or without the
State of Missouri as may be stated in the notice of the meeting.
The purpose or purposes of any special meeting of the shareholders
shall be set forth in the notice of meeting, and, except as otherwise required
by law or by the Articles of Incorporation, no business shall be transacted at
any special meeting of the shareholders other than the items of business stated
in the notice of meeting. The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this Section
1.2, and if he should so determine, such chairman shall declare to the meeting
that any such business not properly brought before the meeting shall not be
transacted.
Section 1.3. Notice of Meetings. Whenever shareholders are required
------------------
or permitted to take any action at a meeting, the Secretary or any Assistant
Secretary shall cause a written notice of the meeting to be given which shall
state the place, date and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called. Unless
otherwise provided by law, the written notice of any meeting shall be given not
less than ten nor more than sixty days before the date of the meeting to each
shareholder entitled to vote at such meeting. If mailed, such notice shall be
deemed to be given three (3) days after it is deposited in the United States
mail, postage prepaid, directed to the shareholder at such shareholder's address
as it appears on the records of the Corporation.
Section 1.4. Nomination of Directors. (a) Only persons who are
-----------------------
nominated in accordance with the procedures set forth in this Section 1.4 shall
be eligible for election as directors of the corporation. Nominations of
persons for election to the Board of Directors of the corporation may be made at
any annual meeting of stockholders by or at the direction of the Board of
Directors or by any shareholder of the corporation entitled to vote for the
election of directors at the meeting who was a shareholder of record at the time
of giving of the notice provided for in this Section 1.4 and who complies with
the notice procedures set forth in this Section 1.4. Any such nomination by a
shareholder shall be made pursuant to timely notice in writing to the Secretary
of the corporation. To give timely notice for an annual meeting, a
shareholder's notice shall be delivered to the Secretary of the corporation at
the principal executive offices of the
3
<PAGE>
corporation not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days notice or prior
- --------
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so delivered not later than the
10th day after the first public notice or disclosure (as defined in Section 1.1)
of the date of such meeting. Such shareholder's notice shall be set forth in
writing and shall state (A) such shareholder's name and business address and
-
residence, (B) the name, age, business address and residence address of the
-
persons to be nominated, (C) the principal occupation or employment of the
-
persons to be nominated, (D) the class and number of shares of stock of the
-
corporation which are beneficially owned by such shareholder and by each
nominee, and (E) any other information relating to such shareholder or nominee
-
that is required to be disclosed in connection with the solicitation of proxies
for election of directors, or as otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including, without limitation, each such
person's written consent to being named in a proxy statement as a nominee and to
serving as a director if elected).
(b) Nominations of persons for election to the Board of Directors of
the corporation may be made at a special meeting of shareholders at which
directors are to be elected pursuant to the corporation's notice of meeting (i)
-
by or at the direction of the Board of Directors or (ii) provided that the Board
--
of Directors has determined that directors shall be elected at such special
meeting, by any shareholder of the corporation who is a shareholder of record at
the time of giving of notice provided for in this Section 1.4, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section 1.4. In the event the corporation calls a special meeting
of shareholders for the purpose of electing one or more directors to the Board
of Directors, any such shareholder may nominate a person or persons (as the case
may be) for election to such position(s) as specified in the corporation's
notice of meeting, if the shareholder's notice shall be delivered to the
Secretary of the corporation at the principal executive offices of the
corporation not earlier than the 90th day prior to such special meeting and not
later than the close of business on the later of the 60th day prior to such
special meeting or the 10th day following the day on which public announcement
is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting.
4
<PAGE>
(c) At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the corporation that information required to be set forth in a shareholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the corporation unless nominated in accordance
with the procedures set forth in this Section 1.4. The chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by these
By-Laws and in that event the defective nomination shall be disregarded. In
addition to the provisions of this Section 1.4, a shareholder shall also comply
with all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth herein.
Section 1.5. Adjournments. Any meeting of shareholders, annual or
------------
special, may be adjourned from time to time, to reconvene at the same or some
other place, provided that notice of any such adjourned meeting shall be given
to each shareholder of record entitled to vote at such adjourned meeting. A
determination of the shareholders of record entitled to notice of or to vote at
a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, the Board of Directors may fix a new record date for the
adjourned meeting. At the adjourned meeting the Corporation may transact any
business which might have been transacted at the original meeting.
Section 1.6. Quorum. For purposes of these By-Laws the term "Common
------
Equity Stock" shall mean the Corporation's Common Shares, par value $.01 per
share, and the Corporation's Excess Shares, par value $.01 per share. At each
meeting of shareholders, except where otherwise provided by law or the Articles
of Incorporation or these By-Laws, the holders of a majority in interest of the
outstanding shares of Common Equity Stock entitled to vote present in person or
represented by proxy, shall constitute a quorum to take action with respect to
that vote on that matter. In the absence of a quorum of the holders of stock
entitled to vote on a matter, the holders of Common Equity Stock so present or
represented may, by majority vote, adjourn the meeting of shareholders from time
to time in the manner provided by Section 1.5 of these By-Laws until a quorum of
such holders of stock shall be so present or represented. Shares of its own
stock belonging on the record date for the meeting to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is
5
<PAGE>
held, directly or indirectly, by the Corporation, shall neither be entitled to
vote nor be counted for quorum purposes.
Section 1.7. Organization. Meetings of shareholders shall be
------------
presided over by the Chairman of the Board, if any, or in the absence of the
Chairman of the Board by the Vice Chairman of the Board, if any, or in the
absence of the Vice Chairman of the Board by any President, or in the absence of
the President by a Vice President, or in the absence of the foregoing persons by
a chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary, or in the
absence of the Secretary an Assistant Secretary, shall act as secretary of the
meeting, but in the absence of the Secretary and any Assistant Secretary the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 1.8. Voting; Proxies. Unless otherwise provided in these By-
---------------
Laws, the Articles of Incorporation or by law, each shareholder entitled to vote
at any meeting of shareholders shall be entitled to one vote for each share of
stock held by such shareholder which has voting power upon the matter in
question. Each shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such shareholder by proxy, but no
such proxy shall be voted or acted upon after eleven months from its date,
unless the proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power,
regardless of whether the interest with which it is coupled is an interest in
the stock itself. A shareholder may revoke any proxy which is not irrevocable
by attending the meeting and voting in person or by filing an instrument in
writing revoking the proxy or another duly executed proxy bearing a later date
with the Secretary of the Corporation. Proxies by telegram, cablegram or other
electronic transmission must either set forth or be submitted with information
from which it can be determined that the telegram, cablegram or other electronic
transmission was authorized by the shareholder. Any copy, facsimile
telecommunication or other reliable reproduction of a writing or transmission
created pursuant to this section may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall
6
<PAGE>
be a complete reproduction of the entire original writing or transmission.
Voting at meetings of shareholders need not be by written ballot unless the
holders of a majority in interest of the outstanding shares of all classes of
stock entitled to vote thereon present in person or represented by proxy at such
meeting shall so determine. At each meeting of the shareholders for the election
of directors, provided a quorum is present, the directors shall be elected by a
plurality of the votes validly cast in such election. In all other matters,
unless otherwise provided by law or by the Articles of Incorporation or these
By-Laws, the affirmative vote of the holders of a majority of all shares of
Common Equity Stock present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the shareholders.
Section 1.9. Fixing Date for Determination of Shareholders of Record.
-------------------------------------------------------
In order that the Corporation may determine the shareholders entitled to notice
of or to vote at any meeting of shareholders or any adjournment thereof, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors, and which record date shall not be more than sixty nor less
than ten days before the date of such meeting. If no record date is fixed by
the Board of Directors, the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of shareholders of record entitled
to notice of or to vote at a meeting of shareholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
In order that the Corporation may determine the shareholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining shareholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the
7
<PAGE>
action taken or proposed to be taken is delivered to the Corporation by delivery
to its registered office in the State of Missouri, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of shareholders are recorded. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
law, the record date for determining shareholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the Board of Directors adopts the resolution taking such
prior action.
In order that the Corporation may determine the shareholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the shareholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
shareholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 1.10. List of Shareholders Entitled to Vote. The Secretary
-------------------------------------
shall prepare and make, at least ten days before every meeting of shareholders,
a complete list of the shareholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each share holder and the number
of shares registered in the name of each shareholder. Such list shall be open
to the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any shareholder who is present.
Section 1.11. Consent of Shareholders in Lieu of Meeting. Unless
------------------------------------------
otherwise provided in the Articles of Incorporation or by law, any action
required by law to be
8
<PAGE>
taken at any annual or special meeting of shareholders of the Corporation, or
any action which may be taken at any annual or special meeting of such
shareholders, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by all holders of each outstanding class of stock entitled to
vote on such action and shall be delivered to the Corporation by delivery to (A)
its registered office in the State of Missouri by hand or by certified mail or
registered mail, return receipt requested, (B) its principal place of business,
or (C) an officer or agent of the Corporation having custody of the book in
which proceedings of meetings of shareholders are recorded. Every written
consent shall bear the date of signature of each shareholder who signs the
consent and no written consent shall be effective to take the corporate action
referred to therein unless, within sixty days of the earliest dated consent
delivered in the manner required by this By-Law to the Corporation, written
consents signed by a sufficient number of holders to take action are delivered
to the Corporation by delivery to (A) its registered office in the State of
Missouri by hand or by certified or registered mail, return receipt requested,
(B) its principal place of business, or (C) an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
shareholders are recorded.
ARTICLE II
Board of Directors
------------------
Section 2.1 Powers; Number; Qualifications. The business and affairs
------------------------------
of the Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by law or in the Articles of
Incorporation. The Board of Directors shall not be less than three nor more
than fourteen, the exact number thereof within such limitations to be fixed from
time to time by resolution adopted by a majority of the entire Board of
Directors, and the exact number shall be eleven unless otherwise determined by
resolution adopted by a majority of the entire Board of Directors. As used in
this Section, "entire Board" means the total number of Directors which the
Corporation would have if there were no vacancies as such number is fixed by
resolution of the Board of Directors. In the event that the Board of Directors
is increased by such a resolution, the vacancy or vacancies so resulting shall
be filled by a vote of the majority of the Directors then in office. No
decrease in
9
<PAGE>
number of the Board of Directors shall shorten the term of any incumbent
Directors. Directors need not be shareholders.
The Board of Directors shall 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. At each Annual Meeting of Shareholders,
commencing with the 1998 Annual Meeting, successors to Directors of the Class
whose terms then expire shall be elected to hold office for a term expiring at
the third succeeding Annual Meeting of Shareholders. Any director (other than a
director elected by the holders of the Preferred Shares of the Corporation upon
a failure to pay dividends) or the entire Board of Directors may be removed, for
cause only, by the holders of 66 2/3 of all shares then entitled to vote at an
election of directors. The provisions of this Section 2.1 shall not be amended,
altered, changed or repealed unless approved by the affirmative vote of the
holders of not less than seventy five percent of the total voting power of all
outstanding shares of voting stock.
Section 2.2 Election; Term of Office; Resignation; Vacancies; Newly
-------------------------------------------------------
Created Directorships. (a) Each director shall hold office until his or her
- ---------------------
successor is elected and qualified or until his or her earlier death,
resignation, removal or disqualification. Any director may resign at any time
upon written notice to the Board of Directors or to the Chairman, any President
or the Secretary of the Corporation. Such resignation shall take effect at the
time specified therein, and unless otherwise specified therein no acceptance of
such resignation shall be necessary to make it effective. Should the office of
any director become vacant through death, removal, resignation, disqualification
or otherwise, and where newly created directorships result from any increase in
the authorized number of directors, the Board of Directors shall have the right
to elect or appoint, as the case may be, the replacement director or newly
created directorship. Any director elected or appointed to fill a vacancy or
newly created directorship shall hold office until the election of the class for
which such director shall have been chosen and his or her successor is elected
and qualified or until his or her earlier resignation or removal. Except as
otherwise set forth in these By-Laws or the Articles of Incorporation, at each
meeting of the shareholders for the election of directors, directors shall be
elected by a plurality of the votes cast in such election.
10
<PAGE>
Section 2.3 Regular Meetings. Regular meetings of the Board of
----------------
Directors may be held at such places within or without the State of Missouri and
at such times, but no less frequently than quarterly, as the Board may from time
to time determine, and if so determined notice thereof need not be given. The
Board of Directors from time to time may by resolution provide for the holding
of regular meetings and fix the place (which may be within or without the State
of Missouri) and the date and hour of such meetings. Notice of regular meetings
need not be given, provided, however, that if the Board of Directors shall fix
or change the time or place of any regular meeting, notice of such action shall
be mailed promptly, or sent by telegram, radio or cable, to each director who
shall not have been present at the meeting at which such action was taken,
addressed to him or her at his or her usual place of business, or shall be
delivered to him or her personally. Notice of such action need not be given to
any director who attends the first regular meeting after such action is taken
without protesting the lack of notice to him or her, prior to or at the
commencement of such meeting, or to any director who submits a signed waiver of
notice, whether before or after such meeting.
Section 2.4 Special Meetings. Special meetings of the Board of
----------------
Directors shall be held upon the request of the Chairman of the Board or any
President on three (3) days written notice to each director by mail or on one
days notice if delivered to him personally or communicated to him by telephone,
telegram or telecopier, and at a place in Los Angeles, California or such other
reasonable place as is specified in such notice; special meeting shall be called
by the Chairman, any President or the Secretary in like manner and on like
notice on the written consent of a majority of the Board of Directors.
Section 2.5 Participation in Meetings by Conference Telephone
-------------------------------------------------
Permitted. Unless otherwise restricted by the Articles of Incorporation or
- ---------
these By-Laws, members of the Board of Directors, or any committee designated by
the Board, may participate in a meeting of the Board or of such committee, as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this By-Law shall
constitute presence in person at such meeting.
Section 2.6 Quorum; Vote Required for Action. (a) At all meetings of
--------------------------------
the Board a majority of the total
11
<PAGE>
authorized number of directors shall constitute a quorum for the transaction of
business.
(b) The vote of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board of Directors.
(c) In case at any meeting of the Board a quorum shall not be
present, the members of the Board present may adjourn the meeting from time to
time until a quorum shall be present.
Section 2.7 Organization. Meetings of the Board of Directors shall
------------
be presided over by the Chairman of the Board, if any, or in the absence of the
Chairman of the Board by the Vice Chairman of the Board, if any, or in the
absence of the Vice Chairman of the Board by any President, or in their absence
by a chairman chosen at the meeting. The Secretary, or in the absence of the
Secretary an Assistant Secretary, shall act as secretary of the meeting, but
in the absence of the Secretary and any Assistant Secretary the chairman of the
meeting may appoint any person to act as secretary of the meeting. The duties
of the Chairmen of the Board shall include presiding over meetings of the Board
and the shareholders and the Chairman shall also be entitled to vote as part of
the Board.
Section 2.8 Action by Directors Without a Meeting. Unless otherwise
-------------------------------------
restricted by the Articles of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
Section 2.9 Compensation of Directors. The amount, if any, which any
-------------------------
member of the Board of Directors or any committee thereof shall be entitled to
receive as compensation for his or her services as such shall be fixed from time
to time by resolution of the Board of Directors.
ARTICLE III
Committees
----------
Section 3.1 Committees. (a) The Board of Directors may, by
----------
resolution passed by a majority of the whole
12
<PAGE>
Board, designate one or more committees with each such committee to consist of
such number of directors as from time to time may be fixed by the Board of
Directors.
(b) Should any vacancy occur in any committee of the Board due to the
removal, resignation, death or other absence from office of a committee member,
the Board of Directors shall designate a qualified person as a replacement
member of such committee. Any person designated to any committee pursuant to
this Section 3.1(b) shall hold office for the unexpired term of the committee
member whom he replaced. The Board of Directors shall have the right, with or
without cause, to remove such committee member from such committee and to
designate a replacement committee member as provided above.
(c) Any such committee, to the extent provided in the resolution of
the Board of Directors or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Articles of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
shareholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the shareholders a
dissolution of the Corporation or a revocation of a dissolution or amending
these By-Laws; and, unless the resolution, these By-Laws or the Articles of
Incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, to adopt a
certificate of merger or to remove or indemnify directors.
Section 3.2 Quorum; Vote Required for Action. (a) Subject to Section
--------------------------------
3.2(b) below, at all meetings of any committee of the Board, a majority of the
total authorized membership for such committee shall constitute a quorum for the
transaction of business.
(b) When action is to be taken by vote of any committee of the Board
each member of such committee shall be accorded one vote. Each and every
corporate action taken by vote of any committee of the Board shall be authorized
by affirmative vote of a majority of the committee members present at a duly
constituted meeting at which a quorum is present and acting throughout.
13
<PAGE>
Section 3.3 Other Committee Rules. Except as provided in Section 3.2
---------------------
above and unless the Board of Directors otherwise provides, each committee
designated by the Board may adopt, amend and repeal rules for the conduct of its
business. Each committee shall otherwise conduct its business in the same
manner as the Board conducts its business pursuant to Article II of these By-
Laws.
Section 3.4 Nominating Committee. In addition to any other
--------------------
committees which the Board of Directors may designate pursuant to Section 3.1
above, the Corporation shall establish a Nominating Committee. The Nominating
Committee shall be comprised of the Chairman and two Independent Directors and
shall make recommendations as to the organization, size and composition of the
Board and committees thereof, propose nominees for election to the Board and the
committees thereof, and consider the qualifications, compensation and retirement
of Directors.
ARTICLE IV
Officers
--------
Section 4.1 Officers; Election. As soon as practicable after the
------------------
annual meeting of shareholders in each year, the Board of Directors shall elect
one or more Presidents, a Secretary and a Treasurer, and from among its members
a Chairman of the Board. The Board may also elect one or more Vice Presidents,
one or more Assistant Vice Presidents, one or more Assistant Secretaries, and
one or more Assistant Treasurers and such other officers as the Board may deem
desirable or appropriate and may give any of them such further designations or
alternate titles as it considers desirable. Any number of offices may be held by
the same person.
Section 4.2 Term of Office; Resignation; Removal; Vacancies. Unless
-----------------------------------------------
otherwise provided in the resolution of the Board of Directors electing any
officer, each officer shall hold office until his or her successor is elected
and qualified or until his or her earlier resignation or removal. Any officer
may resign at any time upon written notice to the Board or to a President or the
Secretary of the Corporation. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. The Board may remove any
officer with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer, if any, with the Corpora-
14
<PAGE>
tion, but the election of an officer shall not of itself create contractual
rights. Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise may be filled by the Board at any regular or
special meeting.
Section 4.3 Authority and Duties of Officers. The officers of the
--------------------------------
Corporation shall have such authority and shall exercise such powers and perform
such duties as may be specified in these By-Laws under the direction of the
Board of Directors, except that in any event each officer shall exercise such
powers and perform such duties as may be required by law. The Board shall set a
policy as to which actions taken by officers shall be considered material and
shall require board authorization.
Section 4.4 The Presidents. Each President shall be the chief
--------------
executive officer and chief operating officer of the Corporation, shall have
general control and supervision of the policies and operations of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He or she shall manage and administer the
Corporation's business and affairs under the direction of the Board of Directors
and shall also perform all duties and exercise all powers usually pertaining to
the office of a chief executive officer and chief operating officer of a
corporation. He or she shall have the authority to sign, in the name and on
behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and
other documents and instruments in connection with the business of the
Corporation, and together with the Secretary or an Assistant Secretary,
conveyances of real estate and other documents and instruments to which the seal
of the Corporation is affixed. He or she shall have the authority to cause the
employment or appointment of such employees and agents of the Corporation as the
conduct of the business of the Corporation may require, to fix their
compensation, and to remove or suspend any employee or agent elected or
appointed by the President or the Board of Directors. The President shall
perform such other duties and have such other powers as the Board of Directors
or the Chairman may from time to time prescribe.
If there are two Co-Presidents, the Co-Presidents shall be co-chief
executive officers and co-chief operating officers of the Corporation. The Co-
Presidents shall have general control and supervision of the policies and
operations of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. Each Co-President shall manage
and administer the
15
<PAGE>
Corporation's business and affairs under the direction of the Board of Directors
and shall also perform all duties and exercise all powers usually pertaining to
the office of a chief executive officer or chief operating officer of a
corporation, as the case may be. Each shall have the authority to sign, in the
name and on behalf of the Corporation, checks, orders, contracts, leases, notes,
drafts and other documents and instruments in connection with the business of
the Corporation, and together with the Secretary or an Assistant Secretary,
conveyances of real estate and other documents and instruments to which the seal
of the Corporation is affixed. Each shall have the authority to cause the
employment or appointment of such employees and agents of the Corporation as the
conduct of the business of the Corporation may require, to fix their
compensation, and to remove or suspend any employee or agent elected or
appointed by a Co-President or the Board of Directors, other than the other Co-
President. The Co-Presidents shall perform such other duties and have such other
powers as the Board of Directors or the Chairman may from time to time
prescribe.
Section 4.5 The Vice Presidents. Each Vice President shall perform
-------------------
such duties and exercise such powers as may be assigned to him or her from time
to time by a President. In the absence of a President, the duties of President
shall be performed and his or her powers may be exercised by such Vice President
as shall be designated by a President, or failing such designation, such duties
shall be performed and such powers may be exercised by each Vice President in
the order of their earliest election to that office; subject in any case to
review and superseding action by a President.
Section 4.6 The Secretary. The Secretary shall have the following
-------------
powers and duties:
(a) He or she shall keep or cause to be kept a record of all the
proceedings of the meetings of the stockholders and of the Board of
Directors in books provided for that purpose.
(b) He or she shall cause all notices to be duly given in accordance
with the provisions of these by-laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a
resolution of the Board of Directors, he or she shall furnish a copy of
such resolution to the members of such Committee.
16
<PAGE>
(d) He or she shall be the custodian of the records and of the seal
of the Corporation and cause such seal (or a facsimile thereof) to be
affixed to all certificates representing shares of the Corporation prior to
the issuance thereof and to all instruments the execution of which on
behalf of the Corporation under its seal shall have been duly authorized in
accordance with these By-Laws, and when so affixed he or she may attest the
same.
(e) He or she shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required by
law, the Articles of Incorporation or these by-laws.
(f) He or she shall have charge of the stock books and ledgers of the
Corporation and shall cause the stock and transfer books to be kept in such
manner as to show at any time the number of shares of stock of the
Corporation of each class issued and outstanding, the names (alphabetically
arranged) and the addresses of the holders of record of such shares, the
number of shares held by each holder and the date as of which each became
such holder of record.
(g) He or she shall sign (unless the Treasurer, an Assistant
Treasurer or an Assistant Secretary shall have signed) certificates
representing shares of the Corporation the issuance of which shall have
been authorized by the Board of Directors.
(h) He or she shall perform, in general, all duties incident to the
office of secretary and such other duties as may be specified in these by-
laws or as may be assigned to him or her from time to time by the Board of
Directors, the Chairman or a President.
Section 4.7 The Treasurer. The Treasurer shall be the chief
-------------
financial officer of the Corporation and shall have the following powers and
duties:
(a) He or she shall have charge and supervision over and be
responsible for the moneys, securities, receipts and disbursements of the
Corporation, and shall keep or cause to be kept full and accurate records
of all receipts of the Corporation.
(b) He or she shall cause the moneys and other valuable effects of
the Corporation to be deposited in
17
<PAGE>
the name and to the credit of the Corporation in such banks or trust
companies or with such bankers or other depositaries.
(c) He or she shall cause the moneys of the Corporation to be
disbursed by checks or drafts upon the authorized depositaries of the
Corporation and cause to be taken and preserved proper vouchers for all
moneys disbursed.
(d) He or she shall render to the Board of Directors or the
President, whenever requested, a statement of the financial condition of
the Corporation and of all his or her transactions as Treasurer, and render
a full financial report at the annual meeting of the stockholders, if
called upon to do so.
(e) He or she shall be empowered from time to time to require from
all officers or agents of the Corporation reports or statements giving such
information as he or she may desire with respect to any and all financial
transactions of the Corporation.
(f) He or she may sign (unless an Assistant Treasurer or the
Secretary or an Assistant Secretary shall have signed) certificates
representing stock of the Corporation the issuance of which shall have been
authorized by the Board of Directors.
(g) He or she shall perform, in general, all duties incident to the
office of Treasurer and such other duties as may be specified in these By-
Laws or as may be assigned to him or her from time to time by the Board of
Directors, the Chairman or a President.
Section 4.8 Additional Officers. The Board of Directors may appoint
-------------------
such other officers and agents as it may deem appropriate, and such other
officers and agents shall hold their offices for such terms and shall exercise
such powers and perform such duties as may be determined from time to time by
the Board of Directors. The Board of Directors from time to time may delegate
to any officer or agent the power to appoint subordinate officers or agents and
to prescribe their respective rights, terms of office, authorities and duties.
Any such officer or agent may remove any such subordinate officer or agent
appointed by him or her, for or without cause.
18
<PAGE>
Section 4.9 Security. The Board of Directors may require any
--------
officer, agent or employee of the Corporation to provide security for the
faithful performance of his or her duties, in such amount and of such character
as may be determined from time to time by the Board of Directors.
ARTICLE V
Stock
-----
Section 5.1 Certificates. Every holder of stock in the corporation
------------
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman or Vice Chairman of the Board of Directors, if any,
or a President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation,
representing the number of shares of stock in the Corporation owned by such
holder. If such certificate is manually signed by one officer or manually
countersigned by a transfer agent or by a registrar, any other signature on the
certificate may be a facsimile, engraved or printed, to the extent permitted by
law. In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.
If the Corporation is authorized to issue more than one class of stock
or more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate which the Corporation shall issue to represent such class or
series of stock, provided that, except as otherwise provided by law, in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock a statement that the Corporation will furnish without charge to each
shareholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
19
<PAGE>
Section 5.2 Lost, Stolen or Destroyed Stock Certificates; Issuance
------------------------------------------------------
of New Certificates. The Corporation may issue a new certificate of stock in
- -------------------
the place of any certificate theretofore issued by it, alleged to have been
lost, stolen or destroyed upon delivery to the Board of Directors of an
affidavit of the owner or owners of such certificate, setting forth such
allegation. The Corporation may require the owner of the lost, stolen or
destroyed certificate, or such owner's legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 5.3 Legends. Each certificate of stock shall bear such
-------
legends as are required by the agreement or document pursuant to which such
stock was issued, the Articles of Incorporation and applicable law, including,
without limitation, a conspicuous notation of the restrictions on transfer of
such stock so long as the Articles of Incorporation remain in effect. The
Corporation shall, at the request of any shareholder holding a certificate
bearing any such legend, issue a new certificate or certificates in lieu of and
in exchange for such existing certificate, but free of any such legend, at such
time as any such agreement or document, the Articles of Incorporation and
applicable law cease to require such certificate to bear such legend.
Section 5.4 Transfer of Shares. Upon surrender on any business day
------------------
to the Corporation at its principal office or the transfer agent of the
Corporation of a certificate of stock duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer or exchange, it
shall be the duty of the Corporation to issue a new certificate to the person
entitled thereto to reflect any such transfer or exchange, cancel the old
certificate, and record the transaction upon its books; provided, however, that
the Corporation shall (and shall cause its transfer agent to) close its books
against any transfer or exchange of shares of stock at any time if and to the
extent such transfer or exchange is not permitted pursuant to applicable
provisions of the Articles of Incorporation, any agreement or document pursuant
to which such stock was issued, any legend appearing on such certificate or
applicable law.
20
<PAGE>
ARTICLE VI
Miscellaneous
-------------
Section 6.1 Fiscal Year. The fiscal year of the Corporation shall
-----------
begin on the first day of January and end on the thirty-first day of December of
each year.
Section 6.2 Seal. The Corporation may have a corporate seal which
----
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6.3 Waiver of Notice of Meetings of Shareholders, Directors
-------------------------------------------------------
and Committees. Whenever notice is required to be given by law or under any
- --------------
provision of the Articles of Incorporation or these By-Laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the share holders,
directors or members of a committee of directors need be specified in any
written waiver of notice unless so required by the Articles of Incorporation or
these By-Laws.
Section 6.4 Indemnification of Directors, Officers and Others. (a)
-------------------------------------------------
The Corporation shall, to the fullest extent permitted by the General and
Business Corporation Law of Missouri (the "GBCL"), indemnify and advance
expenses to any person who was or is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a Director or Officer of the Corporation or is or was serving at the request
of the Corporation as a director or officer of any other corporation or
enterprise. Such right of indemnification shall inure to the benefit of the
heirs, executors, administrators and personal representatives of such a person.
The indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses
21
<PAGE>
may be entitled under any agreement, vote of shareholders or disinterested
directors or otherwise.
(b) The Corporation may, to such extent as it deems appropriate and
as may be permitted by the GBCL, indemnify any other person acting in any of the
other capacities referred to in Section 351.355 of the GBCL against any such
claim by reason of the fact that he is or was serving the Corporation or at the
request of the Corporation in any of such capacities or arising out of his
status in any such capacity.
(c) The Corporation may, but shall not be required to, supplement the
right of indemnification under paragraph (a) above by (1) the purchase of
-
insurance on behalf of any one or more of such persons, whether or not the
Corporation would be obligated to indemnify such person under paragraph (a)
above, (2) individual or group indemnification agreements with any one or more
-
of such persons and (3) advances for related expenses of such a person.
-
Section 6.5 Interested Directors; Quorum. No contract or transaction
----------------------------
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, if the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith authorizes the contract or transaction by a majority of the disinterested
directors.
Section 6.6 Form of Records. Any records maintained by the
---------------
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
22
<PAGE>
Section 6.7 Amendment of By-Laws. These By-Laws may be amended,
--------------------
altered or repealed, and new By-Laws may be adopted:
(a) by resolution adopted by a majority of the Board of Directors at
any special or regular meeting of the Board if, in the case of such special
meeting only, notice of such amendment, alteration, repeal or adoption is
contained in the notice or waiver of notice of such meeting; or
(b) by the affirmative vote of the holders of record of a majority of
the outstanding voting stock of the Corporation at any regular or special
meeting of the stockholders if, in the case of such special meeting only,
notice of such amendment, alteration, repeal or adoption is contained in
the notice or waiver of notice of such meeting, unless the provision of the
Articles of Incorporation or these By-Laws provide for greater than
majority vote.
23
<PAGE>
EXHIBIT 3.3
AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED
BY-LAWS
OF
WESTFIELD AMERICA, INC.
(FORMERLY, CENTERMARK PROPERTIES, INC.)
This Amendment No. 1 to the Second Amended and Restated By-Laws of
Westfield America, Inc. (the "Corporation"), hereby amends the Second Amended
-----------
and Restated By-Laws (the "By-Laws") of the Corporation as follows:
-------
The fourth sentence of paragraph two of Section 1.1 of the By-Laws and
the fourth sentence of Section 1.4(a) of the By-Laws are hereby amended and
restated in their entirety to read as follows:
"To be timely, a shareholder's written notice must be delivered to or
mailed to and received by the Secretary of the Corporation at the principal
executive offices of the Corporation not less than 90 days nor more than
120 days prior to the anniversary date of the immediately preceding annual
meeting of shareholders; provided, however, that in the event that the
-------- -------
annual meeting is called on a date that is not within 30 days before or
after such anniversary date, notice by the shareholder in order to be
timely must be so received not later than the close of business on the
10/th/ day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual
meeting was made, whichever first occurred."
The second sentence of Section 1.4(b) of the By-Laws is hereby amended
and restated in its entirety to read as follows:
"In the event the Corporation calls a special meeting of shareholders for
the purpose of electing one or more directors to the Board of Directors,
any such shareholder may nominate a person or persons (as the case may be)
for election to such position(s) as specified in the Corporation's notice
of meeting, if the shareholder's notice shall be delivered to the Secretary
of the Corporation at the principal executive offices of the Corporation
not earlier than the 120/th/ day prior to such special meeting and not
later than the close of business on the later of the 90/th/ day prior to
such special meeting or the 10/th/ day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such special
meeting."
<PAGE>
Except to the extent specifically set forth herein, the By-Laws shall
remain in full force and effect, unmodified in any respect.
<PAGE>
EXHIBIT 3.4
AMENDMENT NO. 2 TO
SECOND AMENDED AND RESTATED
BY-LAWS
OF
WESTFIELD AMERICA, INC.
This Amendment No. 2 to the Second Amended and Restated By-Laws of
Westfield America, Inc. (the "Corporation"), hereby amends the Second Amended
-----------
and Restated By-Laws (the "By-Laws") of the Corporation as follows:
-------
The second sentence of Section 2.1 of the By-Laws is hereby amended and
restated in its entirety to read as follows:
"The Board of Directors shall not be less than three nor more than the sum
of (i) fourteen and (ii) the number of directors that the holders of preferred
stock of the Corporation shall then have the right to elect, the exact number
thereof within such limitations to be fixed from time to time by resolution
adopted by a majority of the entire Board of Directors, and the exact number
shall be ten unless otherwise determined by resolution adopted by a majority of
the entire Board of Directors."
Section 3.1(c) of the By-Laws is hereby amended and restated in its
entirety to read as follows:
"(c) Any such committee, to the extent provided in the resolution of the
Board of Directors or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Articles of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
shareholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the shareholders a
dissolution of the Corporation or a revocation of a dissolution or amending
these By-Laws; and, unless the resolution, these By-Laws or the Articles of
Incorporation expressly so provides, no such committee shall have the power or
authority to authorize the issuance of stock, to adopt a certificate of merger
or to remove or indemnify directors."
Except to the extent specifically set forth herein, the By-Laws shall
remain in full force and effect, unmodified in any respect.
<PAGE>
EXHIBIT 10.1
- --------------------------------------------------------------------------------
LOAN AGREEMENT
Dated as of October 30, 1998
Between
Borrowers (as defined herein)
And
THE CAPITAL COMPANY OF AMERICA LLC,
as Lender
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
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I DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1
1.1 Specific Definitions 1
1.2 Index of Other Definitions 18
1.3 Principles of Construction 19
II THE LOAN 20
2.1 The Loan 20
2.1.1 Commitment 20
2.1.2 Note 20
2.1.3 Use of Loan Proceeds 21
2.2 Conditions Applicable to All Advances 21
2.2.1 Facility Amount 21
2.2.2 No Default 21
2.2.3 Collateral Property Requirements 21
2.2.4 Expenses 21
2.2.5 New Collateral Property 21
2.2.6 Number of Closings 21
2.3 [Reserved] 21
2.4 [Reserved] 21
2.5 Conditions Precedent to Designation of a Collateral Property 22
2.5.1 First Mortgage 22
2.5.2 Second Mortgage 22
2.5.3 Title Insurance 22
2.5.4 Environmental Audit 22
2.5.5 Insurance 23
2.5.6 Operating Statements; Budgets 23
2.5.7 Searches 23
2.5.8 Survey 23
2.5.9 Management 23
2.5.10 Leases and Material Contracts 23
2.5.11 Tenant Estoppels and SNDA's 24
2.5.12 Property Condition Report 24
2.5.13 Appraisal 24
2.5.14 Zoning Compliance, Etc. 24
2.5.15 Recording Taxes 24
2.5.16 Perfection of Security Interests 24
2.5.17 Opinions 24
2.5.18 Ground Lease 25
2.5.19 REA 25
2.5.20 Reserves and Escrows 25
2.5.21 Rent Roll 25
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2.5.22 Further Documents 25
2.5.23 Approval 25
2.5.24 Expenses 25
2.5.25 Effective Date 25
2.5.26 Additional Properties 26
2.6 Substitution of Collateral Properties 26
III INTEREST; PAYMENTS 29
3.1 Interest; Monthly Payments 29
3.1.1 Generally 29
3.1.2 29
3.1.3 Property Cash Flow Allocation 29
3.1.4 Default Rate 30
3.2 Loan Repayment 30
3.2.1 Repayment 30
3.2.2 Mandatory Prepayments 31
3.3 Release of Property 31
3.3.1 Release of Individual Properties 31
3.3.2 Release on Payment in Full 33
3.3.3 Release Documents 33
3.4 Payments and Computations 33
3.4.1 Making of Payments 33
3.4.2 Computations 33
3.4.3 Late Payment Charge 33
3.5 Special Cash Management Termination 34
3.6 [Reserved] 34
3.7 Fees 34
3.7.1 Draw Fee 34
3.7.2 Authorization 34
3.8 Taxes 35
3.9 Breakage Indemnity 35
IV CASH MANAGEMENT; ESCROWS AND RESERVES 36
4.1 Cash Management Arrangements 36
4.2 Required Repairs; Required Repair Funds 36
4.2.1 Required Repairs 36
4.2.2 Release of Required Repair Funds 37
4.2.3 Repair Fund L/C 37
4.3 Tax and Insurance Escrow Fund 38
4.4 Replacement Reserves 39
4.4.1 Replacement Reserve Fund 39
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4.4.2 Payment of Replacement Expenses 39
4.5 Rollover Reserves 40
4.5.1 Rollover Reserve Fund 40
4.5.2 Payment of Leasing Expenses 40
4.6 Ground Rent Escrow 41
4.6.1 Ground Rent Escrow Fund 41
4.7 Operating Expense Reserves 41
4.7.1 Operating Expense Reserve Fund 41
4.7.2 Payment of Approved Operating Expenses 42
4.8 Casualty/Condemnation Fund 42
4.9 Security Deposits 42
4.10 Grant of Security Interest; Application of Funds 43
4.11 Investments of Funds 43
4.12 UNOI Letter of Credit 44
4.13 Oakridge Option Fund 44
4.14 Cash Collateral Fund 46
4.15 Regal Reserve Fund 46
4.16 Environmental Fund 47
4.17 Parkway Reserve #2 Fund 48
V REPRESENTATIONS AND WARRANTIES 49
5.1 Borrower Representations 49
5.1.1 Organization; Special Purpose 49
5.1.2 Proceedings; Enforceability 49
5.1.3 No Conflicts 49
5.1.4 Litigation 49
5.1.5 Agreements 50
5.1.6 Title 50
5.1.7 Survey 50
5.1.8 No Bankruptcy Filing 50
5.1.9 Full and Accurate Disclosure 50
5.1.10 No Plan Assets 51
5.1.11 Compliance 51
5.1.12 Contracts 51
5.1.13 Financial Information 51
5.1.14 Condemnation 51
5.1.15 Federal Reserve Regulations 51
5.1.16 Utilities and Public Access 52
5.1.17 Not a Foreign Person 52
5.1.18 Separate Lots 52
5.1.19 Assessments 52
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5.1.20 Enforceability 52
5.1.21 Insurance 52
5.1.22 Use of Property; Licenses 52
5.1.23 Flood Zone 52
5.1.24 Physical Condition 52
5.1.25 Encroachments 53
5.1.26 Leases 53
5.1.27 Filing and Recording Taxes 54
5.1.28 Investment Company Act 54
5.1.29 Fraudulent Transfer 54
5.1.30 Ownership of Borrower 54
5.1.31 Management Agreement 55
5.1.32 Hazardous Substances 55
5.1.33 Name; Principal Place of Business 55
5.1.34 Subordinated Debt 56
5.1.35 Ground Lease 56
5.1.36 REA 56
5.1.37 Development Agreement 56
5.2 Survival of Representations and Covenants 56
VI AFFIRMATIVE COVENANTS 57
6.1 Existence 57
6.2 Taxes and Other Charges 57
6.3 Repairs; Maintenance and Compliance 57
6.3.1 Repairs and Maintenance 57
6.3.2 Legal Compliance 58
6.3.3 Alterations 58
6.4 Litigation 59
6.5 Performance of Other Agreements 59
6.6 Notices 59
6.7 Cooperate in Legal Proceedings 60
6.8 Further Assurances 60
6.9 Financial Reporting 60
6.9.1 Bookkeeping 60
6.9.2 Annual Reports 60
6.9.3 Monthly and Quarterly Reports 61
6.9.4 Other Reports 61
6.9.5 Annual Budget 61
6.9.6 Delivery of Financial Information 62
6.10 Environmental Matters 62
6.10.1 Hazardous Substances 62
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6.10.2 Environmental Monitoring 62
6.11 Title to the Property 64
6.12 Leases 64
6.12.1 Form of Lease 64
6.12.2 New and Renewal Leases 65
6.12.3 Leasing Covenants 67
6.12.4 Nondisturbance Agreements 67
6.12.5 Reciprocal Easement Agreements 67
6.12.6 Notice to Tenants 67
6.13 Estoppel Statement 67
6.14 Property Management 68
6.14.1 Management Agreement 68
6.14.2 Termination of Manager 68
6.14.3 Manager's Subordination 68
6.15 Special Purpose Bankruptcy Remote Entity 69
6.16 Assumptions in Non-Consolidation Opinion 71
6.17 Expenses 71
6.18 Indemnity 71
6.19 Third Party Reports 73
6.20 Schedule 7 73
6.21 Undelivered Documents 73
6.22 Parkway Plaza 73
VII NEGATIVE COVENANTS 74
7.1 Management Agreement 74
7.2 Liens 74
7.3 Dissolution 75
7.4 Change In Business or Operation of Property 75
7.5 Debt Cancellation 75
7.6 Assets 75
7.7 Transfers 75
7.8 Debt 75
7.9 Assignment of Rights 75
7.10 Principal Place of Business 75
7.11 Corporate Organization 75
7.12 ERISA 76
VIII INSURANCE; CASUALTY; AND CONDEMNATION 76
8.1 Insurance 76
8.1.1 Coverage 76
8.1.2 Policies 77
8.2 Casualty 78
8.2.1 Notice; Restoration 78
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8.2.2 Settlement of Proceeds 78
8.3 Condemnation 78
8.3.1 Notice; Restoration 78
8.3.2 Collection of Award 79
8.4 Application of Proceeds or Award 79
8.4.1 Application to Restoration 79
8.4.2 Application to Debt 79
8.4.3 Procedure for Application to Restoration 80
8.4.4 Ground Lease; Anchor Lease 80
IX DEFAULTS 80
9.1 Events of Default 80
9.2 Remedies 83
9.2.1 Acceleration 83
9.2.2 Remedies Cumulative 84
9.2.3 Severance 84
9.2.4 Delay 85
9.2.5 Lender's Right to Perform 85
X SPECIAL PROVISIONS 85
10.1 Sale of Note and Secondary Market Transaction 85
10.1.1 Cooperation 85
10.1.2 Use of Information 86
10.1.3 Borrowers Obligations Regarding Disclosure Documents 87
10.1.4 Borrowers Indemnity Regarding Filings 88
10.1.5 Indemnification Procedure 88
10.1.6 Contribution 88
10.1.7 Rating Surveillance 89
10.1.8 Floor on Coupon Rate 89
XI MISCELLANEOUS 89
11.1 Exculpation 89
11.2 Notices 91
11.2.1 Borrowers' Agent 91
11.3 Brokers and Financial Advisors 91
11.4 Retention of Servicer 92
11.5 Survival 92
11.6 Lender's Discretion 92
11.7 Governing Law 92
11.8 Modification; Waiver in Writing 93
11.9 Delay Not a Waiver 93
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11.10 TRIAL BY JURY 94
11.11 Headings 94
11.12 Severability 94
11.13 Preferences 94
11.14 Waiver of Notice 94
11.15 Remedies of Borrower 94
11.16 Prior Agreements 95
11.17 Offsets, Counterclaims and Defenses 95
11.18 Publicity 96
11.19 No Usury 96
11.20 Conflict; Construction of Documents 96
11.21 No Third Party Beneficiaries 97
11.22 Yield Maintenance Premium 97
11.23 Assignment 97
11.24 Liabilities Not Joint and Several 97
11.25 Third Party Guaranties 98
</TABLE>
SCHEDULES
Schedule 1 - Location of Property
Schedule 2 - Matters Regarding Representations
Schedule 3 - Initial Borrowers
Schedule 4 - Required Repairs
Schedule 5 - Organizational Chart
Schedule 6 - Monthly Replacement Deposit Amounts (Initial Borrowers)
Schedule 7 - Material Contracts
Schedule 8 - Description of Crestwood Alteration
Schedule 9 - Specified Agreements
Schedule 10 - Possible Additional Loan Properties
Schedule 11 - Undelivered Documents
Schedule 12 - Oakridge Option Agreement and Oakridge Subordinate Mortgage
EXHIBITS
Exhibit A - Form of Assumption of Loan Documents
Exhibit B-1 - Form of Manager Consent and Subordination (Westfield)
Exhibit B-2 - Form of Manager Consent and Subordination (other than Westfield)
Exhibit C - Form of Subordination Nondisturbance and Attornment Agreement
Exhibit D - Form of Notice to Tenants
<PAGE>
LOAN AGREEMENT
LOAN AGREEMENT dated as of October 30, 1998 between the Borrowers (as
hereinafter defined) and THE CAPITAL COMPANY OF AMERICA LLC, a Delaware limited
liability company (together with its successors and assigns, "LENDER").
I DEFINITIONS; PRINCIPLES OF CONSTRUCTION
---------------------------------------
1.1 SPECIFIC DEFINITIONS. The following terms have the meanings set forth
--------------------
below:
"ACCEPTABLE APPRAISAL": an appraisal of a Collateral Property (or proposed
Collateral Property) (i) dated not more than 180 days prior to the applicable
Transaction Date, (ii) signed by a qualified MAI appraiser with no interest,
direct or indirect, in the Loan or any Collateral Property, and whose
compensation is not affected by the Appraised Value (and Lender agrees that as
of the date hereof Landauer Associates, Inc. satisfies the foregoing criteria),
(iii) addressed to Lender and its successors and assigns, (iv) made in
compliance with the requirements of the Federal National Mortgage Association
Company or Federal Home Loan Mortgage Corporation, or any successor thereto, and
Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of
1989 and the regulations promulgated thereunder, and (v) otherwise reasonably
satisfactory to Lender in all respects.
"ADVANCE": any portion of any Loan advanced by Lender.
"AFFILIATE": as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person.
"ALLOCABLE SHARE": as to any Borrower: (i) with respect to Principal and
interest thereon, 100% of such Borrower's Allocated Note Amount and 100% of the
interest thereon, (ii) with respect to any Obligation relating solely to the
Collateral Property owned by such Borrower, 100% and (iii) with respect to any
other Obligation, subject to the provisions of Section 11.24, a fraction, the
numerator of which is such Borrower's then Allocated Note Amount and the
denominator of which is the then aggregate Allocated Note Amounts of all
Borrowers.
"ALLOCATED TITLE AMOUNT": with respect to any Collateral Property, 125% of
the Appraised Value of such Collateral Property.
"APPLICABLE DSCR": 1.35.
"APPLICABLE RATING AGENCIES": means the Rating Agencies that have rated any
Securities issued in connection with a Secondary Market Transaction.
"APPRAISED VALUE": the fair market value of a Collateral Property (or
proposed Collateral
<PAGE>
Property) reflected in an Acceptable Appraisal.
"APPROVED BANK" shall mean a bank whose long term unsecured debt
obligations are rated at least "AA" by Standard & Poor's Rating Group.
"APPROVED LEASING EXPENSES": expenses incurred by a Borrower in leasing
space at such Borrower's Collateral Property pursuant to Leases entered into in
accordance with the Loan Documents, including brokerage commissions, tenant
improvements and other inducements, which expenses (i) are (A) specifically
approved by Lender in connection with approving the applicable Lease, (B)
incurred in the ordinary course of business and on market terms and conditions
in connection with Leases which do not require Lender's approval under the Loan
Documents, or (C) otherwise approved by Lender, which approval shall not be
unreasonably withheld or delayed, and (ii) are substantiated by executed Lease
documents and brokerage agreements.
"APPROVED MANAGER": Westfield Management Company, a Delaware general
partnership, or Westfield Management Acquisition, Inc., a Delaware corporation,
or any other wholly owned subsidiary of Westfield Holdings Limited, or any
successor or assignee of any of the foregoing, provided that each successor or
assignee shall be (i) approved by Lender in Lender's reasonable discretion
(unless such successor or assign is wholly owned, directly or indirectly, by
Westfield Holdings Limited and evidence thereof reasonably satisfactory to
Lender has been delivered to Lender prior to the change in Manager, in which
case Lender's approval shall not be required) and (ii) after any Secondary
Market Transaction, approved by each Rating Agency (provided that such Rating
Agency approval shall not be necessary as to any Manager wholly owned, directly
or indirectly, by Westfield Holdings Limited if each Rating Agency has received
a nonconsolidation opinion as to such Manager from Debevoise & Plimpton or
another law firm acceptable to the Rating Agencies in form and substance
satisfactory to the Rating Agencies).
"APPROVED OPERATING EXPENSES": Operating Expenses incurred by a Borrower
which (i) are included in the approved Operating Budget for the Current Month
for the Collateral Property owned by such Borrower, (ii) are for electric, gas,
oil, water, sewer or other utility service to, or Management Fees for, such
Collateral Property or (iii) have been approved by Lender, which approval shall
not be unreasonably withheld or delayed.
"APPROVED REPLACEMENT EXPENSES": Replacement Expenses incurred by a
Borrower which (i) are included in the approved Replacement Budget for the
Current Month for the Collateral Property owned by such Borrower or (ii) have
been approved by Lender, which approval shall not be unreasonably withheld or
delayed.
"BLOCKED ACCOUNT AGREEMENTS": the respective Blocked Account Agreements
among each Borrower, Lender and a Clearing Bank.
"BORROWER": any one of the Borrowers.
<PAGE>
"BORROWER REPRESENTATIVE": as to each Borrower, its general partner or
managing member.
"BORROWERS": collectively, the Initial Borrowers and each of the borrowers
that becomes a signatory to this Agreement pursuant to Sections 2.1.2 and 2.5
hereof, and their permitted successors and assigns.
"BORROWERS' AGENT": Westfield Management Company, a Delaware general
partnership.
"BUSINESS DAY": means any day other than (i) a Saturday or a Sunday, and
(ii) a day on which federally insured depository institutions in New York, New
York or San Francisco, California are authorized or obligated by law,
regulation, governmental decree or executive order to be closed.
"CASH MANAGEMENT EVENT": (i) either (A) an Event of Default occurs or (B)
the Debt Service Coverage Ratio at any time is less than 1.15 and (ii) the
giving by Lender to the Clearing Bank(s) of notice of such occurrence (a "CASH
MANAGEMENT NOTICE").
"CASH MANAGEMENT FEE": the fees charged from time to time by the Deposit
Bank during the continuance of a Cash Management Event in accordance with the
Cash Management Agreement.
"CASH MANAGEMENT TERMINATION": the giving by Lender to the Clearing
Bank(s) of notice that the sweeping of funds into the Deposit Account may cease
(a "CASH MANAGEMENT TERMINATION NOTICE"), which notice Lender shall only be
required to give if (i) the Loans, and all other obligations under the Loan
Documents have been repaid in full, or (ii) for twelve consecutive months after
the cure of the last Cash Management Event to have occurred, (x) there has
occurred no other Cash Management Event, (y) no Event of Default has occurred
and is continuing and (z) the Debt Service Coverage Ratio has been 1.20 or
higher, or (iii) Lender is obligated to give such notice pursuant to Section
3.5(b).
"CODE": the Internal Revenue Code of 1986, as amended, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"COLLATERAL POOL": at any time, all of the Collateral Properties.
"COLLATERAL PROPERTY": as of any date, any Retail Property that is subject
to the Lien of a Mortgage on such date and that satisfied the conditions set
forth in Section 2.6 at the time such Retail Property first became a Collateral
Property.
"CONTROL": with respect to any Person, either (i) ownership directly or
through other entities of more than 50% of all beneficial equity interest in
such Person, or (ii) the possession,
<PAGE>
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, through the ownership of voting
securities, by contract or otherwise.
"CORE PROPERTY": a Collateral Property which Lender has determined
satisfies all of the conditions set forth in clause (A), clause (B) or clause
(C) of this definition.
A: (i) at least 90% of the gross leaseable area of all "in-line"
stores at such Collateral Property is leased and occupied by tenants; (ii)
the average tenant sales at "in-line" stores at such Collateral Property
for tenants who have been in occupancy and paying full rent for at least 12
consecutive months exceeded $275 per square foot of gross leaseable area
during the then most recent 12-month period; (iii) fixed and additional
rents payable by the tenants at "in-line" stores at such Collateral
Property were, in the aggregate, less than 15% of the aggregate annual
tenants' sales at such Collateral Property during such 12-month period; and
(iv) such Collateral Property has at least three "anchor" tenants (which
term includes anchor stores which own their own pads) who are in occupancy
and not in default under their leases or any REA affecting such Collateral
Property.
B: (i) at least 90% of the gross leaseable area of all "in-line"
stores at such Collateral Property is leased and occupied by tenants; (ii)
the average tenant sales at "in-line" stores at such Collateral Property
for tenants who have been in occupancy and paying full rent for at least 12
consecutive months exceeded $300 per square foot of gross leaseable area
during the then most recent 12-month period; (iii) fixed and additional
rents payable by the tenants at "in-line" stores at such Collateral
Property were, in the aggregate, less than 16.5% of the aggregate annual
tenants' sales at such Collateral Property during such 12-month period; and
(iv) such Collateral Property has at least three "anchor" tenants (which
term includes anchor stores which own their own pads) who are in occupancy
and not in default under their leases or any REA affecting such Collateral
Property.
C: (i) at least 85% of the gross leaseable area of all "in-line"
stores at such Collateral Property is leased and occupied by tenants; (ii)
the average tenant sales at "in-line" stores at such Collateral Property
for tenants who have been in occupancy and paying full rent for at least 12
consecutive months exceeded $300 per square foot of gross leaseable area
during the then most recent 12-month period; (iii) fixed and additional
rents payable by the tenants at "in-line" stores at such Collateral
Property were, in the aggregate, less than 15% of the aggregate annual
tenants' sales at such Collateral Property during such 12-month period; and
(iv) such Collateral Property has at least three "anchor" tenants (which
term includes anchor stores which own their own pads) who are in occupancy
and not in default under their leases or any REA affecting such Collateral
Property.
<PAGE>
"COUPON DIFFERENTIAL AMOUNT": as to any partial prepayment of Principal, an
amount, determined immediately following such prepayment and after taking into
account the retirement of any Securities from the proceeds of such prepayment,
equal to the product of (x) the aggregate outstanding principal balance of the
Loans immediately following such prepayment, times (y) the amount, if any, by
which (i) the weighted average coupon rate on all Securities then issued and
outstanding immediately following such prepayment, exceeds (ii) LIBOR plus the
Margin.
"CURRENT MONTH": as of any date of determination, the then current
calendar month.
"DEBT": the unpaid Principal, all interest accrued and unpaid thereon, any
Yield Maintenance Premium and all other sums due to Lender in respect of the
Loan, or under any Loan Document.
"DEBT SERVICE": with respect to any particular period, the scheduled
interest payments due under the Note in such period.
"DEBT SERVICE CONSTANT": for any period, the greater of (i) 9.25% and (ii)
the Interest Rate as of the last day of such period.
"DEBT SERVICE COVERAGE RATIO": as of any date, the ratio calculated by
Lender of (i) the Underwritten Net Operating Income for the 12-month period
ending with the most recently completed calendar month to (ii) the product of
(A) the aggregate outstanding Principal balance of the Loans as of the end of
such period multiplied by (B) the Debt Service Constant.
"DEFAULT": the occurrence of any event under any Loan Document which, but
for the giving of notice or passage of time, or both, would be an Event of
Default.
"DEFAULT RATE": prior to the Stated Maturity Date: a rate per annum equal
to the lesser of (i) the Maximum Rate and (ii) 5% above the Interest Rate,
compounded monthly; from and after the Stated Maturity Date: a rate per annum
equal to the lesser of (i) the Maximum Rate and (ii) 10% above the Interest
Rate, compounded monthly.
"DEPOSIT BANK": LaSalle National Bank, or such other bank or depository
selected by Lender in its sole discretion, which holds and disburses Funds and
other deposits required hereunder.
"DETERMINATION DATE": with respect to any Interest Period, the date which
is two Eurodollar Business Days prior to the commencement of such Interest
Period.
"ELIGIBLE ACCOUNT": either (i) an account or accounts (A) maintained with
a depository institution or trust company, the short term unsecured debt
obligations or commercial paper of which are rated at least A-1+ (or equivalent)
by the applicable Rating Agency in the case of accounts in which funds are held
for 30 days or less (or, in the case of accounts in which funds are held for
more than 30 days, the long term unsecured debt obligations of which are rated
at least AA (or equivalent) by the applicable Rating Agency) or (B) as to which
Lender has
<PAGE>
received a Rating Comfort Letter from each of the applicable Rating Agencies
with respect to holding funds in such account or (ii) a segregated trust account
or accounts maintained with a federal or state chartered depository institution
or trust company acting in its fiduciary capacity which, in the case of a state
chartered depository institution or trust company is subject to regulations
similar to 12 C.F.R. 9.10(b), having in either case a combined capital and
surplus of at least $50,000,000 and subject to federal and state authority, or
any other with respect to which Lender has received a Rating Comfort Letter.
"ENVIRONMENTAL EVENT" means, with respect to any Collateral Property, (a) a
violation of any Environmental Law with respect to such Collateral Property, or
(b) the presence of any Hazardous Substance on, about, or under such Collateral
Property that, under or pursuant to any Environmental Law, would require
remediation, if in the case of either (a) or (b), such event or circumstance
could result in a material adverse affect on the value or operations of such
Collateral Property.
"ERISA": the Employment Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE": all members of a controlled group of corporations and
all trades and business (whether or not incorporated) under common control and
all other entities which, together with Borrower, are treated as a single
employer under any or all of Section 414(b), (c), (m) or (o) of the Code.
"EURODOLLAR BUSINESS DAY": any day other than a Saturday, Sunday or other
day on which banks in the City of London, England are closed for interbank or
foreign exchange transactions.
"FACILITY AMOUNT": an amount determined by Lender equal to the least of
(i) the amount obtained by dividing (A) the Underwritten Net Operating Income
for the Collateral Pool as of the Funding Date in question by (B) the Debt
Service Constant as of the Funding Date, and by (C) 1.35, (ii) 60% of the
Appraised Value of the Collateral Pool as of the Funding Date in question, and
(iii) $850,000,000.
"FASIT": Financial Asset Securitization Investment Trust within the meaning
of Sec tion 860L(a)(1) of the Code.
"FISCAL YEAR": each twelve month period commencing on January 1 and ending
on December 31 during each year of the Term.
"FUNDING DATE": the date on which any Advance is made by Lender.
"FUNDING TERMINATION DATE": November 30, 1998.
<PAGE>
"GAAP": generally accepted accounting principles in the United States of
America as of the date of the applicable financial report.
"GOVERNMENTAL AUTHORITY": any court, board, agency, commission, office or
authority of any nature whatsoever for any governmental unit (federal, state,
county, district, municipal, city or otherwise) now or hereafter in existence.
"GROUND LEASE": any lease defined as a "Ground Lease" in any Mortgage.
"GROUND LESSOR": a lessor under a Qualified Ground Lease.
"GROUND RENT": with respect to any Ground Lease, all ground rents, square
footage rents, percentage rents or any other payments or rents owing by a
Borrower under such Ground Lease.
"INDEPENDENT DIRECTOR": as to any Borrower, an individual selected by such
Borrower and reasonably satisfactory to Lender who shall not have been at the
time of such individual's appointment as a director, does not thereafter become
and shall not have been at any time during the preceding five years (i) a
shareholder/partner/member of, or an officer or employee of, such Borrower or
any of its shareholders, subsidiaries or Affiliates, (ii) a director of any
shareholder, subsidiary or Affiliate of such Borrower other than such Borrower's
Borrower Representative, (iii) a customer of, or supplier to, such Borrower or
any of its shareholders, subsidiaries or Affiliates, (iv) a Person who Controls
any such shareholder, supplier or customer, or (v) a member of the immediate
family of any such shareholder/director/partner/member, officer, employee,
supplier or customer or of any other director of such Borrower's Borrower
Representative.
"INITIAL BORROWERS": the Borrowers identified on Schedule 3 hereto.
"INITIAL MORTGAGES": collectively, the first and second Mortgages executed
by each of the Initial Borrowers, each Initial Borrower having executed a first
and second Mortgage encumbering the Initial Property owned by such Initial
Borrower.
"INITIAL PROPERTIES": collectively, the Collateral Properties encumbered by
the Initial Mortgages, the locations of which are identified on Schedule 1.
----------
"INTEREST PERIOD": (i) the period from the date of the First Advance
through the first day thereafter that is an Interest Period Termination Date and
(ii) each period thereafter from an Interest Period Commencement Date through an
Interest Period Termination Date; except that the Interest Period, if any, that
would otherwise commence before and end after the Maturity Date shall end on the
Maturity Date.
"INTEREST PERIOD COMMENCEMENT DATE": the 11th day of each calendar month;
provided, however, that if the Payment Date is changed by Lender pursuant to the
- -------- -------
definition thereof, Lender may adjust this definition accordingly.
<PAGE>
"INTEREST PERIOD TERMINATION DATE": the 10th day of each calendar month
(notwithstanding that the succeeding Payment Date may not be an Interest Period
Commencement Date because the day after such Interest Period Termination Date is
not a Business Day); provided, however, that if the Payment Date is changed by
-------- -------
Lender pursuant to the definition thereof, lender may adjust this definition
accordingly.
"INTEREST RATE": for any Interest Period, the lesser of (A) LIBOR for such
Interest Period plus the Margin and (B) the Maximum Rate (or, when applicable
pursuant to this Agreement or any other Loan Document, the Default Rate).
"JURISDICTIONALLY CAPPED SECOND MORTGAGE": any second Mortgage executed
and delivered pursuant to Section 2.5.2 hereof which encumbers a Collateral
Property located in a state which requires the payment of mortgage recording tax
in excess of $25,000 in order to record such second Mortgage.
"LEASE ROLLOVER NUMBER": as to any calendar year, the aggregate number of
square feet of gross leaseable area in the Improvements in the Collateral Pool
that are covered by leases the expiration dates of which (after taking into
account all renewals and extensions that have been unconditionally exercised as
of the date in question) are scheduled to occur in such calendar year.
"LEASE ROLLOVER PERCENTAGE": as to any calendar year, a fraction, expressed
as a percentage, the numerator of which is the Lease Rollover Number for such
calendar year and the denominator of which is the aggregate number of square
feet of gross leaseable area of all Improvements in the Collateral Pool.
"LEASEHOLD ESTATE": the leasehold interest and estate of Borrower created
pursuant to a Ground Lease.
"LEASES": all leases and other agreements existing on the date hereof or
hereafter entered into affecting the use, or occupancy of, or the conduct of any
activity upon or in, any Collateral Property or any Improvements thereon,
including any extensions, renewals, modifications or amendments thereof, but
excluding (i) reciprocal easement and operating agreements and (ii) subleases
where the sublessee is not in privity with a Borrower.
"LEGAL REQUIREMENTS": statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of, or agreements (including the
Specified Agreements) with, Governmental Authorities affecting all or part of
any Collateral Property, any Ground Lease or the construction, use, alteration
or operation thereof, whether now or hereafter enacted and in force, and all
permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instrument, either of record or known to any Borrower, at any time in force
affecting all or part of any Collateral Property, including any that may (i)
require repairs, modifications or alterations in or to all or part of any
Collateral Property, or (ii) in any way limit the use and enjoyment thereof.
<PAGE>
"LETTER OF CREDIT" shall mean an irrevocable, unconditional, transferable,
clean sight draft letter of credit in favor of Lender and entitling Lender to
draw thereon in New York, New York, issued by a domestic Approved Bank or the
U.S. agency or branch of a foreign Approved Bank, or if there are no domestic
banks or financial institutions which qualify as an Approved Bank or U.S.
agencies or branches of a foreign bank or financial institution which qualifies
as an Approved Bank then issuing letters of credit, then such letter of credit
may be issued by any domestic bank with a long term unsecured debt rating that
is the highest such rating then given by each Rating Agency to a domestic
commercial bank.
"LIBOR": with respect to any Interest Period, the rate per annum which is
equal to the London Interbank Offered Rate reported from time to time by
Telerate News Service (page 3750), at which foreign branches of major United
States banks offer United States dollar deposits to other banks for a one-month
period in the London interbank market at approximately 11:00 a.m., London time,
on the related Determination Date. If such interest rate shall cease to be
available from Telerate News Service, LIBOR shall be determined from such
financial reporting service as Lender shall reasonably determine and use with
respect to its other loan facilities on which interest is determined based on
LIBOR. If two or more such rates appear on Telerate page 3750 or associated
pages, the rate in respect of such Interest Period will be the arithmetic mean
of such offered rates, absent manifest error.
"LIEN": any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest or any other encumbrance, charge or transfer of,
on or affecting all or part of any Collateral Property or any interest therein,
or in any Borrower or in any Borrower Representative, including any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic's, materialmen's and other similar liens
and encumbrances.
"LOAN DOCUMENTS": this Agreement and all other documents, agreements and
instruments evidencing, securing or delivered to Lender in connection with the
Loan, whether now existing or hereafter executed , including the following: (i)
the Note, (ii) the first and second mortgages on each Collateral Property
(collectively, the "MORTGAGES"), (iii) the Assignments of Leases and Rents with
respect to each Collateral Property, (iv) the Assignments of Agreements with
respect to each Collateral Property, (v) the Deposit Account Agreements among
Borrowers, Lender, Manager and the Deposit Bank (the "DEPOSIT ACCOUNT
AGREEMENTS"), (vi) the Blocked Account Agreements and (vii) the Master Deposit
Account Agreement, as each of the foregoing may be (and each of the foregoing
defined terms shall refer to such documents as they may be) amended, restated,
replaced, supplemented or otherwise modified from time to time.
"MAINTENANCE AND REPAIRS": items of maintenance and repair to the
Improvements or Equipment similar to the items of work (but not limited to such
specific items) described in the
<PAGE>
Dames & Moore physical inspection reports delivered to Lender in connection with
the closing of the Loans.
"MANAGEMENT AGREEMENT": as to each Collateral Property, the management
agreement in effect on the date hereof between the Borrower that owns such
Collateral Property and an Approved Manager for such Collateral Property,
pursuant to which such Approved Manager is to manage such Property, as same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time with the prior approval of Lender (which consent shall not be reasonably
withheld or delayed), and after any Secondary Market Transaction, the approval
of each Rating Agency (provided, however, that any modification which does not
modify the term or economics of the Management Agreement or otherwise materially
modify the Management Agreement, shall require prior notice to, but not the
consent of, Lender, and shall not require the consent of any Rating Agency).
"MANAGEMENT FEE": as to any Management Agreement, all fees in the nature of
management fees payable to Manager under such Management Agreement.
"MANAGER": as to each Collateral Property, the Approved Manager under the
Management Agreement for such Collateral Property.
"MARGIN": 0.53%.
"MATERIAL ALTERATION": as to any Borrower, any alteration affecting
structural elements of such Borrower's Collateral Property the cost of which
exceeds 10% of such Borrower's original Allocated Note Amount; provided,
however, that in no event shall tenant improvement work, or alterations
performed as part of a Restoration, constitute a Material Alteration.
"MATERIAL LEASE": as to any Collateral Property, any Lease (i) which
demises more than 5% of such Collateral Property's gross leaseable area or (ii)
the fixed annual rent under which exceeds 5% of the aggregate fixed annual rent
payable under all Leases of such Collateral Property.
"MATURITY DATE": the date on which the final payment of principal of the
Note becomes due and payable as therein provided, whether at the Stated Maturity
Date, by declaration of acceleration, or otherwise.
"MAXIMUM RATE": the maximum interest rate allowed by applicable law in
effect with respect to the Loan on the date for which a determination of
interest accrued hereunder is made, after taking into account all fees, payments
and other charges that are, under applicable law, characterized as interest.
"MONTHLY REPLACEMENT DEPOSIT": for any Collateral Property, the greater of
(i) one-twelfth of the product obtained by multiplying $0.20 by the number of
square feet of gross leaseable area in such Collateral Property and (ii) the
amount determined by Lender, based on the engineering report for such Collateral
Property reviewed by Lender, at the time such Collateral
<PAGE>
Property first becomes a Collateral Property. On each anniversary of the date of
this Agreement (or, if any such anniversary is not a Payment Date, on the first
Payment Date following such anniversary) the Monthly Replacement Deposit shall
automatically increase by 2.5% of the then Monthly Replacement Deposit amount.
The initial Monthly Replacement Deposit for each of the Collateral Properties
owned by the Initial Borrowers is set forth in Schedule 6 hereto.
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"MONTHLY ROLLOVER DEPOSIT": for any Collateral Property, an amount equal
to one-twelfth of the average annual cost (as determined by Lender) to the
applicable Borrower for tenant improvements and leasing commissions in respect
of such Collateral Property during the 60-month period preceding the date on
which such Collateral Property first becomes a Collateral Property.
"NET OPERATING INCOME": for any period, the excess, if any, of Operating
Income for such period over Operating Expenses for such period.
"OAKRIDGE BORROWER": Oakridge Mall LLC, a Delaware limited liability
company.
"OAKRIDGE PROPERTY": the Collateral Property owned by Oakridge Borrower.
"OBLIGATIONS": all obligations, liabilities and Debt of Borrowers (or any
of them) to Lender, whether now existing or hereafter arising, under this
Agreement or any of the other Loan Documents.
"OFFICER'S CERTIFICATE": as to any Borrower, a certificate delivered to
Lender by such Borrower which is signed by a senior executive officer of such
Borrower's Borrower Representative.
"OPERATING EXPENSES": as to any Collateral Property or proposed Collateral
Property, for any period, all expenditures by or on behalf of the applicable
Borrower in connection with the ownership, operation, maintenance, repair or
leasing of such Collateral Property, including (i) Management Fees, Insurance
Premiums, Ground Rent, bank charges, expenses for accounting, advertising,
marketing, architectural services, utilities (including costs for electricity,
oil, gas, water, steam, heat, ventilation, air conditioning and other energy),
extermination, cleaning, trash removal, window washing, landscaping, security
(including security systems), environmental compliance; and reasonable and
necessary legal and other professional expenses incurred in connection with the
operation of such Collateral Property; (ii) Taxes and Other Charges; (iii)
wages, benefits, payroll taxes, uniforms, insurance costs and all other related
expenses for employees of the applicable Borrower or its Affiliate to the extent
engaged in the repair, operation or maintenance of such Collateral Property;
(iv) the cost of tenant improvements (other than tenant improvements
constituting Replacement Expenses), routine interior and exterior maintenance,
repairs, minor alterations and other tenant services and (v) amounts deposited
into any Funds pursuant to this Agreement; provided that Operating Expenses will
not include Debt Service, Replacement Expenses, non-cash items such as
depreciation and amortization or any
<PAGE>
extraordinary one-time expenditures not considered operating expenses under
GAAP. Operating Expenses shall be determined on a "cash basis".
"OPERATING INCOME": as to any Collateral Property or proposed Collateral
Property, for any period, all regular on-going revenues actually received by
Borrower from the operation of such Collateral Property during such period,
including (i) Rents, (ii) amounts withdrawn from any Funds pursuant to this
Agreement and (iii) all other amounts actually received which in accordance with
GAAP are required to be or are included in the applicable Borrower's annual
financial statements as operating income of such Collateral Property; provided,
that Operating Income will not include (1) income from non-recurring income
sources; (2) advance Rents or other payments; (3) deposits or escrows; (4) any
income otherwise includable in Operating Income but paid to a Person other than
the applicable Borrower; (5) proceeds of Casualty insurance or Condemnation
Awards; or (6) income from a sale, financing or other capital transaction.
Operating Income shall be determined on a "cash basis."
"OTHER CHARGES": with respect to any Collateral Property, all Ground Rents,
maintenance charges, impositions other than Taxes, and any other charges,
including vault charges and license fees for the use of vaults, chutes and
similar areas adjoining such Collateral Property, now or hereafter levied or
assessed or imposed against such Collateral Property or any part thereof,
including all interest and penalties on any of the foregoing.
"PAYMENT DATE": the 11th day of each calendar month (or such other day of
a calendar month selected by Lender to collect debt service payments under loans
which it makes and securitizes) or, if such day is not a Business Day, the first
Business Day thereafter.
"PERMITTED ENCUMBRANCES": as to any Collateral Property: (a) the Liens
created by the Loan Documents, (b) all Liens and other matters disclosed in the
Title Insurance Policies insuring the Mortgages on such Collateral Property, (c)
Liens, if any, for Taxes or Other Charges not yet payable or delinquent, (d)
easements for utilities and rights of way which do not have a materially adverse
affect on the use, operation or value of such Collateral Property and (e) such
other title and survey exceptions as Lender approves in writing in Lender's
reasonable discretion.
"PERMITTED INVESTMENTS": has the meaning given such term in the Deposit
Account Agreements.
"PERMITTED TRANSFERS": (i) a Lease (or an amendment, extension,
modification, waiver or renewal thereof) entered into in accordance with the
Loan Documents, (ii) a Permitted Encumbrance, (iii) a Transfer of a limited
partnership/membership interest in a Borrower by a limited partner/member other
than such Borrower's Borrower Representative, an interest in a limited
partner/member of a Borrower or stock in such Borrower's Borrower Representative
if either (A) such Transfer would not cause the transferee to acquire Control of
such Borrower or such Borrower's Borrower Representative or to increase its
direct or indirect interest in such Borrower or such Borrower's Borrower
Representative to an amount which equals or exceeds 49%, or (B) at such
Borrower's sole cost and expense, such Borrower shall have (1) delivered (or
<PAGE>
caused to be delivered) to Lender, a Rating Comfort Letter from the applicable
Rating Agencies with respect to such Transfer, (2) delivered (or caused to be
delivered) to Lender and the applicable Rating Agencies, a substantive non-
consolidation opinion with respect to such Borrower in form and substance
satisfactory to Lender and the applicable Rating Agencies, and (3) reimbursed
Lender for all reasonable expenses incurred by it in connection with such
Transfer or (iv) any transfer of stock in a publicly held corporation.
"PERSON": any individual, corporation, partnership, joint venture, estate,
trust, unincorporated association, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing.
"PLAN": (i) an employee benefit or other plan established or maintained by
Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate
makes or is obligated to make contributions and (ii) which is covered by Title
IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
"POOLING AND SERVICING AGREEMENT": the Servicing Agreement entered into
with the Servicer in connection with any Secondary Market Transaction, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"PRIMARY OAKRIDGE GROUND LEASE": the Primary Ground Lease (as such term is
defined in the first Mortgage encumbering the Oakridge Property).
"QUALIFIED GROUND LEASE": a ground lease of a Retail Property under which
a Borrower is the lessee, all of the terms and conditions of which are
acceptable to Lender in its sole and absolute discretion (or, in the case of a
ground lease which covers only portions of a Collateral Property not material to
the use, operation or legal compliance of such Collateral Property, in Lender's
reasonable discretion) and as to which the Ground Lessor has executed and
delivered to Lender an estoppel certificate in form, scope and substance
satisfactory to Lender in its sole and absolute discretion.
"QUALIFIED REA": an REA all of the terms and conditions of which are
acceptable to Lender in its sole and absolute discretion and as to which each of
the parties to the REA (other than the applicable Borrower) has executed and
delivered to Lender an estoppel certificate in form, scope and substance
satisfactory to Lender in its sole and absolute discretion.
"RATING AGENCY": any of Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co., Fitch IBCA, Inc. or any other nationally-recognized statistical rating
agency which has issued a rating of any Securities.
"RATING COMFORT LETTER": a letter issued by each of the Applicable Rating
Agencies which confirms that the taking of the action referenced to therein will
not result in any qualification, withdrawal or downgrading of any existing
ratings of Securities created in a
<PAGE>
Secondary Market Transaction.
"REA": any "construction, operation and reciprocal easement agreement" or
similar agreement (including any "separate agreement" or other agreement between
a Borrower and one or more other parties to an REA with respect to an REA)
affecting any Collateral Property or portion thereof.
"REAL PROPERTY": as to any Collateral Property, the portions thereof
constituting land, Improvements thereon and all rights pertaining to such land
and Improvements.
"REINVESTMENT RATE": means the actual reinvestment rate available to
Lender with respect to the amount of the Yield Maintenance Premium in question.
"REMIC": a "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"RENTS": with respect to any Collateral Property, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including, all oil and gas or other mineral royalties and bonuses),
income, fees, receivables, receipts, revenues, deposits (including security,
utility and other deposits), accounts, cash, issues, profits, charges for
services rendered, and other payment and consideration of whatever form or
nature received by or paid to or for the account of or benefit of a Borrower,
Manager (in its capacity as manager of such Collateral Property, and excluding
sums payable by Borrower to Manager pursuant to the Management Agreement) or any
of their agents or employees from any and all sources arising from or
attributable to such Collateral Property and the Improvements therein, including
all receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of the use and
occupancy of such Collateral Property or rendering of services by the applicable
Borrower or Manager (in its capacity as manager of such Collateral Property, and
excluding sums payable by Borrower to Manager pursuant to the Management
Agreement), and proceeds, if any, from business interruption or other loss of
income insurance.
"REPAIR EXPENSES": reasonable, market-rate costs and expenses actually
incurred to pay for Required Repairs.
"REPLACEMENT EXPENSES": expenses incurred to pay for replacements,
improvements and/or Maintenance and Repairs of the Improvements or Equipment or
portions of either.
"REQUIRED RECORD": any financial statement, certificate, report or
information required to be delivered under Section 6.9.
"RETAIL PROPERTY": a "regional" or "super regional" shopping mall.
"ROUTINE HAZARDOUS SUBSTANCES": Hazardous Substances typically used in the
ordinary
<PAGE>
course of business at Retail Properties, which are generated, used, stored and
disposed of in compliance with all applicable Environmental Laws.
"SECURITY DEPOSIT SUB-ACCOUNT": that certain sub-account or accounts
established and maintained by Lender at the Deposit Bank for the purpose of
holding all security deposits of lessees under Leases after a Cash Management
Event.
"SERVICER": Capital America Client Services LLC or its successor in
interest, or if any successor servicer is appointed pursuant to the Pooling and
Servicing Agreement, such successor servicer.
"SPECIFIED AGREEMENTS": the agreements described on Schedule 9.
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"STATE": as to any Collateral Property, the state or commonwealth in which
such Collateral Property is located.
"STATED MATURITY DATE": December 11, 2001.
"SUBSTITUTION DATE": each semi-annual anniversary (or, if such semi-annual
anniversary is not a Payment Date, the closest Payment Date thereto) of the
first Payment Date to occur after the Funding Termination Date, excluding any
such semi-annual anniversary (or closest Payment Date thereto) that occurs on or
after the Maturity Date.
"SURVEY": a current as-built survey of a Collateral Property prepared by a
surveyor licensed by the State in which such Collateral Property is located and
certified to Lender and the Title Company and prepared in accordance with the
Minimum Standard Detail Requirements for ALTA/ ACSM Land Title Surveys meeting
the Accuracy Standards of an Urban Survey, with accuracy and precision
requirements modified to meet current angular and linear tolerance requirements
of such State, showing the legal description and street address of the
Collateral Property; all visible or recorded easements, building lines, curb
cuts, and party walls; all parking, sewage, water, electricity, gas and other
utility facilities, together with recording information concerning the documents
creating any such easements and building lines; stating the net, after deduction
of land dedicated or used or subject to easements for roads, highways, fire
lanes, utilities, storm drains or any other public purpose, and gross area of
the land; and including the following Table A items: 1, 2, 3, 4, 6, 7(a),
7(b)(1), 8, 10, 11 and 13.
"TAXES": as to any Collateral Property, all real estate and personal
property taxes, assessments, water rates or sewer rents, now or hereafter levied
or assessed or imposed against all or any part of such Collateral Property.
"TERM": the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Borrowers
<PAGE>
pursuant to the Loan Documents.
"TITLE COMPANY": collectively, First American Title Insurance Company and
Chicago Title Insurance Company and their respective successors.
"TITLE INSURANCE POLICY": as to any Collateral Property, a policy of title
insurance, in form and amount acceptable to Lender, issued by the Title Company
for the benefit of Lender, its successors and assigns, insuring the Liens of the
first and second Mortgages on such Collateral Property subject to no Liens other
than Liens acceptable to Lender, and containing such endorsements and
affirmative coverages (including affirmative coverage as to "creditors' rights"
and "tie-in" or "aggregation" coverage) as Lender may require.
"TRANSACTION DATE": a date on which an Advance is made or a substitution
of Collateral Property occurs.
"TRANSFER": any sale, conveyance, transfer, lease (including any
amendment, extension, modification, waiver or renewal thereof), assignment,
mortgage, pledge, grant of a security interest or hypothecation, whether by law
or otherwise, of or in (i) all or part of any Collateral Property (including any
legal or beneficial direct or indirect interest therein), (ii) any direct or
indirect interest in any Borrower, or (iii) any direct or indirect interest in
the Borrower Representative of any Borrower.
"UCC": as to any Collateral Property, the Uniform Commercial Code as in
effect in the State in which such Collateral Property is located.
"UNDERWRITTEN NET OPERATING INCOME": for the 12-month period ending with
the most recently completed calendar month, all Operating Income minus all
Operating Expenses during such period, as determined by Lender; provided that,
in determining Underwritten Net Operating Income, the following adjustments
shall be made to the calculation of Operating Income and Operating Expenses:
(1) Fixed rent shall be adjusted so as to equal the lesser of (a)
fixed rent based on the trailing 12-month period plus annualized fixed
rent for credit tenants which have been in occupancy for less than one
year and (b) annualized fixed rent for signed leases with tenants in
occupancy and paying rent.
(2) Reimbursements will be based on the trailing 12-month period and
will be included as income to the extent such reimbursements are
determined by Lender, in its reasonable discretion, to be stabilized
and recurring. With the exception of contractual reimbursements, as
determined by Lender in its reasonable discretion, tenant
reimbursements in excess of the corresponding expense items will not
be included.
(3) Percentage rent will be included only to the extent it is
reasonably
<PAGE>
determined by Lender to be stabilized and recurring up to a maximum of
100% of the amount collected in the trailing 12-month period. In
general, centers which are experiencing flat or declining tenant sales
will be underwritten in an amount which would result if percentage
rent were re-calculated based upon 90% of the tenant sales reported in
the trailing twelve month period. Centers with increasing sales trends
will be underwritten based upon 100% of the collected percentage rent
in the trailing 12-month period.
(4) Month to month tenants and temporary tenant income will be
included only to the extent it is reasonably determined by Lender to
be stabilized and recurring up to a maximum of 100% of rent collected
in the preceding 12 months.
(5) Other income may be included on a case-by-case basis and in any
event only to the extent it is determined by Lender to be stabilized
and recurring and of an operating nature for a period of at least
three years (e.g., interest income would be backed out).
(6) A vacancy and credit loss allowance equal to the greater of (a)
actual vacancy and historical credit loss and (b) 5-10% of the mall
shop revenues (assuming 100% occupancy).
(7) Expenses will be the greater of: (a) the actual expenses for the
trailing 12 months ended in the most recently completed fiscal month
(except real estate taxes and insurance, which will be included at
their stabilized, recurring levels), and (b) the average actual annual
expenses over the past three years and, in either case, will exclude
any non-recurring items and the costs of capital improvements.
(8) Management fees will be charged at the rate of the greater of:
(a) actual management fees and (b) 5% of total fixed and percentage
rents. The amounts of the management fees so determined will be
reduced by those costs which are incurred with respect to a Collateral
Property and are deducted under other numbered clauses of this
definition, but which are paid by the Manager from its management fee.
(9) Capital expenditures will be deemed to be the greater of (a)
$0.20 per square foot of owned gross leaseable area and (b) the amount
recommended by the structural engineering/property condition reports
approved by Lender.
(10) A deduction will be made for the pro-rated amount of tenant
improvement costs and leasing commissions, based on a 60% retention
rate assumption and other assumptions based on market information to
be confirmed by Lender during its due diligence, for the tenants that
are scheduled to roll during the term of the Loan, without duplication
for costs deducted under other sections, subject to a
<PAGE>
minimum of $1.00 per occupied square foot of non-anchor space.
(11) Other adjustments as determined by Lender in its reasonable
discretion consistent with its due diligence findings and prevailing
market conditions.
In determining Underwritten Net Operating Income, all pro forma
adjustments to revenue and expenses shall be approved by Lender in its
reasonable discretion and shall be subject to Lender's full due
diligence. Notwithstanding anything to the contrary contained in this
definition, on the second anniversary of the date hereof, Lender shall
have the option of modifying the foregoing definition of Underwritten
Net Operating Income to reflect underwriting standards which match the
generally accepted, prevailing underwriting standards which at such
time are utilized in the market by Lender, the Rating Agencies and
other commercial financial institutions which are in the business of
making securitizable loans comparable to the Loan. Any such
modification by Lender of the definition of Underwritten Net Operating
Income shall be effective for all purposes of this Agreement
(including any calculation of the Facility Amount and Debt Service
Coverage Ratio). Upon Borrowers' written request from time to time,
Lender shall advise Borrowers of any modification of the definition of
Underwritten Net Operating Income made by Lender pursuant to the two
preceding sentences.
"WELFARE PLAN": means an employee welfare benefit plan, as defined in
Section 3(1) of ERISA.
"YIELD MAINTENANCE PREMIUM": as to any prepayment of Principal (other than
a prepayment in full of all of the Loans), an amount equal to the present value
(calculated using a discount rate equal to the Reinvestment Rate) as of the date
of such prepayment, of a hypothetical stream of payments, each in the Coupon
Differential Amount, made monthly on each Payment Date, from the Payment Date
immediately following the date of such prepayment through and including the
Stated Maturity Date. Under no circumstances shall the Yield Maintenance
Premium be less than zero.
1.2 INDEX OF OTHER DEFINITIONS. The following terms are defined in the
--------------------------
sections or Loan Documents indicated below:
"Accrued Interest" - 3.1.2
"Allocated Note Amount" - 2.1.2
"Annual Budget" - 6.9.5
"Approved Material Lease" - 6.12.2
"Award" - 8.3.2
"Cash Collateral Fund" - 4.14
"Cash Collateral Subaccount" - Master Account Agreement
"Cash Management Accounts" - 4.10
<PAGE>
"Casualty" - 8.2.1
"Casualty/Condemnation Prepayment" - 3.2.2
"Casualty/Condemnation Fund" - 4.8
"CCA Group" - 10.1.3
"Clearing Accounts" - 4.1
"Clearing Banks" - 4.1
"Condemnation" - 8.3.1
"Deemed Approval Procedure" - 6.12.2
"Deposit Account" - 4.1
"Disclosure Document" - 10.1.2
"Early Termination Period" - 3.5
"Environmental Laws" - 5.1.32
"Equipment" - Mortgage
"Event of Default" - 9.1
"Exchange Act" - 10.1.2
"Funds" - 4.10
"Grid" - 2.1.2
"Ground Lease" - Mortgage
"Ground Rent Escrow Fund" - 4.6
"Guaranty" - 2.1.2
"Hazardous Substances" - 5.1.32
"Improvements" - Mortgage
"Indemnified Liabilities" - 6.18
"Indemnified Party" - 6.18
"Insurance Premiums" - 8.1.2
"Insured Casualty" - 8.2.2
"Issuer" - 10.1.3
"Late Payment Charge" - 3.4.3
"Lender's Consultant" - 6.10.2
"Liabilities" - 10.1.3
"Licenses" - 5.1.22
"Loan" - 2.1
"LTV Ratio" - 2.6
"Master Deposit Account" - 4.1
"Master Account Agreement" - 4.1
"Mortgage" - Definition of "Loan Documents"
"Note" - 2.1.2
"Oakridge Guarantor" - 4.13
"Oakridge Guaranty" - 4.13
"Oakridge Option Fund" - 4.13
"Operating Budget" - 6.9.5
"Operating Expense Reserve Fund" - 4.7.1
<PAGE>
"Policies" - 8.1.2
"Principal" - 2.1
"Proceeds" - 8.2.2
"Provided Information" - 10.1.1
"Registration Statement" - 10.1.3
"Release Conditions" - 3.3.1
"Remainder Subaccount" - Deposit Account Agreements
"Remedial Work" - 6.10.2
"Rent Roll" - 5.1.26
"Repair Fund L/C" - 4.2.3
"Replacement Budget" - 6.9.5
"Replacement Reserve Fund" - 4.4.1
"Required Repair Fund" - 4.2.1
"Required Repairs" - 4.2.1
"Responsible Officer" - 11.2.1
"Restoration" - 8.4.1
"Rollover Reserve Fund" - 4.5.1
"Securities" - 10.1.1
"Securities Act" - 10.1.2
"Secondary Market Transaction" - 10.1.1
"Special Purpose Bankruptcy Remote Entity" - 6.15
"Subaccounts" - 4.1
"Tax and Insurance Escrow Fund": - 4.3
"Undelivered Documents" - 5.1.36
"Underwriter Group" - 10.1.3
"Underwriters" - 9.1.3
"Unpaid Balance" - 8.4.2
1.3 PRINCIPLES OF CONSTRUCTION. Unless otherwise specified, (i) all
--------------------------
references to sections and schedules are to those in this Agreement, (ii) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, (iv) the word "including" means "including but not limited to," and (v)
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
II THE LOAN
--------
2.1 THE LOAN.
--------
2.1.1 COMMITMENT. Subject to and upon the terms and conditions of this
----------
<PAGE>
Agreement, Lender agrees to make loans to the respective Borrowers (each, a
"LOAN" and collectively, the "LOANS") on or before the Funding Termination Date
in an aggregate maximum principal sum of up to $850,000,000 (the "PRINCIPAL").
The Loans shall consist of (i) Loans made to the Initial Borrowers,
respectively, on the date hereof and (ii) Loans made after the date hereof but
on or before the Funding Termination Date to Persons who become Borrowers after
the date hereof. The Loans shall mature on the Stated Maturity Date. No amount
repaid in respect of any of the Loans may be reborrowed.
2.1.2 NOTE. (a) The Loans shall be evidenced by a promissory note in
----
the maximum principal sum of up to $850,000,000 (the "NOTE") executed by each of
the Borrowers; provided, however, that, as more particularly described in
Section 11.24, each Borrower shall be liable under the Note only for such
Borrower's Allocated Note Amount. Whenever Lender shall make an Advance, Lender
shall allocate such Advance to one Borrower or among two or more Borrowers, and
the Advances as so allocated among the Borrowers shall constitute the Borrowers'
respective "ALLOCATED NOTE AMOUNTS." Such allocation by Lender shall be based on
the respective Underwritten Net Operating Incomes of the Collateral Properties
as determined by Lender. Lender shall note the amount of each Advance and the
allocation thereof among the Borrowers on the grid attached to the Note (the
"GRID"). Whenever a Borrower makes a payment of Principal, such Borrower's
Allocated Note Amount shall be reduced accordingly and Lender shall make an
appropriate notation on the Grid. Except where this Agreement specifically
provides as to how a prepayment of Principal is to be allocated among Borrowers'
respective Allocated Note Amounts, any prepayment of Principal shall be
allocated to one or more Borrowers' respective Allocated Note Amounts in such
manner as Lender may elect in its sole and absolute discretion. Any person who
becomes a Borrower after the date hereof shall execute and deliver a counterpart
signature page to the Note and an assumption of this Agreement and the other
Loan Documents pursuant to which such person shall become a Borrower for all
purposes of the Loan Documents with an Allocated Note Amount as noted by Lender
on the Grid.
(b) Within 10 days after demand by Lender, each Borrower shall
execute and deliver a "severance note", in form and substance satisfactory to
Lender, which severance note shall evidence such Borrower's obligation to pay
its Allocated Note Amount and such Borrower's Allocable Share of all other
Obligations in accordance with the terms of this Agreement. Each severance note
shall be secured by the first Mortgage granted by the applicable Borrower on the
Collateral Property owned by such Borrower and shall be guaranteed by the other
Borrowers pursuant to the Guaranties.
(c) Each Borrower has executed and delivered to Lender a guaranty of
payment (a "GUARANTY") pursuant to which each Borrower has guaranteed payment by
the other Borrowers of their respective Allocable Shares of the Obligations.
(d) Each Borrower's Guaranty is secured by a second mortgage on the
Collateral Property owned by such Borrower.
2.1.3 USE OF LOAN PROCEEDS. The proceeds of any Loan shall be used by
--------------------
the
<PAGE>
applicable Borrower solely to (i) acquire such Borrower's Collateral
Property; (ii) repay and discharge existing loans relating to such Borrower's
Collateral Property; (iii) fund certain of the Funds required to be funded by
such Borrower; (iv) pay approved costs and expenses in connection with the
foregoing and such Loan; and (v) make distributions to the members or partners
of such Borrower.
2.2 CONDITIONS APPLICABLE TO ALL ADVANCES. Lender shall have no
-------------------------------------
obligation to make any Advance unless Borrowers have complied with all of the
following conditions:
2.2.1 FACILITY AMOUNT. After giving effect to the requested Advance,
---------------
the aggregate outstanding principal balance of the Loans shall not exceed the
Facility Amount (determined as of the end of the then most recent full calendar
month).
2.2.2 NO DEFAULT. On the Funding Date for such Advance, no Default or
----------
Event of Default shall be continuing.
2.2.3 COLLATERAL PROPERTY REQUIREMENTS. If, since the date of the then
--------------------------------
most recent Advance, Borrowers have designated one or more new Collateral
Properties, Borrowers shall have satisfied all of the conditions set forth in
Section 2.5 with respect to each such new Collateral Property.
2.2.4 EXPENSES. Borrowers shall have paid all amounts required to be
--------
paid by Borrowers under Section 6.17.
2.2.5 NEW COLLATERAL PROPERTY. Prior to the making of the requested
-----------------------
Advance, one or more Retail Properties is added to the Collateral Pool and all
of the conditions precedent thereto set forth in Section 2.5 hereof shall have
been satisfied.
2.2.6 NUMBER OF CLOSINGS. After giving effect to the requested
------------------
Advance, the number of Advances made by Lender does not exceed three (provided
that Lender will not unreasonably withhold its consent to one additional closing
which occurs on or before the Funding Termination Date).
2.3 [RESERVED]
2.4 [RESERVED]
2.5 CONDITIONS PRECEDENT TO DESIGNATION OF A COLLATERAL PROPERTY. Each
------------------------------------------------------------
Retail Property designated in a written notice delivered by Borrowers to Lender
shall become a Collateral Property upon satisfaction of the following
conditions:
2.5.1 FIRST MORTGAGE. A Mortgage (substantially in the form of other
--------------
then existing Mortgages) shall constitute a valid first mortgage lien on the fee
simple title to (or on a Borrower's Leasehold Estate interest in a valid and
subsisting Qualified Ground Lease of) the
<PAGE>
proposed Collateral Property, which shall secure the applicable Borrower's
Allocated Note Amount, subject only to such Liens as are acceptable to Lender;
and such Borrower shall have delivered UCC-1 financing statements covering
fixtures owned or to be owned by such Borrower and affixed to, or used in
connection with, such proposed Collateral Property, in each case appropriately
completed and duly executed and delivered to Lender for filing in the
appropriate county and state offices.
2.5.2 SECOND MORTGAGE. A Mortgage (substantially in the form of other
---------------
then existing Mortgages) shall constitute a valid second mortgage lien on the
fee simple title to (or on a Borrower's Leasehold Estate in a valid and
subsisting Qualified Ground Lease of) the proposed Collateral Property, which
shall secure all of the obligations of such Borrower under its Guaranty, subject
only to such Liens as are acceptable to Lender; and such Borrower shall have
delivered UCC-1 financing statements covering fixtures owned or to be owned by
such mortgagor and affixed to, or used in connection with, such proposed
Collateral Property, in each case appropriately completed and duly executed and
delivered to Lender for filing in the appropriate county and state offices.
Notwithstanding the foregoing, with respect to any Jurisdictionally Capped
Second Mortgage, such Mortgage shall secure a maximum principal amount equal to
the amount by which the Allocated Title Amount of the Collateral Property in
question exceeds the principal amount secured by the first Mortgage on such
Collateral Property.
2.5.3 TITLE INSURANCE. Lender shall have received a Title Insurance
---------------
Policy for such Collateral Property and the applicable Borrower shall have paid
to the Title Company (and shall have delivered to Lender evidence of such
payment) all premiums and expenses of the Title Company in connection with the
issuance of such Title Insurance Policy and an amount equal to the recording and
the applicable stamp taxes (including mortgage recording taxes), if any, payable
in connection with recording the insured Mortgages in the appropriate county
land offices.
2.5.4 ENVIRONMENTAL AUDIT. Lender shall be satisfied that (A) there
-------------------
are no pending or threatened claims, suits, actions or proceedings arising out
of or relating to the existence of any Hazardous Substances at, in, on or under
the proposed Collateral Property, (B) the proposed Collateral Property is in
compliance in all material respects with all applicable Environmental Laws, and
(C) no Hazardous Substances exist at, in, on or under the proposed Collateral
Property except in compliance in all material respects with applicable
Environmental Laws. Lender shall have received, without limitation, (1) a
comprehensive environmental audit of the proposed Collateral Property (which
shall include a visual survey, a record review, an area reconnaissance and a
Phase I environmental study and, if the Phase I study shall so require, a Phase
II environmental study), reasonably satisfactory in form and substance to
Lender, conducted and certified by a qualified, independent environmental
consultant within 6 months prior to the time such proposed Collateral Property
first becomes a Collateral Property, (2) evidence that all required approvals
from all governmental and quasi-governmental authorities having jurisdiction
with respect to the proposed Collateral Property, and (3) such other
environmental reports, inspections and investigations as Lender shall require,
prepared, in
<PAGE>
each instance, by engineers or other consultants reasonably satisfactory to
Lender.
2.5.5 INSURANCE. Lender shall have received evidence of the existence
---------
of all insurance required to be maintained by the applicable Borrower pursuant
to the Loan Documents and the designation of Lender as the mortgagee and loss
payee or additional insured, as applicable, thereunder to the extent required by
the Loan Documents, in form and substance specified in the Loan Documents.
2.5.6 OPERATING STATEMENTS; BUDGETS. Lender shall have received
-----------------------------
operating statements for such proposed Collateral Property for three calendar
years prior to the time of designation thereof as a Collateral Property (to the
extent that such Collateral Property has been in service for such time), and an
itemized financial forecast and budget for the operation of such proposed
Collateral Property for the 12 month period thereafter, all prepared in
accordance with GAAP (or such other accounting basis reasonably acceptable to
Lender), consistently applied, together with a written statement of the
assumptions used in the preparation thereof and a certificate of the applicable
Borrower, to the effect that such budget, financial forecast and assumptions are
reasonable and are the same as those used by such Borrower for its business
planning purposes for such proposed Collateral Property.
2.5.7 SEARCHES. Lender shall have received copies of UCC filing
--------
searches, tax lien searches, judgment searches and real estate tax searches and
municipal department searches setting forth any and all building violations (if
available) in each county where such proposed Collateral Property is located
(and in the case of UCC filing searches, in the office of the Secretary of State
or other applicable state office of the State where such proposed Collateral
Property is located), demonstrating as of a recent date the existence of no
other financing statements, tax liens, judgments, building violations or
delinquent real estate taxes, together with evidence that all fees payable in
connection with any such searches have been paid.
2.5.8 SURVEY. Lender shall have received a Survey of such proposed
------
Collateral Property that is satisfactory to Lender and certified to Lender, the
Title Company and any other parties requested by Lender as of a certification
date satisfactory to the Title Company and reasonably satisfactory to Lender.
2.5.9 MANAGEMENT. The manager of the proposed Collateral Property
----------
shall have executed and delivered a manager consent and subordination in
accordance with Section 6.14.3.
2.5.10 LEASES AND MATERIAL CONTRACTS. Lender shall have received
-----------------------------
certified copies of all Leases, reciprocal easement agreements and material
contracts relating to the proposed Collateral Property, including all amendments
and modifications thereto, and such leases, reciprocal easement agreements and
contracts shall be in form and substance reasonably satisfactory to Lender.
2.5.11 TENANT ESTOPPELS AND SNDA'S. Lender shall have received
---------------------------
estoppels and subordination, non-disturbance and attornment agreements from such
tenants as Lender may
<PAGE>
reasonably require, all of which shall be reasonably satisfactory to Lender in
form and substance.
2.5.12 PROPERTY CONDITION REPORT. Lender shall have received reports
-------------------------
covering the physical and structural condition of the proposed Collateral
Property in form and substance, and prepared by a qualified independent
engineer, reasonably satisfactory to Lender and dated no more than 6 months
prior to the time such proposed Collateral Property first becomes a Collateral
Property, which shall (i) identify deferred maintenance and the cost thereof and
include a 10-year schedule of annual cost to perform deferred maintenance and of
capital expenditures, and (ii) for Collateral Property in states in which Lender
reasonably determines that there has been a history of earthquakes, assess the
probable maximum loss in the event of earthquake.
2.5.13 APPRAISAL. Lender shall have received an Acceptable Appraisal
---------
of the proposed Collateral Property.
2.5.14 ZONING COMPLIANCE, ETC. Lender shall have received evidence
----------------------
reasonably satisfactory to Lender that all improvements constituting part of the
Collateral Property have been constructed and are being used and operated in
compliance in all material respects with (A) all applicable zoning, subdivision,
environmental and other laws, orders, rules, regulations and requirements of all
governmental or quasi-governmental authorities having jurisdiction with respect
to the proposed Collateral Property, (B) all building permits issued in respect
of the proposed Collateral Property and (C) the certificates of occupancy for
the proposed Collateral Property (copies of which certificates of occupancy
shall have been delivered to Lender).
2.5.15 RECORDING TAXES. The applicable Borrower shall have paid all
---------------
mortgage recording taxes payable (if any) in each jurisdiction in which the
proposed Collateral Property is located in connection with the recordation of
any Mortgage required under this Agreement.
2.5.16 PERFECTION OF SECURITY INTERESTS. Lender shall have received
--------------------------------
evidence that all actions necessary or, in the opinion of Lender, desirable to
perfect and protect the Liens and security interests created by the Loan
Documents have been or will be taken, including evidence that each Mortgage on a
proposed Collateral Property has been or will be duly filed and recorded in the
appropriate governmental offices and that the related UCC financing statements
have been or will be duly filed in the appropriate governmental offices.
2.5.17 OPINIONS. Lender shall have received an opinion of counsel as to
--------
the applicable Borrower and an opinion of local counsel to Lender in the State
in which the proposed Collateral Property is located, in each case with respect
to such matters as Lender may request (including as to enforceability of the
Loan Documents against such Borrower and a "nonconsolidation" opinion with
respect to such Borrower, its partners, the manager of the Collateral Property
and such other persons as Lender shall designate, which nonconsolidation opinion
may be given by Debevoise & Plimpton), in form and substance and from counsel
reasonably satisfactory to Lender.
<PAGE>
2.5.18 GROUND LEASE. If the proposed Collateral Property is subject to
------------
a ground lease, such Ground Lease is a Qualified Ground Lease.
2.5.19 REA. If the proposed Collateral Property is subject to an REA,
---
such REA is a Qualified REA.
2.5.20 RESERVES AND ESCROWS. Each Borrower shall have (i) paid into
--------------------
the Required Repair Fund any and all reserves for deferred maintenance and/or
environmental remediation as may be required by Lender based on the reports
referred to above, and (ii) made such initial deposits into the other Funds as
Lender may require in accordance with the Loan Documents.
2.5.21 RENT ROLL. A Rent Roll (in spread sheet format, containing such
---------
information as Lender may reasonably require) for the proposed Collateral
Property certified by the proposed additional Borrower shall have been delivered
to Lender.
2.5.22 FURTHER DOCUMENTS. Each Borrower shall have executed and
-----------------
delivered to Lender such documents and agreements and taken such action
including executing such amendments or supplements to, and assumptions of, the
Loan Documents, which Lender may reasonably require. Such documents may include
an Assignment of Leases, Assignment of Agreements, Deposit Account Agreement,
Cash Management Agreement, promissory note or counterpart signature page to the
Note, a contribution agreement among the Borrowers, an Assumption Agreement in
the form of Exhibit A hereto, and such other consents, instruments, documents
---------
and agreements as Lender may reasonably require.
2.5.23 APPROVAL. The proposed Collateral Property has been expressly
--------
approved by Lender in writing as a Collateral Property. Lender's approval of
the proposed Collateral Property shall be given or denied in Lender's reasonable
discretion and, in exercising such reasonable discretion, Lender shall take into
account Lender's analysis of the information required pursuant to this Section
2.5, the composition of all of the Collateral Properties, the effect of the
addition of the Retail Property in question on such composition and Lender's
then underwriting and due diligence standards and requirements.
2.5.24 EXPENSES. Borrowers shall have paid all amounts required to be
--------
paid by Borrowers under Section 6.17.
2.5.25 EFFECTIVE DATE. The proposed Collateral Property shall become a
--------------
Collateral Property on the applicable Funding Date provided all of the other
conditions of this Section 2.5 have been satisfied.
2.5.26 ADDITIONAL PROPERTIES. A Retail Property not on Schedule 10
--------------------- -----------
hereto cannot become a Collateral Property other than pursuant to a substitution
under Section 2.6.
<PAGE>
2.5.27 NOTICES TO TENANTS. Upon the proposed Collateral Property
------------------
becoming a Collateral Property, the owner thereof shall promptly deliver a
notice to each tenant of such Collateral Property in the form of Exhibit D
---------
hereto.
2.6 SUBSTITUTION OF COLLATERAL PROPERTIES. (a) Subject to the terms and
--------------------------------------
conditions set forth in this Section 2.6, on any Substitution Date Borrowers may
obtain a release of Lender's Lien against one or more Collateral Properties by
substituting one or more other Retail Properties (a "SUBSTITUTE PROPERTY") for
the Collateral Property or Collateral Properties so released. Any such
substitution shall be subject, in each case, to the satisfaction of the
following conditions precedent:
(i) Such substitution shall occur on a Substitution Date;
(ii) Borrowers shall request such substitution by written notice
to Lender given at least 60 days prior to the Substitution Date on which the
substitution is to occur;
(iii) Lender shall have received any due diligence materials
requested by Lender with respect to each Substitute Property at least 60 days
before the Substitution Date (other than items such as title reports and
estoppels which are typically not delivered 60 days before a closing, provided
such items are delivered a reasonable period of time before the Substitution
Date) and the same are reasonably satisfactory to Lender in all respects;
(iv) Each Substitute Property is of the same general quality as
the Collateral Property it is replacing, as determined by Lender in its
reasonable discretion;
(v) The tenant quality of each Substitute Property is at least as
high as the tenant quality of the Collateral Property it is replacing, as
determined by Lender in its reasonable discretion;
(vi) Immediately after giving effect to such substitution the
Collateral Pool is in Lender's reasonable judgement no less geographically
diverse than it was immediately before such substitution (for example, after
giving effect to such substitution, the aggregate Underwritten Net Operating
Income for Collateral Properties located in any one State may not exceed by more
than 5% the highest aggregate Underwritten Net Operating Income for all
Collateral Properties located in any one state immediately before such
substitution);
(vii) After giving effect to the substitution the number of
Collateral Properties is ten or more;
(viii) The Underwritten Net Operating Income of each Substitute
Property is equal to or greater than the Underwritten Net Operating Income of
the Collateral Property it is replacing;
(ix) After giving effect to such substitution, Underwritten Net
Operating Income for all of the Collateral Properties shall be equal to or
greater than each of
<PAGE>
(x) the Underwritten Net Operating Income of the Collateral Pool as of the day
after the Funding Termination Date and (y) the Underwritten Net Operating Income
of the Collateral Properties immediately before such substitution;
(x) After giving effect to such substitution, the Debt Service
Coverage Ratio must be equal to or greater than each of (x) the Debt Service
Coverage Ratio immediately prior to such substitution and (y) 1.35;
(xi) After giving effect to such substitution, the ratio of unpaid
Principal to the Appraisal Value of the Collateral Pool (the "LTV RATIO") shall
not exceed either of (x) the LTV Ratio as of the day after the Funding
Termination Date or (y) the LTV Ratio immediately prior to such substitution;
(xii) After giving effect to such substitution, the Lease Rollover
Percentage as reasonably determined by Lender will not exceed 20% for any
calendar year all or any portion of which occurs prior to the Stated Maturity
Date;
(xiii) Either (x) Lender shall have reasonably determined that the
Lease Rollover Percentage as of immediately after the substitution will not, for
any calendar year all or any portion of which occurs prior to the Stated
Maturity Date, be more than 2% in excess of the Lease Rollover Percentage for
such calendar year (or portion thereof) as of immediately prior to the
substitution or (y) the applicable Borrower shall deposit into the Rollover
Reserve Fund for such Substitute Property an amount equal to (1) $1.00
multiplied by (2) the increase in the Lease Rollover Number which resulted in
the condition set forth in the foregoing clause (x) not being satisfied;
(xiv) Lender shall have, in its reasonable discretion, approved
the substitution, which approval shall be based on, among other things, Lender's
determination that:
(A) after giving effect to much substitution there are at least 4
Core Properties;
(B) after giving effect to such substitution, there is no
environmental condition affecting any Collateral Property(ies)
that has a material adverse effect on the value of the Collateral
Pool as a whole; and
(C) after giving effect to such substitution, the Underwritten
Net Operating Income of each Collateral Property is less than 15%
of the aggregate Underwritten Net Operating Income of the entire
Collateral Pool;
(xv) On any Substitution Date, no more than 25% of the Collateral
Properties (calculated by share of Underwritten Net Operating Income) may be
released from the Liens of the Loan Documents pursuant to this Section 2.6;
<PAGE>
(xvi) With respect to each Substitute Property, Borrowers shall
have complied with the conditions set forth in Section 2.5;
(xvii) No Event of Default shall be continuing;
(xviii) The Substitute Property is satisfactory to Lender in all
respects in Lender's reasonable discretion (after Lender's due diligence
investigation);
(xix) Borrowers shall execute and deliver such other consents,
certificates, documents, agreements or instruments as Lender may reasonably
request (including any modifications to this Agreement or the other Loan
Documents amending, e.g., the schedules hereto);
(xx) Borrowers shall pay all amounts required to be paid by
Borrowers under Section 6.17;
(xxi) The applicable Borrowers shall deliver an Officer's
Certificate certifying that all information delivered to Lender by or on behalf
of such Borrowers in connection with the Substitution is true, accurate and
complete in all material respects; and
(xxii) The applicable Borrowers shall have paid to Lender all
amounts required under Article IV in connection with the Substitute Property.
(b) For purposes of calculating Underwritten Net Operating Income and
Debt Service Coverage Ratio under Section 2.6(a), if any Collateral Property
being substituted for has suffered a Casualty or Condemnation or an
Environmental Event, then, at Lender's option, the Underwritten Net Operating
Income of such Collateral Property shall be calculated as of the end of the last
full calendar month preceding such Casualty, Condemnation or Environmental
Event, as the case may be.
(c) For purposes of determining whether any of the conditions set
forth in this Section 2.6 have been satisfied, Borrowers will not be required to
pay for the cost of any reports or updates of reports by third parties (e.g.,
engineers or environmental consultants) with respect to any then existing
Collateral Property (as distinguished from a proposed Substitute Property)
unless the Underwritten Net Operating Income of such existing Collateral
Property has declined by 10% or more since the date on which it first became a
Collateral Property.
III INTEREST; PAYMENTS
------------------
3.1 INTEREST; MONTHLY PAYMENTS.
--------------------------
3.1.1 GENERALLY. (a) From and after the date of each Advance,
---------
interest shall
<PAGE>
accrue thereon at the Interest Rate.
(b) On the date hereof each Borrower shall pay interest at the
Interest Rate on its unpaid Allocated Note Amount for the period from the date
hereof through November 10, 1998. On December 11, 1998 and each Payment Date
thereafter to and including the Maturity Date, each Borrower shall pay interest
at the Interest Rate on its unpaid Allocated Note Amount which has accrued
through the last day of the Interest Period immediately preceding such Payment
Date. All accrued and unpaid interest shall be due and payable on the Maturity
Date.
3.1.2 (a) On or before the 25th day of each calendar month, Lender
shall deliver to Borrower's Agent a statement as to the aggregate amount of
interest and payments into Funds due on the following Payment Date (provided,
however, that the failure to deliver such statement shall not, except as
expressly provided in this Section 3.1.2(b), relieve any Borrower of its
obligation to make any payment hereunder on the due date therefor).
(b) If Lender does not render such statement by the 25th day of a
calendar month, Borrower's Agent shall use reasonable, good faith efforts to
contact the Servicer to obtain the relevant payment information (and Lender
shall promptly after the date hereof provide Borrower's Agent with a contact
name and telephone number at the Servicer). If despite such efforts Borrower's
Agent does not obtain such information by the applicable Payment Date, each
Borrower may, on such Payment Date, pay an amount not less than the aggregate
amount paid by such Borrower on the immediately preceding Payment Date (the
"Minimum Payment"). If the amount actually due and payable by such Borrower on
the applicable Payment Date exceeds the amount paid by such Borrower, then
provided the payment by such Borrower equalled or exceeded the Minimum Payment,
the failure to pay such excess when due shall not be a Default or Event of
Default, and no late charge or Default Rate interest shall be payable by reason
thereof, provided such Borrower pays such excess within five (5) days after
Lender delivers to such Borrower a statement therefor.
3.1.3 PROPERTY CASH FLOW ALLOCATION. (a) Commencing on December 11,
-----------------------------
1998 and continuing on each Payment Date occurring prior to the Maturity Date,
except following the acceleration of all or any part of the Debt, any Rents
received by any Borrower and/or its Manager and, after a Cash Management Event,
Rents with respect to such Borrower's Collateral Property deposited into the
Deposit Account during the immediately preceding Interest Period shall be
applied as follows in the following order of priority: (i) First, to make the
monthly required payments of Ground Rent, if any, pertaining to such Borrower's
Collateral Property (including, the payment to Lender of any sums required to be
deposited into the Ground Rent Escrow Fund); (ii) Second, to make payments to
the Tax and Insurance Escrow Fund required to be made by such Borrower; (iii)
Third, during the continuance of a Cash Management Event, to pay the monthly
portion of the Cash Management Fee due and payable by such Borrower; (iv)
Fourth, to Lender to pay the interest payment on such Borrower's Allocated Note
Amount required under Section 3.1.1(b) (plus, if applicable, such Borrower's
Allocable Share of interest at the Default Rate and any other charges then due
to Lender under the Loan Documents); (v) Fifth, to make payments to the Capital
Reserve Fund required to be made by
<PAGE>
such Borrower; (vi) Sixth, to make payments to the Rollover Reserve Fund
required to be made by such Borrower; (vii) Seventh, in the case of the Oakridge
Borrower, to make payments to the Oakridge Option Fund required to be made by
the Oakridge Borrower; (viii) Eighth, during the continuance of a Cash
Management Event, to make payments for Approved Operating Expenses pertaining to
such Borrower's Collateral Property; (ix) Ninth, after the consummation of a
Secondary Market Transaction, to pay such Borrower's Allocable Share of the
expenses described in Section 10.1.7; (x) Tenth, to make payments (pursuant to
such Borrower's Guaranty) to pay any amounts due from other Borrowers under this
Section 3.1.3 (a) which are unpaid; and (xi) Lastly, payments to such Borrower
of any excess amounts unless a Cash Management Event has existed for 30 days or
more, in which case all Rents remaining after application thereof pursuant to
the preceding clause "Tenth" shall be paid into the Cash Collateral Fund.
(b) Subject to the provisions of Section 3.1.2(b), the failure of any
Borrower to make all of the payments required under clauses (i) through (ix) of
Section 3.1.3(a) in full on each Payment Date shall constitute a Default under
this Agreement.
(c) At any time after the Maturity Date or after the acceleration of
all or any portion of the Debt, Lender may, in its sole discretion, permit the
application of Rents in any order, and to any portion or portions of the Debt,
as Lender shall determine.
3.1.4 DEFAULT RATE. After the occurrence and during the continuance
------------
of an Event of Default, the entire unpaid Debt shall bear interest at the
Default Rate, and shall be payable upon demand from time to time, to the extent
permitted by applicable law. Payment or acceptance of interest at the Default
Rate is not a permitted alternative to timely payment and shall not constitute a
waiver of any Default or Event of Default or an amendment to this Agreement or
any other Loan Document and shall not otherwise prejudice or limit any rights or
remedies of Lender.
3.2 LOAN REPAYMENT.
--------------
3.2.1 REPAYMENT. Each Borrower shall repay its Allocated Note
---------
Amount in full on the Maturity Date, together with interest thereon to (but
excluding) the date of repayment and such Borrower's Allocable Share of any
other amounts due and owing under the Loan Documents. No Borrower shall have the
right to prepay all or any portion of the Principal before the Stated Maturity
Date; provided, however, that (x) a Borrower may repay its Allocated Note Amount
-------- -------
in full (but not in part) without penalty or premium on any Payment Date
occurring on or after December 11, 1999 provided that all of the other Borrowers
simultaneously prepay their respective Allocated Note Amounts in full on such
Payment Date and (y) any Borrower may prepay its Allocated Note Amount or a
portion thereof on any Payment Date occurring on or after December 11, 1999
provided that such prepayment is accompanied by the Yield Maintenance Premium
applicable thereto. In the event any such prepayment is not made on a Payment
Date, each Borrower making a prepayment of Principal shall also pay interest
that would have accrued on such prepaid Principal to but not including the next
Payment Date.
<PAGE>
Except during the continuance of an Event of Default, all proceeds of any
repayment, including permitted prepayments, of any Loan shall be applied by
Lender as follows in the following order of priority: (i) First, to accrued and
unpaid interest on such Loan at the Interest Rate; (ii) Second, to Principal of
such Loan; (iii) Third, to the applicable Borrower's Allocable Share of any
other amounts then due and owing under the Loan Documents and (iv) Fourth, to
obligations under such Borrower's Guaranty. If prior to the Stated Maturity Date
the Debt is accelerated by reason of an Event of Default and Lender receives a
Principal payment of less than the aggregate outstanding Principal balance of
the Loans, then Lender shall be entitled to receive, in addition to all other
sums due under the Loan Documents, an amount equal to the Yield Maintenance
Premium applicable to such prepayment. During the continuance of an Event of
Default, all proceeds of repayment, including any payment or recovery on any
Collateral Property (whether through foreclosure, deed-in-lieu of foreclosure or
otherwise) shall, unless otherwise provided in the Loan Documents, be applied in
such order and in such manner as Lender shall elect in Lender's discretion.
3.2.2 MANDATORY PREPAYMENTS. Each Loan is subject to mandatory
---------------------
prepayment, without premium or penalty, in certain instances of Insured Casualty
or Condemnation (each a "CASUALTY/CONDEMNATION PREPAYMENT"), in the manner and
to the extent set forth in Section 8.4.2. Each Casualty/Condemnation Prepayment
shall be made on a Payment Date and shall be applied as follows in the following
order of priority: (i) First, to costs and expenses of Lender (if any),
including reasonable attorney's fees and disbursements, in connection with such
prepayment or reasonably expended by Lender to protect the collateral value of
the Property; (ii) Second, accrued and unpaid interest at the Interest Rate;
(iii) Third, to Principal (with each Casualty/Condemnation Prepayment being
applied first to reduce the Allocated Note Amount of the Borrower whose
Collateral Property was the subject of the Casualty/Condemnation); and (iv)
Fourth, to any other amounts then due and owing under the Loan Documents. If
such Casualty/Condemnation Prepayment is not paid on a Payment Date, the payment
amount will include interest that would have accrued on the Principal prepaid to
but not including the next Payment Date.
3.3 RELEASE OF PROPERTY. Except as set forth in this Section 3.3, no
-------------------
repayment or prepayment shall cause, give rise to a right to require, or
otherwise result in, the release of the Lien of any Mortgage.
3.3.1 RELEASE OF INDIVIDUAL PROPERTIES. A Borrower on one or more
--------------------------------
occasions may obtain (i) the release of the Collateral Property owned by it from
the Liens of the Mortgages thereon (and related Loan Documents) and (ii) the
release of such Borrower's obligations under the Loan Documents with respect to
such Collateral Property (other than those expressly stated to survive), upon
satisfaction of each of the following conditions:
(a) Either (i) the Release Conditions are satisfied; or (ii) Lender is
required to release such Collateral Property pursuant to Section 2.6 in
connection with a substitution of Collateral Properties (it being understood
that a release pursuant to Section 2.6 need not satisfy any Release Conditions
not expressly set forth in Section 2.6).
<PAGE>
(b) Such Borrower shall submit to Lender, not less than twenty (20)
days prior to the date of such release, releases of Lien (and related Loan
Documents) for such Collateral Property (for execution by Lender) in a form
appropriate in the jurisdiction in which such Collateral Property is located and
satisfactory to Lender in its reasonable discretion, and all other documentation
Lender requires to be delivered by such Borrower in connection with such
release, together with an Officer's Certificate of such Borrower certifying that
such documentation (i) is in compliance with all Legal Requirements, (ii) will
effect such release in accordance with the terms of this Agreement, and (iii)
will not impair or otherwise adversely affect the Liens, security interests and
other rights of Lender under the Loan Documents not being released (or as to the
parties to the Loan Documents and Collateral Properties subject to the Loan
Documents not being released).
(c) As used herein "RELEASE CONDITIONS" means:
(i) Borrowers shall request the release by written notice to
Lender given at least 60 days prior to the date the release is to be effected;
(ii) The date of release shall be a Payment Date occurring on or
after December 11, 1999;
(iii) Immediately after giving effect to the release (and any
prepayment of Principal permitted under Section 3.2.1 that is made immediately
before such release), the Debt Service Coverage Ratio is equal to or greater
than each of (x) 1.35 and (g) the Debt Service Coverage Ratio immediately before
such release;
(iv) Simultaneously with such release, each Borrower whose
Collateral Property is being released shall pay to Lender (x) such Borrower's
outstanding Allocated Note Amount together with all interest accrued thereon and
all other sums, if any, then outstanding which constitute such Borrower's
Allocable Share of the Debt and (y) the Yield Maintenance Premium applicable to
the Principal being prepaid by such Borrower;
(v) Simultaneously with such release, the Borrowers whose
Collateral Properties are not being released (the "REMAINING BORROWERS") shall
prepay their respective Allocated Note Amounts by an aggregate principal amount
equal to 25% of the aggregate Prin cipal amount being paid to Lender pursuant to
clause (x) of the preceding subparagraph (iv) (such 25% amount being allocated
- ---------- -----------------
among the Remaining Borrowers in a manner acceptable to Lender);
(vi) No Event of Default shall be continuing;
(vii) Borrowers shall have paid all amounts required to be paid
by Borrowers under Section 6.17; and
<PAGE>
(viii) The applicable Borrower shall deliver an Officer's
Certificate certifying that all information delivered to Lender by or on behalf
of such Borrower in connection with such release is true, complete and accurate
in all material respects.
(d) Upon the release of a Collateral Property, any amounts previously
deposited by a Borrower into any Fund with respect to such Collateral Property
shall be returned to such Borrower (or, if so directed in writing by such
Borrower, applied to amounts due and payable under this Agreement).
3.3.2 RELEASE ON PAYMENT IN FULL. Lender shall, upon the written
--------------------------
request and at the expense of Borrowers, upon payment in full of the Debt in
accordance herewith, release the Liens of the Mortgages if not theretofore
released.
3.3.3 RELEASE DOCUMENTS. When the Release Conditions are satisfied
------------------
with respect to a Collateral Property or when Lender is required to release a
Collateral Property pursuant to Section 2.6, Lender shall execute and deliver to
the applicable Borrower such documents as may be necessary or appropriate to
release such Borrower from its obligations under the Loan Documents and to
release all liens held by Lender on such Collateral Property. All such
documents shall be prepared by Borrower's counsel, shall be reasonably
acceptable to Lender in form and substance and shall be delivered to Lender at
least 20 days before the proposed release date.
3.4 PAYMENTS AND COMPUTATIONS.
-------------------------
3.4.1 MAKING OF PAYMENTS. Each payment by a Borrower hereunder or
------------------
under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by 1:00 p.m., New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrowers.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the first Business
Day thereafter. All payments made by any Borrower hereunder or under the other
Loan Documents, shall be without any deduction, set-off or counterclaim,
whatsoever and are payable without relief from valuation and appraisement laws
and with all costs and charges incurred in the collection or enforcement
thereof, including attorneys' fees and court costs. Payments to Lender made
from the Deposit Account shall be deemed to have been made before 1 p.m., New
York City time, on the date such payment is made.
3.4.2 COMPUTATIONS. Interest payable hereunder or under the Note
------------
shall be computed on the basis of the actual number of days elapsed over a
360-day year, compounded monthly.
3.4.3 LATE PAYMENT CHARGE. If any Principal, interest or other sum
-------------------
due under any Loan Document is not paid on the date on which it is due,
Borrowers shall pay to Lender
<PAGE>
upon demand an amount equal to the lesser of 5% of such unpaid sum or the
maximum amount permitted by applicable law (the "LATE PAYMENT CHARGE"), in order
to defray the expense incurred by Lender in handling and processing such
delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment; provided that if no such late payment has occurred within
the prior 12-month period, Borrower shall only be required to pay the late
payment charge provided for in this Section 3.4.3 if such failure to pay
continues for two Business Days after notice from Lender. Such amount shall be
secured by the Loan Documents. Any action by Lender regarding the collection of
a Late Payment Charge will be without prejudice to any other rights, nor act as
a waiver of any other rights, that Lender may have as provided herein, at law or
in equity. No Late Payment Charge shall be due in connection with any payment to
be made from a Subaccount, provided that on the date such payment is due there
are sufficient funds in such Subaccount to make the payment in question.
3.5 SPECIAL CASH MANAGEMENT TERMINATION.
-----------------------------------
(a) Upon the occurrence of a Cash Management Event by reason of the
Debt Service Coverage Ratio being less than 1.15, one or more Borrowers shall
have the right, for 30 days after receipt by Borrower's Agent of the applicable
Cash Management Notice (the "Early Termination Period"), to either (x) make a
partial prepayment of Principal (including any applicable Yield Maintenance
Premium) in accordance with the provisions of Section 3.2.1 which causes the
Debt Service Coverage Ratio to increase to 1.20 or greater, (y) effect a release
pursuant to Section 3.2.2 which causes the Debt Service Coverage Ratio to
increase to 1.20 or greater or (z) if the Early Termination Period occurs before
December 11, 1999, deposit an amount into the Cash Collateral Fund equal to the
Principal (and Yield Maintenance Premium) that would need to be paid to Lender
to make a prepayment pursuant to Section 3.2.1 (assuming a prepayment was
permitted on such date) that would result in the Debt Service Coverage Ratio
increasing to 1.20 or greater.
(b) If prior to the expiration of the Early Termination Period
Borrower takes the action described in any of clauses (x), (y) and (z) of
Section 3.5(a), Lender shall give a Cash Management Termination Notice.
(c) If one or more Borrowers makes a deposit into the Cash Collateral
Fund pursuant to clause (z) of Section 3.5(a), then (i) such deposit shall, on
---------- --------------
December 11, 1999, be applied as a prepayment pursuant to Section 3.2.1 and (ii)
prior to such application such deposit (excluding the portion thereof
representing the applicable Yield Maintenance Premium) shall be deducted from
the outstanding Principal for purposes of calculating the Debt Service Coverage
Ratio.
3.6 [RESERVED]
3.7 FEES.
----
3.7.1 DRAW FEE. Simultaneously with each Advance made on or after
--------
the date hereof, Borrowers shall pay to Lender a draw fee equal to 0.375% of the
amount of such
<PAGE>
Advance.
3.7.2 AUTHORIZATION. Borrowers hereby authorize and direct Lender to
-------------
pay itself the Draw Fee out of the proceeds of the applicable Advance.
3.8 TAXES. Any and all payments by a Borrower hereunder and under the
-----
other Loan Documents shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on Lender's income, and franchise taxes imposed on Lender by the law or
regulation of any Governmental Authority (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to in this Section 3.8 as "APPLICABLE TAXES"). If a Borrower shall be
required by law to deduct any Applicable Taxes from or in respect of any sum
payable hereunder to Lender, the following shall apply provided the Applicable
Taxes do not result because the Lender (due to permitted succession or
assignment) is not a United States person as defined at section 7701(a)(30) of
the Code or the Lender has failed to provide information necessary to avoid
back-up withholding pursuant to section 3406 of the Code: (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.8), Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Borrower shall make such
deductions and (iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law. Borrowers also agree to pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
recordation of, or otherwise with respect to, this Agreement or any other Loan
Document ("OTHER TAXES"). Borrowers shall indemnify Lender for the full amount
of Applicable Taxes or Other Taxes (including any Applicable Taxes or Other
Taxes imposed by any jurisdiction on amounts paid or payable under this Section
3.8) paid by Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such
Applicable Taxes or Other Taxes were correctly or legally asserted. Payments
pursuant to this Section 3.8 shall be made within 15 days after the date Lender
makes written demand therefor.
3.9 BREAKAGE INDEMNITY. Borrowers shall indemnify Lender against any loss
------------------
or expense which Lender may actually sustain or incur as a consequence of (i)
any payment or prepayment of the Loan or any portion thereof made on a date
other than a Payment Date, (ii) any default in payment or prepayment of the
Principal or any part thereof or interest accrued thereon, as and when due and
payable (at the date thereof or otherwise, and whether by acceleration or
otherwise), (iii) any delay in making a requested Advance by reason of any
Borrower's act or failure to act or failure to satisfy a condition precedent to
the making of such Advance and (iv) the occurrence of any Event of Default, in
each case including any loss or expense actually sustained or incurred or
determined by Lender to be actually sustained or incurred in liquidating or
redeploying deposits from third parties acquired to effect or maintain the Loan
or any part thereof. Such loss or expense shall include any Yield Maintenance
Premium payable hereunder, as well as, but without double counting, an amount
equal to the
<PAGE>
excess, if any, as determined by Lender of (A) its cost of obtaining the funds
for the Loan or portion thereof being paid or prepaid for the period from the
date of such payment or prepayment to the last day of the then current Interest
Period over (B) the amount of interest (as determined by Lender) that would be
realized by Lender in redeploying the funds so paid or prepaid for the balance
of such Interest Period. Lender shall deliver to Borrowers a statement for any
such sums which it is entitled to receive pursuant to this Section 3.9, which
statement shall include a reasonable explanation for the amount(s) thereof. Such
statement shall be binding and conclusive absent manifest error.
IV CASH MANAGEMENT; ESCROWS AND RESERVES
-------------------------------------
4.1 CASH MANAGEMENT ARRANGEMENTS. All Rents shall be transmitted directly
----------------------------
by tenants of each Collateral Property into one or more accounts (the "CLEARING
ACCOUNTS") maintained by the applicable Borrower but controlled by Lender at one
or more banks selected by the applicable Borrower (the "CLEARING BANKS") as more
fully described in the Blocked Account Agreements. All Rents received by a
Borrower or Manager shall be deposited into the applicable Clearing Account
within one Business Day of receipt. Funds deposited into the Clearing Accounts
shall be swept by the Clearing Banks on a daily basis into respective Borrowers'
respective operating accounts (or joint operating account) at the Clearing Banks
(which accounts are under the sole control of the respective Borrowers), unless
a Cash Management Event shall have occurred; in which event, until a Cash
Management Termination, such funds shall be swept by the Clearing Banks on a
daily basis into the applicable Eligible Account at the Deposit Bank controlled
by Lender (a "DEPOSIT ACCOUNT") and applied and disbursed in accordance with
this Agreement and the applicable Deposit Account Agreement. Lender may (and
during the continuation of a Cash Management Event Lender will) also establish
subaccounts of each Deposit Account for the purpose of retaining all Funds
described in this Article IV and for retaining the monthly interest payments,
which subaccounts shall at all times be Eligible Accounts (such subaccounts, and
any other accounts or subaccounts at the Deposit Bank, other than the Deposit
Accounts, are referred to herein as "SUBACCOUNTS"). Borrowers, Lender and the
Deposit Bank shall also enter into a Master Deposit Account Agreement (the
"MASTER DEPOSIT ACCOUNT AGREEMENT") pursuant to which an Eligible Account
controlled by Lender shall be established at the Deposit Bank (the "MASTER
DEPOSIT ACCOUNT") into which funds shall be swept in accordance with the terms
of the Deposit Account Agreements and this Agreement. The Clearing Accounts, the
Deposit Accounts, any Subaccount and the Master Deposit Account will be under
the sole control and dominion of Lender, and Borrower shall have no right of
withdrawal therefrom. Amounts in the Deposit Accounts and the Master Account
Deposit shall be invested in Permitted Investments in accordance with the
Deposit Account Agreements and the Master Account Agreement.
4.2 REQUIRED REPAIRS; REQUIRED REPAIR FUNDS.
---------------------------------------
4.2.1 REQUIRED REPAIRS. Each Borrower identified on Schedule 4 shall
---------------- ----------
<PAGE>
promptly commence and thereafter diligently complete each item of the repairs
and Remedial Work at such Borrower's Collateral Property described on Schedule 4
----------
(the "REQUIRED REPAIRS"). On the date hereof, each such Borrower shall deposit
with Lender the amount set forth for such Borrower on Schedule 4 (the "REQUIRED
----------
REPAIR FUND"). Lender shall have the right to require that additional sums be
deposited into the Required Repair Fund in connection with any property added
(and as a condition to such property being added) to the Collateral Pool after
the date hereof. Lender shall invest the Required Repair Fund in Permitted
Investments.
4.2.2 RELEASE OF REQUIRED REPAIR FUNDS. From time to time (but not
--------------------------------
more often than monthly), Lender shall disburse funds held in the Required
Repair Fund to the applicable Borrower, within 30 days after the delivery by the
applicable Borrower to Lender of a request therefor, in increments of at least
$5,000 provided that (i) on the day of the request and on the day of payment no
Event of Default shall have occurred and be continuing; (ii) such disbursement
is for a Repair Expense that has been incurred by such Borrower; (iii) Lender
shall have (if it desires) verified (by an inspection conducted at the
applicable Borrower's expense) performance of the work associated with such
Repair Expense; (iv) the request for disbursement is accompanied by (A) an
Officer's Certificate certifying (r) the amount of funds to be disbursed, (s)
that such funds will be used to pay or reimburse the applicable Borrower for
Repair Expenses and a description thereof, (t) that the funds remaining in the
Required Repair Fund after such disbursement are equal to or more than 125% of
the cost to fully complete and pay for the remaining Required Repairs, (u) that
the work that is the subject of such disbursement has been performed in a good
and workmanlike manner and in accordance with all Legal Requirements, (v) the
identity of each Person that supplied materials or labor in connection with the
Required Repairs, (w) that each such Person has been or, upon receipt of the
requested disbursement, will be paid in full, (x) that all outstanding trade
payables (other than those to be paid from the requested disbursement, those
otherwise permitted to be outstanding under Section 7.8) have been paid in full,
(y) that the same has not been the subject of a previous disbursement, and (z)
that all previous disbursements have been used to pay the previously identified
Repair Expenses; and (v) if requested by Lender, such Borrower shall deliver to
Lender (A) copies of appropriate Lien waivers or other evidence of payment
satisfactory to Lender, (B) a title search for the applicable Collateral
Property indicating that it is free from all Liens not previously approved by
Lender, (C) a copy of each License required in connection with the Required
Repairs, and (D) such other evidence as Lender shall reasonably request that the
Required Repairs (or portion thereof in question) have been completed and paid
for.
4.2.3 REPAIR FUND L/C. (a) Each Borrower shall have the option, at
---------------
any time when no Event of Default exists, to deliver to Lender a Letter of
Credit in a face amount equal to the sum then required to be on deposit in the
Required Repair Fund with respect to such Borrower (a "REPAIR FUND L/C"). Upon
the delivery by a Borrower of a Repair Fund L/C, Lender shall return to such
Borrower the undisbursed portion of any deposit previously made by such
Borrower into the Required Repair Fund.
(b) Provided no Event of Default then exists, Lender shall return a
Repair Fund L/C to the applicable Borrower when the Required Repairs pertaining
to such Borrower's
<PAGE>
Collateral Property have been fully performed and paid for and such Borrower has
delivered to Lender the items described in clauses (i) through (v) of Section
4.2.2. If Borrowers deliver one Repair Fund L/C in the aggregate amount of all
Required Repair Funds, then, when the Required Repairs pertaining to a
Borrower's Collateral Property have been fully performed and paid for and such
Borrower has delivered to Lender the items described in clauses (i) through (iv)
and, if requested by Lender, clause (v) of Section 4.2.2., Lender shall,
provided no Event of Default then exists, agree to accept a new Repair Fund L/C
or an amendment to the Repair Fund L/C which will have the effect of reducing
the Repair Fund L/C to an amount equal to the then required aggregate amount of
all Required Repair Funds.
(c) To the extent Lender draws on any Repair Fund L/C, the proceeds of
such draw shall be held in the Required Repair Fund in accordance with Sections
4.2.1 and 4.2.2.
(d) (i) Upon the occurrence of an Event of Default, Lender shall
have the right, but not the obligation, to draw on any Repair Fund L/C and apply
the proceeds thereof to pay any of the following in any order that Lender may
elect in its sole and absolute discretion: Taxes, Insurance Premiums, Ground
Rent, payments on account of Required Repairs and any amounts then due and
payable under any Loan Document.
(ii) Lender shall have the additional right to draw on any Repair
Fund L/C:
(A) if at least 30 days prior to the date on which such
Repair Fund L/C is scheduled to expire Lender has not
received a notice from the issuer of such Repair Fund
L/C that such Repair Fund L/C has been extended for a
period of at least one year;
(B) upon receipt of notice from the issuer of such Repair
Fund L/C that such Repair Fund L/C will be terminated;
or
(C) ten Business Days after Lender has notified the
applicable Borrower that the issuer of such Repair Fund
L/C is no longer an Approved Bank.
(iii) Notwithstanding anything to the contrary contained in this
Section 4.2.3 or elsewhere in this Agreement, Lender shall have no obligation to
draw on any Repair Fund L/C upon the happening of an event described in
subsections (d)(ii)(A), (B) or (C) or otherwise, and Lender shall not be liable
for any losses sustained by any Borrower due to the insolvency of the issuer of
any Repair Fund L/C, notwithstanding that Lender elected not to draw on such
Repair Fund L/C.
4.3 TAX AND INSURANCE ESCROW FUND. Each Borrower shall pay to Lender on
-----------------------------
each Payment Date (i) one-twelfth of the Taxes for such Borrower's Collateral
Property that Lender estimates will be payable during the next 12 months in
order to accumulate with Lender
<PAGE>
sufficient funds to pay all such Taxes at least 30 days prior to their
respective due dates, and (ii) one-twelfth of the Insurance Premiums that Lender
estimates will be payable for the renewal of the coverage afforded by the
Policies relating to such Borrower's Collateral Property upon the expiration
thereof in order to accumulate with Lender sufficient funds to pay all such
Insurance Premiums at least 30 days prior to the expiration of such Policies
(the amounts paid under the foregoing clauses (i) and (ii) with respect to the
entire Collateral Pool, less disbursements thereof pursuant hereto, being called
the "TAX AND INSURANCE ESCROW FUND"). Lender will (a) apply the Tax and
Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to be
made by the respective Borrowers pursuant to Sections 6.2 and 8.1 prior to the
date upon which interest or penalties would be imposed, provided that the
applicable Borrower has promptly supplied Lender with notices of all Taxes and
Insurance Premiums due for such Borrower's Collateral Property, or (b) reimburse
the applicable Borrower for such amounts upon presentation of evidence of
payment and an Officer's Certificate in form and substance satisfactory to
Lender; subject, however, to a Borrower's right to contest Taxes in accordance
with Section 6.2. Following the payment by Lender of any Taxes pursuant to this
Section 4.3, Lender shall send a "paid" receipt to the applicable Borrower.
Provided each Borrower has deposited funds into the Tax and Insurance Escrow
Fund as required under this Section and given Lender timely notice of the amount
and due date of such taxes, Borrowers shall not be liable for interest or
penalties resulting from late payment of such Taxes by Lender, and, so long as
no portion of the Debt has been accelerated, Lender or Servicer shall be
responsible for such interest and penalties. In making any payment relating to
the Tax and Insurance Escrow Fund, Lender may do so according to any bill,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof. If the amount of the Tax and Insurance Escrow Fund shall exceed the
amounts next coming due for Taxes and Insurance Premiums pursuant to Sections
6.2 and 8.1, Lender shall, in its sole discretion, return any excess to the
applicable Borrower(s) or credit such excess against future payments to be made
to the Tax and Insurance Escrow Fund. If at any time Lender determines that the
Tax and Insurance Escrow Fund is not or will not be sufficient to pay the Taxes
or Insurance Premiums next coming due, Lender shall notify the applicable
Borrower(s) of such determination and the applicable Borrower(s) shall increase
their respective monthly payments to Lender by the amount that Lender estimates
is sufficient to make up the deficiency at least 30 days prior to delinquency of
the Taxes and/or expiration of the Policies, as the case may be. Lender
acknowledges that each Borrower currently causes its Premiums to be paid by Afco
Acceptance Corp. ("Afco") through an agreement with Westfield America, Inc., and
Lender agrees that amounts for each Borrower's Premiums held in such Borrower's
Tax and Insurance Escrow Fund shall be released to reimburse such Borrower for
payments made by it to reimburse Westfield America, Inc. for the amounts paid to
Afco with respect to such Borrower's Premiums (subject to compliance by such
Borrower with clause (b) of this Section 4.3) or any other similar arrangements
---------- -----------
reasonably acceptable to Lender.
<PAGE>
4.4 REPLACEMENT RESERVES.
--------------------
4.4.1 REPLACEMENT RESERVE FUND. Each Borrower shall pay to Lender on
------------------------
each Payment Date (in addition to other payments required hereunder) an amount
equal to the Monthly Replacement Deposit for such Borrower's Collateral Property
(such payments with respect to the entire Collateral Pool, less disbursements
thereof pursuant hereto, being called the "REPLACEMENT RESERVE FUND"). If the
amount of the Replacement Reserve Fund shall exceed the amounts due for Approved
Replacement Expenses pursuant to the terms hereof, Lender shall, in its
discretion, return any excess to the applicable Borrower(s) or, if future
Replacement Reserve Fund payments are then required, credit such excess against
such future payments.
4.4.2 PAYMENT OF REPLACEMENT EXPENSES. From time to time (but not
-------------------------------
more often than monthly), Lender shall disburse funds held in the Replacement
Reserve Fund to the applicable Borrower, within 30 days after the delivery by
the applicable Borrower to Lender of a request therefor, in increments of at
least $5,000 provided that (i) on the day of the request and on the day of
payment no Event of Default shall have occurred and be continuing; (ii) such
disbursement is for a Replacement Expense that has been incurred by such
Borrower (provided that, during the continuance of a Cash Management Event, such
Replacement Expense must be an Approved Replacement Expense); (iii) Lender shall
have (if it desires) verified (by an inspection conducted at the applicable
Borrower's expense) performance of the work associated with such Approved
Expense (or Replacement Expense, as the case may be); and (iv) the request for
disbursement is accompanied by (A) an Officer's Certificate certifying (v) the
amount of funds to be disbursed, (w) that such funds will be used to pay or
reimburse the applicable Borrower for Approved Replacement Expenses (or
Replacement Expenses, as the case may be) and a description thereof, (x) that
all outstanding trade payables (other than those to be paid from the requested
disbursement, those otherwise permitted to be outstanding under Section 7.8)
have been paid in full, (y) that the same has not been the subject of a previous
disbursement, and (z) that all previous disbursements have been used to pay the
previously identified Approved Replacement Expenses (or Replacement Expenses, as
the case may be), and (B) reasonably detailed documentation as to the amount,
necessity and purpose therefor.
4.5 ROLLOVER RESERVES.
-----------------
4.5.1 ROLLOVER RESERVE FUND. Each Borrower shall pay to Lender on
---------------------
each Payment Date the Monthly Rollover Deposit for such Borrower's Collateral
Property (in addition to other payments required hereunder) (such payments with
respect to the entire Collateral Pool, less disbursements thereof pursuant
hereto, being called the "ROLLOVER RESERVE FUND"). Lender will apply such
payments to payment of Approved Leasing Expenses pursuant to the terms hereof.
Each Borrower shall also deposit into the Rollover Reserve Fund all payments
("Lease Termination Payments") received from tenants in connection with the
termination or cancellation of any Lease more than one year prior to its
expiration date, including fees, penalties and commissions (provided that, upon
the releasing of all or any portion of the space demised under such cancelled or
terminated space, Lender shall, upon the applicable Borrower's request and
provided no Event of Default then exists, release to such Borrower the portion,
if any, of the
<PAGE>
Lease Termination Payment which exceeds the actual Leasing Expenses incurred or
to be incurred in connection with such releasing). If the amount of the Rollover
Reserve Fund shall exceed the amounts due for Approved Leasing Expenses pursuant
to the terms hereof, Lender shall, in its discretion, return any excess to the
applicable Borrower(s), credit such excess against future payments to the
Rollover Reserve Fund or allocate such excess to other Subaccounts. If Lender
determines in its reasonable judgment that the amount of the Rollover Reserve
Fund will be insufficient to pay the amounts due or to become due for Approved
Leasing Expenses (after taking into accounts any Lease Termination Payments
theretofore deposited into the Rollover Reserve), Lender may adjust the monthly
amounts required to be deposited into the Rollover Reserve Fund upon 30 days'
notice to the applicable Borrower(s). Alternatively, Lender may in its
discretion determine that the amount of the Rollover Reserve Fund will exceed
the amounts due or to become due for Approved Leasing Expenses, in which case
Lender may reduce the monthly amounts to be deposited therein.
4.5.2 PAYMENT OF LEASING EXPENSES. From time to time (but not more
---------------------------
than once per month) Lender shall disburse funds held in the Rollover Reserve
Fund to the applicable Borrower(s), within 15 days after the delivery by the
applicable Borrower(s) to Lender of a request therefor, in increments of at
least $5,000, provided (i) on the day of the request and on the day of payment
no Event of Default shall have occurred and be continuing; (ii) such
disbursement is for an Approved Leasing Expense; (iii) Lender shall have (if it
desires) verified (by an inspection conducted at such Borrower's expense)
performance of any construction work associated with such Approved Leasing
Expense; and (iv) the request for disbursement is accompanied by (A) an
Officer's Certificate certifying (v) the amount of funds to be disbursed, (w)
that such funds will be used only to pay (or reimburse the applicable
Borrower(s) for) Approved Leasing Expenses and a description thereof, (x) that
all outstanding trade payables (other than those to be paid from the requested
disbursement or those otherwise permitted to be outstanding under Section 7.8)
have been paid in full, (y) that the same has not been the subject of a previous
disbursement, and (z) that all previous disbursements have been used only to pay
(or reimburse the applicable Borrower(s) for) the previously identified Approved
Leasing Expenses, and (B) reasonably detailed supporting documentation as to the
amount, necessity and purpose therefor. During the continuance of a Cash
Management Event, any such disbursement to pay (rather than reimburse) Approved
Leasing Expenses may, at Lender's option, be made by joint check payable to the
applicable Borrower(s) and the payee of such Approved Leasing Expenses.
4.6 GROUND RENT ESCROW.
------------------
4.6.1 GROUND RENT ESCROW FUND. Each Borrower whose Collateral
-----------------------
Property is subject to a Ground Lease that requires payment of net annual rent
on other than a monthly basis, shall pay to Lender on each Payment Date one-
twelfth of the annual net rent that Lender estimates will be payable under such
Ground Lease during the next 12 months in order to accumulate with Lender
sufficient funds to pay the then next installment of annual net rent due under
such Ground Lease at least 30 days prior to the due date thereof (such payments
with
<PAGE>
respect to all Ground Leases, less disbursements thereof pursuant hereto, the
"GROUND RENT ESCROW FUND"). Lender will apply the Ground Rent Escrow Fund to
payments of annual net rent required to be made by the applicable Borrower under
its Ground Lease, or to reimburse such Borrower for such amounts upon
presentation of evidence of payment and an Officer's Certificate of such
Borrower in form and substance satisfactory to Lender. In making any payment
relating to the Ground Rent Escrow Fund, Lender may do so according to any bill,
statement or estimate procured from the landlord under the applicable Ground
Lease, without inquiry into the accuracy of such bill, statement or estimate or
into the validity of any claim by such landlord. If at any time Lender
determines that the portion of the Ground Rent Escrow Fund allocable to any
Ground Lease is not or will not be sufficient to pay the annual net Rent
pursuant to such Ground Leases next coming due, Lender shall notify the
applicable Borrower(s) of such determination and the applicable Borrower(s)
shall increase its (their) monthly payments to Lender by the amount that Lender
reasonably estimates is sufficient to make up the deficiency at least 30 days
prior to delinquency of the annual net rent under the applicable Ground
Lease(s).
4.7 OPERATING EXPENSE RESERVES.
--------------------------
4.7.1 OPERATING EXPENSE RESERVE FUND. After the occurrence of a Cash
------------------------------
Management Event each Borrower shall pay to Lender an amount equal to the
Approved Operating Expenses for its Collateral Property for the next Current
Month (such payments with respect to the entire Collateral Pool, less
disbursements thereof pursuant hereto, being called the "OPERATING EXPENSE
RESERVE FUND"). If the amount of the Operating Expense Reserve Fund shall
exceed the amounts due for Approved Operating Expenses pursuant to the terms
hereof, Lender shall, in its discretion, return any excess to the applicable
Borrower(s) or, if future Operating Reserve Fund payments are then required,
credit such excess against such future payments.
4.7.2 PAYMENT OF APPROVED OPERATING EXPENSES. From time to time (but
--------------------------------------
not more than once per month) Lender shall disburse funds held in the Operating
Expense Reserve Fund to the applicable Borrower(s), provided (i) on the day of
the request and on the date of payment no portion of the Debt shall have been
accelerated ; (ii) such disbursement is for an Approved Operating Expense; and
(iii) such disbursement is requested by the applicable Borrower(s) in writing,
accompanied by (A) an Officer's Certificate certifying (v) the amount of funds
to be disbursed, (w) that such funds will be used to pay Approved Operating
Expenses and a description thereof, (x) that all outstanding trade payables
(other than those to be paid from the requested disbursement or those otherwise
permitted to be outstanding under Section 7.8) have been paid in full, (y) that
the same has not been the subject of a previous disbursement, and (z) that all
previous disbursements have been or will be used to pay the previously
identified Approved Operating Expenses, and (B) reasonably detailed
documentation as to the amount, necessity and purpose therefor. Subject to
satisfaction of the preceding conditions, if Lender receives from a Borrower a
valid request for a disbursement for payment of Approved Operating Expenses for
the then Current Month at least five Business Days prior to the Payment Date
occurring in such Current Month, then the disbursement in respect of such
Approved Operating Expenses shall be made to such Borrower on such Payment Date.
Notwithstanding anything to
<PAGE>
the contrary in the foregoing, during the continuance of an Event of Default
Lender shall have the right, in lieu of disbursing to Borrowers funds from the
Operating Expense Reserve Fund, to pay such funds directly to the obligees or to
pay such funds to the applicable Borrower and the obligee in question jointly.
4.8 CASUALTY/CONDEMNATION FUND. The applicable Borrower shall pay, or
--------------------------
cause to be paid, to Lender all Proceeds or Awards due to any Casualty or
Condemnation (such amounts, less disbursements thereof pursuant hereto, the
"CASUALTY/CONDEMNATION FUND"), in accordance with the provisions of Article
VIII. All amounts in the Casualty/Condemnation Fund shall disbursed in
accordance with the provisions of Article VIII.
4.9 SECURITY DEPOSITS. (a) Security deposits under Leases shall not be
-----------------
commingled with any other funds of any Borrower (unless permitted by applicable
Legal Requirements) and all security deposits paid in cash under Leases, shall,
unless permitted to be commingled with Borrowers' funds under applicable Legal
Requirements, be deposited by the applicable Borrower at an account at the
Clearing Bank. After the occurrence of a Cash Management Event, each Borrower
shall, upon Lender's request, if permitted by applicable Legal Requirements,
turn over to Lender the security deposits (and any interest theretofore earned
thereon) under Leases, to be held by Lender in the Security Deposit Subaccount
subject to the terms of the Leases. If applicable Legal Requirements prohibit
any Borrower from turning over to Lender security deposits under Leases, such
Borrower shall keep such security deposits at a separately designated account at
the Clearing Bank so that the security deposits shall not be commingled with any
other funds of such Borrower. Security deposits held in the Security Deposit
Subaccount will be released by Lender upon notice from the applicable Borrower
together with such evidence as Lender may reasonably request that such security
deposit is required to be returned to a tenant pursuant to the terms of a Lease
or may be applied as Rent pursuant to the rights of such Borrower under the
applicable Lease.
(b) Any letter of credit or other instrument that a Borrower receives
in lieu of a cash security deposit shall (i) be maintained in full force and
effect in the full amount unless replaced by a cash deposit as hereinabove
described, (ii) if pertaining to a Material Lease, be issued by an institution
reasonably satisfactory to Lender, (iii) if permitted pursuant to any Legal
Requirements, name Lender as payee or mortgagee thereunder (or be fully
assignable to Lender) and (iv) in all respects, comply with any applicable Legal
Requirements and, if pertaining to a Material Lease, otherwise be reasonably
satisfactory to Lender. Each Borrower shall, upon request, provide Lender with
evidence reasonably satisfactory to Lender of such Borrower's compliance with
the foregoing.
4.10 GRANT OF SECURITY INTEREST; APPLICATION OF FUNDS. As security for
------------------------------------------------
payment of each Borrower's Allocable Share of the Debt and the performance by
each Borrower of all other terms, conditions and provisions of the Loan
Documents, each Borrower hereby pledges and assigns to Lender, and grants to
Lender a security interest in, all right, title and interest of such Borrower in
and to all Rents and in and to all payments to or monies held in the Clearing
Accounts, the Deposit Account, the Subaccounts and the Master Deposit Account
(collectively, the "CASH MANAGEMENT ACCOUNTS"), and in the Required Repair Fund,
Tax and Insurance
<PAGE>
Escrow Fund, Replacement Reserve Fund, Rollover Reserve Fund, Operating Expense
Reserve Fund, UNOI Fund, Regal Reserve Fund, Environmental Fund, Parkway Reserve
Fund, Parkway Reserve #2 Fund, Cash Collateral Fund and Casualty/Condemnation
Fund (collectively, together with all other funds designated as or deemed to be
"FUNDS" under this Agreement, the "FUNDS"). Each Borrower for itself and on
behalf of each of its Affiliates hereby grants to Lender a continuing security
interest in, and agrees to hold in trust for the benefit of Lender, all Rents in
its possession prior to the (i) payment of such Rents to Lender or (ii) deposit
of such Rents into the Deposit Account. No Borrower shall, without obtaining the
prior written consent of Lender, further pledge, assign or grant any security
interest in any Cash Management Account or Fund, or permit any Lien to attach
thereto, or any levy to be made thereon, or any UCC-l Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto. This Agreement is, among other things, intended by the parties to be a
security agreement for purposes of the UCC. Upon the occurrence and during the
continuance of an Event of Default, Lender may apply any sums in any Cash
Management Account or Fund as provided under Section 3.1.3(c). The parties
hereto acknowledge that sums at any time in the Remainder Subaccounts and/or in
the Master Deposit Account have also been pledged to Lender pursuant to, and as
additional collateral for, the Guaranties.
4.11 INVESTMENTS OF FUNDS. Provided that no Event of Default is
--------------------
continuing, upon the written request of Borrowers, which request may be made
once per Interest Period, Lender shall direct the Deposit Bank to invest and
reinvest any balance in the Deposit Accounts or any Subaccount from time to time
in Permitted Investments as instructed by Borrowers, all as set forth in the
Deposit Account Agreements. At all other times such investment and reinvestment
decisions shall be made by Lender, it being the intent of the parties that, to
the extent practicable, prior to acceleration of the Debt or any portion
thereof, funds in the Deposit Accounts and the Master Deposit Account shall be
invested at all times.
4.12 UNOI LETTER OF CREDIT.
---------------------
(a) On the date hereof Borrowers shall deposit with Lender the sum of
$1,615,000 (the "UNOI FUND"); provided, however, that in lieu of all or any part
of the UNOI Fund, Borrowers may deliver to Lender a Letter of Credit (the "UNOI
L/C") in the face amount of the required UNOI Fund (or the applicable portion
thereof).
(b) After the date hereof Borrowers shall have the option at any time,
provided no Event of Default then exists, to deliver to Lender a Letter of
Credit in a face amount equal to the amount then in the UNOI Fund (also, a "UNOI
L/C"). Upon delivery to Lender of such UNOI L/C, Lender shall return to
Borrowers the funds then on deposit in the UNOI Fund.
(c) If the Debt Service Coverage Ratio as of June 11, 1999 or December
11, 1999 is 1.35 or greater, Lender shall return to Borrowers all UNOI L/Cs and
any UNOI Fund then held by Lender. If the Debt Service Coverage Ratio as of
June 11, 1999 and as of December 11, 1999 is less than 1.35, Lender shall hold
the UNOI L/Cs and UNOI Fund as additional security for the Loans until the Loans
are paid in full.
<PAGE>
(d) If at any time the issuer of a UNOI L/C ceases to be an Approved
Bank, Borrowers shall, within 30 days after request by Lender, deliver to Lender
a new UNOI L/C issued by an Approved Bank (or immediately available funds in
such amount for deposit into the UNOI Fund), whereupon Lender shall return the
original UNOI L/C to Borrowers.
(e) If Borrowers fails to comply with the provisions of Section
-------
4.12(d), or if at any time a UNOI L/C is not replaced or renewed at least 30
- -------
days prior to its date of expiration, Lender may draw on such UNOI L/C and the
proceeds thereof shall be deposited into the UNOI Fund.
(f) If for any reason a UNOI L/C shall expire without a replacement
UNOI L/C having been delivered to Lender, Borrowers shall, within 5 days after
demand, deliver to Lender a new UNOI L/C (or immediately available funds in such
amount for deposit into the UNOI Fund).
4.13 OAKRIDGE OPTION FUND.
--------------------
(a) On the date hereof, the Oakridge Borrower shall deposit with
Lender the sum of $4,500,000, representing 25% as of the current estimated
purchase price for the fee estate in the Oakridge Property pursuant to the
Primary Option as set forth and defined in the Oakridge Option Agreement (such
deposit, together with all amounts paid to Lender pursuant to paragraphs (b) and
(c) of this Section 4.13, being called the "OAKRIDGE OPTION FUND").
------------
(b) On each Payment Date occurring between the date hereof and
September 15, 2000 (the latter date being the first day of the Primary Option
Period (as defined in the Oakridge Option Agreement), Oakridge Borrower shall
pay to lender an amount equal to $204,545.45 (or such other monthly amount as
Lender may reasonably determine to be necessary in order that the aggregate
amount in the Oakridge Option Fund on the Payment Date immediately preceding the
Primary Option Period shall be equal to 50% of the purchase price for the fee
estate pursuant to the Primary Option.
(c) On each Payment Date occurring between September 16, 2000 and June
15, 2002 (the latter date being the first day of the Secondary Option Period as
defined in the Oakridge Option Agreement), Oakridge Borrower shall pay to Lender
an amount equal to $1,000,000 (or such other amount as Lender may reasonably
determine to be necessary in order that the aggregate amount in the Oakridge
Option Fund on the Payment Date immediately preceding the Secondary Option
Period shall be equal to 100% of the purchase price for the fee estate pursuant
to the Secondary Option).
(d) Oakridge Borrower shall have the option at any time, provided no
Event of Default then exists, to deliver to Lender a Letter of Credit in a face
amount equal to the sum then required to be in the Oakridge Option Fund (the
"OAKRIDGE L/C"). Upon delivery to Lender of
<PAGE>
the Oakridge L/C, Lender shall return to Oakridge Borrower the funds then on
deposit in the Oakridge Option Fund.
(e) If at any time the issuer of the Oakridge L/C ceases to be an
Approved Bank, Oakridge Borrower shall, within thirty (30) days after request by
Lender, deliver to lender a new Oakridge L/C issued by an Approved Bank (or
immediately available funds in amount of such Letter of Credit), whereupon
Lender shall return the original Oakridge L/C to Oakridge Borrower.
(f) If Oakridge Borrower fails to comply with the provisions of
Section 4.13(e), or if at any time the Oakridge L/C is not replaced or renewed
- ---------------
at least thirty (30) days prior to its expiration, Lender may draw on the
Oakridge L/C and the proceeds thereof shall constitute the Oakridge Option Fund.
(g) If for any reason the Oakridge L/C should expire without a
replacement Oakridge L/C having been delivered to Lender, Oakridge Borrower
shall, within 5 days after demand, deliver to Lender a new Oakridge L/C, or
deposit funds with Lender, in the amount then required to be in the Oakridge
Option Fund.
(h) Upon the exercise of the Secondary Option, the Oakridge Borrower
shall deposit into the Oakridge Option Fund the amount, if any, by which the
purchase price for the fee estate pursuant to the Secondary Option exceeds the
sum of (i) the amount of any Oakridge L/C then held by Lender plus (ii) amounts
theretofore deposited into the Oakridge Option Fund (less any such amounts
returned to Oakridge Borrower pursuant to Section 4.13(d)).
(i) Upon the exercise of the Primary Option or the Secondary Option,
Lender shall release the Oakridge Reserve Fund, or return to Oakridge Borrower
the Oakridge L/C, provided that, simultaneously with such release or return,
Oakridge Borrower executes and delivers to Lender such documents as Lender may
reasonably request to spread the liens of the first and second Mortgages
concerning the Primary Oakridge Ground Lease, and any other applicable loan
documents, so as to encumber the fee estate in the Oakridge Property and to
cause the Title Policies insuring such Mortgages to be endorsed so as to cover
such first and second Mortgages as so spread.
(j) Upon demand of Lender at any time after both (1) the Primary
Option Period has commenced, and (2) the landlord under the Primary Oakridge
Ground Lease has given a notice of default to the tenant thereunder which
remains uncured, the Oakridge Borrower shall exercise the Primary Option and
close thereunder, and spread the liens of its Mortgages as described in Section
-------
4.13(h), above.
- -------
(k) Westfield America, Inc. (the "OAKRIDGE GUARANTOR") has delivered
to Lender a guaranty (the "OAKRIDGE GUARANTY") of the obligations of Oakridge
Borrower under paragraph (h) of this Section 4.13.
------------- ------------
4.14 CASH COLLATERAL FUND.
--------------------
<PAGE>
(a) After the occurrence of a Cash Management Event, all Rents
remaining in a Deposit Account after application thereof pursuant to clause
"Ninth" of Section 3.1.3(a), shall be transferred to the Master Deposit Account
----------------
(all funds at any time in the Master Deposit Account being called the "Cash
Collateral Fund").
(b) Funds in the Cash Collateral Subaccount shall be utilized to pay
(i) fees and other sums due and payable to the Management Consultants, to the
extent such fees and sums have not been paid pursuant to clauses "Seventh" and
"Ninth" of Section 3.1.3(a), and (ii) other payments described in clause (i)
through (ix) of Section 3.1.3(a) to the extent the Rents from any Borrower's
----------------
Collateral Property are insufficient to pay same.
(c) Upon a Cash Management Termination, Lender shall deliver to
Borrower all sums then in the Cash Collateral Fund.
4.15 REGAL RESERVE FUND.
------------------
(a) On the date hereof Parkway Borrower shall deposit with Lender the
sum of $2,550,000 (such sum, less disbursements thereof pursuant hereto, the
"REGAL RESERVE").
(b) From time to time (but not more often than monthly), Lender shall
disburse funds held in Regal Reserve to Parkway Borrower, within 30 days after
the delivery by the Parkway Borrower to Lender of a request therefor, in
increments of at least $5,000, provided that (i) on the day of the request and
on the day of payment no Event of Default shall exist and (ii) such request for
disbursement is accompanied by an Officer's Certificate certifying (A) that the
amount of such requested disbursement is due and payable to Regal Cinema
pursuant to its lease and (B) all prior disbursements to Parkway Borrower
pursuant to this Section 4.15(b) have been paid to Regal Cinema.
(c) Parkway Borrower shall have the option at any time, provided no
Event of Default then exists, to deliver to Lender a Letter of Credit in a face
amount equal to the sum then required to be in the Regal Reserve Fund (the
"REGAL L/C"). Upon delivery to Lender of the Regal L/C, Lender shall return to
Parkway Borrower the funds then on deposit in the Regal Reserve Fund.
(d) If at any time the issuer of the Regal L/C ceases to be an
Approved Bank, Parkway Borrower shall, within thirty (30) days after request by
Lender, deliver to Lender a new Regal L/C issued by an Approved Bank (or
immediately available funds in amount of such Letter of Credit), whereupon
Lender shall return the original Regal L/C to Parkway Borrower.
(e) If Parkway Borrower fails to comply with the provisions of Section
-------
4.15(d), or if at any time the Regal L/C is not replaced or renewed at least
- -------
thirty (30) days prior to its expiration, Lender may draw on the Regal L/C and
the proceeds thereof shall constitute the Regal Reserve Fund.
<PAGE>
(f) If for any reason the Regal L/C should expire without a
replacement Regal L/C having been delivered to Lender, Parkway Borrower shall,
within 5 days after demand, deliver to Lender a new Regal L/C, or deposit funds
with Lender, in the amount then required to be in the Regal Reserve Fund.
4.16 ENVIRONMENTAL FUND.
------------------
(a) On the date hereof Fox Hills Malls LLC ("FOX HILLS BORROWER")
shall deposit with Lender the sum of $100,000 (the "ENVIRONMENTAL FUND");
provided, however, that in lieu of the Environmental Fund, Fox Hills Borrower
may deliver to Lender a Letter of Credit (an "ENVIRONMENTAL L/C") in a face
amount equal to the required Environmental Fund.
(b) After the date hereof Fox Hills Borrower shall have the option at
any time, provided no Event of Default then exists, to deliver to Lender a
Letter of Credit in a face amount equal to the amount then in the Environmental
Fund (also, an "ENVIRONMENTAL L/C"). Upon delivery to Lender of such
Environmental L/C, Lender shall return to Fox Hills Borrower the funds then on
deposit in the Environmental Fund.
(c) Certain 1991 environmental reports disclosed low levels of
chlorinated solvents at the Collateral Property owned by Fox Hills Borrower.
Upon the delivery to Lender of evidence reasonably satisfactory to Lender that
such solvents have been removed or that the conditions pertaining thereto are
such that no remediation is necessary to satisfy Lender's standards and
requirements, Lender shall, provided no Event of Default then exists, return to
Fox Hills Borrower the Environmental Fund or Environmental L/C. Fox Hills
Borrower acknowledges that soil testing may be required in connection with the
foregoing.
(d) If at any time the issuer of an Environmental L/C ceases to be an
Approved Bank, Fox Hills Borrower shall, within 30 days after request by Lender,
deliver to Lender a new Environmental L/C issued by an Approved Bank (or
immediately available funds in such amount for deposit into the Environmental
Fund), whereupon Lender shall return the original Environmental L/C to Fox Hills
Borrower.
(e) If Fox Hills Borrower fails to comply with the provisions of
Section 4.16(d), or if at any time an Environmental L/C is not replaced or
- ---------------
renewed at least 30 days prior to its date of expiration, Lender may draw on
such Environmental L/C and the proceeds thereof shall be deposited into the
Environmental Fund.
(f) If for any reason an Environmental L/C shall expire without a
replacement Environmental L/C having been delivered to Lender, Fox Hills
Borrower shall, within 5 days after demand, deliver to Lender a new
Environmental L/C (or immediately available funds in such amount for deposit
into the Environmental Fund).
<PAGE>
4.17 PARKWAY RESERVE #2 FUND.
-----------------------
(a) On the date hereof Parkway Borrower shall deposit with Lender the
sum of $178,000 (the "PARKWAY RESERVE #2 FUND").
(b) On or prior to the date of the second Advance, Parkway Borrower
shall increase the amount on deposit in the Parkway Reserve #2 Fund to a total
of $363,000 (unless the initial deposit into such Fund has then been released
pursuant to Section 4.17(d).
(c) After the date hereof Parkway Borrower shall have the option at
any time, provided no Event of Default then exists, to deliver to Lender a
Letter of Credit in a face amount equal to the amount then in the Parkway
Reserve #2 Fund (the "PARKWAY RESERVE #2 L/C"). Upon delivery to Lender of such
Parking Reserve #2 L/C, Lender shall return to Parkway Borrower the funds then
on deposit in the Parkway Reserve #2 Fund.
(d) Upon the delivery to Lender of evidence reasonably satisfactory to
Lender that Parkway Borrower has no further payment or contribution obligations
for street and/or highway improvements under that certain Development Agreement
by and between the City of El Cajon and H and H El Cajon for the Parkway Plaza
Expansion dated as of March 17, 1989, Lender shall, provided no Event of Default
then exists, return to Parkway Borrower the Parkway #2 Reserve Fund or Parkway
#2 Reserve L/C.
(e) If at any time the issuer of the Parkway Reserve #2 L/C ceases to
be an Approved Bank, Parkway Borrower shall, within 30 days after request by
Lender, deliver to Lender a new Parkway Reserve #2 L/C issued by an Approved
Bank (or immediately available funds in such amount for deposit into the Parkway
Reserve #2 Fund), whereupon Lender shall return the original Parkway Reserve #2
L/C to Parkway Borrower.
(f) If Parkway Borrower fails to comply with the provisions of Section
-------
4.17(e), or if at any time a Parkway Reserve #2 L/C is not replaced or renewed
- -------
at least 30 days prior to its date of expiration, Lender may draw on such
Parkway Reserve #2 L/C and the proceeds thereof shall be deposited into the
Parkway Reserve #2 Fund.
(g) If for any reason a Parkway Reserve #2 L/C shall expire without a
replacement Parkway Reserve #2 L/C having been delivered to Lender, Borrowers
shall, within 5 days after demand, deliver to Lender a new Parkway Reserve #2
L/C (or immediately available funds in such amount for deposit into the Parkway
Reserve #2 Fund).
V REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 BORROWER REPRESENTATIONS. Each Borrower represents and warrants as of
------------------------
the date hereof that, except to the extent (if any) disclosed on Schedule 2 with
reference to a specific subsection of this Section 5.1:
5.1.1 ORGANIZATION; SPECIAL PURPOSE. Each Borrower has been duly
-----------------------------
organized
<PAGE>
and is validly existing and in good standing under the laws of the
State of formation, with requisite power and authority, and all rights,
licenses, permits and authorizations, governmental or otherwise, necessary to
own its properties and to transact the business in which it is now engaged.
Each Borrower is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, business and operations. Each Borrower is a Special Purpose
Bankruptcy Remote Entity, and the sole business of each Borrower is the
ownership, management and operation of the Collateral Property owned by it.
5.1.2 PROCEEDINGS; ENFORCEABILITY. Each Borrower has taken all
---------------------------
necessary action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party. The Loan Documents to which any Borrower
is a party have been duly executed and delivered by such Borrower and constitute
legal, valid and binding obligations of such Borrower enforceable against such
Borrower in accordance with their respective terms, subject to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally,
and general principles of equity.
5.1.3 NO CONFLICTS. The execution, delivery and performance by each
------------
Borrower of the Loan Documents to which it is a party will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any Lien (other than pursuant
to the Loan Documents) upon any of the property of such Borrower pursuant to the
terms of, any agreement or instrument to which such Borrower is a party or by
which its property is subject (including any Ground Lease), nor will such action
result in any violation of the provisions of any statute or any order, rule or
regulation of any Governmental Authority having jurisdiction over such Borrower
or any of its properties. Each Borrower's rights under the Licenses and the
Management Agreement pertaining to the Collateral Property owned by such
Borrower will not be adversely affected by the execution and delivery of the
Loan Documents, such Borrower's performance thereunder, the recordation of any
Mortgage executed by such Borrower, or the exercise of any remedies by Lender.
Any consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution and delivery by any
Borrower of the Loan Documents has been obtained and is in full force and
effect.
5.1.4 LITIGATION. There are no actions, suits or other proceedings
----------
at law or in equity by or before any Governmental Authority now pending or
threatened against or affecting any Borrower, any Borrower Representative, the
Manager or any Collateral Property, which, if adversely determined, might
materially adversely affect the condition (financial or otherwise) or business
of any Borrower, any Borrower Representative, Manager or the condition or
ownership of any Collateral Property.
5.1.5 AGREEMENTS. No Borrower is a party to any agreement or
----------
instrument or subject to any restriction which might adversely affect such
Borrower or its Collateral Property, or such Borrower's business, properties,
operations or condition, financial or otherwise. No Borrower is in default in
any material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Permitted Encumbrance or
any
<PAGE>
other agreement or instrument to which it is a party or by which it or any
Collateral Property is bound.
5.1.6 TITLE. Each Borrower has good fee title (or, if the Mortgages
-----
granted by such Borrower are leasehold mortgages, leasehold title) to the
portion of its Collateral Property constituting Real Property, and good title to
the balance of the Property, free and clear of all Liens except the Permitted
Encumbrances. The Mortgages executed by each Borrower, when properly recorded
in the appropriate records, together with any UCC financing statements required
to be filed in connection therewith, will create (i) valid, perfected first and
second priority lien on the fee interest in the Property (or, if the Mortgages
granted by such Borrower are leasehold mortgages, the leasehold estate), and
(ii) perfected security interests in and to, and perfected collateral
assignments of, all personalty proported to be covered by such Mortgages
(including the Leases affecting such Collateral Property), all in accordance
with the terms thereof, in each case subject only to any applicable Permitted
Encumbrances. The Permitted Encumbrances do not materially adversely affect the
value or use of any Collateral Property, or any Borrower's ability to repay such
Borrower's Allocable Share of the Loan. There are no claims for payment for
work, labor or materials affecting any Collateral Property which are or may
become a Lien prior to, or of equal priority with, any Liens created by the Loan
Documents.
5.1.7 SURVEY. To the best of each Borrower's knowledge, the survey
------
for each Collateral Property delivered to Lender does not fail to reflect any
material matter affecting such Collateral Property or the title thereto which is
required to be reflected thereon in accordance with the standards for a Survey
described in the definition thereof.
5.1.8 NO BANKRUPTCY FILING. None of the Borrowers is contemplating
--------------------
either the filing of a petition by it under any state or federal bankruptcy or
insolvency law or the liquidation of all or a major portion of its property (a
"BANKRUPTCY PROCEEDING"), and none of the Borrowers has any knowledge of any
Person contemplating the filing of any such petition against any Borrower. In
addition, no Borrower or Borrower Representative or any principal or Affiliate
of any Borrower or Borrower Representative has been a party to, or the subject
of a Bankruptcy Proceeding for the past ten years.
5.1.9 FULL AND ACCURATE DISCLOSURE. No statement of fact made by
----------------------------
Borrower in any Loan Documents contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
therein not misleading. There is no material fact presently known to any
Borrower that has not been disclosed to Lender which adversely affects, or, as
far as any Borrower can foresee, might adversely affect, the Property or the
business, operations or condition (financial or otherwise) of any Borrower.
5.1.10 NO PLAN ASSETS. No Borrower is an "employee benefit plan," as
--------------
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and no assets of
any Borrower constitutes or will constitute "plan assets" of one or more such
plans within the meaning of 29 C.F.R. Sec tion 2510.3-101.
<PAGE>
5.1.11 COMPLIANCE. Each Borrower and its Collateral Property and the
----------
use thereof comply in all material respects with all applicable Legal
Requirements. No Borrower is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of such Borrower. There has not been and shall never be committed
by any Borrower or any other Person in occupancy of or involved with the
operation or use of any Collateral Property any act or omission affording any
Governmental Authority the right of forfeiture as against any Collateral
Property or any part thereof or any monies paid in performance of any Borrower's
obligations under any Loan Document.
5.1.12 CONTRACTS. As of September 10, 1998 there are no material
---------
service, maintenance or repair contracts affecting any Collateral Property other
than those identified on Schedule 7. All information set forth in Schedule 7 is
---------- ----------
true, accurate and complete in all material respects as of September 10, 1998.
Except as disclosed on Schedule 7, there are no material service, maintenance or
----------
repair contracts that are not terminable on one month's notice or less without
cause and without penalty or premium. All service, maintenance or repair
contracts affecting any Collateral Property have been entered into at arms-
length in the ordinary course of a Borrower's business and provide for the
payment of fees in amounts and upon terms comparable to existing market rates.
5.1.13 FINANCIAL INFORMATION. All financial data, including the
---------------------
statements of cash flow and income and operating expense, that have been
delivered to Lender in respect of any Collateral Property (i) are true, complete
and correct in all material respects, (ii) accurately represent the financial
condition of such Collateral Property as of the date of such reports, and (iii)
to the extent prepared by an independent certified public accounting firm, have
been prepared in accordance with GAAP consistently applied throughout the
periods covered, except as disclosed therein. No Borrower has any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that would
have a material adverse affect on the financial condition of such Borrower.
Since the date of such financial statements, there has been no materially
adverse change in the financial condition, operations or business of any
Borrower from that set forth in said financial statements.
5.1.14 CONDEMNATION. No Condemnation or other proceeding has been
------------
commenced or, to any Borrower's best knowledge, is contemplated with respect to
all or part of any Collateral Property or for the relocation of roadways
providing access to any Collateral Property.
5.1.15 FEDERAL RESERVE REGULATIONS. No part of the proceeds of the
---------------------------
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose that would be inconsistent with such
Regulation U or any other regulation of such Board of Governors, or for any
purpose prohibited by Legal Requirements or any Loan Document.
<PAGE>
5.1.16 UTILITIES AND PUBLIC ACCESS. Each Property has rights of
---------------------------
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service it for its intended uses. All public
utilities necessary to the full use of each Collateral Property are located in
the public right-of-way abutting such Collateral Property, and all such
utilities are connected so as to serve such Collateral Property without passing
over other property absent a valid easement. All roads necessary for the use of
each Collateral Property for its current purpose have been completed and
dedicated to public use and accepted by all Governmental Authorities.
5.1.17 NOT A FOREIGN PERSON. No Borrower is a "foreign person" with
--------------------
in the meaning of (S) 1445(f)(3) of the Code.
5.1.18 SEPARATE LOTS. There is no portion of any Collateral Property
-------------
which is part of a tax lot all or any portion of which is not encumbered by a
Mortgage.
5.1.19 ASSESSMENTS. There are no pending or proposed material
-----------
special or other assessments for public improvements or otherwise affecting any
Collateral Property, or any contemplated improvements to any Collateral Property
that may result in such special or other assessments.
5.1.20 ENFORCEABILITY. The Loan Documents are not subject to, and no
--------------
Borrower has asserted, any right of rescission, set-off, counterclaim or
defense, including the defense of usury. No exercise of any of the terms of the
Loan Documents, or any right thereunder, will render any Loan Document
unenforceable.
5.1.21 INSURANCE. Each Borrower has obtained and has delivered to
---------
Lender insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement.
5.1.22 USE OF PROPERTY; LICENSES. Each Collateral Property is used
-------------------------
exclusively for retail and other appurtenant and related uses. Except as
heretofore discussed in writing to Lender, all material certifications, permits,
licenses and approvals, including certificates of completion and occupancy
permits required for the legal use, occupancy and operation of the Property
(collectively, the "LICENSES"), have been obtained and are in full force and
effect. The uses being made of each Collateral Property are in conformity in
all materials respects with, and are permitted under, the certificate of
occupancy issued for such Collateral Property.
5.1.23 FLOOD ZONE. Except as disclosed on a survey delivered to
----------
Lender, none of the Improvements on any Collateral Property is located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards.
5.1.24 PHYSICAL CONDITION. Except as otherwise disclosed in the
------------------
written physical inspection reports heretofore delivered to Lender, each
Collateral Property, including all Improvements, parking facilities, systems,
Equipment and landscaping, are in good condition,
<PAGE>
order and repair in all material respects; there exists no structural or other
material defect or damages to any Collateral Property, whether latent or
otherwise. No Borrower has received notice from any insurance company or bonding
company of any defect or inadequacy in any Collateral Property, or any part
thereof, which would adversely affect its insurability or cause the imposition
of extraordinary premiums or charges thereon or any termination of any policy of
insurance or bond.
5.1.25 ENCROACHMENTS. All of the Improvements on any Collateral
-------------
Property included in determining the appraised value of such Collateral Property
lie wholly within the boundaries and building restriction lines of such
Collateral Property, and no improvement on an adjoining property encroaches upon
such Collateral Property, and no easement or other encumbrance upon such
Collateral Property encroaches upon any of the Improvements, so as to affect the
value or marketability of such Collateral Property, except those insured against
by the Title Insurance Policy.
5.1.26 LEASES. Borrowers have delivered to Lender a true, correct
------
and complete rent roll for each Collateral Property (each a, "RENT ROLL"), which
includes all Leases affecting such Collateral Property (including schedules for
all executed Leases for tenants not yet in occupancy or under which the rent
commencement date has not occurred). Except as set forth in the Rent Rolls and
estoppel certificates delivered to Lender on or prior to the Funding Date for
the applicable Collateral Property: (i) to the best of each Borrower's
knowledge, each Lease is in full force and effect; (ii) the tenants under the
Leases have accepted possession of and are in occupancy of all of their
respective demised premises, have commenced the payment of rent under the
Leases, and, to the best of each Borrower's knowledge, there are no offsets,
claims or defenses to the enforcement thereof; (iii) to the best of each
Borrower's knowledge, all rents due and payable under the Leases have been paid
and no portion thereof has been paid for any period more than 30 days in
advance; (iv) the rent payable under each Lease is the amount of fixed rent set
forth in the Rent Roll, and, to the best of each Borrower's knowledge, there is
no claim or basis for a claim by the tenant thereunder for an adjustment to the
rent; (v) to the best of each Borrower's knowledge, no tenant has made any
written claim against the landlord under any Lease which remains outstanding,
there are no defaults on the part of the landlord under any Lease, and no event
has occurred which, with the giving of notice or passage of time, or both, would
constitute such a default; (vi) to each Borrower's best knowledge, there is no
present material default by the tenant under any Lease; (vii) no Borrower holds
any security deposits under the Leases; (viii) a Borrower is the sole owner of
the entire lessor's interest in each Lease; (ix) to the best of each Borrower's
knowledge, each Lease is the valid, binding and enforceable obligation of a
Borrower and the applicable tenant thereunder; and (x) to the best of each
Borrower's knowledge, no Person has any possessory interest in, or right to
occupy, any Collateral Property except under the terms of a Lease.
Notwithstanding the foregoing, the breach of any of the representations
contained in the preceding sentence shall not constitute an Event of Default
provided that (i) the relevant Lease is not a Material Lease and (ii) the facts
resulting in such breach do not, after taking into account all other facts
resulting in other breaches of the
<PAGE>
representations contained in the preceding sentence, do not have a material
adverse affect on the value, Underwritten Net Operating Income, use or operation
of any Collateral Property. None of the Leases contains any option to purchase
or right of first refusal to purchase any Collateral Property or any part
thereof. Neither the Leases nor the Rents have been assigned or pledged except
to Lender, and no other Person has any interest therein except the tenants
thereunder.
5.1.27 FILING AND RECORDING TAXES. All transfer taxes, deed stamps,
--------------------------
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements in connection with the
transfer of any Collateral Property to any Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar taxes required
to be paid by any Person under applicable Legal Requirements in connection with
the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents have been paid.
5.1.28 INVESTMENT COMPANY ACT. No Borrower is (i) an "investment
----------------------
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (ii) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (iii) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
5.1.29 FRAUDULENT TRANSFER. No Borrower has entered into the Loan or
-------------------
any Loan Document with the actual intent to hinder, delay, or defraud any
creditor, and each Borrower has received reasonably equivalent value in exchange
for its obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of each Borrower's
assets exceeds and will, immediately following the execution and delivery of the
Loan Documents, exceed Borrower's total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities. The fair saleable value of
each Borrower's assets is and will, immediately following the execution and
delivery of the Loan Documents, be greater than such Borrower's probable
liabilities, including the maximum amount of its contingent liabilities or its
debts as such debts become absolute and matured. Each Borrower's assets do not
and, immediately following the execution and delivery of the Loan Documents will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. No Borrower intends to, or believes
that it will, incur debts and liabilities (including contingent liabilities and
other commitments) beyond its ability to pay such debts as they mature (taking
into account the timing and amounts to be payable on or in respect of
obligations of such Borrower).
5.1.30 OWNERSHIP OF BORROWER. As to each Borrower that is a limited
---------------------
partnership, the sole general partner of such Borrower is its Borrower
Representative. As to each Borrower that is a limited liability company, the
sole managing member of such Borrower is its Borrower Representative. Westfield
America, Inc. is the owner of all of the issued and outstanding capital stock of
each Borrower Representative, all of which capital stock has been
<PAGE>
validly issued and fully paid and is nonassessable. The only limited partners or
other members of each Borrower are identified on Schedule 5 hereto. The stock of
each Borrower Representative and all limited partnership or membership interests
in each Borrower are owned free and clear of all Liens, warrants, options and
rights to purchase. No Borrower has an obligation to any Person to purchase,
repurchase or issue any ownership interest in it. Attached hereto as Schedule 5
is an organizational chart for each Borrower indicating the ownership interests
in each Borrower and its Borrower Representative.
5.1.31 MANAGEMENT AGREEMENT. The Management Agreement for each
--------------------
Collateral Property is in full force and effect. There is no default, breach or
violation existing thereunder, and no event has occurred (other than payments
due but not yet delinquent) that, with the passage of time or the giving of
notice, or both, would constitute a default, breach or violation thereunder, by
either party thereto. The Management Fee and the terms and provisions of the
Management Agreement are subordinate to the Loan Documents in accordance with
the term set forth in the applicable Manager Consent and Subordination. Lender
approves the terms of the Management Agreements heretofore delivered to Lender.
5.1.32 HAZARDOUS SUBSTANCES. To the best of each Borrower's
--------------------
knowledge after due inquiry, except as disclosed in the written environmental
reports delivered to Lender prior to the date hereof: (i) no Collateral Property
is in violation of any Legal Requirement pertaining to or imposing liability or
standards of conduct concerning environmental regulation, contamination or
clean-up, including the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act, the Emergency
Planning and Community Right-to-Know Act of 1986, the Hazardous Substances
Transportation Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean
Air Act, the Toxic Substance Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act, any state super-lien and environmental
clean-up statutes, any local law requiring related permits and licenses and all
amendments to and regulations in respect of the foregoing laws (collectively,
"ENVIRONMENTAL LAWS"); (ii) no Collateral Property is subject to any private or
governmental Lien or judicial or administrative notice or action or inquiry,
investigation or claim relating to hazardous, toxic, dangerous and/or regulated
substances, wastes, materials, raw materials which include hazardous
constituents, pollutants or contaminants, including asbestos, asbestos
containing materials, petroleum, tremolite, anthlophylite, actinolite,
polychlorinated biphenyls and any other substances or materials which are
included under or regulated by Environmental Laws or which are considered by
scientific opinion to be otherwise dangerous in terms of the health, safety and
welfare of humans (collectively, "HAZARDOUS SUBSTANCES"); (iii) no Hazardous
Substances are or have been (including the period prior to the acquisition of
any Collateral Property by the Borrower that owns it), discharged, generated,
treated, stored on, incorporated in, or removed from any Collateral Property
other than in compliance with all Environmental Laws; (iv) except for Routine
Hazardous Substances, no Hazardous Substances are or have been (including the
period prior to the acquisition of any Collateral Property by the Borrower that
owns it), disposed of or transported from any Collateral Property other than in
compliance with all Environmental Laws; (v) no Hazardous Substances are present
in, on or under any nearby real property which could migrate to or otherwise
affect any Collateral Property; and (vi) no underground storage
<PAGE>
tanks exist on any Collateral Property. There have been no environmental
investigations, studies, audits, reviews or other analyses conducted by or on
behalf of any Borrower which have not been provided to Lender.
5.1.33 NAME; PRINCIPAL PLACE OF BUSINESS. No Borrower uses or will
---------------------------------
use any trade name and has done or will do business under any name other than
its actual name set forth herein or the name of its Collateral Property. The
principal place of business of each Borrower is its primary address for notices
as set forth in Section 11.2, and no Borrower has any other place of business
------------
(other than its Collateral Property).
5.1.34 SUBORDINATED DEBT. No Borrower has any indebtedness with
-----------------
respect to its Collateral Property or any excess cash flow or any residual
interest therein, whether secured or unsecured, other than Permitted
Encumbrances and the permitted indebtedness described in Section 7.8.
5.1.35 GROUND LEASE. With respect to each Ground Lease: (i) The
------------
applicable Borrower has delivered to Lender a true and correct copy of such
Ground Lease, together with all amendments and modifications thereto; (ii) such
Ground Lease is in full force and effect and has not otherwise been modified or
amended; (iii) to the best of each Borrower's knowledge, there are no defaults
under such Ground Lease and no event has occurred, which with the passage of
time, the giving of notice, or both, would constitute a default under such
Ground Lease (iv) all rents, additional rents and other sums due and payable
under such Ground Lease have been paid in full; (v) neither the lessee
thereunder nor the Ground Lessor has commenced any action or given or received
any notice for the purpose of terminating such Ground Lease; (vi) the applicable
Borrower's interest in such Ground Lease may be encumbered by the Mortgages
granted in connection with the Loan.
5.1.36 REA. With respect to each REA: (i) the applicable Borrower
---
has delivered to Lender a true and correct copy of such REA, together with all
amendments and modifications thereto (other than the amendments identified on
Schedule ll (the "UNDELIVERED DOCUMENTS"). Such REA is in full force and effect
- -----------
and has not otherwise been modified or amended; (ii) except as disclosed in
estoppels delivered to Lender prior to the Funding Date for the applicable
Collateral Property, there are no defaults under such REA and no event has
occurred, which with the passage of time, the giving of notice, or both, would
constitute a default (other than a technical, non-material default which would
not entitle a party to terminate or exercise any remedies with respect to an
REA) under such REA; (iii) all sums due and payable under such REA have been
paid in full; (iv) no party thereto has commenced any action or given or
received any notice for the purpose of terminating such REA; and (v) the
applicable Borrower's interest in such REA may be encumbered by the Mortgages
granted in connection with the Loan and is assignable without the consent of any
other party to the REA.
5.1.37 DEVELOPMENT AGREEMENT. The Master Development Framework
---------------------
Agreement dated as of July 1, 1996, as amended on May 21, 1997, between
Westfield U.S.
<PAGE>
Development, L.P. and Westfield America, Inc. is in full force and effect. The
Master Development Framework Agreement will not be binding on any person that
acquires the Trust Property by reason of a foreclosure of a Mortgage or deed-in-
lieu thereof. Lender approves the terms of the Master Development Framework
Agreement.
5.2 SURVIVAL OF REPRESENTATIONS AND COVENANTS. All of the representations
-----------------------------------------
and warranties in Section 5.1 and elsewhere in the Loan Documents (i) shall
survive for so long as any portion of the Debt remains owing to Lender and (ii)
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf. The
representations, warranties and covenants set forth in Section 5.1.32 and 6.10
shall not be subject to the exculpation provisions of Section 11.1.
VI AFFIRMATIVE COVENANTS
---------------------
Until the end of the Term, Borrower hereby covenants and agrees with Lender
that:
6.1 EXISTENCE. Each Borrower shall (i) do or cause to be done all things
---------
necessary to preserve, renew and keep in full force and effect its existence,
rights, and franchises, (ii) continue to engage in the business presently
conducted by it, (iii) obtain and maintain all Licenses applicable to it or its
Collateral Property, and (iv) qualify to do business and remain in good standing
under the laws of each jurisdiction, in each case as and to the extent required
for the ownership, maintenance, management and operation of the Collateral
Property owned by it.
6.2 TAXES AND OTHER CHARGES. Each Borrower shall pay all Taxes and Other
-----------------------
Charges applicable to such Borrower and the Collateral Property owned by it as
the same become due and payable, and deliver to Lender receipts for payment or
other evidence satisfactory to Lender that such Taxes and Other Charges have
been so paid no later than 30 days before they would be delinquent if not paid
(provided, however, that a Borrower need not furnish such receipts for payment
of Taxes paid by Lender pursuant to Section 4.3). No Borrower shall suffer and
shall promptly cause to be paid and discharged any Lien against its Collateral
Property other than Permitted Encumbrances, and shall promptly pay for all
utility services provided to such Collateral Property. After prior notice to
Lender, a Borrower, at its own expense, may contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application of any Taxes or Other Charges,
provided that (i) no Event of Default has occurred and remains uncured, (ii)
such proceeding shall suspend the collection of such Taxes or Other Charges,
(iii) such proceeding shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which such Borrower is subject
and shall not constitute a default thereunder, (iv) no part of or interest in
any Collateral Property will be in danger of being sold, forfeited, terminated,
canceled or lost, (v) such Borrower shall have furnished such security as may be
required in the proceeding, or as may be requested by Lender, to insure the
payment of any such Taxes or Other Charges, together with all interest and
penalties thereon, which shall not be less than 125% of the unpaid Taxes and
Other Charges being contested (and in the case of any Taxes being contested, any
sums in the Tax and Insurance Escrow fund dedicated to payment of such contested
Taxes shall count toward such 125%), and (vi) such Borrower shall promptly upon
final determination thereof pay the amount
<PAGE>
of such Taxes or Other Charges, together with all costs, interest and penalties.
Lender may pay over any such security or part thereof held by Lender to the
claimant entitled thereto at any time when, in the judgment of Lender, the
entitlement of such claimant is established.
6.3 REPAIRS; MAINTENANCE AND COMPLIANCE; ALTERATIONS
------------------------------------------------
6.3.1 REPAIRS AND MAINTENANCE. Each Borrower shall at all times
-----------------------
maintain, preserve and protect all franchises and trade names, and each Borrower
shall cause its Collateral Property to be maintained in a good and safe
condition and repair and shall not, without Lender's prior written consent,
remove or demolish the Improvements or Equipment (except for removal of
Equipment being replaced with Equipment of the same or greater value and
utility, and demolition necessary to perform alterations permitted under Section
6.3.3).
6.3.2 LEGAL COMPLIANCE. Each Borrower shall promptly comply in all
----------------
material respects with all Legal Requirements applicable to itself or its
Collateral Property and cure properly any violation of a Legal Requirement
within 30 days after such Borrower receives notice of such violation. Each
Borrower shall promptly repair, replace or rebuild any part of its Collateral
Property that becomes damaged, worn or dilapidated and shall complete and pay
for any Improvements constituting part of its Collateral Property at any time in
the process of construction or repair. Notwithstanding the foregoing, a Borrower
may defer compliance with a Legal Requirement pending such Borrower's contest
thereof provided that (1) such Borrower is permitted by the applicable Legal
Requirement to delay compliance therewith pending such proceedings, (2) neither
the affected Collateral Property nor any part thereof or interest therein will
be sold, forfeited or lost if such Borrower fails to promptly comply with the
Legal Requirement being contested, and if Borrower fails to prevail in contest,
such Borrower would thereafter have the opportunity to comply with such Legal
Requirement, (3) Lender would not, by virtue of such permitted contest, be
exposed to any risk of any civil liability for which such Borrower has not
furnished additional security as provided in clause (4) below, or to any risk of
----------
criminal liability, and neither the Collateral Property nor any interest therein
would be subject to the imposition of any Lien for which such Borrower has not
furnished additional security as provided in clause (4) below, as a result of
----------
the failure to comply with such Legal Requirement and (4) if requested by Lender
at any time, such Borrower shall have furnished to Lender additional security in
respect of the Legal Requirement being contested and the loss or damage that may
result from such Borrower's failure to prevail in such contest in such amount as
may be reasonably requested by Lender but in no event less than one hundred
twenty-five percent (125%) of the cost of complying such Legal Requirement and
any loss or damage that may result from such Borrower's failure to prevail in
such contest.
6.3.3 ALTERATIONS. Borrower may, without Lender's consent, perform
-----------
alterations to the Improvements and Equipment which do not constitute a Material
Alteration and which do not adversely affect such Borrower's financial condition
or the value or net operating income of such Borrower's Collateral Property. No
Borrower shall perform any Material Alteration without Lender's prior written
consent, which consent shall not be unreasonably withheld or delayed; provided,
however, that Lender may, in its sole and absolute discretion, withhold consent
to any
<PAGE>
alteration the cost of which is reasonably estimated to exceed $15,000,000 or
which is likely to result in a decrease of Underwritten Net Operating Income by
2.5% or more for a period of 30 days or longer. In considering a Borrower's
request for Lender's consent to a Material Alteration, Lender shall have the
right to retain an architect and/or engineer, at the applicable Borrower's
expense, to review and approve the plans and specifications for such Material
Alteration. Lender may, as a condition to giving its consent to a Material
Alteration, require that the applicable Borrower deliver to Lender as security
for payment of the cost of such Material Alteration and as additional security
for Borrower's Allocable Share of the Debt any of the following: (1) cash, (2)
U.S. Treasury securities, (3) other securities having a rating acceptable to
Lender and that the Rating Agencies have confirmed in writing will not, in and
of itself, result in a downgrade, withdrawal or qualification of the initial,
or, if higher, then current ratings assigned in connection with any Secondary
Market Transaction, or (4) an irrevocable Letter of Credit (payable on sight
draft only) issued by a Qualified Counterparty. Such security shall be in an
amount equal to the cost of the Material Alteration as reasonably estimated by
Lender. Upon the occurrence of an Event of Default, Lender may apply such
security to payment of the Debt. If the security posted is other than cash, upon
substantial completion of the Material Alteration and submission to Lender of
evidence satisfactory to Lender that (i) the Material Alteration was constructed
in accordance with applicable Legal Requirements and substantially in accordance
with plans and specifications approved by Lender (which approval shall not be
unreasonably withheld or delayed), (ii) all contractors, subcontractors,
materialmen and professionals who provided work, materials or services in
connection with the Material Alteration have been paid in full and have
delivered unconditional releases of lien and (iii) all material Licenses
necessary for the use, operation and occupancy of the Material Alteration (other
than those which depend on the performance of tenant improvement work) have been
issued, Lender shall, provided no Event of Default then exists, return the
security (or the unapplied portion thereof) to the applicable Borrower. At the
applicable Borrower's request, Lender shall, provided no Event of Default then
exists, return one-half of the security to such Borrower when Lender has
determined, in its sole discretion, that 75% of the Material Alteration has been
completed and paid for and that the remaining security is sufficient to ensure
payment in full for all work, services and materials necessary to complete the
Material Alteration as contemplated in clauses (i), (ii) and (iii) of the
preceding sentence. If the security posted is cash, Lender shall disburse such
cash in accordance with the same procedures as are applicable to disbursement of
Proceeds or an Award under Section 8.4.3. The applicable Borrower shall
reimburse Lender upon demand for all out-of-pocket costs and expenses (including
the reasonable fees of all professionals) incurred by Lender in reviewing plans
and specifications or in making any determinations necessary to implement the
provisions of this Section 6.3.3. Lender hereby (x) approves the Material
Alteration described on Schedule 8 hereto and (y) for so long as no Cash
----------
Management Event is continuing, waives the applicable Borrower's obligation to
post security in connection with the Material Alteration described in Schedule
--------
8.
- -
6.4 LITIGATION. Each Borrower shall give prompt written notice to Lender
----------
of any litigation, governmental proceedings or claims or investigations
regarding an alleged actual violation of a Legal Requirement pending or
threatened against such Borrower which would, if adversely determined,
materially adversely affect such Borrower's condition (financial or
<PAGE>
otherwise) or business or its Collateral Property.
6.5 PERFORMANCE OF OTHER AGREEMENTS. Each Borrower shall observe and
-------------------------------
perform in all material respects each and every term to be observed or performed
by it pursuant to the terms of any agreement or instrument affecting or
pertaining to its Collateral Property, including any Ground Lease affecting such
Collateral Property.
6.6 NOTICES. Each Borrower shall promptly advise Lender of any material
-------
adverse change in such Borrower's condition, financial or otherwise, or of the
occurrence of any Default or Event of Default of which such Borrower has
knowledge, including any notice sent by the Ground Lessor concerning any Ground
Lease under which such Borrower is the lessee. Each Borrower shall cause to be
delivered to Lender any Securities and Exchange Commission or other public
filings, if any, of such Borrower, its Borrower Representative, Manager, or any
Affiliate of any of the foregoing within ten (10) business days of such filing.
6.7 COOPERATE IN LEGAL PROCEEDINGS. Each Borrower shall cooperate fully
------------------------------
with Lender with respect to, and permit Lender, at its option, to participate
in, any proceedings before any Governmental Authority which may in any way
affect the rights of Lender under any Loan Document.
6.8 FURTHER ASSURANCES. Each Borrower shall, at such Borrower's sole cost
------------------
and expense, (i) furnish to Lender all then existing instruments, documents,
boundary surveys, footing or foundation surveys, certificates, plans and
specifications, appraisals, title and other insurance reports and agreements,
reasonably requested by Lender; (ii) execute and deliver to Lender such
documents, instruments, certificates, assignments and other writings, and do
such other acts necessary or desirable, to evidence, preserve and/or protect the
collateral at any time securing or intended to secure the Debt, as Lender may
reasonably require from time to time; (iii) do and execute all and such further
lawful and reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of the Loan Documents, as
Lender shall reasonably require from time to time and (iv) upon Lender's request
therefor given from time to time after the occurrence of any Default or Event of
Default pay for (a) reports of UCC, federal tax lien, state tax lien, judgment
and pending litigation searches with respect to such Borrower and (b) searches
of title to any Collateral Property, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations reasonably
designated by Lender.
6.9 FINANCIAL REPORTING.
-------------------
6.9.1 BOOKKEEPING. Each Borrower shall keep on a Fiscal Year basis,
-----------
in accordance with GAAP, proper and accurate books, records and accounts
reflecting all of the financial affairs of such Borrower and all items of income
and expense and any services, Equipment or furnishings provided in connection
with the operation of such Borrower's Property, whether such income or expense
is realized by such Borrower, Manager or any Affiliate of such Borrower or
Manager. Lender shall have the right from time to time during normal business
<PAGE>
hours upon reasonable notice to examine such books, records and accounts at the
office of such Borrower or other Person maintaining them, and to make such
copies or extracts thereof as Lender shall desire. After an Event of Default,
Borrowers shall pay any costs incurred by Lender to examine such books, records
and accounts, as Lender shall determine to be necessary or appropriate in the
protection of Lender's interest.
6.9.2 ANNUAL REPORTS. Each Borrower shall furnish to Lender annually,
--------------
(i) within 40 days after each Fiscal Year, unaudited financial statements of
such Borrower, and (ii) within 120 days after each Fiscal Year, a complete copy
of such Borrower's annual financial statements audited by Ernst & Young or
another independent certified public accountant (accompanied by an unqualified
opinion from such accounting firm or other independent certified public
accountant) reasonably acceptable to Lender, each in accordance with GAAP and
containing balance sheets and statements of profit and loss for such Borrower
and its Collateral Property in such detail as Lender may request. Each such
statement (x) shall set forth the financial condition and the income and
expenses for its Collateral Property for the immediately preceding calendar
year, including statements of annual Net Operating Income, and (y) shall be
accompanied by an Officer's Certificate certifying (1) that such statement
presents fairly the financial condition of such Collateral Property and has been
prepared in accordance with GAAP, (2) whether there exists a Default or Event of
Default, and if so, the nature thereof, the period of time it has existed and
the action then being taken to remedy it, (3) a list of tenants, if any,
occupying more than twenty percent of the rentable space of such Collateral
Property, and (4) a breakdown showing (a) the year in which each Lease then in
effect expires, (b) the percentage of rentable space covered by such Lease, (c)
the percentage of base rent with respect to which Leases shall expire in each
such year, expressed both on a per year and a cumulative basis. At Borrowers'
option, Borrowers' may submit a combined annual statement with individual
Collateral Property schedules setting forth all information required under this
Section 6.9.2.
6.9.3 MONTHLY AND QUARTERLY REPORTS. Each Borrower shall furnish to
-----------------------------
Lender (x) within 30 days after the end of each calendar month the following
items: (i) monthly and year-to-date operating statements, noting Net Operating
Income and other information necessary and sufficient under GAAP to fairly
represent the financial position and results of operation of its Collateral
Property during such calendar month, all in form reasonably satisfactory to
Lender; (ii) a statement that such Borrower has not incurred any indebtedness
other than indebtedness permitted hereunder; and (iii) occupancy rates, rent
rolls (identifying the leased premises, names of all tenants, units leased,
monthly rental and all other charges payable under each Lease, date to which
paid, term of Lease, date of occupancy, date of expiration, material special
provisions, concessions or inducements granted to tenants, and a year-by-year
schedule showing by percentage the rentable area of the Improvements and the
total base rent attributable to Leases expiring each year) and a delinquency
report for such Collateral Property; and (y) within 40 days after the end of
each calendar quarter the following items: (i) a balance sheet for such calendar
month; (ii) a comparison of the budgeted income and expenses and the actual
income and expenses for each month and year-to-date for such Collateral
Property, together with a detailed explanation of any variances of 10% or more
between budgeted and actual amounts for such
<PAGE>
period and year-to-date; (iii) a statement of the actual Replacement Expenses
made by such Borrower during each calendar quarter as of the last day of such
calendar quarter; and (iv) an aged receivables report. Each such statement shall
be accompanied by an Officer's Certificate certifying (1) that such items are
true, correct, accurate, and complete and fairly present the financial condition
and results of the operations of such Borrower and its Collateral Property in
accordance with GAAP (subject to normal year-end adjustments) and (2) whether
there exists a Default or Event of Default, and if so, the nature thereof, the
period of time it has existed and the action then being taken to remedy it.
6.9.4 OTHER REPORTS. Each Borrower shall furnish to Lender, within ten
-------------
Business Days after request, such further detailed information with respect to
the operation of its Collateral Property and the financial affairs of such
Borrower or Manager as may be reasonably requested by Lender or any applicable
Rating Agency.
6.9.5 ANNUAL BUDGET. Each Borrower shall prepare and submit (or shall
-------------
cause Manager to prepare and submit) to Lender within 30 days after a Cash
Management Event and by November 15 of each year thereafter during the Term
until a Cash Management Termination, for approval by Lender, which approval
shall not be unreasonably withheld or delayed, a proposed pro forma budget for
its Collateral Property for the succeeding Fiscal Year (an "ANNUAL BUDGET"),
and, promptly after preparation thereof, any revisions to such Annual Budget.
Lender's failure to approve or disapprove any Annual Budget or revision within
30 days after Lender's receipt thereof shall be deemed to constitute Lender's
approval thereof. The Annual Budget shall consist of (i) an operating expense
budget (the "OPERATING BUDGET") showing, on a month-by-month basis, in
reasonable detail, each line item of such Borrower's anticipated Operating
Income and Operating Expenses (on a cash and accrual basis), including amounts
required to establish, maintain and/or increase the Funds, and (ii) a
Replacement Expense budget (the "REPLACEMENT BUDGET") showing, on a month-by-
month basis, in reasonable detail, each line item of anticipated Replacement
Expenses.
6.9.6 DELIVERY OF FINANCIAL INFORMATION. After notice to any Borrower
---------------------------------
of a Secondary Market Transaction, such Borrower shall, concurrently with any
delivery to Lender, deliver copies of all financial information provided in this
Article VI to the Rating Agencies, the Servicer, any trustee or any other party
reasonably requested by Lender.
6.10 ENVIRONMENTAL MATTERS.
---------------------
6.10.1 HAZARDOUS SUBSTANCES. So long as any Borrower owns or is in
--------------------
possession of any Collateral Property, such Borrower (i) shall keep such
Collateral Property free from Hazardous Substances (other than Routine Hazardous
Substances) and in compliance with all Environmental Laws, (ii) shall promptly
notify Lender if such Borrower shall become aware that (A) any Hazardous
Substance (other than Routine Hazardous Substances) is on or immediately
adjacent to such Collateral Property, (B) such Collateral Property is in direct
or indirect violation of any Environmental Laws or (C) any condition on or near
such Collateral Property shall pose a threat to the health, safety or welfare of
humans, (iii) shall remove such
<PAGE>
Hazardous Substances and/or cure such violations and/or remove such threats, as
applicable, as required by law, promptly after such Borrower becomes aware of
same, at such Borrower's sole expense and (iv) shall take all actions described
in the environmental report delivered to Lender in connection with the Loan as
being necessary to comply with all applicable laws. Nothing herein shall prevent
any Borrower from recovering such expenses from any other party that may be
liable for such removal or cure.
6.10.2 ENVIRONMENTAL MONITORING. (a) Each Borrower shall give prompt
------------------------
written notice to Lender of (i) any proceeding or inquiry by any party
(including any Governmental Authority) with respect to the presence of any
Hazardous Substance on, under, from or about its Collateral Property, (ii) all
claims made or threatened in writing by any third party (including any
Governmental Authority) against such Borrower or its Collateral Property or any
party occupying such Collateral Property relating to any loss or injury
resulting from any Hazardous Substance, and (iii) such Borrower's discovery of
any occurrence or condition on any real property adjoining or in the vicinity of
its Collateral Property that could cause such Collateral Property to be subject
to any investigation or cleanup pursuant to any Environmental Law. Each
Borrower shall permit Lender to join and participate in, as a party if it so
elects, any legal proceedings or other actions initiated with respect to its
Collateral Property in connection with any Environmental Law or Hazardous
Substance, and such Borrower shall pay all reasonable attorneys' fees and
disbursements incurred by Lender in connection therewith.
(b) Upon Lender's request, at any time and from time to time, each
Borrower shall provide an inspection or audit of its Collateral Property
prepared by a licensed hydrogeologist, licensed environmental engineer or
qualified environmental consulting firm approved by Lender assessing the
presence or absence of Hazardous Substances on, in or near such Collateral
Property. The cost and expense of such audit or inspection shall be paid by a
Borrower with respect to its Collateral Property if Lender, in its good faith
judgment, determines that reasonable cause exists for the performance of an
environmental inspection or audit of such Collateral Property, in which case
such inspections or audits shall be at the applicable Borrower's sole expense.
If a Borrower fails to order any such inspection or audit within 30 days after
such request, Lender may order same, and such Borrower hereby grants to Lender
and its employees and agents access to its Collateral Property and a license to
undertake such inspection or audit. The cost of such inspection or audit shall,
to the extent required to be paid by a Borrower pursuant to this paragraph, be
paid by such Borrower upon demand and if not paid, shall be added to the Debt
and shall bear interest thereafter at the Default Rate until paid.
(c) If any environmental site assessment report prepared in
connection with such inspection or audit recommends that an operations and
maintenance plan be implemented for any Hazardous Substance, whether such
Hazardous Substance existed prior to the ownership by a Borrower of its
Collateral Property, or presently exists or is reasonably suspected of existing,
the applicable Borrower shall cause such operations and maintenance plan to be
prepared and implemented at its expense upon request of Lender. If a licensed
hydrogeologist, licensed environmental engineer or other qualified environmental
consulting firm engaged by Lender ( "LENDER'S CONSULTANT") determines that any
investigation, site monitoring, containment,
<PAGE>
cleanup, removal, restoration or other work of any kind is required to cure a
violation of an applicable Environmental Law or to comply with an order or
directive of any court or governmental agency ("REMEDIAL WORK"), the applicable
Borrower shall commence and thereafter diligently prosecute to completion all
such Remedial Work within 30 days after written demand by Lender for performance
thereof (or such shorter period of time as may be required under applicable
law). All Remedial Work shall be performed by contractors reasonably approved in
advance by Lender, and under the supervision of a consulting engineer reasonably
approved by Lender. All costs of such Remedial Work shall be paid by the
applicable Borrower, including Lender's reasonable attorneys' fees and
disbursements incurred in connection with the monitoring or review of such
Remedial Work. If the applicable Borrower does not timely commence and
diligently prosecute to completion the Remedial Work, Lender may (but shall not
be obligated to) cause such Remedial Work to be performed. All costs and
expenses (including reasonable attorneys' fees and disbursements) relating to or
incurred by Lender in connection with monitoring, reviewing or performing any
Remedial Work in accordance herewith shall be paid by the applicable Borrower
upon demand from Lender and if not, shall be added to the Debt and shall bear
interest thereafter at the Default Rate until paid. Notwithstanding the
foregoing, no Borrower shall be required to commence such Remedial Work within
the above specified time period: (x) if prevented from doing so by any
Governmental Authority, (y) if commencing such Remedial Work within such time
period would result in such Borrower or such Remedial Work violating any
Environmental Law, or (z) if such Borrower, at its expense and after prior
written notice to Lender, is contesting by appropriate legal, administrative or
other proceedings, conducted in good faith and with due diligence, the need to
perform Remedial Work. Each Borrower shall have the right to contest the need to
perform such Remedial Work provided that (1) such Borrower is permitted by the
applicable Environmental Laws to delay performance of the Remedial Work pending
such proceedings, (2) neither the affected Collateral Property nor any part
thereof or interest therein will be sold, forfeited or lost if such Borrower
fails to promptly perform the Remedial Work being contested, and if Borrower
fails to prevail in contest, such Borrower would thereafter have the opportunity
to perform such Remedial Work, (3) Lender would not, by virtue of such permitted
contest, be exposed to any risk of any civil liability for which such Borrower
has not furnished additional security as provided in clause (4) below, or to any
----------
risk of criminal liability, and neither the Collateral Property nor any interest
therein would be subject to the imposition of any Lien for which such Borrower
has not furnished additional security as provided in clause (4) below, as a
----------
result of the failure to perform such Remedial Work and (4) if requested by
Lender at any time, such Borrower shall have furnished to Lender additional
security in respect of the Remedial Work being contested and the loss or damage
that may result from such Borrower's failure to prevail in such contest in such
amount as may be reasonably requested by Lender but in no event less than one
hundred twenty-five percent (125%) of the cost of such Remedial Work and any
loss or damage that may result from such Borrower's failure to prevail in such
contest.
(d) No Borrower shall install or permit to be installed on its
Collateral Property any underground storage tank without Lender's prior written
consent; provided, however, that (i) a Borrower may permit the tenant under any
"anchor", "big box" or TBA (tires,
<PAGE>
batteries and accessories) Lease to install an underground storage tank provided
that (x) such tenant has the right to do so under its Lease and (y) such
installation and the maintenance and repair of such tank is performed in
accordance with all applicable Legal Requirements and (ii) Borrower may install
an underground storage tank if it reasonably determines that an above ground
storage tank is not reasonably feasible, provided that such Borrower complies
with all of the provisions of the preceding clause (y) in connection with such
underground storage tank.
(e) Borrower's obligations to Lender to remediate an environmental
condition existing at any Collateral Property shall terminate if Lender's Lien
on such Collateral Property is released in connection with a substitution of
Collateral Property pursuant to Section 2.5; provided, however, that Borrower's
indemnification obligations under Section 6.18 with respect to such
environmental condition shall not terminate upon such substitution.
6.11 TITLE TO THE PROPERTY. Each Borrower will warrant and defend the
---------------------
title to its Collateral Property, and the validity and priority of the Liens of
the Mortgages, subject only to Permitted Encumbrances, against the claims of all
Persons.
6.12 LEASES.
------
6.12.1 FORM OF LEASE. All Leases other than Material Leases shall be
-------------
written on the standard forms of lease which have been approved by Lender. In
negotiating Leases, changes may be made to the standard form of lease provided
that (i) such changes are commercially reasonable, and (ii) no changes may be
made to the following provisions in Borrowers' standard form of lease without
the prior written consent of Lender: provisions relating to subordination,
attornment, estoppels, mortgagee's right to notice and opportunity to cure
landlord's defaults, and mortgagee's rights with respect to lease amendments and
prepayment of rents. In addition, all renewals of Leases and all proposed
leases shall provide for rental rates comparable to existing local market rates
and shall be arms length transactions. All Leases entered into after the date
hereof shall provide for (x) subordination to the Mortgages and, at Lender's
election, attornment to Lender and (y) the Lender's unilateral right to
subordinate the Mortgages to the Leases. No Lease entered into after the date
hereof will contain any option to purchase, any right of first refusal to
purchase, any right to terminate (except in the event of the destruction of
substantially all of the applicable Collateral Property), any non-disturbance or
similar agreement or any requirement that a Borrower rebuild any Collateral
Property (except as provided in the forms of Lease that have been approved by
Lender); provided, however, that "small shop" leases entered into after the date
-------- -------
hereof and covering not more than 15% of the gross leaseable area of any
Collateral Property may contain so called "kick out" clauses permitting either
landlord or the tenant to terminate the lease if the specified sales revenue is
not attained. Upon request, each Borrower shall furnish Lender with executed
copies of all Leases affecting its Collateral Property then in effect.
6.12.2 NEW AND RENEWAL LEASES.
----------------------
(a) A Borrower may not enter into proposed new Leases or proposed
renewals or
<PAGE>
extensions of existing Leases without the prior written consent of Lender, which
shall not be unreasonably withheld or delayed; provided, however, that Lender's
prior written consent shall not be required if such proposed Lease or extension
is an Approved Material Lease or if such proposed Lease or extension: (i) is not
a Material Lease; (ii) conforms with the requirements of 6.12.1; (iii) with
respect to such new or renewal Lease, the representations set forth in Section
5.1.26 are true and accurate as of the day of the effectiveness of such new or
renewal Lease; (iv) shall have an initial term of not less than three years or
greater than ten years; (v) shall provide for rental rates comparable to
existing local markets (taking into account the type and quality of the tenant,
then prevailing practices with respect to tenant concessions and incentives in
similar Retail Properties in the same metropolitan area, the duration of the
tenancy and the location and configuration of the spaces rented); (vi) shall be
on commercially reasonable terms and shall not contain any terms which would
materially adversely affect Lender's rights under the Loan Documents; and (vii)
shall be to a tenant unaffiliated with any Borrower and which is experienced,
creditworthy and reputable. Any and all new or renewal Leases shall be included
in the definition of Leases hereunder and under the other Loan Documents.
(b) As used herein "APPROVED MATERIAL LEASE" means a Material Lease
or extension thereof which satisfies the following conditions:
(i) Prior to entering into such Lease (or extension), the applicable
Borrower delivered to Lender a lease abstract in a form
previously approved by Lender, which lease abstract sets forth
all material economic terms of the Lease (or extension) and all
other information called for in the form of abstract;
(ii) Lender has approved in writing the terms set forth in the lease
abstract, which approval shall not be unreasonably withheld or
delayed, and shall be deemed given if the Deemed Approval
Procedure was complied with;
(iii) The Lease is on a form which was previously approved in writing
by Lender for the tenant in question (or a new form which is
approved by Lender, which approval shall not be unreasonably
withheld or delayed) and there are no deviations from such form
other than (x) deviations implementing the terms set forth in
the lease abstract approved by Lender and (y) deviations which
do not affect any of the provisions described in clause (ii) of
Section 6.12.1 and which are otherwise immaterial;
(iv) The Lease is executed and delivered within 180 days after Lender
approves the lease abstract; and
(v) The Lease complies with the requirements for all Leases set
forth in Section 6.12.1 (other than requirements expressly
superceded by terms set forth in the lease abstract).
<PAGE>
(c) As used herein "DEEMED APPROVAL PROCEDURE" means:
(i) Borrower shall deliver to Lender a lease abstract as described
in the definition of Approved Material Lease accompanied by a notice
requesting Lender's consent to such abstract and stating "this request
for consent is subject to the Deemed Approval Procedure set forth in
Section 6.12.2 of the Loan Agreement" (such abstract and notice,
collectively, the "FIRST SUBMISSION");
(ii) if Lender shall fail to approve, disapprove or request
additional information with respect to such lease abstract within 15
Business Days after Lender receives the First Submission, the
provisions of clause (iv) below shall apply;
(iii) if Lender shall request additional information pertaining to
such lease abstract within such 15 Business Day Period, the applicable
Borrower shall deliver to Lender all such information to the extent
reasonably available to or obtainable by such Borrower or, to the
extent not so available or obtainable, such Borrower shall so notify
Lender in writing, and in either such case, Lender shall be deemed to
have received the First Submission on the date such additional
information and/or notice, as applicable, is received by Lender;
(iv) if Lender does not disapprove the lease abstract within 15
Business Days after Lender receives the First Submission, Borrower may
send Lender a notice (the "SECOND SUBMISSION") again requesting
Lender's consent to the lease abstract which notice (i) shall contain
a copy of the First Submission (unless Lender has previously
acknowledged receipt thereof) and (ii) shall state that "pursuant to
the Loan Agreement, Lender shall be deemed to have approved the lease
abstract if Lender does not object thereto within 10 Business Days
after receipt hereof;"
(v) if Lender fails to disapprove the lease abstract within 10
Business Days after Lender's receipt of the Second Submission, Lender
shall be deemed to have approved the lease abstract in question.
6.12.3 LEASING COVENANTS. Each Borrower (i) shall observe and perform
-----------------
the material obligations imposed upon the lessor under the Leases; (ii) shall
enforce in a commercially reasonable manner the terms, covenants and conditions
contained in the Leases upon the part of the lessee thereunder to be observed or
performed; (iii) shall not collect any of the rents more than one (1) month in
advance (other than security deposits) except as approved by Lender or as
provided in Leases in existence as of the date hereof; (iv) shall not execute
any other assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) shall not alter, modify or change the
terms of the Leases in a manner inconsistent within the provisions of the Loan
Documents; (vi) shall promptly send copies to Lender of all notices of default
such Borrowers shall give or receive with respect to any Lease demising 20,000
or more square feet of gross leaseable area; and (vii) shall execute and deliver
at
<PAGE>
the request of Lender all such further assurances, confirmations and assignments
in connection with the Leases as Lender shall from time to time reasonably
require. Notwithstanding anything herein to the contrary, no Borrower shall
terminate any Lease without Lender's prior written consent; provided, however,
-------- -------
that a Borrower may, without the prior consent of Lender: (x) terminate any
Lease with a tenant in material default; (y) to the extent consistent with good
commercial practice, terminate any month to month Lease; and (z) terminate any
other Leases (other than a Material Lease) provided that (A) Borrower reasonably
determines that the termination of such Lease(s) is in the best interest of its
Collateral Property, and (B) such terminations do not, in the aggregate (after
taking into account any subsequent releasing of space covered by such terminated
Leases), result in a reduction of gross rental income at such Borrower's
Collateral Property, by an amount exceeding 2.5% of the gross rental income at
such Collateral Property as of the date hereof.
6.12.4 NONDISTURBANCE AGREEMENTS. At a Borrower's request, Lender shall
-------------------------
enter into a subordination, nondisburbance and attornment agreement as to any
Lease permitted under the Loan Documents. Such agreement shall be in the form
attached hereto as Exhibit C, with such changes thereto as may be reasonably
---------
acceptable to Lender.
6.12.5 RECIPROCAL EASEMENT AGREEMENTS. No Borrower shall enter into,
------------------------------
terminate or modify any REA without Lender's consent, which consent shall not be
unreasonably withheld or delayed. Lender shall subordinate the lien of the
applicable Mortgages to any REA Amendment consented to by Lender.
6.12.6 NOTICE TO TENANTS. Promptly after the date hereof (but in no
-----------------
event later than the date on which such Borrower sends out bills for Rents due
in December 1998), each Borrower shall deliver a notice in the form of Exhibit D
---------
to each existing tenant at such Borrower's Collateral Property directing them to
remit their rent checks directly to the applicable Clearing Bank and shall also
deliver such a notice to each future tenant at such Collateral Property.
6.13 ESTOPPEL STATEMENT. After request by Lender, each Borrower shall within
------------------
ten days furnish Lender with a statement, duly acknowledged and certified,
setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii) the date
installments of interest and/or Principal were last paid, (iv) any offsets or
defenses to the payment of the Debt, (v) that the Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving
particulars of such modification and (vi) such other information concerning the
Loan as Lender may request. After request by Lender (but no more frequently than
once in any 12 month period), each Borrower shall, within 30 days, request
tenant estoppel certificates from each tenant at such Borrower's Collateral
Property in form and substance reasonably satisfactory to Lender, and thereafter
use commercially reasonable efforts to obtain such estoppel certificates and
deliver them to Lender. From time to time upon the reasonable request of Lender,
each Borrower whose Collateral Property is subject to a Ground Lease will
endeavor to obtain from Ground Lessor an estoppel certificate in form and
substance reasonably satisfactory to Lender.
<PAGE>
6.14 PROPERTY MANAGEMENT.
-------------------
6.14.1 MANAGEMENT AGREEMENT. Each Borrower shall (i) cause its
--------------------
Collateral Property to be managed pursuant to the Management Agreement; (ii)
promptly perform and observe all of the covenants required to be performed and
observed by it under the Management Agreement and do all things necessary to
preserve and to keep unimpaired its material rights thereunder; (iii) promptly
notify Lender of any default under the Management Agreement of which it is
aware; (iv) promptly deliver to Lender a copy of any notice of default or other
material notice received by such Borrower under the Management Agreement; and
(v) promptly enforce the performance and observance of all of the covenants
required to be performed and observed by Manager under the Management Agreement.
6.14.2 TERMINATION OF MANAGER. If a Cash Management Event shall exist
----------------------
each Borrower shall, at the request of Lender, hire a property management firm
designated by Lender to serve as a property management consultant (the
"Management Consultant") for such Borrower and its Collateral Property.
Borrowers' failure to retain such property management firm within thirty (30)
days after Lender designates such firm shall constitute an immediate Event of
Default. Each Borrower shall continue to retain its Management Consultant until
a Cash Management Termination occurs. The Management Consultant at each
Collateral Property shall oversee and approve and fully participate in all
actions and decisions of the Manager at such Collateral Property, including the
incurring of any expenses, the retention of any broker, the negotiation and
execution of any leases or lease "term sheets", decisions as to tenants and
"tenant mix" and repairs, alterations and improvements. Each Borrower shall
cause its Manager to cooperate with the applicable Management Consultant to
enable the Management Consultant to perform its responsibilities as described
above and in the applicable agreement between such Borrower and its Management
Consultant. All fees payable to the Management Consultant shall be an Approved
Operating Expense.
6.14.3 MANAGER'S SUBORDINATION. Each Borrower shall cause its Manager
-----------------------
to enter into a Manager Consent and Subordination Agreement in the form of
Exhibit B-2 hereto; provided, however, that if such Manager is wholly owned,
- -----------
directly or indirectly by Westfield Holdings Limited, such Manager may enter
into a Manager Consent and Subordination in the form of Exhibit B-1 hereto.
-----------
6.15 SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY. Each Borrower is and shall
----------------------------------------
continue to be a Special Purpose Bankruptcy Remote Entity. A "Special Purpose
Bankruptcy Remote Entity" means a corporation, limited partnership or limited
liability company which on the date hereof and at all times hereafter (i) is
organized solely for the purpose of (A) owning its Collateral Property or (B)
acting as a general partner of the limited partnership that owns a Collateral
Property or member of the limited liability company that owns a Collateral
Property; (ii) is not engaged and will not engage in any business unrelated to
(A) the ownership of its Collateral Property, (B) acting as general partner of
the limited partnership that owns a Collateral Property or (C) acting as a
member of the limited liability company that owns a Collateral
<PAGE>
Property, as applicable; (iii) does not and will not have any assets other than
those related to its Collateral Property or its partnership or member interest
in the limited partnership or limited liability company that owns a Collateral
Property, as applicable; (iv) is not engaged in seeking, or consenting to and
will not engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, asset sale, transfer of partnership or membership
interests (if such entity is a general partner in a limited partnership or a
member in a limited liability company), or amendment of its limited partnership
agreement, articles of incorporation, articles of organization, certificate of
formation or operating agreement (as applicable), if such amendment would
shorten the term of such entity or result in such entity not being a Special
Purpose Bankruptcy Remote Entity; (v) if such entity is a limited partnership,
has, as its only general partners, Special Purpose Bankruptcy Remote Entities
that are corporations; (vi) if such entity is a corporation, has at least one
Independent Director, and will not cause or allow the board of directors of such
entity to take any action requiring the unanimous affirmative vote of 100% of
the members of its board of directors unless an Independent Director shall have
participated in such vote; (vii) if such entity is a limited liability company,
has at least one member that is a Special Purpose Bankruptcy Remote Entity that
is a corporation and such corporation is the managing member of such limited
liability company; (viii) if such entity is a limited liability company, has
articles of organization, a certificate of formation and/or an operating
agreement, as applicable, providing that (A) such entity will dissolve only upon
the bankruptcy of the managing member, (B) the vote of a majority-in-interest of
the remaining members is sufficient to continue the life of the limited
liability company in the event of such bankruptcy of the managing member and
(C) if the vote of a majority-in-interest of the remaining members to continue
the life of the limited liability company following the bankruptcy of the
managing member is not obtained, the limited liability company may not liquidate
a Collateral Property without the consent of the applicable Rating Agencies for
as long as the loan is outstanding; (ix) has not, and without the unanimous
consent of all of its partners, directors or members (including all Independent
Directors), as applicable, will not, with respect to itself or to any other
entity in which it has a direct or indirect legal or beneficial ownership
interest (A) file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings or otherwise seek any relief under any laws relating to
the relief from debts or the protection of debtors generally, (B) dissolve,
liquidate, consolidate, merge, or sell all or substantially all of its assets or
the assets of such other entity or otherwise seek or consent to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any
similar official for such entity or for all or any portion of such entity's
properties; (C) make any assignment for the benefit of such entity's creditors;
(D) take any action that is likely to cause such entity to become insolvent or
(E) engage in any other business activity (other than those stated in clauses
(i) and (ii) above), or amend its organizational documents; (x) is and will
remain solvent and is maintaining and will maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations; (xi) will not
fail to correct any known misunderstanding regarding the separate identity of
such entity; (xii) does and will maintain its accounts, books and records
separate from any other Person and will file its own tax returns; (xiii) does
and will maintain its books, records, resolutions and agreements as official
records; (xiv) does not and will not commingle its funds or assets with those of
any other Person (other than another Borrower); (xv) does and will hold its
assets in its own name; (xvi) does and will conduct its business in its name;
(xvii) does and will maintain its financial statements,
<PAGE>
accounting records and other entity documents separate from any other Person;
(xviii) does and will pay its own liabilities, including the salaries of its own
employees, out of its own funds and assets; (xix) does and will observe all
partnership, corporate or limited liability company formalities, as applicable;
(xx) does and will maintain an arm's-length relationship with its Affiliates;
(xxi) (a) has no indebtedness other than the Loan, Taxes, Insurance Premiums,
Approved Leasing Expenses, Approved Replacement Expenses and other liabilities
in the ordinary course of business relating to the ownership and operation of a
Collateral Property which other liabilities (1) do not exceed, at any time, a
maximum amount of one percent (1%) of the original amount of its Principal and
(2) are paid within sixty (60) days of the date incurred (except for amounts
being disputed in good faith and for which it has made ample reserves), or (b)
if such entity acts as the general partner of a limited partnership which owns
the Property, has and will have no indebtedness other than unsecured trade
payables in the ordinary course of business relating to acting as general
partner of the limited partnership which owns the Property which (1) do not
exceed, at any time, $10,000 and (2) are paid within sixty (60) days of the date
incurred, or (c) if such entity acts as a managing member of a limited liability
company which owns a Collateral Property, has and will have no indebtedness
other than unsecured trade payables in the ordinary course of business relating
to acting as a member of the limited liability company which owns a Collateral
Property which (1) do not exceed, at any time, $10,000 and (2) are paid within
thirty (30) days of the date incurred; (xxii) has not and will not assume or
guarantee or become obligated for the debts of any other Person or hold out its
credit as being available to satisfy the obligations of any other Person except
for the Loan and the liabilities permitted pursuant to this Agreement; (xxiii)
has not and will not acquire obligations or securities of its partners, members
or shareholders; (xxiv) does and will allocate fairly and reasonably any
overhead for shared office space and uses separate stationery, invoices and
checks; (xxv) except in connection with the Loan and except for Permitted
Encumbrances, has not pledged and will not pledge its assets for the benefit of
any other Person; (xxvi) does hold itself out and identify itself and will hold
itself out and identify itself as a separate and distinct entity under its own
name and not as a division or part of any other Person; (xxvii) does maintain
and will maintain its assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify its individual assets from those
of any other Person; (xxviii) holds no loans and will not make loans to any
Person; (xxix) does not and will not identify its partners, members or
shareholders, or any Affiliate of any of them, as a division or part of it;
(xxx) is not a party to, and will not enter into or be a party to, any
transaction with its partners, members, shareholders or Affiliates except in the
ordinary course of its business and on terms which are intrinsically fair and
are no less favorable to it than would be obtained in a comparable arm's-length
transaction with an unrelated third party; (xxxi) has no obligation to indemnify
its partners, officers, directors or members, as the case may be, or has such an
obligation that is fully subordinated to the Debt and will not constitute a
claim against it in the event that cash flow in excess of the amount required to
pay the Debt is insufficient to pay such obligation; and (xxxii) if such entity
is a corporation, it is required to consider the interests of its creditors in
connection with the corporate actions referred to in clause (ix) above.
6.16 ASSUMPTIONS IN NON-CONSOLIDATION OPINION. Each Borrower and its
----------------------------------------
Borrower
<PAGE>
Representative shall conduct their business so that the assumptions made in that
certain substantive non-consolidation opinion letter dated the date hereof,
delivered by Borrowers' counsel in connection with the Loan, shall be true and
correct in all respects.
6.17 EXPENSES. Each Borrower shall reimburse Lender upon receipt of notice
--------
for all reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Lender in connection with the
Loan, including (i) the preparation, negotiation, execution and delivery of the
Loan Documents and the consummation of the transactions contemplated thereby and
all the costs of furnishing all opinions by counsel for Borrowers; (ii) all
costs, fees and expenses (including the fees of any Rating Agencies, trustee or
Servicer) incurred in connection with any Advance, any substitution of a
Collateral Property, any release of a Collateral Property (but excluding the
fees payable to the Rating Agencies in connection with the initial issuance of
Securities); (iii) each Borrower's and Lender's ongoing performance under and
compliance with the Loan Documents, including confirming compliance with
environmental and insurance requirements; (iv) the negotiation, preparation,
execution, delivery and administration of any consents, amendments, waivers or
other modifications of or under any Loan Document and any other documents or
matters requested by Lender; (v) filing and recording of any Loan Documents;
(vi) title insurance, surveys, inspections and appraisals; (vii) the creation,
perfection or protection of Lender's Liens in the Collateral Properties, the
Cash Management Accounts and the Funds (including fees and expenses for title
and lien searches, intangibles taxes, personal property taxes, mortgage
recording taxes, due diligence expenses, travel expenses, accounting firm fees,
costs of appraisals, environmental reports and Lender's Consultant, surveys and
engineering reports); (viii) enforcing or preserving any rights in response to
third party claims or the prosecuting or defending of any action or proceeding
or other litigation, in each case against, under or affecting any Borrower, the
Loan Documents, any Collateral Property, or any other security given for the
Loan; and (ix) enforcing any obligations of or collecting any payments due from
any Borrower under any Loan Document or with respect to any Collateral Property
or in connection with any refinancing or restructuring of the Loan in the nature
of a "work-out", or any insolvency or bankruptcy proceedings. Any costs and
expenses due and payable to Lender hereunder which are not paid by any Borrower
within ten days after demand may be paid from any amounts in the Deposit
Account, with notice thereof to Borrowers. The obligations and liabilities of
each Borrower under this Section 6.17 shall survive the Term and the exercise by
Lender of any of its rights or remedies under the Loan Documents, including the
acquisition of any Collateral Property by foreclosure or a conveyance in lieu of
foreclosure.
6.18 INDEMNITY. Each Borrower shall indemnify and hold harmless Lender and
---------
each of its Affiliates and their respective successors and assigns (including
their respective directors, officers, participants, employees, professionals and
agents and each other Person, if any, who Controls Lender, its Affiliates or any
of the foregoing) (each, an "INDEMNIFIED PARTY") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for an Indemnified
Party in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not
<PAGE>
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against any Indemnified Party (collectively, the "INDEMNIFIED
LIABILITIES") in any manner, relating to or arising out of or by reason of the
Loan, including: (i) any breach by a Borrower of its obligations under, or any
misrepresentation by a Borrower contained in, any Loan Document; (ii) the use or
intended use of the proceeds of the Loan; (iii) any information provided by or
on behalf of a Borrower, or contained in any documentation approved by a
Borrower; (iv) ownership of any Mortgage, any Collateral Property or any
interest therein, or receipt of any Rents; (v) any accident, injury to or death
of persons or loss of or damage to property occurring in, on or about any
Collateral Property or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (vi) any use, non-use or condition in,
on or about any Collateral Property or on adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (vii) performance of any
labor or services or the furnishing of any materials or other property in
respect of any Collateral Property; (viii) the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release, or threatened release
of any Hazardous Substance on, from or affecting any Collateral Property; (ix)
any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Substance; (x) any lawsuit
brought or threatened, settlement reached, or government order relating to such
Hazardous Substance; (xi) any violation of the Environmental Laws which is based
upon or in any way related to such Hazardous Substance, including, without
limitation, the costs and expenses of any Remedial Work, attorney and consultant
fees and disbursements, investigation and laboratory fees, court costs, and
litigation expenses; (xii) any failure of any Collateral Property to comply with
any Legal Requirement; (xiii) any claim by brokers, finders or similar persons
claiming to be entitled to a commission in connection with any Lease or other
transaction involving any Collateral Property or any part thereof, or any
liability asserted against Lender with respect thereto; and (xiv) the claims of
any lessee of any portion of any Collateral Property or any person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease; no Borrower shall have any obligation to any Indemnified Party
hereunder to the extent that it is finally judicially determined that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of such Indemnified Party. If any Indemnified Party becomes
involved in any action, proceeding or investigation in connection with any
transaction or matter referred to or contemplated in this Agreement, Borrowers
shall periodically reimburse any Indemnified Party upon demand therefor in an
amount equal to its reasonable legal and other expenses (including the costs of
any investigation and preparation) incurred in connection therewith. To the
extent that the undertaking to indemnify and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or public
policy, Borrowers shall contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by any Indemnified Party. Any amounts payable
to any Indemnified Party by reason of the application of this paragraph shall
become immediately due and payable and shall bear interest at the Default Rate
from the date loss or damage is sustained by any Indemnified Party until paid.
The obligations and liabilities of Borrower under this Section 6.18 shall
survive the Term and the exercise by Lender of any of its rights or remedies
under the Loan Documents, including the acquisition of any Collateral Property
by foreclosure or
<PAGE>
a conveyance in lieu of foreclosure. As used in this Section 6.18, the term
"Collateral Property" includes any property that was at any time subject to the
Lien of a Mortgage.
6.19 THIRD PARTY REPORTS. Within 30 days after any request by Lender, each
-------------------
Borrower shall deliver to Lender and pay for (or reimburse Lender for cost of)
any reports of third parties (e.g., engineers or environmental consultants)
requested by Lender as to any Collateral Property the Underwritten Net Operating
Income for which has declined by 10% or more since the date on which it first
became a Collateral Property.
6.20 SCHEDULE 7. Within 10 days after the date hereof Borrowers shall
----------
deliver to Lender an updated Schedule 7 showing all changes since September 10,
----------
1998, whereupon such updated schedule shall become Schedule 7 hereto.
----------
6.21 UNDELIVERED DOCUMENTS. Borrower shall use commercially reasonable
---------------------
efforts to promptly obtain and deliver to Lender copies of all Undelivered
Documents.
6.22 PARKWAY PLAZA.
-------------
(a) Parkway Plaza LLC (the "PARKWAY BORROWER") shall use diligent
efforts to cause all parties to the REA encumbering its Collateral Property to
promptly execute an amendment thereto approving the construction and operation
of the movie theater currently under construction at such Collateral Property
(the "AMENDMENT"). In addition, the Parkway Borrower shall use diligent efforts
to cause such Amendment to contain a provision (the "NOTICE PROVISION") whereby
The May Department Store Company ("May Co.") agrees to give Parkway Borrower and
Lender at least ninety days' written notice (the "MAY NOTICE") prior to the date
on which Parkway Borrower shall first be obligated to pay or incur any expense
with respect to the contemplated expansion of the May Co.'s store at Parkway
Plaza (the "MAY EXPANSION"). Parkway Plaza LLC shall deliver to Lender a copy
of the Amendment within two (2) business days after Parkway Borrower executes
the Amendment.
(b) Within 20 days after May Co. gives the May Notice (or, if the
Amendment does not contain a Notice Provision, on the date the Amendment is
executed and delivered), Parkway Borrower shall deposit with Lender an amount
(the "PARKWAY RESERVE FUND") equal to 125% of the total amount which Parkway
Borrower reasonably estimates it will be required to pay or incur in connection
with the May Expansion, which estimate shall be subject to Lender's reasonable
approval.
(c) In lieu of depositing cash with Lender pursuant to Section
6.22(b), Parkway Borrower may deliver to Lender a Letter of Credit (the "MAY
EXPANSION L/C") having a face amount equal to the amount required to be in the
Parkway Reserve Fund.
(d) If at any time the issuer of the May Expansion L/C ceases to be
an Approved Bank, Parkway Borrower shall, within thirty (30) days after request
by Lender, deliver
<PAGE>
to Lender a new May Expansion L/C issued by an Approved Bank (or immediately
available funds in amount of such Letter of Credit), whereupon Lender shall
return the original May Expansion L/C to Parkway Borrower.
(e) If Parkway Borrower fails to comply with the provisions of
Section 6.22(d), or if at any time the May Expansion L/C is not replaced or
- ---------------
renewed at least thirty (30) days prior to its expiration, Lender may draw on
the May Expansion L/C and the proceeds thereof shall constitute the Parkway
Reserve Fund.
(f) If for any reason the May Expansion L/C should expire without a
replacement May Expansion L/C having been delivered to Lender, Parkway Borrower
shall, within five days after demand, deliver to Lender a new May Expansion L/C
(or immediately available funds in such amount for deposit into (a) Parkway
Reserve Fund).
(g) At such time as the Parkway Borrower shall have paid and
performed all of its obligations to [May Co.] in connection with the May
Expansion, as evidenced by an estoppel from May Co. reasonably acceptable to
Lender, Lender shall, provided no Event of Default then exists, return to the
Parkway Borrower any cash or letter of credit previously delivered to Lender
pursuant to this Section 6.22 and not theretofore applied by Lender to any
Obligations in accordance with the Loan Documents.
(h) Lender shall not unreasonably withhold consent to any "lot line
adjustment" necessary in connection with the May Expansion.
VII NEGATIVE COVENANTS
------------------
Until the end of the Term, each Borrower covenants and agrees with Lender
that it will not, directly or indirectly:
7.1 MANAGEMENT AGREEMENT. Without Lender's prior consent: (i) surrender,
--------------------
terminate, cancel, extend or renew the Management Agreement (other than an
extension or renewal on the same terms as the expiring Management Agreement,
with only such modifications as do not require consent of Lender or any Rating
Agency hereunder) or otherwise replace the Manager or enter into any other
management agreement (except pursuant to Section 6.14.2); (ii) reduce or consent
to the reduction of the term of the Management Agreement; (iii) increase or
consent to the increase of the amount of any charges under the Management
Agreement; (iv) otherwise modify, change, supplement, alter or amend in any
material respect, or waive or release in any material respect any of its rights
and remedies under, the Management Agreement; or (v) suffer or permit the
occurrence and continuance of a default beyond any applicable cure period under
the Management Agreement (or any successor management agreement) if such default
permits the Manager to terminate the Management Agreement (or such successor
management agreement).
7.2 LIENS. Without Lender's prior consent, create, incur, assume, permit
-----
or suffer to
<PAGE>
exist any mechanic's, materialmen's or other Lien (other than an inchoate
mechanic's lien the amount of which is not yet due and payable) on any portion
of its Collateral Property or legal or beneficial ownership interest in such
Borrower, except Permitted Encumbrances, unless such Lien is bonded or
discharged within 30 days after such Borrower first receives notice of such
Lien; provided, however, that the existence of liens resulting from mechanics or
-------- -------
materialmen hired by a tenant shall not constitute a Default or Event of Default
hereunder so long as the applicable Borrower is diligently taking all
commercially reasonable action to enforce the obligation of such tenant to cause
such lien to be removed.
7.3 DISSOLUTION. Dissolve, terminate, liquidate, merge with or
-----------
consolidate into another Person;
7.4 CHANGE IN BUSINESS OR OPERATION OF PROPERTY. Enter into any line of
-------------------------------------------
business other than the ownership and operation of its Collateral Property, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business or otherwise cease to operate its Collateral
Property as a retail property or terminate such business for any reason
whatsoever (other than temporary cessation in connection with renovations to its
Collateral Property);
7.5 DEBT CANCELLATION. Cancel or otherwise forgive or release any claim
-----------------
or debt owed to such Borrower by any Person, except in the ordinary course of
such Borrower's business in its reasonable judgment and in a manner consistent
with the operation of first class Retail Properties;
7.6 ASSETS. Purchase or own any property other than its Collateral
------
Property and other property intended to be subject to the lien of a Mortgage;
7.7 TRANSFERS. Make, suffer or permit the occurrence of any Transfer
---------
other than a Permitted Transfer, nor, except in the ordinary course of
Borrower's business, Transfer any License required for the operation of its
Collateral Property;
7.8 DEBT. Create, incur or assume any indebtedness other than (i) the
----
Debt, (ii) Taxes, Insurance Premiums, Approved Replacement Expenses and Approved
Leasing Expenses and (iii) other trade debt incurred in the ordinary course of
business relating to the ownership and operation of its Collateral Property
which other trade debt does not exceed, at any time, a maximum aggregate amount
of one percent (1%) of such Borrower's maximum Allocated Note Amount and is paid
within sixty (60) days of the date incurred (other than amounts being disputed
in good faith);
7.9 ASSIGNMENT OF RIGHTS. Without Lender's prior consent, attempt to (i)
--------------------
assign such Borrower's rights or interest under any Loan Document in
contravention of any Loan Document or (ii) if such Borrower's Collateral
Property is affected by a Ground Lease, surrender, terminate, cancel, modify or
amend such Ground Lease;
<PAGE>
7.10 PRINCIPAL PLACE OF BUSINESS. Change its principal place of business
---------------------------
without first giving Lender 30 days' prior notice;
7.11 CORPORATE ORGANIZATION. Make any change, amendment or modification to
----------------------
the organizational documents of such Borrower, or take any other action, if such
change, amendment, modification or action could result in (x) such Borrower not
being a Special Purpose Bankruptcy Remote Entity or (y) the term of any Borrower
or Borrower Representative being shortened; or
7.12 ERISA. Maintain, sponsor, contribute to or become obligated to
-----
contribute to, or suffer or permit any ERISA Affiliate of such Borrower to,
maintain, sponsor, contribute to or become obligated to contribute to, any Plan
or any Welfare Plan or permit the assets of such Borrower to become "plan
assets," whether by operation of law or under regulations promulgated under
ERISA.
VII INSURANCE; CASUALTY; AND CONDEMNATION
-------------------------------------
8.1 INSURANCE.
---------
8.1.1 COVERAGE. Each Borrower, at its sole cost, for the mutual
--------
benefit of such Borrower and Lender, shall obtain and maintain during the Term
the following policies of insurance with respect to the Collateral Property
owned by such Borrower:
(a) Property insurance insuring against loss or damage by standard,
"all-risk" perils, which shall (i) be in an amount equal to the greatest of (A)
the then full replacement cost of the Collateral Property without deduction for
physical depreciation, (B) the unpaid Principal, and (C) such amount as is
necessary so that the insurer would not deem such Borrower a co-insurer under
such policies, (ii) have deductibles or self insured retentions no greater than
$100,000 (or, in the case of earthquake insurance, 5% of the total insured
values at risk), (iii) be paid annually in advance and (iv) contain a
"Replacement Cost Endorsement" with a waiver of depreciation.
(b) Flood insurance if any part of the Collateral Property is located
in an area identified by the Federal Emergency Management Agency as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Program, in an amount at least
equal to the maximum limit of coverage available with respect to the Collateral
Property under such program.
(c) Commercial general public liability insurance, including broad
form property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence of
$1,000,000 and $2,000,000 in the aggregate per location for any policy year;
together with at least $75,000,000 excess and/or umbrella liability insurance
for any and all claims, including all legal liability imposed upon Borrower and
all court costs and attorneys' fees incurred in connection with the ownership,
<PAGE>
operation and maintenance of the Property.
(d) Rental loss and/or business interruption insurance in an amount
equal to the greater of (i) the estimated Rents for the next succeeding 18-month
period or (ii) the projected Operating Expenses and Debt Service on such
Borrower's Allocated Note Amount for such period. The amount of such insurance
shall be increased from time to time during the Term as and when the estimated
or actual Rents increase.
(e) Insurance against loss or damage from (i) leakage of sprinkler
systems and (ii) explosion of steam boilers, air conditioning equipment, high
pressure piping, machinery and Equipment, pressure vessels or similar apparatus
now or hereafter installed in any of the Improvements (without exclusion for
explosions), in an amount at least equal to $2,000,000.
(f) Worker's compensation insurance with respect to any employees of
such Borrower, as required by any Legal Requirement.
(g) During any period of repair or restoration, builder's "all-risk"
insurance in an amount equal to not less than the full insurable value of the
Collateral Property, against such risks (including fire and extended coverage
and collapse of the Improvements to agreed limits) as Lender may request, in
form and substance acceptable to Lender.
(h) Coverage to compensate for the cost of demolition and the
increased cost of construction in an amount satisfactory to Lender.
(i) Such other insurance (including earthquake insurance and
windstorm insurance) as may from time to time be reasonably required by Lender
in order to protect its interests.
8.1.2 POLICIES.
--------
(a) All policies of insurance (the "POLICIES") required pursuant to
Section 8.1.1 shall (i) be issued by companies approved by Lender and licensed
to do business in the State, with a claims paying ability rating of "AA" or
better by Standard & Poor's Ratings Group (or the equivalent by any other Rating
Agency) and a rating of A:VII or better in the current Best's Insurance Reports;
(ii) name Lender and its successors and/or assigns as their interest may appear
as the mortgagee (in the case of property insurance) or an additional insured
(in the case of liability insurance); (iii) contain (in the case of property
insurance) a Non-Contributory Standard Lender Clause and a Lender's Loss Payable
Endorsement, or their equivalents, naming Lender as the person to which all
payments made by such insurance company shall be paid; (iv) contain a waiver of
subrogation against Lender; (v) be delivered to Lender (provided that copies
certified by the insurance companies may be delivered in lieu of originals);
(vi) contain such provisions as Lender deems reasonably necessary or desirable
to protect its interest, including endorsements providing that neither the
applicable Borrower, Lender nor any other party shall be a co-insurer
<PAGE>
under the Policies and that Lender shall receive at least 30 days' prior written
notice of any modification, reduction or cancellation of any of the Policies;
and (vii) be satisfactory in form and substance to Lender and approved by Lender
as to amounts, form, risk coverage, deductibles, loss payees and insureds. Each
Borrower shall pay the premiums for the Policies required to be maintained by it
hereunder (the "INSURANCE PREMIUMS") as the same become due and payable and
furnish to Lender evidence of the renewal of each of the Policies together with
(unless such Insurance Premiums have been paid by Lender pursuant to Section
4.3) receipts for or other evidence of the payment of the Insurance Premiums
reasonably satisfactory to Lender. If a Borrower does not furnish such evidence
and receipts at least 30 days prior to the expiration of any expiring Policy,
then Lender may, but shall not be obligated to, procure such insurance and pay
the Insurance Premiums therefor, and such Borrower shall reimburse Lender for
the cost of such Insurance Premiums promptly on demand, with interest accruing
at the Default Rate. Each Borrower shall deliver to Lender a certified copy of
each Policy required to be maintained by it hereunder within 90 days after its
effective date. Within 90 days after request by Lender, each Borrower shall
obtain such increases in the amounts of coverage required hereunder as may be
reasonably requested by Lender, taking into consideration changes in the value
of money over time, changes in liability laws, changes in prudent customs and
practices, and the like.
(b) Lender hereby approves the insurance coverage that Borrowers have
in effect on the date hereof as evidenced by submissions delivered to Lender
prior to the date hereof and agrees that Borrower may maintain such coverage by
the existing carriers throughout the Term, notwithstanding that certain of such
carriers providing such coverage are not rated "AA" or better by Standard &
Poor's.
8.2 CASUALTY.
--------
8.2.1 NOTICE; RESTORATION. If any Collateral Property is damaged or
-------------------
destroyed, in whole or in part, by fire or other casualty (a "CASUALTY"),
Borrowers shall give prompt notice thereof to Lender. Following the occurrence
of a Casualty, the Borrower that owns such Collateral Property, regardless of
whether insurance proceeds are available, shall promptly proceed to restore,
repair, replace or rebuild such Collateral Property in accordance with Legal
Requirements to be of at least equal value and of substantially the same
character as prior to such damage or destruction.
8.2.2 SETTLEMENT OF PROCEEDS. In the event of a Casualty covered by
----------------------
any of the Policies (an "INSURED CASUALTY") where the loss does not exceed
$1,000,000, the applicable Borrower may settle and adjust any claim without the
consent of Lender; provided such adjustment is carried out in a competent and
timely manner; and such Borrower is hereby authorized to collect and receipt for
the insurance proceeds (the "PROCEEDS"). In the event of an Insured Casualty
where the loss equals or exceeds $1,000,000, Lender may settle and adjust any
claim without the consent of any Borrower and agree with the insurer(s) on the
amount to be paid on the loss, and the Proceeds shall be due and payable solely
to Lender and held by Lender in the Casualty/Condemnation Fund and disbursed in
accordance herewith. The expenses incurred by Lender in the adjustment and
collection of the Proceeds shall become part of the Debt and shall
<PAGE>
be reimbursed by the applicable Borrower to Lender upon demand.
8.3 CONDEMNATION.
------------
8.3.1 NOTICE; RESTORATION. Borrowers shall promptly give Lender notice
-------------------
of the actual or threatened commencement of any condemnation or eminent domain
proceeding affecting any Collateral Property (a "CONDEMNATION") and shall
deliver to Lender copies of any and all papers served in connection with such
Condemnation. Following the occurrence of a Condemnation, the applicable
Borrower, regardless of whether an Award is available, shall promptly proceed to
restore, repair, replace or rebuild such Collateral Property in accordance with
Legal Requirements to the extent practicable to be of at least equal value and
of substantially the same character as prior to such Condemnation.
8.3.2 COLLECTION OF AWARD. Lender is hereby irrevocably appointed as
-------------------
each Borrower's attorney-in-fact, coupled with an interest, with exclusive power
to collect, receive and retain any award or payment in respect of a Condemnation
(an "AWARD") and to make any compromise or settlement in connection with such
Condemnation. Notwithstanding any Condemnation (or any transfer made in lieu of
or in anticipation of such Condemnation), each Borrower shall continue to pay
such Borrower's Allocable Share of the Debt at the time and in the manner
provided for in the Loan Documents, and the Debt shall not be reduced unless and
until any Award shall have been actually received and applied by Lender to
expenses of collecting the Award and to discharge of the Debt. Lender shall not
be limited to the interest paid on the Award by the condemning authority but
shall be entitled to receive out of the Award interest at the rate or rates
provided in the Note. If a Collateral Property that is the subject of a
Condemnation is sold, through foreclosure or otherwise, prior to the receipt by
Lender of such Award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall be recoverable or shall have been sought, recovered
or denied, to receive all or a portion of the Award sufficient to pay the Debt.
Borrower shall cause any Award that is payable to Borrower to be paid directly
to Lender. Lender shall hold such Award in the Casualty/Condemnation Fund and
disburse such Award in accordance with the terms hereof.
8.4 APPLICATION OF PROCEEDS OR AWARD.
--------------------------------
8.4.1 APPLICATION TO RESTORATION. In the event of an Insured Casualty
--------------------------
or Condemnation with respect to any Collateral Property where (i) the loss is in
an aggregate amount less than 25% of the unpaid Allocated Note Amount of the
Borrower that owns such Collateral Property, (ii) in the reasonable judgment of
Lender, such Collateral Property can be restored within six months, and prior to
the Stated Maturity Date and the expiration of the business interruption
insurance with respect thereto, to an economic unit not less valuable and not
less useful than the same was prior to the Insured Casualty or Condemnation, and
after such restoration will adequately secure the unpaid Principal, and (iii) no
Event of Default shall have occurred and be then continuing, then the Proceeds
or the Award, as the case may be (after reimbursement of any expenses incurred
by Lender), shall be applied to reimburse the applicable Borrower for the cost
of restoring, repairing, replacing or rebuilding such Collateral Property (the
<PAGE>
"RESTORATION"), in the manner set forth herein. The applicable Borrower shall
commence and diligently prosecute such Restoration; provided that (x) such
Borrower shall pay (and if required by Lender, such Borrower shall deposit with
Lender in advance) all costs of such Restoration in excess of the net amount of
the Proceeds or the Award made available pursuant to the terms hereof; and (y)
Lender shall have received evidence reasonably satisfactory to it that during
the period of the Restoration, the Rents from such Collateral Property will be
at least equal to the sum of the Operating Expenses for such Collateral Property
and Debt Service on such Borrower's Allocated Note Amount, as reasonably
determined by Lender.
8.4.2 APPLICATION TO DEBT. Except as provided in Section 8.4.1, the
-------------------
Proceeds and any Award may, at the option of Lender in its sole discretion, be
applied to the sum of (i) accrued but unpaid interest on the Note, (ii) the
outstanding principal balance of the Note (with such Proceeds being applied
first to reduce the Allocated Note Amount of the Borrower whose Collateral
Property was the subject the Condemnation in respect of which the Award was
paid) and (iii) other charges due under the Note (such amount, the "UNPAID
BALANCE"), or applied to reimburse the applicable Borrower for the cost of any
Restoration, in the manner set forth in Section 8.4.3. Any such application to
the Unpaid Balance shall be without any prepayment consideration, unless the
Debt or any portion thereof is accelerated prior to, or within one year after,
the date the Proceeds are received from the insurance company or the Award is
received from the condemning authority, as the case may be, in which event the
applicable Borrower shall pay to Lender an additional amount equal to the Yield
Maintenance Premium, if any, that may be required with respect to the amount of
the Proceeds or Award applied to the Unpaid Balance. After any such application
to the Unpaid Balance, the unpaid Principal shall be reamortized over the
remaining term thereof.
8.4.3 PROCEDURE FOR APPLICATION TO RESTORATION. If a Borrower is
----------------------------------------
entitled to reimbursement out of the Proceeds or an Award held by Lender, such
Proceeds or Award shall be disbursed from time to time from the
Casualty/Condemnation Fund upon Lender being furnished with (i) evidence
satisfactory to it of the estimated cost of completion of the Restoration, (ii)
funds or, at Lender's option, assurances satisfactory to Lender that such funds
are available sufficient in addition to the Proceeds or Award to complete the
proposed Restoration, (iii) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as Lender may
reasonably require and approve, and (iv) all plans and specifications for such
Restoration, such plans and specifications to be approved by Lender prior to
commencement of any work. No payment made prior to the final completion of the
Restoration shall exceed 90% of the value of the work performed from time to
time; funds other than the Proceeds or Award shall be disbursed prior to
disbursement of such Proceeds or Award; and at all times, the undisbursed
balance of such Proceeds or Award remaining in the hands of Lender, together
with funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of the applicable Borrower for that
purpose, shall be at least sufficient in the reasonable judgment of Lender to
pay for the cost of completion of the Restoration, free and clear of all Liens
or claims for Lien. Any surplus that remains out of the Proceeds held by Lender
after
<PAGE>
payment of such costs of Restoration shall be paid to the applicable Borrower.
Any surplus that remains out of the Award received by Lender after payment of
such costs of Restoration shall, in the sole and absolute discretion of Lender,
be retained by Lender and applied to payment of the Debt or returned to the
applicable Borrower.
8.4.4 GROUND LEASE; ANCHOR LEASE; REA. If Lender shall have the right
-------------------------------
or option hereunder to apply Proceeds or an Award to payment of the Debt, but
under any controlling provision in any Ground Lease, "anchor" Lease or REA such
Proceeds or Awards are required to be applied to Restoration of a Collateral
Property, then, notwithstanding anything to the contrary in this Article 8, such
Proceeds or Award shall be applied to Restoration in accordance with such Ground
Lease, "anchor" Lease or REA, subject to such conditions and procedures as
Lender may impose which are not inconsistent with the terms of such Ground
Lease, "anchor" Lease or REA.
IX DEFAULTS
9.1 EVENTS OF DEFAULT. An "Event of Default" shall exist with respect to a
-----------------
Loan to a Borrower upon the occurrence of any of the following events:
(a) any portion of such Borrower's Allocable Share of the Debt is not
paid when due;
(b) such Borrower shall fail to pay when due any deposit into any Fund;
(c) any of the Taxes applicable to such Borrower's Collateral Property
are not paid when due (other than Taxes for which funds have been deposited with
Lender pursuant to Section 4.3), subject to such Borrower's right to contest
Taxes applicable to its Collateral Property in accordance with Section 6.2;
(d) the Policies with respect to the Collateral Property owned by such
Borrower are not delivered to Lender within 90 days after their respective
applicable effective dates or within ten days after written demand from Lender,
whichever is later, or such Policies are not kept in full force and effect;
(e) a Transfer other than a Permitted Transfer occurs with respect to
such Borrower's Collateral Property, an interest in such Borrower or an interest
in the Borrower Representative of such Borrower;
(f) any representation or warranty made by such Borrower or in any
Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished by such Borrower in connection with
any Loan Document, shall be false or misleading in any material respect as of
the date the representation or warranty was made;
<PAGE>
(g) such Borrower or such Borrower's Borrower Representative shall
make an assignment for the benefit of creditors, or shall generally not be
paying its debts as they become due;
(h) a receiver, liquidator or trustee shall be appointed for such
Borrower or such Borrower's Borrower Representative or the Oakridge Guarantor;
or such Borrower or such Borrower's Borrower Representative or the Oakridge
Guarantor shall be adjudicated a bankrupt or insolvent; or any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, such Borrower or such Borrower's Borrower Representative or
the Oakridge Guarantor, as the case may be; or any proceeding for the
dissolution or liquidation of such Borrower or such Borrower's Borrower
Representative or the Oakridge Guarantor shall be instituted; provided, however,
if such appointment, adjudication, petition or proceeding was involuntary and
not consented to by such Borrower or such Borrower's Borrower Representative or
the Oakridge Guarantor, as the case may be, only upon the same not being
discharged, stayed or dismissed within 60 days;
(i) such Borrower breaches any negative covenant contained in Section
7 or any covenant contained in Section 6.14;
(j) such Borrower shall be in default under any other mortgage or
security agreement covering any part of the Collateral Property owned by such
Borrower whether it be superior or junior in Lien to a Mortgage, and such
default shall continue after the expiration of any applicable notice and grace
period provided therein;
(k) except as permitted hereunder, commence any alteration,
improvement, demolition or removal of any of the Improvements constituting part
of such Borrower's Collateral Property without the prior consent of Lender;
(l) an Event of Default as defined or described in any other Loan
Document other than such Borrower's Guaranty occurs; or any other event shall
occur or condition shall exist, if the effect of such event or condition is to
accelerate or to permit Lender to accelerate the maturity of any portion of such
Borrower's Allocable Share of the Debt;
(m) such Borrower shall be in default under any term, covenant or
provision set forth herein or in any other Loan Document (other than such
Borrower's Guaranty) which specifically contains a notice requirement or grace
period and such notice has been given and such grace period has expired;
(n) any of the assumptions contained in any substantive non-
consolidation opinion, delivered to Lender by such Borrower's counsel in
connection with the Loan or otherwise hereunder (the "Original Opinion"), were
not true and correct as of the date of such opinion or thereafter became untrue
or incorrect and Borrower fails to deliver to Lender, within 20 days after
Borrower first become aware that any such assumption is not true or is
incorrect, a
<PAGE>
new substantive non-consolidation opinion from the same counsel (or other
counsel acceptable to Lender and the Rating Agencies) which omits all such
untrue or incorrect assumptions and is otherwise in the same form as the
Original Opinion (other than for changes approved by Lender and the Rating
Agencies);
(o) such Borrower fails to give any notice due to any Person under any
Loan Document (i) within two (2) days after such notice was due or (ii) in
accordance with the applicable procedural requirements set forth in the Loan
Documents;
(p) such Borrower shall fail to pay when due any rent, additional rent
or other charge payable under any Ground Lease (which term, for purposes of this
paragraph (p) shall mean any Ground Lease affecting such Borrower's Collateral
Property or any portion thereof); or such Borrower shall default in the
observance or performance of any other term, covenant or condition of any Ground
Lease and such default is not cured within 20 days prior to the expiration of
any applicable grace period provided therein; or any event shall occur that
would cause any Ground Lease to terminate without notice or action by the
landlord thereunder or would entitle such landlord to terminate any Ground Lease
and the term thereof by giving notice to such Borrower; or any Ground Lease
shall be surrendered, terminated or canceled for any reason or under any
circumstance whatsoever; or any term of any Ground Lease shall be modified or
supplemented without Lender's consent; or any Borrower shall fail, within 10
Business Days after demand by Lender, to exercise its option to renew or extend
the term of any Ground Lease or shall fail or neglect to pursue diligently all
actions necessary to exercise such renewal rights pursuant to such Ground Lease;
(q) such Borrower shall default (other than a default which, in the
sole judgment of Lender, is not material) under any REA and, in the case of any
such default that is non-monetary, such default is not cured within 20 days
prior to the expiration of any applicable grace period provided therein; or any
event shall occur that would cause any REA to terminate without notice or action
by any party thereto or would entitle any party to terminate any REA and the
term thereof by giving notice to such Borrower; or any REA shall be surrendered,
terminated or canceled for any reason or under any circumstance whatsoever; or
any term of any REA shall be modified or supplemented without Lender's consent;
or any Borrower shall fail, within 10 Business Days after demand by Lender, to
exercise its option to renew or extend the term of any REA or shall fail or
neglect to pursue diligently all actions necessary to exercise such renewal
rights pursuant to such REA;
(r) such Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or any other Loan
Document (other than such Borrower's Guaranty) not specified in this Section
9.1, for ten days after notice to such Borrower from Lender, in the case of any
Default which can be cured by the payment of a sum of money, or for 30 days
after notice from Lender in the case of any other Default; provided, however,
that if such non-monetary Default is susceptible of cure but cannot reasonably
be cured within such 30-day period, and such Borrower shall have commenced to
cure such Default within such 30-
<PAGE>
day period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended for an additional period of time as
is reasonably necessary for such Borrower in the exercise of due diligence to
cure such Default, such additional period not to exceed 90 days;
(s) an Event of Default shall occur with respect to a Loan to any
other Borrower; or
(t) Oakridge Borrower shall default under (i) the Oakridge Subordinate
Mortgage and such default shall continue after the expiration of any applicable
notice or grace period or (ii) the Oakridge Option Agreement;
(u) any Undelivered Document shall have a material adverse effect on
the value, Underwritten Net Operating Income, use or operation of a Collateral
Property.
(v) a default shall occur with respect to the Oakridge Guaranty;
(w) a default shall occur with respect to any Guaranty of the Loan; or
(x) if such Borrower shall fail to deliver any replacement or renewal
Letter of Credit (or immediately available funds in the amount of the applicable
Letter of Credit) as and when required under Sections 4.12, 4.13, 4.15, 4.16,
4.17 or 6.22.
9.2 REMEDIES.
--------
9.2.1 ACCELERATION. Upon the occurrence of an Event of Default with
------------
respect to a Loan to any Borrower (other than an Event of Default described in
paragraph (g) or (h) of Section 9.1) and at any time and from time to time
thereafter, in addition to any other rights or remedies available to it pursuant
to the Loan Documents or at law or in equity, Lender may take such action,
without notice or demand, that Lender deems advisable to protect and enforce its
rights against such Borrower and in and to any and all Collateral Properties of
such Borrower and any and all Ground Leases to which such Borrower is a party,
and against any and all guarantors of such Borrower's Allocable Share of the
Debt and any and all collateral for the guaranty obligations of such guarantors,
including declaring that Borrower's Allocable Share of the Debt (including
unpaid interest, Default Rate interest, Late Payment Charges, Yield Maintenance
Premium and any other amounts owing by such Borrower) to be immediately due and
payable), without notice or demand; and upon any Event of Default described in
paragraph(g) or (h) of Section 9.1, that Borrower's Allocable Share of the Debt
(including unpaid interest, Default Rate interest, Late Payment Charges, Yield
Maintenance Premium and any other amounts owing by such Borrower) shall
immediately and automatically become due and payable, without notice or demand,
and each Borrower hereby expressly waives any such notice or demand, anything
contained in any Loan Document to the contrary notwithstanding.
9.2.2 REMEDIES CUMULATIVE. Upon the occurrence of an Event of
-------------------
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender
<PAGE>
against any or all Borrowers under the Loan Documents or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by law, equity or contract or as set forth in the
Loan Documents. Without limiting the generality of the foregoing, each Borrower
agrees that if an Event of Default is continuing, (i) to the extent permitted by
applicable law, Lender is not subject to any "one action" or "election of
remedies" law or rule, and (ii) all Liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against the Collateral Properties, each
Mortgage has been foreclosed, the Collateral Properties have been sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full. To the extent permitted by applicable law, nothing contained in any Loan
Document shall be construed as requiring Lender to resort to any portion of the
Collateral Pool for the satisfaction of any of the Debt in preference or
priority to any other portion, and Lender may seek satisfaction out of the
entire Collateral Pool or any part thereof, in its absolute discretion.
9.2.3 SEVERANCE. Without limiting the provisions of Section 2.1.2(b),
---------
Lender shall have the right from time to time to sever the Note and the other
Loan Documents into one or more separate notes, mortgages and other security
documents to reflect each Borrower's Allocable Share of the Debt and in such
priorities of payment and liens as Lender shall determine in its sole discretion
for purposes of evidencing and enforcing its rights and remedies. Each Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect such severance, each Borrower
ratifying all that such attorney shall do by virtue thereof.
9.2.4 DELAY. No delay or omission to exercise any remedy, right, power
-----
accruing upon an Event of Default, or the granting of any indulgence or
compromise by Lender shall impair any such remedy, right or power hereunder or
be construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A waiver
of one Default or Event of Default shall not be construed to be a waiver of any
subsequent Default or Event of Default or to impair any remedy, right or power
consequent thereon. Notwithstanding any other provision of this Agreement, to
the extent permitted by applicable law, Lender reserves the right to seek a
deficiency judgment or preserve a deficiency claim, in connection with the
foreclosure of any Mortgage, to the extent necessary to foreclose on any other
Collateral Property or part thereof, the Rents, the Funds or any other
collateral that constitutes security for the same obligation.
<PAGE>
9.2.5 LENDER'S RIGHT TO PERFORM. If any Borrower fails to perform any
-------------------------
covenant or obligation contained herein and such failure shall continue for a
period of (5) five Business Days after such Borrower's receipt of written notice
thereof from Lender, without in any way limiting Lender's right to exercise any
of its rights as provided hereunder or under any of the other Loan Documents,
Lender may, but shall have no obligation to, perform, or cause performance of,
such covenant or obligation, and the expenses of Lender incurred in connection
therewith shall be payable by such Borrower to Lender upon demand and if not
paid shall be added to the Debt and shall bear interest thereafter at the
Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to
send notice to such Borrower of any other Borrower of any such failure.
X SPECIAL PROVISIONS
------------------
10.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION.
---------------------------------------------
10.1.1 COOPERATION. At Lender's request (to the extent not already
-----------
required to be provided by Borrowers under this Agreement), each Borrower shall
cooperate with Lender to enable Lender to satisfy the market standards to which
Lender customarily adheres or which may be reasonably required in the
marketplace or by the Rating Agencies in connection with one or more sales or
assignments of the Note or participations therein or securitizations (including
any FASIT) of rated single or multi-class securities (the "SECURITIES") secured
by or evidencing ownership interests in the Note and the Mortgage (each such
sale, assignment, participation and/or securitization, a "SECONDARY MARKET
TRANSACTION"). No Borrower shall be required to incur any out-of-pocket expense
to comply with the provisions of this Section 10.1.1 (unless Lender agrees to
reimburse such Borrower therefor). In furtherance of the foregoing, each
Borrower shall, at the request of Lender in connection with any Secondary Market
Transaction, and so long as the Loan is still outstanding:
(a) (i) provide updates of financial and other information with respect
to its Collateral Property, such Borrower and its Affiliates, Manager and any
tenants of its Collateral Property, (ii) provide updated business plans and
budgets relating to its Collateral Property and (iii) perform or permit or cause
to be performed or permitted such site inspection, appraisals, surveys, market
studies, environmental reviews and reports (Phase I's and, if appropriate, Phase
II's), engineering reports and other due diligence investigations of its
Collateral Property, as may be reasonably requested from time to time by Lender
or the Rating Agencies or as may be necessary or appropriate in connection with
a Secondary Market Transaction or Exchange Act requirements (the items provided
to Lender pursuant to this paragraph (a) being called the "PROVIDED
INFORMATION"), together, if customary, with appropriate verification of and/or
consents to the Provided Information through letters of auditors or opinions of
counsel of independent attorneys acceptable to Lender and the Rating Agencies;
(b) use reasonable efforts to cause counsel to render opinions as to
non-consolidation, fraudulent conveyance, true sale and true contribution and
any other opinion customary in securitization transactions with respect to its
Collateral Property, such Borrower
<PAGE>
and its Affiliates, which counsel and opinions shall be reasonably satisfactory
to Lender and the Rating Agencies;
(c) provide current certificates of good standing and qualification
with respect to such Borrower from appropriate Governmental Authorities; and
(d) execute such amendments to the Loan Documents and such Borrower's
organizational documents as may be requested by Lender or the Rating Agencies or
otherwise to effect a Secondary Market Transaction, provided that nothing
contained in this subsection (e) shall result in an economic change in the
transaction or impose any material legal obligations on any Borrower or restrict
Borrower in any material way.
10.1.2 USE OF INFORMATION. Each Borrower understands that certain of
------------------
the Provided Information and the Required Records may be included in disclosure
documents in connection with a Secondary Market Transaction, including a
prospectus or private placement memorandum (each, a "DISCLOSURE DOCUMENT") and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers or other parties relating
to the Secondary Market Transaction. In the event that the Disclosure Document
is required to be revised, each Borrower shall cooperate with Lender in updating
the Provided Information or Required Records for inclusion or summary in the
Disclosure Document or for other use reasonably required in connection with a
Secondary Market Transaction by providing all current information pertaining to
such Borrower, and its Collateral Property necessary to keep the Disclosure
Document accurate and complete in all material respects with respect to such
matters. Such disclosure may include the opinion or judgment of Lender or
Servicer concerning the Provided Information or other matters disclosed.
10.1.3 BORROWERS OBLIGATIONS REGARDING DISCLOSURE DOCUMENTS. In
----------------------------------------------------
connection with a Disclosure Document, each Borrower shall:
(a) if requested by Lender, certify in writing that such Borrower has
carefully examined those portions of such Disclosure Document, pertaining to
such Borrower, its Collateral Property, the Manager and the Loan, including
applicable portions of the sections entitled "Special Considerations",
"Description of the Mortgages", "Description of the Mortgage Loans and Mortgaged
Property", "The Manager", "The Borrower" and "Certain Legal Aspects of the
Mortgage Loan", and such portions (and portions of any other sections reasonably
requested and pertaining to such Borrower, its Collateral Property, the Manager
or the Loan) do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading;
(b) indemnify (i) any underwriter, syndicate member or placement agent
<PAGE>
(collectively, the "UNDERWRITERS") retained by Lender or its issuing company
affiliate (the "ISSUER") in connection with a Secondary Market Transaction, (ii)
Lender and (iii) the Issuer that is named in the Disclosure Document or
registration statement relating to a Secondary Market Transaction (the
"REGISTRATION STATEMENT"), and each of the Issuer's directors, each of its
officers who have signed the Registration Statement and each person or entity
who controls the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within (iii), the
"CCA GROUP"), and each of its directors and each person who controls each of the
Underwriters, within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively, the "UNDERWRITER GROUP") for any losses,
claims, damages or liabilities (the "LIABILITIES") to which Lender, the CCA
Group or the Underwriter Group may become subject (including reimbursing all of
them for any legal or other expenses actually incurred in connection with
investigating or defending the Liabilities) insofar as the Liabilities arise out
of or are based upon any untrue statement of any material fact contained in any
of the Required Records or in any of the applicable portions of such sections of
the Disclosure Document applicable to any Borrower, Manager, any Collateral
Property or the Loan, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in the
applicable portions of such sections or necessary in order to make the
statements in the applicable portions of such sections in light of the
circumstances under which they were made, not misleading, provided, however,
-------- -------
that no Borrower shall be required to indemnify Lender for any Liabilities
relating to untrue statements or omissions or inadequacies of disclosure which
(i) any Borrower identified to Lender in writing at the time of such Borrower's
examination of such Disclosure Document or (ii) are set forth in a report
prepared by a third party not Affiliated with any Borrower; and
(c) reimburse any member of the CCA Group for any legal or other
expenses reasonably incurred by such member in connection with investigating or
defending the Liabilities.
Borrowers' Liability under clause (a) or (b) above shall be limited to
Liabilities arising out of or based upon any such untrue statement or omission
made therein in reliance upon and in conformity with information furnished to
Lender by or on behalf of a Borrower in connection with the preparation of those
portions of the Disclosure Document pertaining to Borrowers, Manager, the
Collateral Properties or the Loan or in connection with the underwriting of the
debt, including financial statements of Borrowers, operating statements, rent
rolls and other Required Records, environmental site assessment reports and
property condition reports with respect to the Collateral Properties. The
foregoing indemnity will be in addition to any liability which Borrowers may
otherwise have. Lender shall give Borrower a copy of any Disclosure Document
that is to be subject to the foregoing indemnification obligations a reasonable
amount of time prior to its delivery to potential investors pursuant to an
offering.
10.1.4 BORROWERS INDEMNITY REGARDING FILINGS. In connection with
-------------------------------------
filings under the Exchange Act, each Borrower shall (i) indemnify Lender, the
CCA Group and the Underwriter Group for any Liabilities to which Lender, the CCA
Group or the Underwriter Group may become subject insofar as the Liabilities
arise out of or are based upon the omission or alleged omission to state in the
Provided Information or Required Records a material fact
<PAGE>
required to be stated in the Provided Information or Required Records in order
to make the statements in the Provided Information or Required Records, in light
of the circumstances under which they were made not misleading and (ii)
reimburse Lender, the CCA Group or the Underwriter Group for any legal or other
expenses reasonably incurred by Lender, CCA Group or the Underwriter Group in
connection with defending or investigating the Liabilities.
10.1.5 INDEMNIFICATION PROCEDURE. Promptly after receipt by an
-------------------------
indemnified party under Section 10.1.3 or 10.1.4 of notice of the commencement
of any action for which a claim for indemnification is to be made against any
Borrowers, such indemnified party shall notify Borrowers in writing of such
commencement, but the omission to so notify the Borrowers will not relieve any
Borrower from any liability that it may have to any indemnified party hereunder
except to the extent that failure to notify causes prejudice to such Borrower.
In the event that any action is brought against any indemnified party, and it
notifies Borrowers of the commencement thereof, Borrowers will be entitled,
jointly with any other indemnifying party, to participate therein and, to the
extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice of commencement,
to assume the defense thereof with counsel satisfactory to such indemnified
party in its sole discretion. After notice from Borrowers to such indemnified
party under this Section 10.1.5, Borrowers shall not be responsible for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both any Borrowers and an indemnified party, and any indemnified party shall
have reasonably concluded that there are any legal defenses available to it
and/or other indemnified parties that are different from or additional to those
available to any such Borrower(s), then the indemnified party or parties shall
have the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Borrowers shall not be liable for the expenses of
more than one separate counsel unless there are legal defenses available to it
that are different from or additional to those available to another indemnified
party.
10.1.6 CONTRIBUTION. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnity agreement provided for in
Section 10.1.3 or 10.1.4 is for any reason held to be unenforceable by an
indemnified party in respect of any Liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under Section 10.1.3
or 10.1.4, each Borrower shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that 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 not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, the following factors shall be considered: (i)
the CCA Group's and each Borrower's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; and (iii) any
other equitable considerations appropriate in the circumstances. Lender and
each Borrower hereby agree that it may not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
<PAGE>
10.1.7 RATING SURVEILLANCE. Lender will retain the Rating Agencies
-------------------
to provide rating surveillance services on Securities. The pro rata expenses of
such surveillance will be paid for by Borrowers based on the applicable
percentage of such expenses determined by dividing the then outstanding
Principal by the then aggregate outstanding amount of the pool created in the
Secondary Market Transaction which includes the Loan.
10.1.8 FLOOR ON COUPON RATE. Lender agrees that the coupon rate on
--------------------
any Securities shall not be lower than 75 basis points below the sum of Libor
plus the Margin.
XI MISCELLANEOUS
-------------
11.1 EXCULPATION.
-----------
(a) Subject to the qualifications below, Lender shall not enforce the
liability and obligation of any Borrower to perform and observe the obligations
contained in the Loan Documents by any action or proceeding wherein a money
judgment shall be sought against such Borrower, except that Lender may bring a
foreclosure action, an action for specific performance or any other appropriate
action or proceeding to enable Lender to enforce and realize upon its interest
and rights under the Loan Documents, or in the Collateral Properties, the Rents
or any other collateral given to Lender pursuant to the Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against a Borrower only to
the extent of Borrower's interest in its Collateral Property, in the Rents and
in any other collateral given to Lender, and Lender shall not sue for, seek or
demand any deficiency judgment against any Borrower in any such action or
proceeding under or by reason of or under or in connection with any Loan
Document. The provisions of this section shall not, however, (i) constitute a
waiver, release or impairment of any obligation evidenced or secured by any Loan
Document; (ii) impair the right of Lender to name any Borrowers as a party
defendant in any action or suit for foreclosure and sale under any Mortgage;
(iii) affect the validity or enforceability of any of the Loan Documents or any
guaranty made in connection with the Loan or any of the rights and remedies of
Lender thereunder; (iv) impair the right of Lender to obtain the appointment of
a receiver; (v) impair the enforcement of any Assignment of Leases; (vi)
constitute a prohibition against Lender to commence any other appropriate action
or proceeding in order for Lender to fully realize the security granted by the
Mortgages or to exercise its remedies against the Collateral Properties; or
(vii) constitute a waiver of the right of Lender to enforce the liability and
obligation of any Borrower, by money judgment or otherwise, to the extent of any
loss, damage, cost, expense, liability, claim or other obligation incurred by
Lender (including attorneys' fees and costs reasonably incurred) arising out of
or in connection with the following: (a) fraud or intentional misrepresentation
by such Borrower or any guarantor in connection with the Loan; (b) the gross
negligence or willful misconduct of such Borrower; (c) the breach of any
representation, warranty, covenant or indemnification in any Loan Document
concerning Environmental Laws or Hazardous Substances, including Sections 5.1.32
and 6.10, and clauses (viii) through (xi) of Section 6.18; (d) physical waste or
after an Event of Default, the removal or disposal of any portion of any
Collateral Property; (e) the misapplication or conversion by such Borrower of
(x) any Proceeds paid by reason of any Insured Casualty, (y) any Award received
in connection with a
<PAGE>
Condemnation, or (z) any Rents, refunds of Taxes or Other Charges or Funds
(i.e., use of Rents or refunds of Taxes or Other Charges or Funds to make
distributions or payments to members/partners/shareholders of such Borrower
during the continuance of an Event of Default; (f) failure to pay charges for
labor or materials or other charges that can create Liens on any portion of any
Collateral Property unless such charges are the subject of a bona fide dispute
in which the applicable Borrower is contesting the amount or validity thereof;
(g) any security deposits collected with respect to any Collateral Property
which are not delivered to Lender upon a foreclosure of any Mortgage encumbering
such Collateral Property or action in lieu thereof, except to the extent any
such security deposits were applied in accordance with the terms and conditions
of any of the Leases prior to the occurrence of the Event of Default that gave
rise to such foreclosure or action in lieu thereof; and (h) such Borrower's
indemnifications of Lender set forth in Sections 10.1.3 and 10.1.4.
(b) Notwithstanding anything to the contrary in this Agreement or any
of the Loan Documents, (A) Lender shall not be deemed to have waived any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Debt or to require that all collateral shall continue to secure all of the
Debt in accordance with the Loan Documents, and (B) the Debt shall be fully
recourse to Borrowers in the event that (1) any Borrower or any Person owning an
interest (directly or indirectly) in any Borrower commences any action, suit,
claim, arbitration, governmental investigation or other proceeding (x) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to have an
order for relief entered with respect to any Borrower, or seeking to adjudicate
any Borrower a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to any Borrower or any Borrower's debts, or (y) seeking appointment
of a receiver (other than a Borrowers seeking the appointment of a receiver
during the pendency of a foreclosure action against such Borrower commenced by
Lender), trustee, custodian or other similar official for any Borrower or for
all or substantially all of any Borrower's assets or (2) any Borrower ever
ceases to be a Special Purpose Bankruptcy Remote Entity.
(c) Notwithstanding anything to the contrary set forth in Section
11.1(a), the provisions of Section 11.1(a) shall be void and of no effect, and
the Loan shall become fully recourse to Borrowers, if any Borrower or any Person
acting on behalf of any Borrower shall breach or violate any of the provisions
of Section 11.17(b) hereof.
11.2 NOTICES. All notices, consents, approvals and requests required or
-------
permitted hereunder or under any other Loan Document (a "NOTICE") shall be given
in writing and shall be effective for all purposes if hand delivered or sent (i)
by certified or registered United States mail, postage prepaid, or (ii) by (A)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and (B) telecopier (with answer back
acknowledged), in any case addressed as follows (or to such other address or
Person as a party shall designate from time to time by notice to the other
party): If to Lender: The Capital
<PAGE>
Company of America LLC, Two World Financial Center, Building B, New York, New
York 10281, Attention: Barry Funt, Telecopier (212) 667-1567, with copies to:
Capital America Client Services, 600 East Las Colinas Blvd., Suite 1300, Irving,
Texas 75039, Attention: Legal Department, Telecopier (972) 401-8554 and Kaye,
Scholer, Fierman, Hays & Handler, LLP, 425 Park Avenue, New York, New York
10022, Attention: Stephen Gliatta, Telecopier: (212) 836-7156; if to Borrower:
c/o Westfield Corporation, Inc., 11601 Wilshire Boulevard, 12/th/ Floor, Los
Angeles, CA 90025, Attention: President, Telecopier: (310) 478-8776, with a copy
to: Westfield Corporation, Inc., 11601 Wilshire Boulevard, 12/th/ Floor, Los
Angeles, CA 90025, Attention: Office of Legal Counsel, Telecopier: (310) 478-
8776, with a copy to Debevoise & Plimpton, 875 Third Avenue, New York, New York
10028, Attention: Barry Mills. A notice shall be deemed to have been given: in
the case of hand delivery, at the time of delivery; in the case of registered or
certified mail, when delivered or the first attempted delivery on a Business
Day; or in the case of expedited prepaid delivery, upon the first attempted
delivery on a Business Day.
11.2.1 BORROWERS' AGENT. (a) Each of the Borrowers hereby makes,
----------------
constitutes and appoints Borrowers' Agent the true and lawful attorney-in-fact
of such Borrower, with the power from time to time, in the name, place and stead
of such Borrower, to give Lender directions of any kind with respect to the
funding of Advances and to give and receive notices of any kind on behalf of
such Borrower under this Agreement or any of the other Loan Documents. The
power-of-attorney shall bind each of the Initial Borrowers and all Borrowers who
hereafter become signatories to this Agreement.
(b) Borrowers' Agent shall notify Lender of the names of its
officers and employees authorized to request and take other actions on behalf of
Borrowers (each a "RESPONSIBLE OFFICER") and shall provide Lender with a
specimen signature of each such officer or employee. Lender shall be entitled to
rely conclusively on a Responsible Officer's authority to give and receive
notices and take other all other actions of any kind on behalf of Borrowers or
any of them until Lender receives written notice to the contrary. Lender shall
have no duty to verify the authenticity of the signature appearing on any
notice.
11.3 BROKERS AND FINANCIAL ADVISORS. Each Borrower hereby represents that
------------------------------
it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the Loan. Borrowers and Lender
shall indemnify and hold the other harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any Person that such Person acted on behalf of the indemnifying
party in connection with the transactions contemplated herein. The provisions
of this Section 11.3 shall survive the expiration and termination of this
Agreement and the repayment of the Debt.
11.4 RETENTION OF SERVICER. Lender reserves the right to retain the
---------------------
Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, any Pooling and Servicing Agreement or similar agreement entered into
as a result of a Secondary Market Transaction, the Cash
<PAGE>
Management Agreement or otherwise, together with such other powers as are
reasonably incidental thereto. Borrowers shall pay any reasonable fees and
expenses of the Servicer in connection with a release or substitution of any
Collateral Properties, assumption or modification of the Loan, enforcement of
the Loan Documents or any other action taken by Servicer hereunder on behalf of
Lender.
11.5 SURVIVAL. This Agreement and all covenants, agreements,
--------
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as any of the Debt is unpaid. Each Borrower's covenants and agreements
in this Agreement shall inure to the benefit of the respective legal
representatives, successors and assigns of Lender.
11.6 LENDER'S DISCRETION. Whenever pursuant to this Agreement or any
-------------------
other Loan Document, Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory shall (except as is otherwise
specifically herein provided) be in the sole discretion of Lender and shall be
final and conclusive.
11.7 GOVERNING LAW. (a) THIS AGREEMENT WAS MADE BY LENDER AND ACCEPTED BY
-------------
BORROWERS IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED
PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND PROCEDURES RELATING TO
ENFORCEMENT OF THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED
BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE
VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT. TO THE
FULLEST EXTENT PERMITTED BY LAW, EACH BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO (S) 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
<PAGE>
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR ANY
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, PURSUANT TO (S) 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, AND EACH BORROWER WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. EACH BORROWER DOES HEREBY
DESIGNATE AND APPOINT CT CORPORATION SYSTEM AT 1633 BROADWAY, NEW YORK, NEW YORK
10019, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE
OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID
SERVICE OF SUCH BORROWER MAILED OR DELIVERED TO SUCH BORROWER IN THE MANNER
PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON SUCH BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW
YORK. EACH BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED
ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO
TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW
YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS),
AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT
CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR
11.8 MODIFICATION; WAIVER IN WRITING. No modification, amendment,
-------------------------------
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor consent to any departure by any Borrower
therefrom, shall in any event be effective unless the same shall be in a writing
signed by the party against whom enforcement is sought, and then such waiver or
consent shall be effective only in the specific instance, and for the purpose,
for which given. Except as otherwise expressly provided herein, no notice to or
demand on any Borrower shall entitle such Borrower or any other Borrower to any
other or future notice or demand in the same, similar or other circumstances.
11.9 DELAY NOT A WAIVER. Neither any failure nor any delay on the part of
------------------
Lender in insisting upon strict performance of any term, condition, covenant or
agreement, or exercising any right, power, remedy or privilege hereunder, or
under any other Loan Document, shall operate as or constitute a waiver thereof,
nor shall a single or partial exercise thereof preclude any other future
exercise, or the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under any Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under the Loan Documents, or to declare an Event of Default for
failure to effect prompt payment of any such other amount.
<PAGE>
11.10 TRIAL BY JURY. BORROWERS AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL
-------------
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING
IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY BORROWERS AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY
OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
OTHER.
11.11 HEADINGS. The Section headings in this Agreement are included herein
--------
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
11.12 SEVERABILITY. Wherever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.13 PREFERENCES. To the extent any Borrower makes a payment to Lender, or
-----------
Lender receives proceeds of any collateral, which is in whole or part
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the Debt or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender. This provision
shall survive the expiration or termination of this Agreement and the repayment
of the Debt.
11.14 WAIVER OF NOTICE. No Borrower shall be entitled to any notices of any
----------------
nature whatsoever from Lender except with respect to matters for which this
Agreement or any other Loan Document specifically and expressly provides for the
giving of notice by Lender to such Borrower and except with respect to matters
for which such Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Each Borrower hereby expressly waives
the right to receive any notice from Lender with respect to any matter for which
no Loan Document specifically and expressly provides for the giving of notice by
Lender to such Borrower.
11.15 REMEDIES OF BORROWER. In the event that a claim or adjudication is
--------------------
made that Lender or its agent, including Servicer, has acted unreasonably or
unreasonably delayed acting in
<PAGE>
any case where by law or under any Loan Document, Lender or such agent, as the
case may be, has an obligation to act reasonably or promptly, each Borrower
agrees that neither Lender nor its agents, including Servicer, shall be liable
for any monetary damages, and such Borrower's sole remedy shall be to commence
an action seeking injunctive relief or declaratory judgment. Any action or
proceeding to determine whether Lender has acted reasonably shall be determined
by an action seeking declaratory judgment. Each Borrower specifically waives any
claim against Lender and its agents, including Servicer, with respect to actions
taken by Lender or its agents on any Borrower's behalf pursuant to Section
9.2.5.
11.16 PRIOR AGREEMENTS. This Agreement and the other Loan Documents contain
----------------
the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Loan Documents; provided, however, that the
-------- -------
following provisions of the Commitment Letter dated October 16, 1998 between
Lender and Westfield America, Inc. continue to survive: provisions pertaining to
the "Capital America Good Faith Deposit"; provisions of paragraph 6 of such
Commitment Letter pertaining to the application of certain deposits to fees and
expenses payable by Borrowers hereunder; provisions pertaining to the
termination of the "SUV Commitment Letter and Term Sheet"; and provisions
pertaining to the "New Swap" with Westfield America, Inc.
11.17 OFFSETS, COUNTERCLAIMS AND DEFENSES.
-----------------------------------
(a) Each Borrower hereby waives the right to assert a counterclaim,
other than a compulsory counterclaim, in any action or proceeding brought
against it by Lender or its agents, including Servicer. Any assignee of
Lender's interest in and to the Loan Documents shall take the same free and
clear of all offsets, counterclaims or defenses that are unrelated to the Loan
Documents which any Borrower may otherwise have against any assignor of such
documents, and no such unrelated offset, counterclaim or defense shall be
interposed or asserted by any Borrower in any action or proceeding brought by
any such assignee upon such documents, and any such right to interpose or assert
any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by each Borrower.
(b) Each Borrower agrees that each Advance made by Lender hereunder
may be transferred, assigned or sold separately by Lender, including a transfer
into a Secondary Market Transaction (any transferred, assigned or sold advance,
a "TRANSFERRED ADVANCE"). Each Borrower agrees that if Lender shall fail to
-------------------
make any future Advance required hereunder, neither such Borrower, nor any other
Borrower, nor any Person acting on behalf of any Borrower shall have any right
of set-off, offset, or recoupment, or any similar right, against any Transferred
Advance, and neither such Borrower, nor any other Borrower, nor any Person
acting on behalf of any Borrower shall withhold or fail to make any payment due,
or perform any other obligation, under any Transferred Advance, and neither such
Borrower, nor any other Borrower, nor any Person acting on behalf of any
Borrower shall assert the failure by Lender to make any such future Advance as a
defense to its obligations to pay and perform with respect to any Transferred
Advance, and neither such Borrower, nor any other Borrower, nor any Person
acting on behalf of
<PAGE>
any Borrower shall make any claim, or bring any action, suit or proceeding,
against the owner of any Transferred Advance as a result of such failure by
Lender to make a future Advance. Each Borrower agrees to indemnify Lender and
each owner of a Transferred Advance, and to hold Lender and each owner of a
Transferred Advance harmless against, any action, claim, proceeding, liability,
cost or expense (including attorneys' fees and expenses) arising out of or
related to a breach or violation by such Borrower or any other Borrower or any
Person acting on behalf of any Borrower of Borrowers' agreements in this Section
11.17(b). In the event that any Borrower or any Person acting on behalf of any
Borrower shall breach or violate any of its agreements in this Section 11.17(b),
each Borrower agrees that the Loan shall immediately become full recourse to
Borrowers. For purposes of this Section 11.17(b), all references to Lender shall
not include any successor or assignee of the initial Lender unless such
successor or assignee expressly assumes the obligation of the initial Lender to
make one or more future Advances under this Agreement.
11.18 PUBLICITY. All news releases, publicity or advertising by any
---------
Borrower or its Affiliates through any media intended to reach the general
public, which refers to the Loan Documents, the Loan, Lender, any member of the
CCA Group, a Loan purchaser, the Servicer or the trustee in a Secondary Market
Transaction, shall be subject to the prior written approval of Lender.
11.19 NO USURY. Borrowers and Lender intend at all times to comply with
--------
applicable state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under state law) and that this Section 11.19 shall
control every other agreement in the Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under the Note or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Debt, or if Lender's
exercise of the option to accelerate the maturity of the Loan or any prepayment
by a Borrower results in such Borrower having paid any interest in excess of
that permitted by applicable law, then it is Borrowers' and Lender's express
intent that all excess amounts theretofore collected by Lender shall be credited
against the unpaid Principal and all other Debt (or, if the Debt has been or
would thereby be paid in full, refunded to the applicable Borrower(s)), and the
provisions of the Loan Documents immediately be deemed reformed and the amounts
thereafter collectible thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for thereunder.
All sums paid or agreed to be paid to Lender for the use, forbearance or
detention of the Loan shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Loan until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum lawful rate from time to time in effect
and applicable to the Debt for so long as the Debt is outstanding.
Notwithstanding anything to the contrary contained in any Loan Document, it is
not the intention of Lender to accelerate the maturity of any interest that has
not accrued at the time of such acceleration or to collect unearned interest at
the time of such acceleration.
<PAGE>
11.20 CONFLICT; CONSTRUCTION OF DOCUMENTS. In the event of any conflict
-----------------------------------
between the provisions of this Agreement and any of the other Loan Documents,
the provisions of this Agreement shall control. The parties hereto acknowledge
that each is represented by separate counsel in connection with the negotiation
and drafting of the Loan Documents and that the Loan Documents shall not be
subject to the principle of construing their meaning against the party that
drafted them.
11.21 NO THIRD PARTY BENEFICIARIES. Except as provided in the following
----------------------------
sentence, the Loan Documents are solely for the benefit of Lender and Borrowers
and nothing contained in any Loan Document shall be deemed to confer upon anyone
other than the Lender and Borrowers any right to insist upon or to enforce the
performance or observance of any of the obligations contained therein. Each of
the current owners of the properties identified on Schedule 10 hereto is an
-----------
intended third party beneficiary of Lender's obligation to make Loans as
described in Article II above.
----------
11.22 YIELD MAINTENANCE PREMIUM. Each Borrower acknowledges that Lender
-------------------------
intends to enter into a Secondary Market Transaction which may result in various
classes of Securities with different coupon rates. Each Borrower also
acknowledges that (i) the proceeds of any partial prepayment of Principal may be
utilized to retire Securities bearing a coupon rate lower than the Interest
Rate, (ii) that following such prepayment the remaining outstanding Securities
may bear a weighted average coupon rate in excess of the Interest Rate and (iii)
that, absent the Yield Maintenance Premium payable hereunder in connection with
such prepayment, Lender will not receive the benefits intended to be conferred
by the Loan Documents. For these reasons, and to induce Lender to make the
Loans, Borrowers expressly waive any right or privilege to prepay the Loans
except as may be specifically permitted herein and agree that, except as
expressly provided for herein, all partial prepayments, if any, whether
voluntary or involuntary, will be accompanied by the Yield Maintenance Premium.
Such Yield Maintenance Premium shall be required whether payment is made by a
Borrower, by a Person on behalf of Borrower, or by the purchaser at any
foreclosure sale, and may be included in any bid by Lender at such sale. Each
Borrower further acknowledges that (A) it is a knowledgeable real estate
developer and/or investor; (B) it fully understands the effect of the provisions
of this Section 11.22, as well the other provisions of the Loan Documents; (C)
the making of the Loans by Lender at the Interest Rate and other terms set forth
in the Loan Documents are sufficient consideration for such Borrower's
obligation to pay a Yield Maintenance Premium (if required); and (D) Lender
would not make the Loans on the terms set forth herein without the inclusion of
such provisions. Borrowers also acknowledge that the provisions of this
Agreement limiting the right of prepayment and providing for the payment of the
Yield Maintenance Premium and other charges specified herein were independently
negotiated and bargained for, and constitute a specific material part of the
consideration given by Borrowers to Lender for the making of the Loans.
11.23 ASSIGNMENT. The Loan, the Note, the Loan Documents and all Lender's
----------
rights, title, obligations and interests therein may be assigned by Lender at
any time in its sole discretion whether by operation of law (pursuant to a
merger or other successor in interest) or otherwise. Subject to the provisions
of Section 11.17, upon such assignment, all references to Lender in this
<PAGE>
Loan Agreement and in any Loan Document shall be deemed to refer to such
assignee or successor in interest and such assignee or successor in interest
shall thereafter stand in the place of Lender; provided, however that the
original named Lender herein shall not be released of its obligations in respect
of Advances which Lender is thereafter required to make hereunder. No Borrower
may assign its rights, interests or obligations under this Loan Agreement or
under any of the Loan Documents except as expressly permitted hereunder.
11.24 LIABILITIES NOT JOINT AND SEVERAL. Each Borrower shall be liable
---------------------------------
as a primary obligor (as distinguished from liability as a guarantor) only for
such Borrower's Allocable Share of the Obligations. If any Borrower shall for
any reason be released of any of its Obligations (other than an Obligation as to
which the released Borrower's Allocable Share was 100%) pursuant to the Loan
Documents, then each Borrower's Allocable Share of such Obligation shall be
equal to a fraction, the numerator of which is such Borrower's then Allocated
Note Amount and the denominator of which is the then aggregate Allocated Note
Amounts of all Borrowers who have not been released of their liability for such
Obligation.
11.25 THIRD PARTY GUARANTIES. Lender agrees that upon request by a
----------------------
Borrower, Lender will accept guaranties of a portion of such Borrower's
obligations hereunder from third parties designated by such Borrower, provided
that (i) the form of such guaranties shall be reasonably acceptable to Lender
and (ii) all Borrowers and the Oakridge Guarantor shall execute such instruments
as Lender may reasonably request to confirm that neither the delivery of such
new guaranties, nor any waiver, extension, modification, forbearance or release
of or with respect to such new guaranties, will affect in any way any of the
obligations of any Borrower or the Oakridge Guarantor under any Loan Document.
[Signatures on the following page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
PARKWAY PLAZA LLC
By: Parkway Plaza, Inc.
Managing Member
By: /s/ Irv Hepner
--------------
Name: Irv Hepner
Title: Secretary
HORTON PLAZA LLC
By: Horton Plaza, Inc.
Managing Member
By: /s/ Irv Hepner
--------------
Name: Irv Hepner
Title: Secretary
FOX HILLS MALL LLC
By: Fox Hills Mall, Inc.
By: /s/ Irv Hepner
--------------
Name: Irv Hepner
Title: Secretary
OAKRIDGE MALL LLC
By: Oakridge Mall, Inc.
Managing Member
By: /s/ Irv Hepner
--------------
Name: Irv Hepner
Title: Secretary
<PAGE>
THE CAPITAL COMPANY OF AMERICA LLC
By: /s/ Wayne Brandt
________________________
Name: Wayne Brandt
Title: Managing Director
The undersigned hereby agrees to the provisions of Section 11.1(c) and Section
11.17(b)
WESTFIELD AMERICA, INC.
By: /s/ Irv Hepner
---------------
Irv Hepner
Secretary
<PAGE>
Schedule 1
----------
Location of Properties
----------------------
1. Fox Hills Mall: Culver, Los Angeles County, California
2. Horton Plaza: San Diego, San Diego County, California
3. Parkway Plaza: El Cajon, San Diego County, California
4. Oakridge Mall: San Jose, Santa Clara County, California
S1-1
<PAGE>
Schedule 2
----------
Matters Regarding Representations
---------------------------------
None
S2-1
<PAGE>
Schedule 3
----------
Initial Borrowers
-----------------
1. Fox Hills Mall LLC, a Delaware limited liability company
2. Horton Plaza LLC, a Delaware limited liability company
3. Oakridge Mall LLC, a Delaware limited liability company
4. Parkway Plaza LLC, a Delaware limited liability company
S3-1
<PAGE>
Schedule 4
----------
Required Repairs
----------------
<TABLE>
<S> <C>
Fox Hills Mall $143,125
Horton Plaza $ 1,500
Oakridge Mall $ 12,500
Parkway Plaza $120,490
</TABLE>
S4-1
<PAGE>
Schedule 6
----------
Replacement Reserve Fund (Initial Borrowers)
--------------------------------------------
<TABLE>
<S> <C>
Fox Hills Mall $98,719.08
Horton Plaza $11,302.75/month
Oakridge Mall $13,254/month
Parkway Plaza $9,844/month
</TABLE>
S6-1
<PAGE>
Schedule 7
----------
Material Contracts
------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Mall Kellermeyer Building 30 days' written notice with 12/99
Service-Maintenance 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Landscape Services 30 days' written notice with 4/99
Landscaping (exterior) 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Interiorscapes 30 days' written notice with 4/99
Landscaping (interior) 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Fox Hills Mall Merchants Building 30 days' written notice with 2/18/99
Maintenance 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Centre Scapes 30 days' written notice with 5/31/98 Holdover
Landscaping (exterior) 48 hours written notice of month to month
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Rohan & Associates Air 30 days' written notice with 3/99
Conditioning Maint. 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Montgomery Kone Contract to be terminated 1/31/99
Elevator Maintenance in writing by owner and by
an officer and the contractor
- --------------------------------------------------------------------------------------------------------------
Horton Plaza Merchants Building 30 days' written notice with 11/25/98
Maintenance 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Brookwood Landscape 30 days' written notice with 1/1/99
Landscaping 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
S7-1
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EDCO Trash one year Renews every
March 1/st/
- -------------------------------------------------------------------------------------------------------------
Marcel's Power Parking 30 days' written notice with 1/1/99
Lot Sweeping 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Oakridge Mall Shrine Maintenance Inc. 30 days' written notice with 9/30/98
48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Landscaping Management 30 days' written notice with 12/3/98
Landscaping (exterior) 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Crystal Springs 30 days' written notice with 3/31/2000
Landscape Company 48 hours written notice of
Landscaping (interior) intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Universal Sweep 30 days' written notice with 3/31/2000
Parking Lot Sweeping 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Parkway Plaza Merchants Building 30 days' written notice with 2/23/99
Maintenance 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Brookwood Landscape 30 days' written notice with 12/31/98
Landscaping (exterior) 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Ram Air Conditioning 30 days' written notice with 12/31/98
Maintenance 48 hours written notice of
intention to exercise right
of termination.
- -------------------------------------------------------------------------------------------------------------
Universal Refuse Removal City Contract no term
- -------------------------------------------------------------------------------------------------------------
Crestwood Plaza Interstate Cleaning written notice of termination 1/14/2000
Corporation
Maintenance
- -------------------------------------------------------------------------------------------------------------
</TABLE>
S7-2
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Professional Security may be canceled by either 1/14/2000
Consultants party without cause by giving
30 day notice of cancellation
in writing.
- -------------------------------------------------------------------------------------------------------------
Johnson Controls 30 days' written notice. 12/31/98
Air Conditioning
Maintenance
- -------------------------------------------------------------------------------------------------------------
BioLogix Cleaning 8/31/98
- -------------------------------------------------------------------------------------------------------------
Enfield Square The Slanetz Corp - 1/31/99
Snow Removal
- -------------------------------------------------------------------------------------------------------------
Interstate Cleaning may be canceled by either 1/31/2000
Corporation - party without cause by giving
Maintenance 30 day notice in writing.
- -------------------------------------------------------------------------------------------------------------
Mid Rivers Mall The Brickman Group 30 days' written notice 12/31/98
Landscape Maintenance
- -------------------------------------------------------------------------------------------------------------
Interstate Cleaning 30 days' written notice 1/31/99
Corporation
Maintenance
- -------------------------------------------------------------------------------------------------------------
Security 30 days' written notice 3/14/2000
- -------------------------------------------------------------------------------------------------------------
Parking Lot may be canceled by either 12/31/98
Maintenance party without reason with
or without cause by the giving
5 day notice of cancellation
in writing.
- -------------------------------------------------------------------------------------------------------------
Northwest Plaza ICC-Maintenance 30 day written notice of 1/31/2000
termination
- -------------------------------------------------------------------------------------------------------------
IPC International - month to month month to month
Security
- -------------------------------------------------------------------------------------------------------------
Otis Elevator/Escalator 30 days' written notice 8/23/99
Service
- -------------------------------------------------------------------------------------------------------------
Brickman Group 30 days' written notice 11/30/98
Exterior Landscaping
- -------------------------------------------------------------------------------------------------------------
Plaza Bonita Professional Security 30 days' written notice by 1/31/2000
Consultants-Security either party
- -------------------------------------------------------------------------------------------------------------
Interstate Cleaning may be canceled by either 9/30/99
Corporation - party without cause by giving
Maintenance 30 day notice in writing
- -------------------------------------------------------------------------------------------------------------
</TABLE>
S7-3
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Brookwood Landscape, may be canceled by either 9/30/98
Inc.-Landscaping party without cause by giving
30 day notice in writing
- -------------------------------------------------------------------------------------------------------------
Montgomery 10/31/98
Elevator/Escalator
Service
- -------------------------------------------------------------------------------------------------------------
Plaza West Covina Professional Security Contractor shall promptly 3/7/2000
Consultant-Security take all action necessary to
fully comply with the terms
within 24 hours after written
notice
- -------------------------------------------------------------------------------------------------------------
Interstate Cleaning 30 days' written notice 6/30/99 and 6/30/2000
Corporation
Maintenance
- -------------------------------------------------------------------------------------------------------------
Centre Scapes, Inc. - Contractor shall promptly 5/31/99
Landscaping take all action necessary to
fully comply with the terms
within 24 hours after written
notice
- -------------------------------------------------------------------------------------------------------------
Montgomery Kone- 10/31/98
Elevator/Escalator
Service
- -------------------------------------------------------------------------------------------------------------
University Towne Center ISS-Maintenance 30 day written notice of Expired
termination with 8 hours
written notice of intent to
terminate
- -------------------------------------------------------------------------------------------------------------
IPC International- 30 day written notice of 12/31/98
Security termination with 48 hours
written notice of intent to
terminate
- -------------------------------------------------------------------------------------------------------------
USA Waste-Trash 30 day written notice of 12/31/98
termination with 8 hours
written notice of intent to
terminate
- -------------------------------------------------------------------------------------------------------------
Marcel's Power 30 day written notice of 2/1/99
Sweeping-Parking lot termination with 48 hours
Maintenance written notice
- -------------------------------------------------------------------------------------------------------------
</TABLE>
S7-4
<PAGE>
Schedule 8
----------
Description of Crestwood Alteration
-----------------------------------
CRESTWOOD PLAZA
---------------
Crestwood, Missouri
Summary
- -------
Crestwood Plaza is a single-level regional mall located in the St. Louis suburb
of Crestwood, Missouri. The center, totaling 1,019,000 s.f., is anchored by
Dillard's, Famous-Barr, and Sears. The proposed redevelopment consists of an
additional 27,000 s.f. of specialty stores and anticipates construction to begin
in January 1999 with a scheduled completion date of October 1999.
<TABLE>
<S> <C>
Project Cost:
Construction Cost $4,353,304
Indirect Cost 2,984,893
----------
Total Project Cost $7,228,197
==========
Income $ 729,540
==========
Yield 10.1%
IRR 14.5%
</TABLE>
Management recommends that the Board of Directors approve the expenditure of
funds to proceed with the project.
Finance
Total project cost will be funded through the existing unsecured corporate
credit facility.
S8-1
<PAGE>
CRESTWOOD PLAZA
Property Description
- --------------------
Crestwood Plaza is a one-level enclosed super regional mall located in the St.
Louis suburb of Crestwood, Missouri, approximately 10 miles southwest of
downtown St. Louis. The shopping center, which was acquired in 1998 has a total
gross leaseable area of 1,019,000 s.f., and is anchored by Dillard's (170,000
s.f.), Sears (221,000 s.f.), and Famous-Barr (160,000 s.f.). The center has 150
specialty stores with a strong representation of upscale tenants. The site
consists of 47 acres.
Redevelopment Opportunity
- -------------------------
The Crestwood Plaza expansion consists of the conversion of the existing
pedestrian bridge on the east side of Sears into a traditional mall and the
addition of 27,000 s.f. of gross retail area. The existing bridge is narrow and
tunnel like and is not architecturally harmonious with the existing mall
elements.
The modifications to and the expansion of the common area will create a natural
connection between the east and west sections of the mall resulting in better
customer circulation through the mall, increasing its leaseability.
A development application has been submitted to the City of Crestwood for its
review and approval. Planning and Zoning approval was received in June and the
final Board of Alderman approval is anticipated by mid-July.
The anticipated start of construction is in January 1999 with the completion in
October 1999.
S8-2
<PAGE>
CRESTWOOD PLAZA
EXPANSION OF RETAIL BRIDGE
ESTIMATED COST ANALYSIS
<TABLE>
<S> <C>
- ------------------------------------------
Construction Cost $4,353,304
- ------------------------------------------
Indirect Cost:
- ------------------------------------------
Architect & Engineering 435,330
- ------------------------------------------
Predevelopment 228,635
- ------------------------------------------
Municipal Contributions 74,215
- ------------------------------------------
Tenant Allowances 1,242,740
- ------------------------------------------
Owner's Representative 32,500
- ------------------------------------------
Leasing Cost 178,282
- ------------------------------------------
Development Cost 327,250
- ------------------------------------------
Loan Origination Cost 103,084
- ------------------------------------------
Capitalized Interest 252,856
----------
- ------------------------------------------
Subtotal Indirect Cost 2,874,893
- ------------------------------------------
----------
Total Project Cost $7,228,197
==========
- ------------------------------------------
</TABLE>
S8-3
<PAGE>
CRESTWOOD PLAZA
EXPANSION OF RETAIL BRIDGE
INCREMENTAL PROJECT INCOME
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Annual Tenant
Sq. Ft. $/SF Min. Rent Allowance
------- ---- --------- ---------
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail Shops:
New GLA 27,428 $30.00 $822,840 $822,840
------ -------- --------
- -----------------------------------------------------------------------
Subtotal-Retail Shops 27,428 822,840 822,840
- -----------------------------------------------------------------------
Total New Space 27,428 822,840 822,840
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Rent Loss:
- -----------------------------------------------------------------------
The Remington Store (584) (27,302) 58,400
- -----------------------------------------------------------------------
Claire's Accessories (615) (27,601) 61,600
------ -------- --------
- -----------------------------------------------------------------------
Subtotal-Rent Loss (1,199) (54,903) 119,900
- -----------------------------------------------------------------------
Total Project 26,229 767,937 $924,740
====== ========
- -----------------------------------------------------------------------
Less Management Fee 5.0% (38,937)
--------
- -----------------------------------------------------------------------
Net Incremental Project Income $729,540
========
- -----------------------------------------------------------------------
</TABLE>
[MAP OF PROPOSED SITE PLAN HAS BEEN OMITTED.
AVAILABLE UPON WRITTEN REQUEST OF THE COMPANY]
S8-4
<PAGE>
Schedule 9
----------
Specified Agreements
--------------------
OAKRIDGE MALL
None
PARKWAY PLAZA
None
HORTON PLAZA
1. Second Amended Disposition and Development Agreement dated 11/2/81
between the Redevelopment Agency of the City of San Diego and Ernest W.
Hahn, Inc. (predecessor in interest to Borrower), all subsequent
amendments and supplements thereto and various Implementation Agreements
related thereto.
2. Payment Agreement dated October 18, 1982 between the Redevelopment
Agency of the City of San Diego and EWH 1979 Development Company, L.P.
(predecessor in interest to Borrower), as amended 12/18/87, 6/10/93 and
11/21/95.
FOX HILLS MALL
1. Participation Agreement dated 8/19/96 between H, B-H Associates
(predecessor in interest to Borrower), Culver City Redevelopment Agency
and Broadway Stores, Inc. (now Macy's).
2. Participation Agreement dated 12/19/96 between H, B-H Associates
(predecessor in interest to Borrower) and Culver City Redevelopment
Agency.
3. Disposition and Development Agreement (Slauson-Sepulveda Redevelopment
Project) dated 6/26/72 between Culver City Redevelopment Agency and
H, B-H Associates (predecessor in interest to Borrower) and all
subsequent amendments and supplements thereto.
S9-1
<PAGE>
Schedule 10
-----------
Other Properties
----------------
1. North West Plaza: St. Maryland Heights, St. Louis County, Missouri
1. Crestwood Plaza: Crestwood, St. Louis County, Missouri
1. Enfield Square: Enfield, Hartford County, Connecticut
1. Plaza Bonita: National City, San Diego County, California
1. Plaza West Covina: West Covina, Los Angeles County, California
1. Mid Rivers Mall: St. Peters, St. Charles County, Missouri
1. West Park Mall: Cape Girardeau, Cape Girardeau County, Missouri
1. Los Cerritos Mall: Los Cerritos, Los Angeles County, California
1. Capital Mall: Olympia, Thurston County, Washington
S10-1
<PAGE>
Schedule 11
-----------
Undelivered Documents
---------------------
A. Fox Hills Mall
Assignment of Lease dated December 31, 1975 from The May Department Stores
Company to Jack G. Weinstock and Esther Weinstock, Trustee under the Trust
Agreement dated April 22, 1971.
B. Parkway Plaza
Supplemental Agreement dated July 24, 1994 (re: J.C. Penney).
C. Oakridge Mall
1. Sears
-----
a. Documentation adding Marshall Field to REA.
b. Assignment of Lease dated October 15, 1977 from Ernest W. Hahn,
Inc. to Oakridge Associates.
c. Letter Agreement dated May 15, 1982 from Oakridge Associates to
Montgomery Ward.
2. Montgomery Ward
---------------
a. Assignment of Lease dated February 1, 1973 from Montgomery Ward
Development Corporation to Sanward Associates.
b. Consent and Assumption Agreement dated December 31, 1973 between
Pearlblossom Development Corporation and Ernest W. Hahn, Inc.
c. Assignment dated November 23, 1977 from Ernest W. Hahn, Inc. to
Oakridge Associates.
d. Letter Agreement dated June 24, 1986 from Ernest W. Hahn, Inc. to
Montgomery Ward.
S11-1
<PAGE>
Schedule 12
-----------
Oakridge Option Agreement and Subordinate Deed of Trust
-------------------------------------------------------
1. Option Agreement dated 3/19/91 between William J. Mabie and Inez E. Mabie,
as Co-Trustees of the Mabie Revocable Trust, William J. Mabie, as Trustee
of the Trust of Herbert F. Mabie, deceased, as Lessor, and Oakridge
Associates (predecessor in interest to Borrower), as Lessee.
2. Deed of Trust dated 3/19/91 made by Oakridge Associates (predecessor in
interest to Borrower), as trustor, to Commonwealth Land Title Insurance
Company, as trustee for the benefit William J. Mabie, and individual, Inez
E. Mabie, an individual, as trustees of the Mabie Revocable Trust under
Agreement dated 11/13/87, William J. Mabie as trustee of the Trust created
by the Will of Herbert F. Mabie, deceased, as beneficiary, recorded in Book
L647, page 0212, Official Records, Santa Clara County, California.
S12-1
<PAGE>
EXHIBIT A
---------
ASSUMPTION AGREEMENT
This Assumption Agreement (this "Agreement") is made as of this ____
day of __________, ____, by _______________, a __________ limited __________,
having an address at ____________________("Assumption Borrower").
RECITALS
WHEREAS, The Capital Company of America LLC, a Delaware limited
liability company ("Lender"), Fox Hills Mall LLC, a Delaware limited liability
company, Horton Plaza LLC, a Delaware limited liability company, Parkway Plaza
LLC, a Delaware limited liability company and Oakridge Mall LLC, a Delaware
limited liability company (each, an "Individual Initial Borrower" and
collectively, the "Initial Borrowers") entered into that certain Loan Agreement
dated as of October __, 1998 (the "Loan Agreement") with respect to a series of
loans to be made by Lender, subject to the terms and conditions contained
therein, in the aggregate maximum amount of up to $850,000,000 to each of the
Individual Initial Borrowers and each of the persons that becomes a "Borrower"
under the Loan Agreement pursuant to Section 2.1.2 of the Loan Agreement; and
WHEREAS, Assumption Borrower desires to become a Borrower pursuant to
Section 2.1.2 of the Loan Agreement.
NOW THEREFORE, in consideration of the foregoing and the loan be made
by Lender to Assumption Borrower, the receipt and sufficiency of which is hereby
acknowledged, and in furtherance of the terms of the Loan Agreement, Assumption
Borrower hereby acknowledges and agrees as follows:
1. Capitalized terms appearing herein and not otherwise defined shall
have the meanings ascribed to such terms in the Loan Agreement.
2. Assumption Borrower hereby (a) makes all of the representations,
warranties and covenants applicable to a Borrower under the Loan Agreement and
(b) assumes and agrees to be bound by all of the obligations, terms and
conditions of the Loan Agreement applicable to a Borrower thereunder. Without
limiting the foregoing, Assumption Borrower agrees that it shall be primarily
liable for its Allocable Share of the Obligations.
3. All the terms and conditions of the Loan Agreement are incorporated
herein by reference as if all such terms and conditions were set forth herein.
A-1
<PAGE>
4. Assumption Borrower hereby agrees to execute and deliver such other
instruments as Lender may reasonably request from time to time to confirm its
joinder in and assumption of all of its obligations under the Loan Agreement.
5. This Agreement may be relied upon by, shall run to the benefit of and
may be enforced by Lender and its successors and assigns
6. This Agreement shall be governed by the laws of the State of New York
applicable to agreements executed and to be performed in New York.
7. This Agreement cannot be modified, changed, or discharged except by an
agreement in writing signed by Assumption Borrower and Lender.
[Signatures on the following page]
A-2
<PAGE>
IN WITNESS WHEREOF the undersigned has caused this Assumption
Agreement to be duly executed by its duly authorized representatives as of the
day and year first above written.
ASSUMPTION BORROWER:
, a
---------------------------- ---------------
By: , Inc., a
----------------------------------
corporation, its
--------------------------
--------------------------
By:
---------------------------------------
Name:
Title:
ACKNOWLEDGED AND ACCEPTED:
THE CAPITAL COMPANY OF AMERICA LLC
By:
------------------------------
Name:
Title:
A-3
<PAGE>
EXHIBIT B-1
-----------
Form of Manager Consent and Subordination
(Westfield Manager)
MANAGER'S CONSENT AND SUBORDINATION
OF MANAGEMENT AGREEMENT
-----------------------------------
THIS MANAGER'S CONSENT AND SUBORDINATION OF MANAGEMENT AGREEMENT (this
"Agreement"), dated as of _________________, 1998, is executed by the
- ----------
undersigned, ______________________, a _____________________ ("Manager"), as an
inducement to The Capital Company of America LLC, a Delaware limited liability
company (together with its successors and assigns, the "Lender"), to make loans
to ________________, a ___________ limited __________ ("Borrower") and certain
affiliates of Borrower (each a Borrower, and collectively, the "Borrowers") in
an aggregate principal amount not to exceed $850,000,000 (the "Loans") pursuant
to that certain Loan Agreement dated as of October __, 1998 (the "Loan
Agreement"), in connection with various properties, including the property owned
by Borrower known as ___________ (the "Property").
1. Definitions. All capitalized terms not defined herein shall have
-----------
the meanings ascribed thereto in the Loan Agreement.
2. Manager's Representations. Manager warrants and represents to
-------------------------
Lender, as of the date hereof, that the following are true and correct:
a. That Manager has agreed to act as manager of the Property
pursuant to that certain management agreement, between Borrower
and Manager, which agreement is described on Exhibit A attached
---------
hereto and made a part hereof, and has not been amended, modified
or supplemented except as set forth on said Exhibit A (the
---------
"Management Agreement").
--------------------
b. That the entire agreement between Manager and Borrower for the
management of the Property is evidenced by the Management
Agreement.
c. That the Management Agreement constitutes the valid and binding
agreement of Manager, enforceable in accordance with its terms,
and Manager has full authority under all state or local laws and
regulations, to perform all of its obligations under said
Management Agreement.
d. That neither Borrower not Manager is in default in the
performance of any of its obligations under the Management
Agreement.
B1-1
<PAGE>
e. That Manager has received and reviewed a copy of the Loan
Agreement.
3. Manager's Agreements. Manager hereby consents to and agrees to
--------------------
each and every one of the following covenants and agreements for the benefit of
Lender and as a condition to Lender's making the Loans:
a. No termination of Management Agreement. Manager shall not
--------------------------------------
terminate the Management Agreement without first obtaining Lender's written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed. Notwithstanding the foregoing, Manager shall have the right to
terminate the Management Agreement of default by Borrower with respect to non-
payment of the management fee due thereunder by giving Lender thirty (30) days
prior written notice of such termination. In the event Lender shall cure such
non-payment default in the aforesaid thirty (30) day period, then any such
termination notice shall be of no further force or effect.
b. Subordination of Management Agreement to Lien of Mortgages. Any
-----------------------------------------------------------
and all liens, rights and interests (whether choate or inchoate and including,
without limitation, all mechanic's and materialman's liens under applicable law)
owned, claimed or held, or to be owned, claimed or held, by Manager in and to
the Property, other than rights of Manager to receive payment of the basic
management fee and all other amounts payable under the Management Agreement for
periods prior to the termination thereof, are and shall be, and are hereby made,
in all respects subordinate and inferior to the liens and security interests
created or to be created for the benefit of Lender, its successors and assigns,
and securing the repayment of the Debt and including, without limitation, those
created under and by virtue of the Mortgages.
c. Lender's Right to Terminate. Upon the occurrence of an Event of
----------------------------
Default under the Note, the Loan Agreement or any of the other Loan Documents
(each, an "Operative Event"), Manager shall, at the request of Lender, continue
performance, subject to Paragraph 3(d) hereof, on behalf of Lender, of all of
Manager's obligations under the terms of the Management Agreement with respect
to the Property, provided that Lender gives Manager the notice provided for in
Paragraph 3(i) hereof and Lender (or Borrower) performs or causes to be
performed the obligations of Borrower to Manager under the Management Agreement
accruing or arising from and after, and with respect to the period commencing
upon, the effective date of such notice. Notwithstanding anything contained in
the Management Agreement to the contrary, Lender, or Borrower at Lender's
direction pursuant to the Loan Documents, shall have the right to terminate the
Management Agreement upon, or at any time after, Lender or any third party
acquires the Property, whether by foreclosure, deed-in-lieu of foreclosure or
otherwise, by giving Manager thirty (30) day prior written notice of such
termination, in which event Manager shall resign as manager of the Property
effective upon the end of such thirty (30) day period. Manager agrees not to
look to Lender for payment of any accrued by unpaid fees relating to the
Property accruing from and after the effective date of such termination.
B1-2
<PAGE>
d. Cooperation with Management Consultant. If, pursuant to the Loan
--------------------------------------
Agreement, Borrower retains a Management Consultant, Manager shall cooperate
with the Management Consultant to enable the Management Consultant to perform
its responsibilities as described in the Loan Agreement.
e. No Amendments to Management Agreement. Manager will not amend or
-------------------------------------
modify the Management Agreement in any manner which would (i) materially and
adversely affect the management, operation or value of the Property, or (ii)
increase the base management fee payable thereunder, without the prior written
consent of Lender which consent shall not be unreasonably withheld, delayed or
conditioned. In the event Manager fails to secure such approval, the Management
Agreement shall, for the purposes of Manager's obligations to Lender pursuant to
this Agreement, including Manager's obligation aforesaid to continue performance
thereunder for Lender's benefit pursuant to the terms of this Agreement, be
deemed not to have been modified by such amendment.
f. Delivery of Rent Roll and Service Contracts. Within twenty (20)
--------------------------------------------
Business Days after Lender's request therefor, but not more than once in any
calendar quarter, and only to the extent not furnished by Borrower, Manager
shall furnish to Lender a current rent roll of all tenants of the Property,
including a list of which tenants are in default under their respective leases,
and a schedule of all other entities with whom Manager has entered into leases,
contracts or other agreements relating to the Property, together with copies of
all such leases, contracts or agreements.
g. Further Assurances. Manager further agrees, without cost to
------------------
Manager, to (i) execute such affidavits and certificates as Lender shall
reasonably require to further evidence the agreements herein contained, (ii) on
request from Lender, and only to the extent not furnished by Borrower, furnish
Lender with copies of such information as Borrower is entitled to receive under
the Management Agreement, and (iii) at reasonable times, and upon reasonable
advance notice, cooperate with Lender's representative or agent in any
inspection of the Property.
h. Assignment of Rents and Leases. Manager acknowledges that, in
--------------------------------
connection with the Loan, Borrower has executed and delivered to Lender an
Assignment of Rents and Leases, dated as of the date hereof, assigning to
Lender, among other things, all of Borrower's right, title and interest in and
to all of the leases now or hereafter affecting the Property, including any of
Borrower's rights in the security deposits thereunder (to the extent permitted
by applicable law). Manager hereby agrees that upon receipt of written notice
from Lender that a Cash Management Event has occurred under the Loan Agreement
and that Lender has accelerated the indebtedness secured thereby, Manager shall,
upon receipt of Lender's notification therefor, thenceforth deliver to Lender,
for application in accordance with the terms and conditions of the Loan
Agreement and the other Loan documents, all proceeds relating to the Property
then being held by Manager and all rents, security deposits (upon compliance
with any requirements of applicable law with respect thereto and provided that
the same shall not be applied against the principal balance of the Loans except
to the extent required by applicable law
B1-3
<PAGE>
but shall be held and applied in accordance with the applicable leases) and
other proceeds received from the after the date thereof from any and all tenants
or other parties occupying or using any portion of the Property.
i. No Joint Venture. Lender has not obligation to Manager with
----------------
respect to the Debt and Manager shall not be a third party beneficiary with
respect to any of Lender's obligations to Borrower set forth in the Loan
Documents. The relationship of Lender to Borrower is one of a creditor to a
debtor, and Lender is not a joint venturer or partner of Borrower.
j. Lender Not Obligated Under Management Agreement. Manager further
-----------------------------------------------
agrees that, except as hereinafter set forth, nothing herein shall impose upon
Lender any obligation for payment or performance in favor of Manager. In the
event that Lender notifies Manager in writing after an Operative Event that
Lender has elected to assert the rights of Borrower under the Management
Agreement, Lender shall pay Manager the sums due Manager under the terms of the
Management Agreement (subject to and in accordance with the terms of the
Management Agreement and this Agreement) for the period commencing on the
effective date of Lender's notice to Manager and ending on the expiration date
or earlier termination of the Management Agreement.
k. Lender's Reliance on Representations. Manager has executed this
------------------------------------
Agreement for the purpose of inducing the Lender to make the Loans in accordance
with the Loan Agreement and with full knowledge that Lender shall rely upon the
representations, warranties and agreements herein contained when making the
Loans, and that but for this instrument and the representations, warranties and
agreements herein contained, the Lender would not take such actions.
l. Governed by Loan Documents. Manager agrees that until such time
----------------------------
as the Debt has been repaid in full, the terms and provisions of this Agreement
and the Note, the Loan Agreement and the other Loan Documents shall be superior
to the terms and provisions of the Management Agreement with respect to the
payment of any management fees thereunder (other than with respect to payment of
management fees and other amounts payable under the Management Agreement for
any periods prior to the termination thereof) and termination of the Management
Agreement, and to the extent there are any inconsistencies between the
Management Agreement and this Agreement and the Loan Documents with respect to
such terms and provisions, the terms, provisions and conditions in this
Agreement and the Loan Documents shall govern in all respects.
4. Borrower Consent. Borrower has joined herein to evidence its
----------------
consent to all the agreements of Manager contained in this Agreement.
5. Severability. Wherever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision
B1-4
<PAGE>
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
6. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be an original and all of which shall
collectively constitute but one and the same instrument.
7. Assignment. Lender shall have the right to transfer, sell and
----------
assign its interest in this Agreement to any Person. All references to "Lender"
hereunder shall be deemed to include the successors and assigns of Lender.
8. Notices. Any notice, election, request, communication or demand
-------
which is required or permitted to be given or served hereunder shall be in
writing and shall be given or served by hand delivery against receipt, by any
nationally recognized overnight courier service providing evidence of the date
of delivery or by certified mail return receipt requested, postage prepaid,
addressed to Manager at 11601 Wilshire Boulevard, 12/th/ Floor, Los Angeles,
California 90025, Attention: Mark Stefanek, Chief Financial Officer, with copy
to Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, Attention:
Barry Mills, Esq., and to Lender at Two World Financial Center, Building B, New
York, New York 10281, Attention: Barry Funt, with copies to Capital America
Client Services, 600 East Las Conlinas Boulevard, Suite 1300, Irving, Texas
75039, Attention: Legal Department and Kaye, Scholer, Fierman, Hays & Handler,
LLP, 425 Park Avenue, New York, New York 10022, Attention Stephen Gliatta, Esq.,
or at such other address as shall be designated from time to time by Manager or
Lender by notice given in accordance with the provisions of this Section 8. Any
such notice or demand given hereunder shall be effective upon delivery or three
(3) days after mailing aforesaid. All notices, elections, requests,
communications and demands required or permitted hereunder shall be in the
English language.
9. Non-Recourse. Anything contained in this Agreement to the
------------
contrary notwithstanding (except as provided below), Lender's recourse with
respect to any claims arising under or in connection with this Agreement shall
be limited solely to the interest of Manager in the Management Agreement, and
none of (i) Manager or any of its Affiliates, (ii) any Persons who presently or
in the future own any direct ownership interest in Manager or any successor of
Manager (each a "Direct Beneficial Owner") or any affiliate thereof, (iii) any
Person owning, directly or indirectly, any legal or beneficial interest in
Manager or any Direct Beneficial Owner of any Affiliate thereof, or (iv) any
partner, principal, officer, controlling person, beneficiary, trustee, advisor,
shareholder, employee, agent, nominee, Affiliate or director of any Person
described in clauses (i) through (iii) above shall be personally liable for the
performance of any obligation hereunder or the payment of any amount due
hereunder, provided, however, that the foregoing limitation on the personal
-------- -------
liability of the Persons described in clauses (i) through (iv) above shall not
impair the validity of this Agreement or the right of Lender to enforce any of
its rights or remedies hereunder or under any of the other Loan Documents upon
the occurrence of a Cash
B1-5
<PAGE>
Management Event as provided in this Agreement. Nothing contained herein shall
release, impair or otherwise affect any right, remedy or recourse Lender may
have against Manager or Borrower with respect to (a) any fraud or bad faith or
any material and intentional misrepresentation by Manager or its Affiliates made
in connection with the transactions contemplated hereby, (b) bad faith waste by
Manager, (c) any misapplication of Rents following and during the continuance of
an Operative Event, or (d) any misapplication of proceeds of any insurance
policies required to be maintained by Borrower or Manager.
[Remainder of Page Intentionally Left Blank]
B1-6
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
of the day and year first above written.
MANAGER:
___________________________________, a
_________________
By: ______________________________, a
_____________, its ______________
By: ____________________________
Name:
Title:
BORROWER:
___________________________________, a Delaware
limited partnership
By: ______________________________, a Delaware
corporation, its general partner
By: ____________________________
Name:
Title:
B1-7
<PAGE>
Exhibit A
Management Agreement
--------------------
B1-8
<PAGE>
EXHIBIT B-2
-----------
Form of Manager Consent and Subordination
(Manager other than Westfield)
CONSENT AND SUBORDINATION OF MANAGER
____________________, 199___
The Capital Company of America LLC
Two World Financial Center
Building B
New York, New York 10281
Ladies and Gentlemen:
Reference is made to (i) that certain Management Agreement (the "Management
Agree ment"), dated as of ______________, between _____________________ (the
"Borrower") and the undersigned (the "Manager") with respect to the property
known as ________________ and located in the City of _______________,
_____________ County, ___________ (the "Property"), and (ii) that certain Loan
Agreement (the "Loan Agreement") dated as of _________, 199__, between the
Borrower and The Capital Company of America LLC (together with its successors
and assigns, the "Lender"). Any capitalized terms used herein but not defined
herein shall have the same meanings as are ascribed to them in the Loan
Agreement.
The Manager acknowledges and understands that delivery of this letter to you
is a condition to the Lender making a certain loan to the Borrower pursuant to
the Loan Agreement in the original principal amount of up to $______________
(the "Loan").
The Borrower and the Manager hereby agree as follows:
1. The Management Agreement is and shall be subject and subordinate in all
respects to (i) the Mortgage (and to the lien of the Mortgage), (ii) the Loan
Documents, and (iii) any and all modifications, amendments, renewals and/or
substitutions of the Mortgage and/or any of the other Loan Documents. This
paragraph 1 shall be self-operative and no further instrument of subordination
shall be required. If requested, however, the Borrower and/or the Manager shall
execute
B2-1
<PAGE>
and deliver such further instruments as the Lender may deem reasonably necessary
to effectuate this subordination.
2. If there shall have occurred and be continuing an Event of Default and the
Lender shall have obtained (i) title to the Property (or any portion thereof)
whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy sale or
otherwise and/or (ii) possession of the Property (or any portion thereof)
whether personally or through an agent, a receiver or a trustee, the Manager
shall, if and to the extent requested in writing by the Lender, continue
performance under the Management Agreement in accordance with the terms thereof
so long as the Manager is paid compensation thereafter accruing under the
Management Agreement. The Borrower and the Manager understand, however, that
nothing contained herein, in the Mortgage or in any of the other Loan Documents
shall be construed to obligate the Lender to perform or discharge any of the
Borrower's obligations, duties or liabilities under the Management Agreement.
3. Upon the occurrence of any default by the Borrower under the terms of the
Management Agreement, the Manager shall, promptly upon becoming aware thereof,
provide the Lender with notice in writing thereof, and after receipt of said
notice, the Lender shall have the same time period within which to cure said
defaults as the Borrower has under the Management Agreement although the
Borrower and the Manager understand that the Lender shall not have any
obligation to do so. Notwithstanding the foregoing, the failure by the Manager
to notify the Lender of a default under the Management Agreement shall not be
deemed to constitute a waiver by the Manager of such default. Furthermore, the
Borrower and the Manager agree that the Lender may terminate the Management
Agreement (i) in accordance with Section 5.14 of the Loan Agreement or in the
event of the Manager's gross negligence, malfeasance or willful misconduct/1/,
or (ii) by giving five days' notice to the Manager upon the Lender (or a
successor owner, as the case may be) obtaining (A) title to the Property (or any
portion thereof) whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy
sale or otherwise, and/or (B) possession of the Property (or any portion
thereof) whether personally or through an agent, a receiver or a trustee. If
the Lender elects to terminate the Management Agreement in accordance with this
Paragraph 3, the Borrower and the Manager understand and agree that the Manager
shall look solely to the Borrower for any and all fees, charges or other sums
payable to the Manager under the Management Agreement. If the Management
Agreement shall be so terminated by the Lender, the Manager agrees to cooperate
with the Lender to ensure a smooth transition to the new property manager.
4. The Manager hereby confirms that (i) the term of the Management Agreement
shall expire on or before the Optional Prepayment Date, and (ii) if the Debt has
not been repaid in full on or before the Optional Prepayment Date, the term of
the Management Agreement may only be
- ---------------------------
/1/ The Management Agreement must permit the Borrower to terminate the
Management Agreement in the event of the Manager's gross negligence,
malfeasance or willful misconduct.
B2-2
<PAGE>
renewed or extended beyond the Optional Prepayment Date with the prior written
approval of the Servicer./2/
5. This letter shall inure to the benefit of the Lender and its successors
and assigns, including the trustee in a Secondary Market Transaction. In the
event of any inconsistency or conflict with the provisions of this letter and
the provisions of the Management Agreement, the provisions of this letter shall
control.
6. The Manager agrees that it shall not change, amend, modify or terminate
the Management Agreement without the Lender's prior written approval in each
instance, which approval may be given or denied by the Lender in its sole
discretion. If the Manager does so amend, modify or terminate the Management
Agreement without the Lender's prior written approval, such amendment,
modification or termination shall be void ab initio.
7. This letter shall be governed by, and construed in accordance with, the
law of the State of New York.
8. Without limiting the generality of any other provisions contained herein
or in the other Loan Documents, no failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies of the Lender provided
herein and in the other Loan Documents are cumulative and are in addition to,
and are not exclusive of, any rights or remedies provided by law or in equity.
9. The Manager represents and warrants to the Lender that as of the date
hereof (i) the Management Agreement is in full force and effect and has not been
amended, modified, assigned, terminated or supplemented, (ii) the Manager is not
in default under the provisions of the Management Agreement and there is no
condition which, with the giving of notice and/or the lapse of time, would
constitute such a default, and (iii) to the best of Manager's knowledge, the
Borrower is not in default under the provisions of the Management Agreement and
there is no condition which, with the giving of notice and/or the lapse of time,
would constitute such a default.
- ---------------------------
/2/ The Management Agreement must expire on or before the Optional
Prepayment Date and may not be renewed or extended without the prior
written approval of the Servicer.
B2-3
<PAGE>
10. This letter may not be amended, modified, terminated or supplemented
without the written approval of each of the Manager, the Borrower and the
Lender.
Very truly yours,
[MANAGER]
By: _____________________________
Name:
Title:
AGREED AND CONSENTED
TO AS OF ___________________, 199__
[BORROWER]
By: ______________________, its ________
By: ______________________
Name:
Title:
B2-4
<PAGE>
EXHIBIT C
---------
Form of Subordination, Nondisturbance and Attornment Agreement
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Non-Disturbance and Attornment Agreement (this Agreement), made as of
_________, 199__, by and between THE CAPITAL COMPANY OF AMERICA LLC, a limited
liability company organized under the laws of Delaware and having an address at
Two World Financial Center, New York, New York 10281 (the Lender) and
_______________________, a __________________, having an address at
_______________________ (the Tenant);
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, by a lease (as the same may be amended from time to time, the Lease)
dated _______________, 19__, between __________________________ (the Landlord),
as landlord, and Tenant, as tenant, the Landlord leased to Tenant a certain
portion of the building known as and located at _____________________, being
more fully described in said Lease (the Premises);
WHEREAS, the Landlord has executed and delivered to the Lender a mortgage
note in the original principal amount of ______________ ($________) Dollars,
which note is secured by, among other things, a mortgage or deed of trust (which
mortgage or deed of trust, and all amendments, renewals, increases,
modifications, replacements, substitutions, extensions, spreaders, restatements
and consolidations thereof and all re-advances thereunder and additions thereto
is referred to as the Mortgage) encumbering certain land being more particularly
described in Schedule A attached hereto (the Land), together with the buildings
and other improvements located or to be located thereon (such buildings and
other improvements and the Land, collectively, the Mortgaged Property)
including, without limitation, the Premises.
NOW, THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
1. The Lease, as the same may hereafter be modified, amended or extended,
is and shall be subject and subordinate in each and every respect to the
Mortgage, to all renewals, modifications, replacement and extensions thereof, to
all terms, conditions and provisions thereof and to each and every advance
heretofore made or hereafter made under the Mortgage.
C-1
<PAGE>
2. The Lender agrees that if any action or proceeding is commenced by the
Lender for the foreclosure of the Mortgage or the sale of the Mortgaged
Property, the Tenant shall not be named as a party therein (unless required by
law), and the sale of the Mortgaged Property in any such action or proceeding
and the exercise by the Lender of any of its other rights under the Mortgage, or
under the note secured by the Mortgage, shall be made subject to all rights of
the Tenant under the Lease, provided that at the time of the commencement of any
such action or proceeding and at the time of any such sale or exercise of any
such other rights, the Tenant shall not be in default under any of the terms,
covenants or conditions of the Lease or of this Agreement on the Tenant's part
to be observed or performed.
3. The Tenant shall concurrently give the Lender copies of all notices
and other communications given by the Tenant to the Landlord relating to (i)
defaults or alleged defaults on the part of the Landlord or the Tenant under the
Lease, (ii) any violations of any ordinances, statutes, laws, rules, codes,
regulations or requirements of any governmental agency, and (iii) any assignment
or subletting of all or any portion of the Premises.
4. In the event of any act or omission by the Landlord which would give
the Tenant the right, either immediately or after the lapse of a period of time,
to terminate the Lease, or to claim a partial or total eviction, the Tenant will
not exercise any such right (i) until it has sent written notice of such act or
omission to the Lender as provided herein, and (ii) unless the Lender shall have
failed within sixty (60) days after receipt of such notice to cure such default
or, if such default is not reasonably susceptible of cure within such sixty (60)
days, the Lender shall not have commenced the cure of such default within sixty
(60) days of receipt of such notice and thereafter diligently pursued such
action.
5. In the event that the interest of the Landlord is transferred by
reason of, or assigned in lieu of foreclosure or other proceedings for
enforcement of the Mortgage, then, subject to the provisions of this Agreement,
the Lease shall nevertheless continue in full force and effect and, upon the
written request of the Lender, the Tenant shall attorn to the Lender and shall
recognize the Lender as its landlord. Although the foregoing provision shall be
self-operative, in order to confirm such attornment, upon the request of the
Lender, the Tenant shall execute and deliver to the Lender (i) an agreement of
attornment in form and content reasonably satisfactory to the Lender, at the
Tenant's sole cost and expense, confirming the foregoing attornment and agreeing
to perform all the terms, covenants and conditions of the Lease on the Tenant's
part to be performed for the benefit of such Lender with the same force and
effect as if such Lender were the Landlord originally named in this Lease or
(ii) a new lease with the Lender, as landlord, for the remaining term of the
Lease and otherwise on the same terms and conditions and with the same options,
if any, then remaining. Nothing herein contained shall be construed however, to
obligate the Lender to cure any default by the Landlord under the Lease
occurring prior to any date on which the Lender shall succeed to the rights of
the Landlord, it being expressly agreed that under no circumstances shall the
Lender be obligated to remedy any such default.
C-2
<PAGE>
6. If the Lender shall succeed to the interest of the Landlord, the
Lender shall have no personal liability as successor to the Landlord, and the
Tenant shall look only to the estate and property of the Lender in the Mortgaged
Property or the proceeds therefor for the satisfaction of the Tenant's remedies
for the collection of a judgment (or other judicial process) requiring the
payment of money in the event of any default by the Lender as landlord under the
Lease. In addition, the Lender as holder of the Mortgage or as landlord under
the Lease if it succeeds to that position, shall in no event (i) be liable to
the Tenant for any act or omission of any prior landlord, (ii) be subject to any
offset or defense which the Tenant might have against any prior landlord, (iii)
be liable to the Tenant for any liability or obligation of any prior landlord
occurring prior to the date that the Lender or any subsequent owner acquires
title to the Premises, or (iv) be liable to the Tenant for any security or other
deposits given to secure the performance of the Tenant's obligations under the
Lease, except to the extent that the Lender shall have acknowledged actual
receipt of such security or other deposits in writing. No other property or
assets of the Lender shall be subject to levy, execution or other enforcement
procedure for the satisfaction of the Tenant's remedies under or with respect to
the Lease, the relationship of the landlord and the tenant thereunder or the
Tenant's use or occupancy of the Premises.
7. All notices and other communications hereunder shall be sent by
certified or registered mail (postage prepaid, return receipt requested) to the
Lender at the address set forth above, Attention: ________________________, or
to the Tenant at the address set forth in the Lease, or to such other address or
person as may be specified in a notice sent in accordance with the provisions of
this Section 7, and shall be deemed given when received at the addresses
specified above.
8. No prepayment of rent or additional rent due under the Lease of more
than one month in advance shall be binding upon the Lender, as holder of the
Mortgage or as landlord under the Lease if the Lender succeeds to that position,
unless consented to by the Lender, and from and after the date hereof, no
amendment, modification, surrender or cancellation of the Lease shall be binding
upon the Lender, as holder of the Mortgage or as landlord under the Lease if the
Lender succeeds to that position, unless such amendment, modification, surrender
or cancellation is done in compliance with the terms of the Mortgage.
9. This Agreement shall apply to, bind and inure to the benefit of the
parties hereto and their respective successors and assigns. As used herein, the
term Tenant shall mean and include the present tenant under the Lease, any
permitted subtenant under the Lease, any permitted assignee of the Lease and any
successor of any of them. The term Lender as used herein shall include the
holder of the Mortgage, the successors and assigns of the Lender, and any
person, party or entity which shall become the owner of the Mortgaged Property
by reason of a foreclosure of the Mortgage or the acceptance of a deed or
assignment in lieu of foreclosure or other proceedings for enforcement of the
Mortgage or otherwise. The term Landlord as used herein shall mean and include
the present landlord under the Lease and such landlord's predecessors and
successors in interest under the Lease.
C-3
<PAGE>
10. This Agreement may not be modified in any manner or terminated except
by an instrument in writing executed by the parties hereto.
[11. This Agreement satisfies the condition to the subordination of
the Lease to the Mortgage set forth in Section ___ of the Lease with respect to
the execution and delivery of ______.]
12. This Agreement shall be governed by and construed in accordance with
the laws of the State of _________.
13. Both the Tenant and the Lender hereby irrevocably waive all right to
trial by jury in any action, proceeding or counterclaim arising out of or
relating to the Lease or this Agreement.
C-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
THE CAPITAL COMPANY OF AMERICA LLC
By: __________________________________
Name:
Title:
[TENANT]
By: __________________________________
Name:
Title:
C-5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of _____________ 199_, before me personally came
____________________, to me known, who, being by me duly sworn, did depose and
say that he resides at _________________________ that he is a _____________ of
Capital Company of America LLC, the limited liability company described in and
which executed the foregoing instrument, and that he signed his name thereto by
order of the board of directors of said company.
________________________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the _____ day of ___________ 199_, before me personally came
________________________, to me known, who, being by me duly sworn, did depose
and say that he resides at _______________ that he is a _________________ of
_______________________, the _____________________ describe in and which
executed the foregoing instrument, and that he signed his name thereto by order
of the board of directors of said corporation.
________________________________
Notary Public
C-6
<PAGE>
EXHIBIT D
---------
Form of Notice to Tenants
[BORROWER'S NAME AND ADDRESS]
, 1998
-------------
[Name and Address of Tenant]
Re: Lease of Stores at
(the "Center")
--------------
Ladies and Gentlemen:
The undersigned is the Owner of the Center and the landlord under your
lease of a store at the Center (your "Lease").
By this letter, you are hereby directed (1) to make all checks, in
payment of rent and other sums due to the landlord under your Lease, payable to
the order of [applicable Clearing Bank], and (2) to deliver such checks or
otherwise make such payments to the following address:
[Name and Address of Clearing Bank]
The foregoing direction is irrevocable, except with the written
consent of our mortgagee, The Capital Company of America LLC (or its successors
or assigns), notwithstanding any future contrary request or direction from the
undersigned or any other person (other than The Capital Company of America LLC
(or its successors or assigns)). Thank you for your cooperation.
Very truly yours,
[BORROWER}
By:
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.2
ASSUMPTION AND AMENDMENT AGREEMENT
This Assumption and Amendment Agreement (this "AGREEMENT") is made as
of this 9th day of December 1998, by NORTHWEST PLAZA LLC, a Delaware limited
liability company, WEA CRESTWOOD PLAZA LLC, a Delaware limited liability
company, ENFIELD SQUARE LLC, a Delaware limited liability company, PLAZA BONITA
LLC, a Delaware limited liability company, PLAZA WEST COVINA LLC, a Delaware
limited liability company, MID RIVERS MALL LLC, a Delaware limited liability
company, WEST PARK PARTNERS, L.P., a Missouri limited partnership, CAPITAL MALL
COMPANY, a Washington limited partnership (each of the foregoing a "NEW
BORROWER" and collectively, the "NEW BORROWERS"); FOX HILLS MALL LLC, a Delaware
limited liability company, HORTON PLAZA LLC, a Delaware limited liability
company, PARKWAY PLAZA LLC, a Delaware limited liability company, and OAKRIDGE
MALL LLC, a Delaware limited liability company (each, an "INITIAL BORROWER" and
collectively, the "INITIAL BORROWERS"); and THE CAPITAL COMPANY OF AMERICA LLC
(together with its successors and assigns, "LENDER").
RECITALS
WHEREAS, Lender and the Initial Borrowers entered into that certain
Loan Agreement dated as of October 30, 1998 (the "LOAN AGREEMENT") with respect
to a series of loans made and to be made by Lender, subject to the terms and
conditions contained therein, in the aggregate maximum amount of up to
$850,000,000, to each of the Initial Borrowers and each of the persons that
becomes a "Borrower" under the Loan Agreement pursuant to Section 2.1.2 of the
Loan Agreement;
WHEREAS, each of the New Borrowers desires to become a Borrower
pursuant to Section 2.1.2 of the Loan Agreement; and
WHEREAS, the Initial Borrowers and the New Borrowers (each a
"BORROWER" and collectively, the "BORROWERS") desire to amend certain provisions
of the Loan Agreement.
NOW THEREFORE, in consideration of the foregoing and the Loans made by
Lender to the New Borrowers respectively, the receipt and sufficiency of which
are hereby acknowledged, and in furtherance of the terms of the Loan Agreement,
Borrowers hereby agree as follows:
1. Definitions. Capitalized terms appearing herein and not otherwise
-----------
defined shall have the meanings ascribed to such terms in the Loan Agreement.
The term "Loan Agreement" as used in any of the Loan Documents shall be deemed
to refer to the Loan Agreement as amended by this Agreement and as it may
hereafter be amended or modified from time to time.
2. Assumption by New Borrowers. Each of the New Borrowers hereby (a)
---------------------------
makes all of the representations, warranties and covenants applicable to a
Borrower under the Loan Agreement and (b) assumes and agrees to be bound by all
of the obligations, terms and conditions of the Loan
<PAGE>
Agreement applicable to a Borrower thereunder. Without limiting the foregoing,
each New Borrower agrees that it shall be primarily liable for its Allocable
Share of the Obligations.
3. Amendment of Schedules. Schedules 4, 5, 6, 7, 9 and 11 of the Loan
----------------------
Agreement are hereby replaced by Schedules 4, 5, 6, 7, 9 and 11 to this
Agreement, and Schedule 13 to this Agreement is hereby added as Schedule 13 to
the Loan Agreement.
4. Additional Reserves. Article IV of the Loan Agreement is amended as
-------------------
follows: (i) the phrase "Parkway Reserve #2 Fund" in the ninth line of Section
4.10 is deleted and, in its place, the phrase "Additional Reserve Funds" is
inserted, (ii) the reference to "$1,615,000" in Section 4.12(a) is changed to
$3,156,791, and (iii) Section 4.17 is deleted in its entirety and, in its place,
the following new Section 4.17 is inserted:
"4.17 Additional Reserves.
-------------------
(a) On the date hereof each Borrower identified on Schedule 13 shall
deposit with Lender the amount of the Additional Reserve listed opposite
such Borrower's name on Schedule 13 (each such deposit, an "ADDITIONAL
RESERVE FUND"); provided, however, that in lieu of any Additional Reserve
Fund, the applicable Borrower may deliver to Lender a Letter of Credit (an
"ADDITIONAL RESERVE L/C") in a face amount equal to such Borrower's
required Additional Reserve Fund.
(b) After the date hereof any such Borrower shall have the option at any
time, provided no Event of Default then exists, to deliver to Lender a
Letter of Credit in a face amount equal to the amount then in such
Borrower's Additional Reserve Fund (also, an "ADDITIONAL RESERVE L/C").
Upon delivery to Lender of any such Additional Reserve L/C, Lender shall
return to the applicable Borrower the funds then on deposit in such
Borrower's Additional Reserve Fund.
(c) If at any time the issuer of an Additional Reserve L/C ceases to be an
Approved Bank, the applicable Borrower shall, within 30 days after request
by Lender, deliver to Lender a new Additional Reserve L/C issued by an
Approved Bank (or immediately available funds in such amount for deposit
into the applicable Additional Reserve Fund), whereupon Lender shall return
the original Additional Reserve L/C in question to the applicable Borrower.
(d) If a Borrower fails to comply with the provisions of Section 4.17(c),
or if at any time an Additional Reserve L/C is not replaced or renewed at
least 30 days prior to its date of expiration, Lender may draw on such
Additional Reserve L/C and the proceeds thereof shall be deposited into the
applicable Additional Reserve Fund.
(e) If for any reason an Additional Reserve L/C shall expire without a
replacement Additional Reserve L/C having been delivered to Lender, the
applicable Borrower shall, within 5 days after demand, deliver to Lender a
new Additional Reserve L/C (or immediately available funds in such amount
for deposit into the applicable Additional Reserve Fund).
-2-
<PAGE>
(f) (i) Additional Reserve No. 1 shall be released to Plaza West
Covina LLC ("COVINA BORROWER") within 30 days after Covina Borrower
delivers to Lender a request therefor accompanied by a written
confirmation from the Redevelopment Agency of the City of West Covina
(the "COVINA AGENCY") reasonably acceptable to Lender that no sums are
due from Covina Borrower to Covina Agency with respect to the matters
referred to in paragraph number 5 of the estoppel letter dated
November 24, 1998 from the Covina Agency, or that the amount due with
respect to such matters is equal to or less than the then amount of
Additional Reserve No. 1 (and, in the latter case, Lender may release
such reserve by making direct payment to the Covina Agency of the
amount due it and by disbursing any balance to Covina Borrower).
Notwithstanding the foregoing, Lender may, upon prior notice to Covina
Borrower, pay over Additional Reserve No. 1 to the Covina Agency at
any time when, in the judgment of Lender, the entitlement of Covina
Agency thereto is established.
(ii) Additional Reserve No. 2 shall be released to Covina Borrower
within 30 days after the delivery by Covina Borrower to Lender of a
request therefor accompanied by an Officer's Certificate certifying
that the amount of the requested disbursement is due and payable to
Oshman's pursuant to its lease and that the requested disbursement
will be used to make such payment (or to reimburse Covina Borrower if
it has theretofore made the payment to Oshman's).
(iii) Additional Reserve No. 3 shall be released to WEA Crestwood
Plaza LLC ("CRESTWOOD BORROWER") within 30 days after the delivery to
Lender of a request therefor accompanied by written confirmation from
Sears (or if Sears is not then a Credit Entity [which term shall be
deemed to mean an entity whose senior unsecured debt is rated BBB- or
higher by Standard & Poor's], from a Credit Entity) that Sears (or
such Credit Entity) is responsible for all environmental conditions
and hazardous substances relating to the 15 hydraulic lifts in the
premises demised to Sears.
(iv) Additional Reserve #4 shall be released to Northwest Plaza LLC
("NORTHWEST BORROWER") within 30 days after the delivery to Lender of
a request therefor accompanied by written confirmation from J.C.
Penney (or if J.C. Penney is not then a Credit Entity, from a Credit
Entity) that J.C. Penney (or such Credit Entity) is responsible for
all environmental conditions and hazardous substances relating to the
two hydraulic lifts in the premises demised to J.C. Penney.
(v) Additional Reserve #5 shall be released to Northwest Borrower
within 30 days after the delivery to Lender of a request therefor
accompanied by written confirmation from Sears (or if Sears is not
then a Credit Entity, from a Credit Entity) that Sears (or such Credit
Entity) is responsible for all
-3-
<PAGE>
environmental conditions and hazardous substances relating to the four
hydraulic lifts in the premises demised to Sears.
(vi) Additional Reserve #6 shall be released to Northwest
Borrower within 30 days after the delivery to Lender of a request
therefor accompanied by an Officer's Certificate certifying that the
amount of the requested disbursement is due and payable to Burlington
Coat Factory Warehouse under its lease and that the requested
disbursement will be used to make such payment (or to reimburse
Northwest Borrower if it has theretofore made the payment to
Burlington).
(vii) Additional Reserve #7 shall be released to West Covina
Borrower within 30 days after the delivery to Lender of a request
therefor accompanied by evidence reasonably satisfactory to Lender
that West Covina Borrower has been unconditionally and fully released
from any and all liability, contingent or otherwise, under or with
respect to Section 2 of that certain Agreement Re Debt Service Savings
and Sales Tax Guarantee dated as of June 27, 1996 (the "SALES TAX
AGREEMENT") between CenterMark Properties of West Covina, Inc.
(predecessor in interest to West Covina Borrower) and the
Redevelopment Agency for the City of West Covina (the "WEST COVINA
AGENCY"). West Covina Borrower represents and warrants to Lender that
the Sales Tax Agreement has not been modified or amended.
(viii) Additional Reserve #8 shall be released to Enfield Square LLC
("ENFIELD BORROWER") within 15 days after the delivery to Lender of a
request therefor accompanied by (i) an Officer's Certificate
certifying that (x) a Certificate of Occupancy (as defined below) has
been issued and is in full force and effect with respect to the
building (the "Hoyt Building") being constructed on the property
demised to Interstate Connecticut Corporation ("HOYT") and (y) Hoyt's
obligation to pay "Basic Rent" under Section 4.1 of its lease has
commenced, and (ii) a copy of such Certificate of Occupancy; provided,
--------
however, that, notwithstanding compliance with the foregoing
-------
conditions, Lender shall not be obligated to release Additional
Reserve #8 until Enfield Borrower has delivered to Lender an Officer's
Certificate certifying that Hoyt has commenced payment of "Basic Rent"
under Section 4.1 of its lease. "CERTIFICATE OF OCCUPANCY" means
either (A) a permanent certificate of occupancy or (B) a temporary
certificate of occupancy containing no conditions other than
conditions requiring the completion of typical "punch-list" items of
construction and/or other conditions reasonably satisfactory to
Lender.
(g) Notwithstanding anything to the contrary contained in
Paragraph 4(f), in no event shall Lender have any obligation to
release any Additional Reserve at any time than an Event of Default is
continuing."
-4-
<PAGE>
5. Additional Covenants. The following sections are added at the end of
--------------------
Article VI of the Loan Agreement:
"6.23 Enfield Square.
--------------
(a) Enfield Square LLC (the "ENFIELD BORROWER") shall use diligent efforts
to cause May Co. and J.C. Penney to execute and deliver an amendment to the
REA for the Enfield Borrower's Collateral Property as soon as reasonably
possible (but in any event by December 1, 1999), which amendment shall
reduce the required parking to 4.5 spaces per 1,000 square feet of gross
leasable area and otherwise be reasonably acceptable to Lender in form and
substance;
(b) Within 15 days after the issuance of the Certificate of Occupancy for
the Hoyt Building, Enfield Borrower shall (a) submit an application for,
and thereafter diligently and continuously pursue the issuance of, approval
for resubdivision of the Land Swap Parcels (as such term is defined in that
certain opinion letter dated on or about the date hereof issued to Lender
by the law firm of Cummings & Lockwood (the "Zoning Opinion")) in the
fashion contemplated in the Zoning Opinion (the "Resubdivision") and (b)
complete such additional conveyances as are necessary to assure appropriate
merger of title, also as contemplated in the Zoning Opinion. Within 30
days after the issuance of the Resubdivision approval and the passage of
any applicable appeals periods, Enfield Borrower shall cause Cummings &
Lockwood to reissue the Zoning Opinion without any exception with respect
to compliance of the Land Swap Parcels with applicable zoning or
resubdivision laws, and otherwise in form and substance reasonably
acceptable to Lender.
6.24 Environmental Matters. Each of the Borrowers shall promptly
----------------------
comply with the recommendations described in the summary of Remedial Work
contained in Schedule 4 (which recommendations are more fully described in
----------
the environmental reports applicable to such Borrower's Collateral Property
prepared by the environmental consultants identified on Schedule 4).
----------
Without limiting the foregoing, each Borrower shall prepare and implement,
within 180 days after the date hereof, any operations and maintenance plan
applicable to such Borrower's Collateral Property and referred to in
Schedule 4)."
----------
6.25 West Covina. West Covina Borrower shall use commercially
-----------
reasonable efforts to obtain on or before March 31, 1999 from the West
Covina Agency and the City of West Covina a written instrument executed by
the West Covina Agency and the City of West Covina fully and
unconditionally releasing West Covina Borrower from all liability,
contingent or otherwise, under or with respect to the Sales Tax Agreement.
6. Contracts. The references to "September 10, 1998" in Section 5.1.12
---------
of the Loan Agreement are hereby changed to "December 1, 1998".
7. Leases. Notwithstanding the provisions of Section 6.12.1 of the Loan
------
Agreement, at the specific request of any "national tenant", Landlord may enter
into a lease with such tenant the attornment provision of which provides that a
"new owner" will take subject to offsets, defenses and
-5-
<PAGE>
counterclaims of such tenant written notice of which was given by such tenant to
Lender prior to the date of attornment.
8. Interest Rate Cap. At Lender's request, Borrowers shall, at no out-
-----------------
of-pocket cost or expense (i.e., costs or expenses payable to third parties) to
Borrowers, enter into an amendment to the Loan Agreement which caps the Interest
Rate at a rate designated by Lender. Lender shall have no obligation to make
any such request or to enter into any such amendment.
9. Certain Guaranties. Borrowers acknowledge that, pursuant to Section
------------------
11.25 of the Loan Agreement, JCP Realty, Inc. and Cordano Associates (the
"Additional Guarantors") executed and delivered limited guaranties of payment
with respect to the Loans (the "Additional Guaranties"). Each Borrower agrees
that its obligations under the Loan Documents shall not be released, reduced,
impaired or in any way affected by reason of (i) Lender's full or partial
release of the Additional Guarantors or either of them or of the Additional
Guaranties or either of them, or (ii) Lender's waiver or modification of, or
failure to enforce or delay in enforcing, either or both of the Additional
Guaranties or any provisions thereof. Each Borrower further agrees that (i) any
determination of the value of any Collateral Properties pursuant to either of
the Additional Guaranties shall not be binding on Lender for any purpose other
than the determination of liability of the Additional Guarantors under the
Additional Guaranties and (ii) no Borrower shall be entitled to raise as a
defense to its obligations arising under the Loan Documents any provision of
either of the Additional Guaranties or any action or inaction by Lender relating
to the Additional Guaranties or either of them.
10. Miscellaneous.
-------------
(a) All of the terms and conditions of the Loan Agreement are incorporated
herein by reference as if all such terms and conditions were set forth
herein.
(b) Each of the New Borrowers hereby agrees to execute and deliver such
other instruments as Lender may reasonably request from time to time to
confirm its joinder in and assumption of all of its obligations under the
Loan Agreement.
(c) This Agreement may be relied upon by, shall run to the benefit of and
may be enforced by Lender and its successors and assigns.
(d) This Agreement shall be governed by the laws of the State of New York
applicable to agreements executed and to be performed in New York.
(e) This Agreement cannot be modified, changed, or discharged except by an
agreement in writing signed by Borrowers and Lender.
-6-
<PAGE>
IN WITNESS WHEREOF each of the undersigned has caused this Agreement
to be duly executed by its duly authorized representatives as of the day and
year first above written.
NORTHWEST PLAZA LLC, a Delaware limited liability
company
By: Northwest Plaza, Inc., a Delaware corporation, its
managing member
By: /s/ Irv Hepner
----------------------------
Name: Irv Hepner
Title: Secretary
WEA CRESTWOOD PLAZA LLC, a Delaware limited liability
company
By: Crestwood Plaza, Inc., a Delaware corporation, its
managing member
By: /s/ Irv Hepner
----------------------------
Name: Irv Hepner
Title: Secretary
ENFIELD SQUARE LLC, a Delaware limited liability
company
By: Enfield Square, Inc., a Delaware corporation, its
managing member
By: /s/ Irv Hepner
----------------------------
Name: Irv Hepner
Title: Secretary
<PAGE>
PLAZA BONITA LLC, a Delaware limited liability company
By: Plaza Bonita, Inc., a Delaware corporation, its
managing member
By: /s/ Irv Hepner
----------------------------
Name: Irv Hepner
Title: Secretary
PLAZA WEST COVINA LLC, a Delaware limited liability
company
By: Plaza West Covina, Inc., a Delaware corporation,
its managing member
By: /s/ Irv Hepner
----------------------------
Name: Irv Hepner
Title: Secretary
MID RIVERS MALL LLC, a Delaware limited liability
company
By: Mid Rivers, Inc., a Delaware corporation, its
managing member
By: /s/ Irv Hepner
----------------------------
Name: Irv Hepner
Title: Secretary
<PAGE>
WEST PARK PARTNERS, L.P., a Missouri limited
partnership
By: West Park Shopping Center, Inc., a Delaware
corporation, its general partner
By: /s/ Irv Hepner
----------------------------
Name: Irv Hepner
Title: Secretary
CAPITAL MALL COMPANY, a Washington limited partnership
By: Capital Shopping Center, Inc., a Delaware
corporation, its managing member
By: /s/ Irv Hepner
----------------------------
Name: Irv Hepner
Title: Secretary
FOX HILLS MALL LLC, a Delaware limited liability
company
By: Fox Hills Mall, Inc., a Delaware corporation, its
managing member
By: /s/ Irv Hepner
-----------------------------
Name: Irv Hepner
Title: Secretary
HORTON PLAZA LLC, a Delaware limited liability company
By: Horton Plaza, Inc., a Delaware corporation, its
managing member
By: /s/ Irv Hepner
-----------------------------
Name: Irv Hepner
Title: Secretary
<PAGE>
PARKWAY PLAZA LLC, a Delaware limited liability company
By: Parkway Plaza, Inc., a Delaware corporation, its
managing member
By: /s/ Irv Hepner
-----------------------------
Name: Irv Hepner
Title: Secretary
OAKRIDGE MALL LLC, a Delaware limited liability company
By: Oakridge Mall, Inc., a Delaware corporation, its
managing member
By: /s/ Irv Hepner
-----------------------------
Name: Irv Hepner
Title: Secretary
<PAGE>
ACKNOWLEDGED AND ACCEPTED:
THE CAPITAL COMPANY OF AMERICA LLC
By: /s/ Wayne Brandt
-------------------------------------------
Name: Wayne Brandt
Title: Managing Director
<PAGE>
SCHEDULE 4
----------
Required Repairs and Remedial Work
----------------------------------
MALL AMOUNT DESCRIPTION
Fox Hills Mall $143,125 Reseal asphalt; parking structure repairs;
building exterior repairs; roof repairs; replace
rooftop HVAC; replace exterior lighting fixtures;
replace carpet and floor tiles in bathrooms;
inspect and repair elevators.
Horton Plaza $ 1,500 Remove decorative lighting on roof.
Oakridge Mall $ 12,500 Repair cement walkways and clean drains.
Parkway Plaza $120,490 Parking lot repairs and miscellaneous site work.
Capital Mall $ 17,063 Miscellaneous painting.
Plaza West Covina $ 19,375 Reseal asphalt; replace hot water heaters;
perform study on electrical system.
Plaza Bonita $ 9,375 Roof repair.
Enfield Square $165,025 Site repairs; exterior window repairs; roof
repairs; replace wiring; install insulation and
plumbing system; fire protection system upgrades.
Mid Rivers Mall $ 86,563 Parking lot repair; re-caulk building exterior;
electrical system repairs.
Crestwood Plaza $ 31,500 Repair cracked concrete; roof repairs; repair
expansion joint near Sears.
Northwest Plaza $ 63,169 Repair concrete; building exterior and roof
repair.
West Park Mall $199,748 Site repairs; miscellaneous painting; roof
coating; HVAC repair.
S4 - 1
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
[LOGO OF CAPITAL AMERICA APPEARS HERE] SCHEDULE 4 (CONTINUED) SUMMARY OF REMEDIAL WORK
DAMES AQUA
& MOORE TERRA AMOUNT
- ----------------------------------------------------------------------------------------------------------
FOX HILLS MALL
- --------------
<S> <C> <C> <C>
(1) The dates of construction for the Cal-FED Bank (5700 Sepulveda Blvd), X X $12,500
4-story office building (6090 Sepulveda Blvd.) and 4-level parking
structure were not documented by D&M. Aqua Terra recommends that the
age of these structures be determined, and if necessary, an asbestos
investigation should be conducted to determine whether suspect ACM are
located in these areas and the condition of the suspect ACM. According
to D&M, Westfield will prepare and implement an asbestos O&M program to
manage the on-site ACM. Cost estimated at $5,000-$10,000.
(2) Westfield should work with representatives of Fox Hills Mall to X X
coordinate the disposal of approximately 600-gallons of non-hazardous
material observed during the Phase I ESA which have lost their useful
shelf life.
- ----------------------------------------------------------------------------------------------------------
TOTAL $12,500
- ----------------------------------------------------------------------------------------------------------
HORTON PLAZA
- ------------
(1) With respect to the two diesel fuel ASTs associated with emergency X X $ 2,500
generators (the mall emergency generator and the emergency generator
owned by Mervyn's), Westfield should take the appropriate action
regarding the construction/installation of a secondary containment
system around the mall emergency generator AST and work with
representatives of Mervyn's regarding secondary containment around
their emergency generator AST.
(2) While no leaks or stains were observed on the concrete beneath the X X
central parking area passenger elevator or the LaSalle passenger
elevator, Westfield should coordinate the repair of the oil leaks
associated with the elevator motors and encourage mall representatives
to inspect hydraulic systems on a regular basis.
(3) Westfield should ensure that the tenants with photo processing systems X
are in compliance for wastewater disposal to the sewer and storage of
hazardous materials.
(4) Westfield should improve housekeeping practices in the trash compactor X
areas so that potential hydraulic oil leaks are more easily detected.
- ----------------------------------------------------------------------------------------------------------
TOTAL $ 2,500
- ----------------------------------------------------------------------------------------------------------
</TABLE>
OAKRIDGE
- --------
S4 - 2
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
[LOGO OF CAPITAL AMERICA APPEARS HERE] SCHEDULE 4 (CONTINUED) SUMMARY OF REMEDIAL WORK
DAMES AQUA
& MOORE TERRA AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) Prepare and implement an Operations & Maintenance Plan to deal with X X $12,500
asbestos containing materials remaining on the subject property.
- ---------------------------------------------------------------------------------------------------------
TOTAL $12,500
- ---------------------------------------------------------------------------------------------------------
PARKWAY PLAZA
- -------------
(1) Bulk hazardous materials, such as the 55-gallon drums of diesel, need X X $ 1,250
to be stored within a secondary containment unit to prevent potential
leakage or spillage to the ground surface. Westfield needs to take the
appropriate action regarding the construction/installation of a
secondary containment system in the storage area.
- ---------------------------------------------------------------------------------------------------------
TOTAL $ 1,250
- ---------------------------------------------------------------------------------------------------------
PLAZA BONITA
- ------------
(1) Prepare and implement an Operations & Maintenance Plan to deal with X X $12,500
asbestos containing materials remaining on the subject property.
- ---------------------------------------------------------------------------------------------------------
TOTAL $12,500
- ---------------------------------------------------------------------------------------------------------
PLAZA WEST COVINA (MISSING D&M REPORT)
- --------------------------------------
(1) The subject property and surrounding area are part of a USEPA NPL X
Region of known groundwater contamination. Volatile organic compounds
(VOCs) have been identified in local groundwater wells. Given that the
subject property has not utilized VOCs on-site in the past and is
therefore not a potential source of contamination, and that the subject
property is not among the identified responsible parties for this NPL
Region, D&M concludes that it is not likely that the subject property
will be held responsible for any of the investigation and remedial
costs of the site. AquaTerra concurs but recommends that the owners of
the subject property remain in contact with the USEPA and monitor the
files regarding the investigation and remedial activities in progress.
=========================================================================================================
</TABLE>
S4 - 3
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
[LOGO OF CAPITAL AMERICA APPEARS HERE] SCHEDULE 4 (CONTINUED) SUMMARY OF REMEDIAL WORK
DAMES AQUA
& MOORE TERRA AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(2) Asbestos-containing materials were not addressed in this report. Given X $12,500
the construction date of buildings located on the eastern portion of
the subject property (1993), it is not likely that asbestos-containing
materials exist in these areas. However, the western portion of the
subject property was developed in 1975. AquaTerra recommends that an
asbestos survey be performed in these areas in order to identify
friable and non-friable asbestos-containing materials, to quantify the
materials and to evaluate their condition. According to D&M, Westfield
will conduct an asbestos survey for the portion of the mall constructed
in 1975 and also implement an asbestos O&M program to manage the
on-site ACM.
(3) Chemical staining was identified by D&M around the silver recovery unit X
by Ritz Camera. According to site representatives, this unit has
leaked in the past. D&M states that Westfield will contact the tenants
to clean the stained areas and repair the silver recovery unit to avoid
future leaks, spills and damage to lower level stores. Also, oil
staining was identified on the concrete floor around a hydraulic trash
compactor on-site. D&M states that Westfield will have the compactor
repaired.
(4) Pad-mounted transformers were identified on-site. According to D&M, X
these transformers are owned and the responsibility of Southern
California Edison (SCE), who has verified that the transformers do not
contain PCBs. However, minor oil staining was identified on the
concrete floor around one of the transformers on-site. According to
D&M, the mall manager will contact the utility company to repair or
replace the transformer.
- ---------------------------------------------------------------------------------------------------------
TOTAL $12,500
- ---------------------------------------------------------------------------------------------------------
ENFIELD SQUARE
- --------------
(1) Westfield should continue to monitor the status of the work being X X
performed on the adjacent gasoline station site.
=========================================================================================================
</TABLE>
S4 - 4
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
[LOGO OF CAPITAL AMERICA APPEARS HERE] SCHEDULE 4 (CONTINUED) SUMMARY OF REMEDIAL WORK
DAMES AQUA
& MOORE TERRA AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(2) The date of construction for the maintenance building was not X X $12,500
documented by D&M. AquaTerra recommends that the age of this structure
be determined, and if necessary, an asbestos investigation should be
conducted to determine whether suspect ACM are located in this building
and the condition of the suspect ACM. When the useful life of the
Hypalon roof is exhausted, the owners of the subject property will be
required to remove roofing materials to the steel deck and dispose of
the asbestos containing materials appropriately. When floor tile that
contains asbestos becomes damaged or renovations are planned, an
asbestos abatement contractor should be hired to perform appropriate
abatement. During the interim, an asbestos Operations & Maintenance
(O&M) Plan should be implemented whenever building operations may
impact asbestos containing materials. The estimated cost for the
preparation of an O&M Plan by D&M is between $5,000 and $10,000. The
estimate by Aqua Terra to implement an O&M program to manage the areas
of ACM in-place is $500.
- ---------------------------------------------------------------------------------------------------------
TOTAL $12,500
- ---------------------------------------------------------------------------------------------------------
CRESTWOOD PLAZA
- ---------------
(1) Mall management needs to contact an elevator maintenance company and a X X
solid waste removal company to repair leaking hydraulic systems and
encourage mall representatives to inspect said hydraulic systems on a
regular basis as a part of an on-going maintenance program.
Additionally, AquaTerra recommends that the staining from the leakage
be cleaned.
(2) Used car batteries are stored on wooden pallets at the Sears Automotive X
Center on-site. According to D&M, the concrete floor was observed to
be pitted in this area. D&M did not observe soils in the area of the
battery storage area. AquaTerra recommends better housekeeping
practices be implemented to prevent the battery storage area from
developing into an issue of concern.
- ---------------------------------------------------------------------------------------------------------
(3) Prepare and implement an Operations & Maintenance Plan to deal with X X $12,500
asbestos containing materials remaining on the subject property.
- ---------------------------------------------------------------------------------------------------------
TOTAL $12,500
- ---------------------------------------------------------------------------------------------------------
MID RIVERS MALL (NO ENVIRONMENTAL ISSUES NOTED)
- -----------------------------------------------
- ---------------------------------------------------------------------------------------------------------
TOTAL $ 0
- ---------------------------------------------------------------------------------------------------------
NORTHWEST PLAZA
- ---------------
(1) On September 2, 1998, Sears submitted a work plan for corrective action X X
to MDNR, which was
</TABLE>
S4 - 5
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
[LOGO OF CAPITAL AMERICA APPEARS HERE] SCHEDULE 4 (CONTINUED) SUMMARY OF REMEDIAL WORK
DAMES AQUA
& MOORE TERRA AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
approved. Westfield should monitor the progress/status of the work plan
being implemented by Sears.
(2) With respect to ASTs observed in the Firestone Service Center, X X $ 2,500
Westfield should work with representatives of Firestone regarding the
installation of secondary containment around their two ASTs.
(3) D&M observed staining beneath two of the six on-site trash compactors. X
D&M states that the compactors are located on concrete and the stained
areas are limited to the concrete surrounding the compactors.
AquaTerra recommends that better housekeeping practices be implemented.
(4) Prepare and implement an Operations & Maintenance Plan to deal with X X $12,500
asbestos containing materials remaining on the subject property.
- ----------------------------------------------------------------------------------------------------------
TOTAL $15,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
S4 - 6
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
[LOGO OF CAPITAL AMERICA APPEARS HERE] SCHEDULE 4 (CONTINUED) SUMMARY OF REMEDIAL WORK
DAMES AQUA
& MOORE TERRA AMOUNT
- ----------------------------------------------------------------------------------------------------------
WEST PARK MALL
- --------------
<S> <C> <C> <C>
(1) The storage protocols for the waste oil in the maintenance area should X X
be upgraded and existing spillage should be cleaned up.
(2) Prepare and implement an Operations & Maintenance Plan to deal with X X $ 12,500
asbestos containing materials remaining on the subject property.
- ----------------------------------------------------------------------------------------------------------
TOTAL $ 12,500
- ----------------------------------------------------------------------------------------------------------
CAPITAL MALL
- ------------
(1) The Puget Power electrical transformer located near the SWC of the mall X X $ 0
building appears to be leaking. Puget Power should be contacted to
confirm the transformer does not contain PCBs and to immediately repair
the transformer. Puget Power owns the transformer and is reportedly
responsible for the maintenance.
(2) Prepare and implement an Operations & Maintenance Plan to deal with X X $ 12,500
asbestos containing materials remaining on the subject property.
- ----------------------------------------------------------------------------------------------------------
TOTAL $ 12,500
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
GRAND TOTAL $118,750
- ----------------------------------------------------------------------------------------------------------
==========================================================================================================
</TABLE>
S4 - 7
<PAGE>
SCHEDULE 5
----------
Organizational Charts
---------------------
S5 - 1
[ORGANIZATIONAL CHART HAS BEEN OMITTED.
AVAILABLE UPON WRITTEN REQUEST OF THE COMPANY]
<PAGE>
SCHEDULE 6
----------
Replacement Reserve Fund
------------------------
Fox Hills Mall $8,719/month
Horton Plaza $15,086/month
Oakridge Mall $13,273/month
Parkway Plaza $9,911/month
Capital Mall $8,389/month
Plaza West Covina $8,907/month
Plaza Bonita $10,163/month
Enfield Square $30,721/month
Mid Rivers Mall $7,265/month
Crestwood Plaza $16,251/month
Northwest Plaza $43,043/month
West Park Mall $18,201/month
S6 - 1
<PAGE>
SCHEDULE 7
----------
Material Contracts
------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fox Hills Mall Merchants Building 30 days' written notice 2/18/99
Maintenance with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Centre Scapes 30 days' written notice 9/30/99
Landscaping (exterior) with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Professional Security 30 days' written notice. 10/6/00
Consultants
- ----------------------------------------------------------------------------------------------------
Montgomery Kone Contract to be terminated 1/31/99
Elevator Maintenance in writing by owner and by
an officer and the
contractor
- ----------------------------------------------------------------------------------------------------
Horton Plaza Merchants Building 30 days' written notice 11/25/98
Maintenance with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Brookwood Landscape 30 days' written notice 1/1/99
Landscaping with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
EDCO Trash one year Renews every March 1st
- ----------------------------------------------------------------------------------------------------
Marcel's Power 30 days' written notice 1/1/99
Parking Lot Sweeping with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Oakridge Mall Shrine Maintenance Inc. 30 days' written notice 9/30/99
with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
</TABLE>
S7-1
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Landscape Management 30 days' written notice 12/31/98
Landscaping (exterior) with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Crystal Springs 30 days' written notice 3/31/00
Landscape Company with 48 hours written
Landscaping (interior) notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Universal Sweep 30 days' written notice 3/31/00
Parking Lot Sweeping with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Parkway Plaza Merchants Building 30 days' written notice 2/23/99
Maintenance with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Brookwood Landscape 30 days' written notice 12/31/98
Landscaping (exterior) with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Professional Security 30 days' written notice. 9/25/00
Consultants
- ----------------------------------------------------------------------------------------------------
Universal Refuse City Contract no term
Removal
- ----------------------------------------------------------------------------------------------------
Crestwood Plaza Interstate Cleaning written notice of 1/14/2000
Corporation termination.
Maintenance
- ----------------------------------------------------------------------------------------------------
Professional Security may be canceled by either 1/14/00
Consultants party without cause by
giving 30 day notice of
cancellation in writing.
- ----------------------------------------------------------------------------------------------------
Johnson Controls 30 days' written notice. 12/31/98
Air Conditioning
Maintenance
- ----------------------------------------------------------------------------------------------------
BioLogix Cleaning 8/31/98
- ----------------------------------------------------------------------------------------------------
Enfield Square The Slanetz Corp - 1/31/99
Snow Removal
- ----------------------------------------------------------------------------------------------------
</TABLE>
S7-2
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interstate Cleaning may be canceled by either 1/31/00
Corporation - party without cause by
Maintenance giving 30 day notice in
writing
- ----------------------------------------------------------------------------------------------------
Spectaguard may be canceled by either 8/7/99
Acquisition party without cause by
LLC giving 30 day notice in
writing
- ----------------------------------------------------------------------------------------------------
Mid Rivers Mall The Brickman Group 30 days' written notice 12/31/98
Landscape Maintenance
- ----------------------------------------------------------------------------------------------------
Interstate Cleaning 30 days' written notice 1/31/99
Corporation
Maintenance
- ----------------------------------------------------------------------------------------------------
Security 30 days' written notice 3/14/00
- ----------------------------------------------------------------------------------------------------
Property Services, Inc. 30 days' written notice 10/14/00
(snow removal)
- ----------------------------------------------------------------------------------------------------
Northwest Plaza ICC-Maintenance 30 day written notice of 1/31/00
termination
- ----------------------------------------------------------------------------------------------------
IPC International - month to month 1/31/99
Security
- ----------------------------------------------------------------------------------------------------
Otis Elevator/Escalator 30 days' written notice 8/23/99
Service
- ----------------------------------------------------------------------------------------------------
Brickman Group 30 days' written notice 11/30/98
Exterior Landscaping
- ----------------------------------------------------------------------------------------------------
Plaza Bonita Professional Security 30 days' written notice by 1/31/00
Consultants-Security either party
- ----------------------------------------------------------------------------------------------------
Interstate Cleaning may be canceled by either 9/30/99
Corporation - party without cause by
Maintenance giving 30 day notice in
writing
----------------------------------------------------------------------------------------------------
Brookwood Landscape, may be canceled by either 9/30/99
Inc.-Landscaping party without cause by
giving 30 day notice in
writing
- ----------------------------------------------------------------------------------------------------
Montgomery 10/31/00
Elevator/Escalator
Service
- ----------------------------------------------------------------------------------------------------
Plaza West Covina Professional Security Contractor shall promptly 3/7/00
Consultant-Security take all action necessary to
fully comply with the
terms within 24 hours
after written notice
- ----------------------------------------------------------------------------------------------------
</TABLE>
S7-3
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interstate Cleaning 30 days' written notice 6/30/99 and 6/30/00
Corporation
Maintenance
- ----------------------------------------------------------------------------------------------------
Centre Scapes, Inc. - Contractor shall promptly 5/31/99
Landscaping take all action necessary to
fully comply with the
terms within 24 hours
after written notice
- ----------------------------------------------------------------------------------------------------
Montgomery Kone- month to month
Elevator/Escalator
Service
- ----------------------------------------------------------------------------------------------------
West Park Mall Cummins Contracting 5 days written notice by 6/30/99
(Landscaping) either party without cause.
- ----------------------------------------------------------------------------------------------------
MMANTEC, Inc. 30 day written notice of 11/30/98
Housekeeping termination with 48 hours
written notice of intent to
terminate
- ----------------------------------------------------------------------------------------------------
Capital Mall Kellermeyer Building 30 days' written notice 12/99
Services-Maintenance with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Landscape Services 30 days' written notice 4/99
Landscaping (exterior) with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
Interiorscapes 30 days' written notice 4/99
Landscaping (interior) with 48 hours written
notice of intention to
exercise right of
termination.
- ----------------------------------------------------------------------------------------------------
</TABLE>
S7-4
<PAGE>
SCHEDULE 9
----------
Specified Agreements
--------------------
OAKRIDGE MALL
None
PARKWAY PLAZA
None.
HORTON PLAZA
1. Second Amended Disposition and Development Agreement dated 11/2/81
between the Redevelopment Agency of the City of San Diego and Ernest
W. Hahn, Inc. (predecessor in interest to Borrower), all subsequent
amendments and supplements thereto and various Implementation
Agreements related thereto.
2. Payment Agreement dated October 18, 1982 between the Redevelopment
Agency of the City of San Diego and EWH 1979 Development Company, L.P.
(predecessor in interest to Borrower), as amended 12/18/87, 6/10/93
and 11/21/95.
FOX HILLS MALL
1. Participation Agreement dated 8/19/96 between H, B-H Associates
(predecessor in interest to Borrower), Culver City Redevelopment
Agency and Broadway Stores, Inc. (now Macy's).
2. Participation Agreement dated 12/19/96 between H, B-H Associates
(predecessor in interest to Borrower) and Culver City Redevelopment
Agency.
3. Disposition and Development Agreement (Slauson-Sepulveda Redevelopment
Project) dated 6/26/72 between Culver City Redevelopment Agency and H,
B-H Associates (predecessor in interest to Borrower) and all
subsequent amendments and supplements thereto.
WESTPARK MALL
None
CAPITAL MALL
None
S9-1
<PAGE>
NORTHWEST PLAZA
None
CRESTWOOD PLAZA
None
ENFIELD SQUARE
None
MID RIVERS MALL
None
PLAZA BONITA
None
THE PLAZA AT WEST COVINA
Owner Participation Agreement dated as of April 9, 1990 between The
Redevelopment Agency of the City of West Covina (the "Agency") and CenterMark
Properties of West Covina, Inc. (predecessor in interest to Borrower) and all
subsequent amendments and supplements thereto.
Agreement Re: Debt Service Savings and Sales Tax Guarantee dated as of June 27,
1996 between the Agency and CenterMark Properties of West Covina, Inc.
S9-2
<PAGE>
SCHEDULE 11
-----------
Undelivered Documents
---------------------
FOX HILLS MALL
J.C. Penney Separate Agreement.
HORTON PLAZA
None.
PARKWAY PLAZA
None.
OAKRIDGE MALL
Montgomery Ward
---------------
1. Letter Agreement dated as of June 24, 1986 from Earnest Hahn to
Montgomery Ward.
2. Letter Agreement dated May 15, 1982.
NORTHWEST PLAZA
J.C. Penney
-----------
1. Letter Agreement dated December 11, 1987.
2. Letter Agreement dated May 3, 1996.
CRESTWOOD PLAZA
None.
ENFIELD SQUARE
None.
PLAZA BONITA MALL
None.
PLAZA WEST COVINA MALL
REA
---
Supplement to Management Agreement.
S11-1
<PAGE>
MID RIVERS MALL
REA
---
May Company Supplemental Letter Agreement dated November 1, 1996.
WEST PARK MALL
REA
---
1. Guaranty dated March 20, 1982 from Developer's predecessor in interest
to SERSO.
2. Condemnation Award Agreement dated March 30, 1982 between SERSO and
Developer's predecessor in interest.
3. Agreement for Tax Payment dated March 30, 1982 between SERSO and
Developer's predecessor in interest.
4. Common Area Indemnity dated March 30, 1982 from SERSO to May
Department Stores, including Indemnity from Developer's predecessor in
interest to SERSO dated April 29, 1982.
5. Demand and Authorization for Tax Payment dated March 30, 1982 between
Developer's predecessor in interest and J.C. Penney.
CAPITAL MALL
None.
S11-2
<PAGE>
SCHEDULE 13
-----------
<TABLE>
<CAPTION>
Borrower Additional Reserve # Additional Reserve Amount
- -------- -------------------- -------------------------
<S> <C> <C>
Plaza West Covina LLC No. 1 $1,100,000
Plaza West Covina LLC No. 2 $ 344,811
WEA Crestwood Plaza LLC No. 3 $ 225,000
Northwest Plaza LLC No. 4 $ 30,000
Northwest Plaza LLC No. 5 $ 60,000
Northwest Plaza LLC No. 6 $1,020,000
Plaza West Covina LLC No. 7 $2,900,000
Enfield Square LLC No. 8 $7,316,360
</TABLE>
S13-1
<PAGE>
EXHIBIT 10.3
================================================================================
FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
a Delaware limited partnership
______________________
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP
AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM
AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT
THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
dated as of August 3, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
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ARTICLE 1 DEFINED TERMS............................................................ 1
ARTICLE 2 ORGANIZATIONAL MATTERS................................................... 25
Section 2.1 Formation................................................. 25
Section 2.2 Name...................................................... 25
Section 2.3 Registered Office and Agent; Principal Office............. 25
Section 2.4 Power of Attorney......................................... 25
Section 2.5 Term...................................................... 27
ARTICLE 3 PURPOSE.................................................................. 27
Section 3.1 Purpose and Business...................................... 27
Section 3.2 Powers.................................................... 28
Section 3.3 Partnership Only for Purposes Specified................... 28
Section 3.4 Representations and Warranties by the Partners............ 28
ARTICLE 4 CAPITAL CONTRIBUTIONS.................................................... 31
Section 4.1 Capital Contributions of the Partners..................... 31
Section 4.2 Issuances of Additional Partnership Interests............. 32
Section 4.3 Additional Funds and Capital Contributions................ 33
Section 4.4 Stock Option Plans........................................ 35
Section 4.5 Dividend Reinvestment Plan, Stock Incentive Plan
or Other Plan............................................. 36
Section 4.6 No Interest; No Return.................................... 37
Section 4.7 Conversion or Redemption of Preferred Shares.............. 37
Section 4.8 Conversion or Redemption of Junior Shares................. 37
Section 4.9 Other Contribution Provisions............................. 38
Section 4.10 Excluded Properties....................................... 38
ARTICLE 5 DISTRIBUTIONS............................................................ 39
Section 5.1 Requirement and Characterization of Distributions......... 39
Section 5.2 Distributions in Kind..................................... 40
Section 5.3 Amounts Withheld.......................................... 40
Section 5.4 Distributions Upon Liquidation............................ 40
Section 5.5 Distributions to Reflect Additional Partnership
Units or Investor Unit Rights............................. 40
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Section 5.6 Restricted Distributions.................................... 40
ARTICLE 6 ALLOCATIONS................................................................ 41
Section 6.1 Timing and Amount of Allocations of Net Income
and Net Loss................................................ 41
Section 6.2 General Allocations......................................... 41
Section 6.3 Additional Allocation Provisions............................ 41
Section 6.4 Tax Allocations............................................. 45
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS...................................... 46
Section 7.1 Management.................................................. 46
Section 7.2 Certificate of Limited Partnership.......................... 50
Section 7.3 Restrictions on Managing General Partner's Authority........ 50
Section 7.4 Reimbursement of the Managing General Partner............... 53
Section 7.5 Outside Activities of the Managing General Partner.......... 54
Section 7.6 Transactions with Affiliates................................ 55
Section 7.7 Indemnification............................................. 56
Section 7.8 Liability of the Managing General Partner................... 58
Section 7.9 Other Matters Concerning the Managing General Partner....... 60
Section 7.10 Title to Partnership Assets................................. 61
Section 7.11 Reliance by Third Parties................................... 61
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................................. 62
Section 8.1 Limitation of Liability..................................... 62
Section 8.2 Management of Business...................................... 62
Section 8.3 Outside Activities of Limited Partners...................... 62
Section 8.4 Return of Capital........................................... 63
Section 8.5 Rights of Limited Partners Relating to the Partnership...... 63
Section 8.6 Partnership Right to Call Limited Partner Interests......... 64
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS..................................... 64
Section 9.1 Records and Accounting...................................... 64
Section 9.2 Partnership Year............................................ 65
Section 9.3 Reports..................................................... 65
ARTICLE 10 TAX MATTERS................................................................ 65
Section 10.1 Preparation of Tax Returns.................................. 65
Section 10.2 Tax Elections............................................... 65
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Section 10.3 Tax Matters Partner.......................................... 66
Section 10.4 Withholding.................................................. 67
Section 10.5 Organizational Expenses...................................... 68
ARTICLE 11 PARTNER TRANSFERS AND WITHDRAWALS........................................... 68
Section 11.1 Transfer..................................................... 68
Section 11.2 Transfer of General Partner's Partnership Interest........... 69
Section 11.3 Limited Partners' Rights to Transfer......................... 70
Section 11.4 Substituted Limited Partners................................. 73
Section 11.5 Assignees.................................................... 74
Section 11.6 General Provisions........................................... 74
ARTICLE 12 ADMISSION OF PARTNERS....................................................... 76
Section 12.1 Admission of Successor Managing General Partner
and Additional General Partners.............................. 76
Section 12.2 Admission of Additional Limited Partners..................... 77
Section 12.3 Amendment of Agreement and Certificate....................... 78
Section 12.4 Limit on Number of Partners.................................. 78
Section 12.5 Admission.................................................... 78
Section 12.6 Representation and Warranty of the General Partners.......... 78
ARTICLE 13 INVESTORS................................................................... 79
Section 13.1 Grants of Investor Unit Rights............................... 79
Section 13.2 Nature of Investors and Investor Unit Rights................. 80
Section 13.3 Acceptance of Additional Investors........................... 80
Section 13.4 Representations and Warranties by the Investors.............. 81
Section 13.5 Rights of Investors.......................................... 84
Section 13.6 No Interest; No Return....................................... 88
Section 13.7 Investors' Rights to Transfer................................ 88
Section 13.8 Power of Attorney............................................ 92
Section 13.9 Liability of the Managing General Partner.................... 93
Section 13.10 Partnership Right to Terminate Investor Unit Rights.......... 95
ARTICLE 14 DISSOLUTION, LIQUIDATION AND TERMINATION.................................... 96
Section 14.1 Dissolution.................................................. 96
Section 14.2 Winding Up................................................... 96
Section 14.3 Deemed Contribution and Distribution......................... 98
Section 14.4 Rights of Holders............................................ 99
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Section 14.5 Notice of Dissolution....................................... 99
Section 14.6 Cancellation of Certificate of Limited Partnership.......... 99
Section 14.7 Reasonable Time for Winding-Up.............................. 99
ARTICLE 15 PROCEDURES FOR ACTIONS AND CONSENTSOF PARTNERS; AMENDMENTS; MEETINGS....... 100
Section 15.1 Procedures for Actions and Consents of Partners............. 100
Section 15.2 Amendments.................................................. 100
Section 15.3 Meetings of the Partners.................................... 100
ARTICLE 16 GENERAL PROVISIONS......................................................... 101
Section 16.1 Redemption Rights of Qualifying Parties..................... 101
Section 16.2 Addresses and Notice........................................ 106
Section 16.3 Titles and Captions......................................... 106
Section 16.4 Pronouns and Plurals........................................ 107
Section 16.5 Further Action.............................................. 107
Section 16.6 Binding Effect.............................................. 107
Section 16.7 Waiver...................................................... 107
Section 16.8 Counterparts................................................ 108
Section 16.9 Applicable Law.............................................. 108
Section 16.10 Entire Agreement............................................ 108
Section 16.11 Invalidity of Provisions.................................... 108
Section 16.12 Limitation to Preserve REIT Status.......................... 108
Section 16.13 No Partition................................................ 109
Section 16.14 No Third-Party Rights Created Hereby........................ 109
Section 16.15 No Rights as Stockholders................................... 110
Exhibit A PARTNERS AND PARTNERSHIP UNITS............................................. A-1
Exhibit B INVESTORS AND INVESTOR UNIT RIGHTS......................................... B-1
Exhibit C EXAMPLES REGARDING ADJUSTMENT FACTOR....................................... C-1
Exhibit D SUB-ALLOCATION OF GROSS FAIR MARKET VALUES................................. D-1
Exhibit E NOTICE OF REDEMPTION....................................................... E-1
Exhibit F FORM OF PARTNERSHIP UNIT CERTIFICATE....................................... F-1
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Exhibit G LIST OF EXCLUDED PROPERTIES............................................... G-1
Exhibit H PARTNERSHIP UNIT DESIGNATION OF SERIES A
PARTNERSHIP PREFERRED UNITS OF WESTFIELD AMERICA
LIMITED PARTNERSHIP....................................................... H-1
Exhibit I INVESTOR UNIT RIGHT DESIGNATION OF CLASS A INVESTOR
UNIT RIGHTS OF WESTFIELD AMERICA LIMITED PARTNERSHIP...................... I-1
Exhibit I-1 INVESTOR UNIT RIGHT DESIGNATION OF THE CLASS A-1
INVESTOR UNIT RIGHTS OF WESTFIELD AMERICA LIMITED PARTNERSHIP............. I-1-1
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<PAGE>
FIRST AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF WESTFIELD AMERICA LIMITED PARTNERSHIP
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
WESTFIELD AMERICA LIMITED PARTNERSHIP, dated as of August 3, 1998, 1998 is
entered into by and among WESTFIELD AMERICA, INC., a Missouri corporation (the
"Managing General Partner" or "WEA"), the Limited Partners (as defined below)
------------------------ ---
listed, from time to time, on Exhibit A attached hereto and the Investors
---------
listed, from time to time, on Exhibit B attached hereto.
---------
WHEREAS, the Managing General Partner and the Special Limited
Partners, each of which is an Affiliate of the Managing General Partner, have
entered into that certain Limited Partnership Agreement for Westfield America
Limited Partnership, a Delaware limited partnership, dated as of November 12,
1997 (as amended to date, the "Existing Partnership Agreement");
------------------------------
WHEREAS, the Partners now desire to amend the Existing Partnership
Agreement to provide, among other things, for (i) the admission of additional
Limited Partners upon the terms and conditions set forth herein, and (ii) the
granting of certain rights to Investors, upon the terms and conditions set forth
herein, which Investors shall not be partners in the Partnership for any purpose
other than for purposes of United States Federal, state and local tax laws and
the regulations now or hereafter promulgated thereunder;
WHEREAS, the Managing General Partner has submitted, and the Limited
Partners have approved, an amendment and restatement of the Existing Partnership
Agreement on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, 6
---
Del.C. (S) 17-101 et.seq., as it may be amended from time to time, and any
- ------ -------
successor to such statute.
<PAGE>
"Actions" has the meaning set forth in Section 7.7 hereof.
-------
"Additional Funds" has the meaning set forth in Section 4.3.A hereof.
----------------
"Additional General Partner" means a Person who is admitted to the
--------------------------
Partnership as a General Partner pursuant to Section 4.2 and Section 12.1 hereof
and who is shown as such on the books and records of the Partnership.
"Additional Limited Partner" means a Person who is admitted to the
--------------------------
Partnership as a Limited Partner pursuant to Section 4.2 and Section 12.2 hereof
and who is shown as such on the books and records of the Partnership.
"Adjusted Available Cash" shall mean, as of any date of determination,
-----------------------
the sum of Available Cash and REIT Available Cash.
"Adjusted Capital Account Deficit" means, with respect to any Partner
--------------------------------
or Investor, the deficit balance, if any, in such Person's Capital Account as of
the end of the relevant Partnership Year, after giving effect to the following
adjustments:
(i) decrease such deficit by any amounts that such Person is
obligated to restore pursuant to this Agreement or by operation of law upon
liquidation of such Partner's Partnership Interest or such Investor's
Investor Unit Rights (as the case may be) or that such Person is deemed to
be obligated to restore pursuant to the penultimate sentence of each of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) increase such deficit by the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"Adjustment Factor" means 1.0; provided, however, that in the event
----------------- -------- -------
that:
(i) WEA (a) declares or pays a dividend on its outstanding
REIT Shares in REIT Shares or makes a distribution to all holders of
its outstanding REIT Shares in REIT Shares, (b) splits or subdivides
its outstanding REIT Shares or (c) effects a reverse stock split or
otherwise combines its outstanding REIT Shares into a smaller number
of REIT Shares, the Adjustment Factor shall be adjusted by multiplying
the Adjustment Factor previously in effect by a fraction, (i) the
numerator of which shall be the number of REIT
2
<PAGE>
Shares issued and outstanding on the record date for such dividend,
distribution, split, subdivision, reverse split or combination
(assum ing for such purposes that such dividend, distribution, split,
subdivision, reverse split or combination has occurred as of such
time) and (ii) the denominator of which shall be the actual number of
REIT Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, split,
subdivision, reverse split or combination;
(ii) WEA distributes any rights, options or warrants to all
holders of its REIT Shares to subscribe for or to purchase or to
otherwise acquire REIT Shares (or other securities or rights
convertible into, exchangeable for or exercisable for REIT Shares) at
a price per share less than the Value of a REIT Share on the record
date for such distribution (each a "Distributed Right"), then the
-----------------
Adjustment Factor shall be adjusted by multiplying the Adjustment
Factor previously in effect by a fraction (a) the numerator of which
shall be the number of REIT Shares issued and outstanding on the
record date plus the maximum number of REIT Shares purchasable under
such Distributed Rights and (b) the denominator of which shall be the
number of REIT Shares issued and outstanding on the record date plus a
fraction (1) the numerator of which is the maximum number of REIT
Shares purchasable under such Distributed Rights times the minimum
purchase price per REIT Share under such Distributed Rights and (2)
the denominator of which is the Value of a REIT Share as of the record
date; provided, however, that, if any such Distributed Rights expire
-------- -------
or become no longer exercisable, then the Adjustment Factor shall be
adjusted, effective retroactive to the date of distribution of the
Distributed Rights, to reflect a reduced maximum number of REIT Shares
or any change in the minimum purchase price for the purposes of the
above fraction; and
(iii) WEA shall, by dividend or otherwise, distribute to all
holders of its REIT Shares evidences of its indebtedness or assets
(including securities, but excluding any dividend or distribution
referred to in subsection (i) above), which evidences of indebtedness
or assets relate to assets not received by the General Partner and/or
any Special Limited Partner pursuant to a pro rata distribution by the
Partnership, then the Adjustment Factor shall be adjusted to equal the
amount determined by multiplying the Adjustment Factor in effect
immediately prior to the close of business on the date fixed for
determination of shareholders entitled to receive such distribution by
a fraction (i) the numerator shall be such Value of a REIT Share on
the date fixed for such determination and (ii) the denominator shall
be the Value of a REIT Share on
3
<PAGE>
the dates fixed for such determination less the then fair market value
(as determined by the Managing General Partner, whose determination
shall be conclusive) of the portion of the evidences of indebtedness
or assets so distributed applicable to one REIT Share.
Any adjustments to the Adjustment Factor shall become effective immediately
after such event, retroactive to the record date, if any, for such event,
provided, however, that any Limited Partner or Investor may waive, by written
- -------- -------
notice to the Managing General Partner, the effect of any adjustment to the
Adjustment Factor applicable to the Partnership Common Units held by such
Limited Partner or Investor Unit Rights held by such Investor, and, thereafter,
such adjustment will not be effective as to such Partnership Common Units or
Investor Unit Rights, as applicable. For illustrative purposes, examples of
adjustments to the Adjustment Factor are set forth on Exhibit C attached hereto.
---------
"Advisor" means Westfield U.S. Advisory, L.P., a Delaware limited
-------
partnership, together with its successors and assigns, in its capacity as
"Advisor" under the Advisory Agreement.
"Advisory Agreement" means that certain Advisory Agreement dated as of
------------------
July 1, 1996 as now or hereafter amended, restated, modified, supplemented or
replaced, by and between WEA and the Advisor.
"Affiliate" means, with respect to any Person, any Person directly or
---------
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect
-------
to any Person means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this First Amended and Restated Agreement of Limited
---------
Partner ship of Westfield America Limited Partnership, as now or hereafter
amended, restated, modified, supplemented or replaced.
"Applicable Percentage" has the meaning set forth in Section 16.1.B
---------------------
hereof.
"Appraisal" means, with respect to any assets, the written opinion of
---------
an independent third party experienced in the valuation of similar assets,
selected by the Managing General Partner in good faith. Such opinion may be in
the form of an opinion by such independent third party that the value for such
property or asset as set by the Managing General Partner is fair, from a
financial point of view, to the Partnership.
4
<PAGE>
"Assignee" means a Person to whom one or more Partnership Common Units
--------
have been Transferred in a manner permitted under this Agreement, but who has
not become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5 hereof.
"Available Cash" means, with respect to any period for which such
--------------
calculation is being made,
(i) the sum, without duplication, of:
(1) the Partnership's Net Income or Net Loss (as the case
may be) for such period,
(2) Depreciation and all other noncash charges to the
extent deducted in determining Net Income or Net Loss for such period,
(3) the amount of any reduction in reserves of the
Partnership referred to in clause (ii)(6) below (including, without
limitation, reductions resulting because the Managing General Partner
determines such amounts are no longer necessary),
(4) the excess, if any, of the net cash proceeds from the
sale, exchange, disposition, financing or refinancing of Partnership
property for such period over the gain (or loss, as the case may be)
recognized from such sale, exchange, disposition, financing or
refinancing during such period (excluding Terminating Capital
Transactions), and
(5) all other cash received (including amounts previously
accrued as Net Income and amounts of deferred income) or any net
amounts borrowed by the Partnership for such period that was not
included in determining Net Income or Net Loss for such period;
(ii) less the sum, without duplication, of:
(1) all principal debt payments made during such period by
the Partnership,
(2) capital expenditures made by the Partnership during
such period,
5
<PAGE>
(3) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise
described in clause (ii)(1) or clause (ii)(2) above,
(4) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period (including amounts
paid in respect of expenses previously accrued),
(5) any amount included in determining Net Income or Net
Loss for such period that was not received by the Partnership during
such period,
(6) the amount of any increase in reserves (including,
without limitation, working capital reserves) established during such
period that the Managing General Partner determines are necessary or
appropriate in its sole and absolute discretion,
(7) any amount distributed or paid in redemption of any
Limited Partner Interest or Partnership Units, including, without
limitation, any Cash Amount paid, and
(8) any amount distributed or paid in redemption of any
Investor Unit Right, including, without limitation, any Cash Amount
paid.
Notwithstanding the foregoing, Available Cash shall not include (a) any cash
received or reductions in reserves, or take into account any disbursements made,
or reserves established, after dissolution and the commencement of the
liquidation and winding up of the Partnership or (b) any Capital Contributions,
whenever received or any payments, expenditures or investments made with such
Capital Contributions.
"Business Day" means any day except a Saturday, Sunday or other day on
------------
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means, a Partner's Capital Account or an Investor's
---------------
Capital Account, as the context requires, and "Capital Accounts" shall mean all
such Partner's Capital Accounts and Investor's Capital Accounts.
"Capital Contribution" means, (i) with respect to any Partner, the
--------------------
amount of money and the initial Gross Asset Value of any Contributed Property
that such Partner contributes to the Partnership pursuant to Section 4.1, 4.2,
or 4.3 hereof or is deemed to contribute pursuant to Section
6
<PAGE>
4.4 or 4.5 hereof; and (ii) with respect to any Investor, the amount of money
and the initial Gross Asset Value of any Contributed Property that such Investor
contributes to the Partnership pursuant to Article 13 hereof.
"Cash Amount" means the lesser of an amount of cash equal to the
-----------
product of (i) the Value of a REIT Share and (ii) the REIT Shares Amount
determined as of the applicable Valuation Date.
"Certificate" means the Certificate of Limited Partnership of the
-----------
Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.
"Charity" means an entity described in Section 501(c)(3) of the Code
-------
or any trust all the beneficiaries of which are such entities.
"Charter" means the Third Restated Articles of Incorporation of WEA
-------
filed with the Secretary of State of the State of Missouri on May 19, 1997, as
amended, supplemented or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and in
----
effect from time to time or any successor statute thereto, as interpreted by the
applicable Regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Consent" means the consent to, approval of, or vote in favor of a
-------
proposed action by a Partner given in accordance with Article 15 hereof.
"Consent of the Partners" means the Consent of a Majority in Interest
-----------------------
of the Partners, which Consent shall be obtained prior to the taking of any
action for which it is required by this Agreement and, except as otherwise
provided in this Agreement, may be given or withheld by a Majority in Interest
of the Partners, in their reasonable discretion; provided, that if any such
--------
action affects only certain classes or series of Partnership Units, "Consent of
the Partners" means the Consent of a Majority in Interests of the affected
classes or series of Partnership Units.
"Contributed Property" means each Property or other asset, in such
--------------------
form as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership (or deemed contributed by the Partnership to a
"new" partnership pursuant to Code Section 708).
"Controlled Entity" means, as to any Partner or Investor, (a) any
-----------------
corporation more than fifty percent (50%) of the outstanding voting stock of
which is owned by such Partner or
7
<PAGE>
Investor or such Partner's or Investor's Family Members, (b) any trust, whether
or not revocable, of which such Partner or Investor or such Partner's or
Investor's Family Members are the sole beneficiaries, (c) any partnership of
which such Partner or Investor is the managing partner and in which such Partner
or Investor or such Partner's or Investor's Family Members hold partnership
interests representing at least twenty-five percent (25%) of such partnership's
capital and profits and (d) any limited liability company of which such Partner
or Investor is the manager and in which such Partner or Investor or such
Partner's or Investor's Family Members hold membership interests representing at
least twenty-five percent (25%) of such limited liability company's capital and
profits.
"Cut-Off Date" means the fifth (5th) Business Day after the Managing
------------
General Partner's receipt of a Notice of Redemption.
"Debt" means, as to any Person, as of any date of determination, (i)
----
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
that, in accordance with generally accepted accounting principles, should be
capitalized.
"Declination" has the meaning set forth in Section 16.1.A hereof.
-----------
"Depreciation" means, for each Partnership Year or other applicable
------------
period, an amount equal to the Federal income tax depreciation, amortization or
other cost recovery deduction allowable with respect to an asset for such year
or other period, except that if the Gross Asset Value of an asset differs from
its adjusted basis for Federal income tax purposes at the beginning of such year
or period, Depreciation shall be in an amount that bears the same ratio to such
beginning Gross Asset Value as the Federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the Federal income tax
-------- -------
depreciation, amortization or other cost recovery deduction for such year or
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the Managing
General Partner.
"Developer" means Westfield Corporation, Inc., and its successors and
---------
assigns in its capacity as the "Developer" under the Development Agreement.
"Development Agreement" means that certain Master Development
---------------------
Framework Agreement dated as of July 1, 1996 as now or hereafter amended,
restated, modified, supplemented
8
<PAGE>
or replaced, by and between WEA and the Developer which may provide for
development, architectural, design, engineering and other services to be
provided to the Partnership.
"Distributed Right" has the meaning set forth in the definition of
-----------------
"Adjustment Factor."
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the SEC promulgated thereunder.
"Excluded Property" shall mean those assets listed on Exhibit G
----------------- ---------
attached hereto, as Exhibit G may, from time to time, be amended by the Managing
---------
General Partner, together with any other asset now or hereafter held directly
by WEA or any wholly-owned Subsidiary of WEA (other than the stock of any
wholly-owned Subsidiary and interests in the Partnership), in each case to the
extent such asset has not theretofore been contributed to the Partnership.
"Family Members" means, as to a Person that is an individual, such
--------------
Person's spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters and intervivos or testamentary trusts of which only such
Person and his spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters are beneficiaries.
"Funding Debt" means any Debt incurred by or on behalf of the General
------------
Partner or any Special Limited Partner for the purpose of providing funds to the
Partnership.
"General Partner" means the Managing General Partner and any
---------------
Additional General Partner, each in its capacity as a general partner of the
Partnership.
"General Partner Interest" means the Partnership Interest held by the
------------------------
General Partner, which Partnership Interest is an interest as a general partner
under the Act. A General Partner Interest may be expressed as a number of
Partnership Common Units, Partnership Preferred Units or any other Partnership
Units.
"General Partner Loan" has the meaning set forth in Section 4.4.D
--------------------
hereof.
"Gross Asset Value" means, with respect to any asset, the asset's
-----------------
adjusted basis for Federal income tax purposes, except as follows:
(b) The initial Gross Asset Value of any asset contributed by a
Partner or an Investor to the Partnership shall be the gross fair market value
of such asset as determined by the
9
<PAGE>
Managing General Partner and agreed to by the contributing Person. The sub-
allocation of gross fair market value is indicated on Exhibit D attached hereto,
---------
as amended.
(d) The Gross Asset Values of all Partnership assets immediately
prior to the occurrence of any event described in clause (i), clause (ii),
clause (iii), clause (iv), clause (v) or clause (vi) hereof shall be adjusted to
equal their respective gross fair market values, as determined by the Managing
General Partner using such reasonable method of valuation as it may adopt, as of
the following times:
(i) the acquisition of an additional interest in the Partnership
(other than in connection with the execution of this Agreement but
including, without limitation, acquisitions pursuant to Section 4.2 hereof
or contributions or deemed contributions by the General Partner pursuant to
Section 4.2 hereof) by a new or existing Partner in exchange for more than
a de minimis Capital Contribution, if the Managing General Partner
reasonably determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the Partnership
and/or the Investors;
(ii) the grant of additional Investor Unit Right(s), including,
without limitation, grants pursuant to Section 13.1 hereof, to a new or
existing Investor in exchange for more than a de minimis Capital
Contribution, if the Managing General Partner reasonably determines that
such adjustment is necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership and/or the Investors;
(iii) the distribution by the Partnership to a Partner or an Investor
of more than a de minimis amount of Partnership property as consideration
for an interest in the Partnership or Investor Unit Rights, as the case may
be, if the Managing General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership and/or the Investors;
(iv) the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g);
(v) upon the admission of a successor Managing General Partner
pursuant to Section 12.1 hereof; and
(vi) at such other times as the Managing General Partner shall
reasonably determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset
distributed to a Partner or an Investor shall be the gross fair market value of
such asset on the date of distribution as
10
<PAGE>
determined by the distributee and the Managing General Partner provided that, if
the distributee is the Managing General Partner or if the distributee and the
Managing General Partner cannot agree on such a determination, such gross fair
market value shall be determined by Appraisal.
(d) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that
-------- -------
Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the
extent that the Managing General Partner reasonably determines that an
adjustment pursuant to subsection (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subsection (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subsection (a), subsection (b) or subsection
(d) above, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Losses.
"Holder" means either (a) a Partner or (b) an Assignee owning a
------
Partnership Unit, or (c) an Investor.
"Incapacity" or "Incapacitated" means, (i) as to any Partner or
---------- -------------
Investor who is an individual, death, total physical disability or entry by a
court of competent jurisdiction adjudicating such Partner or Investor
incompetent to manage his or her person or his or her estate; (ii) as to any
Partner or Investor that is a corporation or limited liability company, the
filing of a certificate of dissolution, or its equivalent, for the corporation
or the revocation of its charter; (iii) as to any Partner or Investor that is a
partnership, the dissolution and commencement of winding up of the partnership;
(iv) as to any Partner or Investor that is an estate, the distribution by the
fiduciary of the estate's entire interest in the Partnership or Investor Unit
Rights (as the case may be); (v) as to any trustee of a trust that is a Partner
or an Investor, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner or Investor, the bankruptcy of such Partner
or Investor. For purposes of this definition, bankruptcy of a Partner or
Investor shall be deemed to have occurred when (a) the Partner or Investor
commences a voluntary proceeding seeking liquidation, reorganization or other
relief of or against such Partner or Investor under any bankruptcy, insolvency
or other similar law now or hereafter in effect, (b) the Partner or Investor is
adjudged as bankrupt or insolvent, or a final and nonappealable order for relief
under any bankruptcy, insolvency or similar law now or hereafter in effect has
been entered against the Partner or Investor, (c) the Partner or Investor
executes and delivers a general assignment for the benefit of the Partner's or
Investor's creditors, (d) the Partner or Investor files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against the Partner or Investor in any proceeding of the nature described
in clause
11
<PAGE>
(b) above, (e) the Partner or Investor seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator for the Partner or Investor or
for all or any substantial part of the Partner or Investor's properties, (f) any
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred twenty (120) days after the commencement
thereof, (g) the appointment without the Partner or Investor's consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or stayed
within ninety (90) days of such appointment, or (h) an appointment referred to
in clause (g) above is not vacated within ninety (90) days after the expiration
of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
----------
reason of its status as (A) the General Partner or (B) a director of the
General Partner or an officer or employee of the Partnership or the General
Partner and (ii) such other Persons (including Affiliates of the General Partner
or the Partnership) as the Managing General Partner may designate from time to
time (whether before or after the event giving rise to potential liability), in
its sole and absolute discretion.
"Investor" means any Person named as an Investor in Exhibit B attached
-------- ---------
hereto, as such Exhibit B may be amended from time to time, in its capacity as a
---------
holder of Investor Unit Rights. No Investor shall be a "limited partner" or a
"general partner" as such terms are defined in the Act and shall have no rights,
powers or obligations as a "partner" as defined in the Act or for any purpose,
including for any purpose of this Agreement or otherwise at law or in equity;
provided, however that each Investor, in its capacity as an Investor, shall be
treated as a partner of the Partnership for the purposes of United States
Federal, state and local tax laws and the regulations now or hereafter
promulgated thereunder. Except as permitted pursuant to Section 13.10 hereof,
no Investor shall be or be admitted as a partner or joint venturer of the
Partnership or any Partner of the Partnership for purposes of the Act or for any
other purpose other than for purposes of United States Federal, state and local
tax laws and the regulations now or hereafter promulgated thereunder.
"Investor's Capital Account" means, with respect to any Investor, the
--------------------------
Capital Account maintained by the Managing General Partner for such Investor on
the Partnership's books and records in accordance with the following provisions:
(a) To each Investor's Capital Account, there shall be added such
Investor's Capital Contributions, such Investor's distributive share of Net
Income and any items in the nature of income or gain that are specially
allocated pursuant to Section 6.3 hereof, and the principal amount of any
Partnership liabilities assumed by such Investor or that are secured by any
property distributed to such Investor.
(b) From each Investor's Capital Account, there shall be subtracted
the amount of cash and the Gross Asset Value of any property distributed to such
Investor pursuant to any provision of this Agreement, such Person's distributive
share of Net Losses and any items in the
12
<PAGE>
nature of expenses or losses that are specially allocated pursuant to Section
6.3 hereof, and the principal amount of any liabilities of such Investor assumed
by the Partnership or that are secured by any property contributed by such
Investor to the Partnership.
(c) In the event any Investor Unit Right is Transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the Investor's
Capital Account of the transferor to the extent that it relates to the
Transferred Investor Unit Right.
(d) In determining the principal amount of any liability for purposes
of subsections (a) and (b) hereof, there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and Regulations.
(e) The provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and
1.704-2, and shall be interpreted and applied in a manner consistent with such
Regulations. If the Managing General Partner shall determine that it is prudent
to modify the manner in which the Capital Accounts are maintained in order to
comply with such Regulations, the Managing General Partner may make such
modification provided that such modification will not have a material effect on
the amounts distributable to any Investor without such Investor's consent. The
Managing General Partner also shall (i) make any adjustments that are necessary
or appropriate to maintain equality between the Capital Accounts of the Partners
and Investors and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q) and (ii) make any appropriate
modifications in the event that unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2;
provided, however, that such changes shall not materially reduce amounts
- -------- -------
otherwise distributable to the Investors as current cash distributions or as
distributions on termination of the Partnership.
"Investor Unit Right" shall mean an Investor Unit Right that the
-------------------
Managing General Partner has granted pursuant to this Agreement and includes any
and all benefits to which the holder of such an Investor Unit Right may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. The interest
of an Investor in its Investor Unit Rights shall be treated as an "interest" in
the Partnership for purposes of United States Federal, state and local tax laws
and the regulations now or hereafter promulgated thereunder, but shall not
constitute a "partnership interest" as such term is defined in the Act.
"Investor Unit Right Designation" shall have the meaning set forth in
-------------------------------
Section 13.1 hereof.
13
<PAGE>
"IRS" means the Internal Revenue Service, which administers the
---
internal revenue laws of the United States.
"Junior Share" means a share of capital stock of WEA now or hereafter
------------
authorized or reclassified that has dividend rights, or rights upon liquidation,
winding up and dissolution, that are inferior or junior to the REIT Shares.
"Limited Partner" means the Special Limited Partners and any Person
---------------
named as a Limited Partner in Exhibit A attached hereto, as such Exhibit A may
--------- ---------
be amended from time to time, or any Substituted Limited Partner or Additional
Limited Partner, and shown as such in the books and records of the Partnership,
in such Person's capacity as a limited partner of the Partnership.
"Limited Partner Interest" means a Partnership Interest of a Limited
------------------------
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Limited Partners and includes any and all benefits to which the
holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement. A Limited Partner Interest may be expressed
as a number of Partnership Common Units, Partnership Preferred Units or other
Partnership Units.
"Liquidating Event" has the meaning set forth in Section 14.1 hereof.
-----------------
"Liquidator" has the meaning set forth in Section 14.2.A hereof.
----------
"Majority in Interest of the Partners" means Partners holding more
------------------------------------
than fifty percent (50%) of all outstanding Partnership Units entitled to
Consent to or withhold Consent from a proposed action; provided that if there is
--------
one or more Limited Partners that is not an Affiliate of the Managing General
Partner, then the Managing General Partner and its Affiliates shall not be
entitled to Consent to or withhold Consent from such action.
"Majority in Interest of the Investors" means Investors holding more
-------------------------------------
than fifty percent (50%) of all outstanding Investor Unit Rights entitled to
consent to or withhold consent from a proposed action; provided that if there is
--------
one or more Investors that is not an Affiliate of the Managing General Partner,
then the Managing General Partner and its Affiliates shall not be entitled to
consent to or withhold consent from such action.
"Management Agreement" shall mean a property management agreement with
--------------------
respect to the management and operation of any Property entered into between the
Partnership (or any Affiliate of the Partnership), as owner, and the Property
Manager, any Affiliate of the Property Manager or such other property manager as
the Managing General Partner shall engage for the
14
<PAGE>
management and operation of the Property, as manager, as such property
management agreement may be amended, modified, supplemented or restated, from
time to time.
"Managing General Partner" means Westfield America, Inc. and its
------------------------
successors and assigns, as the managing general partner of the Partnership in
their capacities as managing general partner of the Partnership.
"Net Income" or "Net Loss" means, for each Partnership Year of the
---------- --------
Partnership, an amount equal to the Partnership's taxable income or loss for
such year, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Partnership that is exempt from Federal
income tax and not otherwise taken into account in computing Net Income (or Net
Loss) pursuant to this definition of "Net Income" or "Net Loss" shall be added
to (or subtracted from, as the case may be) such taxable income (or loss);
(b) Any expenditure of the Partnership described in Code Section
705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income (or Net Loss) pursuant to this definition of "Net
Income" or "Net Loss," shall be subtracted from (or added to, as the case may
be) such taxable income (or loss);
(c) In the event the Gross Asset Value of any Partnership asset
is adjusted pursuant to subsection (b) or subsection (c) of the definition of
"Gross Asset Value," the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for purposes of computing Net
Income or Net Loss;
(d) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization and other cost
recovery deductions that would otherwise be taken into account in computing such
taxable income or loss, there shall be taken into account Depreciation for such
Partnership Year;
(f) To the extent that an adjustment to the adjusted tax basis
of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b)
is required pursuant to
15
<PAGE>
Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Partner's interest in the Partnership or of an Investor's
interest in its Investor Unit Rights, the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes of
computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this definition of
"Net Income" or "Net Loss," any item that is specially allocated pursuant to
Section 6.3 hereof shall not be taken into account in computing Net Income or
Net Loss. The amounts of the items of Partnership income, gain, loss or
deduction available to be specially allocated pursuant to Section 6.3 hereof
shall be determined by applying rules analogous to those set forth in this
definition of "Net Income" or "Net Loss."
"New Securities" means (i) any rights, options, warrants or
--------------
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or Preferred Shares, excluding Junior Shares, Preferred
Shares and grants under the Stock Option Plans, or (ii) any Debt issued by WEA
that provides any of the rights described in clause (i).
"Nonrecourse Deductions" has the meaning set forth in Regulations
----------------------
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
---------------------
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in
--------------------
the form of Exhibit E attached to this Agreement.
---------
"Optionee" means a Person to whom a stock option is granted under any
--------
Stock Option Plan.
"Original Limited Partners" means the Persons listed as the Limited
-------------------------
Partners on Exhibit A originally attached to this Agreement, without regard to
---------
any amendment thereto, and does not include any Assignee or other transferee,
including, without limitation, any Substituted Limited Partner succeeding to all
or any part of the Partnership Interest of any such Person.
"Ownership Limit" means the applicable restriction or restrictions on
---------------
ownership of shares of WEA imposed under the Charter.
16
<PAGE>
"Partner" means the General Partner or a Limited Partner, and
-------
"Partners" means the General Partner and the Limited Partners.
--------
"Partner Minimum Gain" means an amount, with respect to each Partner
--------------------
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
------------------------
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
------------------------------
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section 1.704-
2(i)(2).
"Partner's Capital Account" means, with respect to any Partner, the
-------------------------
Capital Account maintained by the Managing General Partner for such Partner on
the Partnership's books and records in accordance with the following provisions:
(a) To each Partner's Capital Account, there shall be added such
Partner's Capital Contributions, such Partner's distributive share of Net Income
and any items in the nature of income or gain that are specially allocated
pursuant to Section 6.3 hereof, and the principal amount of any Partnership
liabilities assumed by such Partner or that are secured by any property
distributed to such Partner.
(b) From each Partner's Capital Account, there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses that are specially allocated pursuant to Section 6.3 hereof,
and the principal amount of any liabilities of such Partner assumed by the
Partnership or that are secured by any property contributed by such Partner to
the Partnership.
(c) In the event any interest in the Partnership is Transferred
in accordance with the terms of this Agreement, the transferee shall succeed to
the Partner's Capital Account of the transferor to the extent that it relates to
the Transferred interest.
(d) In determining the principal amount of any liability for
purposes of subsections (a) and (b) hereof, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
17
<PAGE>
(e) The provisions of this Agreement relating to the maintenance
of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b)
and 1.704-2, and shall be interpreted and applied in a manner consistent with
such Regulations. If the Managing General Partner shall determine that it is
prudent to modify the manner in which the Capital Accounts are maintained in
order to comply with such Regulations, the Managing General Partner may make
such modification provided that such modification will not have a material
effect on the amounts distributable to any Partner or Investor without such
Person's consent. The Managing General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Partners and Investors and the amount of Partnership
capital reflected on the Partnership's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (ii)
make any appropriate modifications in the event that unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b)
or Section 1.704-2; provided, however, that such changes shall not materially
-------- -------
reduce amounts otherwise distributable to the Partner as current cash
distributions or as distributions on termination of the Partnership.
"Partnership" means the limited partnership formed and continued under
-----------
the Act and pursuant to this Agreement, and any successor thereto.
"Partnership Common Unit" means a fractional share of the Partnership
-----------------------
Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but
does not include any Partnership Preferred Unit or any other Partnership Unit
specified in a Partnership Unit Designation as being other than a Partnership
Common Unit; provided, however, that the General Partner Interest and the
-------- -------
Limited Partner Interests shall have the differences in rights and privileges as
specified in this Agreement.
"Partnership Employee" means an employee of the Partnership or an
--------------------
employee of a Subsidiary of the Partnership, if any.
"Partnership Interest" means an ownership interest in the Partnership
--------------------
held by either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A Partnership Interest
may be expressed as a number of Partnership Common Units, Partnership Preferred
Units or other Partnership Units and shall be evidenced by a Partnership Unit
Certificate.
"Partnership Junior Unit" means a fractional share of the Partnership
-----------------------
Interests that the Managing General Partner has authorized pursuant to Section
4.1 or Section 4.2 or Section 4.3 hereof that has distribution rights, or rights
upon liquidation, winding up and dissolution, that are inferior or junior to the
Partnership Common Units.
18
<PAGE>
"Partnership Minimum Gain" has the meaning set forth in Regulations
------------------------
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section 1.704-
2(d).
"Partnership Preferred Unit" means a fractional share of the
--------------------------
Partnership Interests that the Managing General Partner has authorized pursuant
to Section 4.1 or Section 4.2 or Section 4.3 hereof that has distribution
rights, or rights upon liquidation, winding up and dissolution, that are
superior or prior to the Partnership Common Units.
"Partnership Record Date" means the record date established by the
-----------------------
Managing General Partner for the distribution of Available Cash pursuant to
Section 5.1 hereof, which record date shall generally be the same as the record
date established by WEA for a distribution to its shareholders of some or all of
its portion of such distribution.
"Partnership Unit" shall mean a Partnership Common Unit, a Partnership
----------------
Preferred Unit, a Partnership Junior Unit or any other fractional share of the
Partnership Interests that the Managing General Partner has authorized pursuant
to Section 4.1 or Section 4.2 or Section 4.3 hereof. The ownership of
Partnership Units shall be evidenced by Partnership Unit Certificates.
"Partnership Unit Certificate" means a certificate for Partnership
----------------------------
Common Units in the form attached hereto as Exhibit F or such other certificate
---------
issued by the Partnership to evidence a Partnership Unit.
"Partnership Unit Designation" shall have the meaning set forth in
----------------------------
Section 4.2 hereof.
"Partnership Year" means the fiscal year of the Partnership, which
----------------
shall be the calendar year.
"Percentage Interest" means, as to each Partner and each Investor, its
-------------------
interest in the Partnership Units or Investor Unit Rights, as applicable, as
determined by dividing the Partnership Units or Investor Unit Rights owned by
such Partner or Investor by the aggregate number of Partnership Units and
Investor Unit Rights then outstanding.
"Permitted Transfer" has the meaning set forth in Section 11.3.A
------------------
hereof.
"Permitted Investor Rights Transfer" has the meaning set forth in
----------------------------------
Section 13.7.A hereof.
19
<PAGE>
"Person" means an individual or a corporation, partnership, trust,
------
unincorporated organization, association, limited liability company or other
entity.
"Pledge" has the meaning set forth in Section 11.3.A hereof.
------
"Preferred Share" means a share of capital stock of WEA now or
---------------
hereafter authorized or reclassified that has dividend rights, or rights upon
liquidation, winding up and dissolution, that are superior or prior to the REIT
Shares.
"Property Manager" means Westfield Management Company, or another
----------------
affiliate of WEA's shareholders and their respective successors and assigns in
their capacity as "Manager" under any Property Management Agreement.
"Properties" means any assets and property of the Partnership such as,
----------
but not limited to, interests in real property and personal property, including,
without limitation, fee interests, interests in ground leases, interests in
limited liability companies, joint ventures or partnerships, interests in
mortgages, and Debt instruments as the Partnership may hold from time to time
and "Property" shall mean any one such asset or property.
--------
"Qualified Transferee" means an "accredited investor" as defined in
--------------------
Rule 501 promulgated under the Securities Act.
"Qualifying Party" means (I) (a) an Original Limited Partner, (b) an
----------------
Additional Limited Partner or an Assignee, (c) an Investor or a transferee of
Investor Rights Units in a Permitted Transfer or pursuant to a Permitted
Investor Rights Transfer, (d) a Family Member, or a lending institution as the
pledgee of a Pledge, who is the transferee in a Permitted Transfer or (e) with
respect to any Notice of Redemption delivered to the Managing General Partner
within the time period set forth in (X) Section 11.3.A(4) hereof, a Substituted
Limited Partner succeeding to all or part of the Limited Partner Interest of (i)
an Original Limited Partner, (ii) an Additional Limited Partner, or (iii) a
Family Member, or a lending institution who is the pledgee of a Pledge, who is
the transferee in a Permitted Transfer, or (Y) Section 13.7.A(4) hereof, a
transferee of Investor Rights Units in a Permitted Transfer or pursuant to a
Permitted Investor Rights Transfer.
"Redemption" has the meaning set forth in Section 16.1.A hereof.
----------
"Regulations" means the applicable income tax regulations under the
-----------
Code, whether such regulations are in proposed, temporary or final form, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section
----------------------
6.3.B(viii) hereof.
20
<PAGE>
"REIT" means a real estate investment trust qualifying under Code
----
Section 856.
"REIT Available Cash" shall mean, as of any date of determination, all
-------------------
amounts which would be available for distribution to the holders of REIT Shares
(calculated in a manner substantially similar to the manner in which the
Partnership calculates Available Cash and without regard to any distributions
from the Partnership to be made, or which have been made, to the Managing
General Partner and any Special Limited Partners hereunder and without regard to
any restriction on distribution imposed on the Managing General Partner by any
third party).
"REIT Partner" means (a) a Partner, including, without limitation, the
------------
Managing General Partner, that is, or has made an election to qualify as, a
REIT, (b) any "qualified REIT subsidiary" (within the meaning of Code Section
856(i)(2)) of any Partner that is, or has made an election to qualify as, a REIT
and (c) any Partner, including, without limitation, any Special Limited Partner,
that is a "qualified REIT subsidiary" (within the meaning of Code Section
856(i)(2)) of a REIT.
"REIT Payment" has the meaning set forth in Section 16.12 hereof.
------------
"REIT Requirements" has the meaning set forth in Section 5.1 hereof.
-----------------
"REIT Share" means a share of WEA's Class B-1 Common Shares, par value
----------
$.01 per share, Class B-2 Common Shares, par value $.01 per share, and Class B-3
Common Shares, par value $.01 per share. Where relevant in this Agreement,
"REIT Shares" includes shares of WEA's Common Shares, par value $.01 per share,
- ------------
issued upon conversion of Preferred Shares or Junior Shares.
"REIT Shares Amount" means a number of REIT Shares equal to the
------------------
product of (a) the number of Tendered Units and (b) the Adjustment Factor;
provided, however, that, in the event that WEA issues to all holders of REIT
- -----------------
Shares as of a certain record date rights, options, warrants or convertible or
exchangeable securities entitling WEA's shareholders to subscribe for or
purchase REIT Shares, or any other securities or property (collectively, the
"Rights"), with the record date for such Rights issuance falling within the
- -------
period starting on the date of the Notice of Redemption and ending on the day
immediately preceding the Specified Redemption Date, which Rights will not be
distributed before the relevant Specified Redemption Date, then the REIT Shares
Amount shall also include such Rights that a holder of that number of REIT
Shares would be entitled to receive, expressed, where relevant hereunder, in a
number of REIT Shares determined by WEA in good faith.
"Related Party" means, with respect to any Person, any other Person
-------------
whose ownership of shares of WEA's capital stock would be attributed to the
first such Person under Code Section 544 (as modified by Code Section
856(h)(1)(B)).
21
<PAGE>
"Rights" has the meaning set forth in the definition of "REIT Shares
------
Amount."
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC promulgated thereunder.
"Special Limited Partners" means Limited Partners that are Affiliates
------------------------
of WEA, each of which shall be designated as a "Special Limited Partner" on
Exhibit A attached hereto, as amended from time to time, and shown as such in
- ---------
the books and records of the Partnership.
"Special Redemption" has the meaning set forth in Section 16.1.A
------------------
hereof.
"Specified Partnership Common Unit Amount" shall mean, (i) with
----------------------------------------
respect to each Excluded Property that is listed on Exhibit G as of the date
hereof, the number of Partnership Common Units set forth opposite such Excluded
Property on Exhibit G, and (ii) with respect to each Excluded Property that is
added to Exhibit G from and after the date hereof, the amount of Partnership
Common Units which would have been issued to WEA, pursuant to Section 4.3.B and
4.2 hereof, if WEA had contributed such Excluded Property on the later to occur
of (A) the date of issuance of any Partnership Common Unit or grant of any
Investor Unit Right to any Person that is not an Affiliate of WEA and (B) the
date that such asset was acquired by WEA or a wholly-owned Subsidiary of WEA, in
exchange for Partnership Common Units equal in value to the fair market value of
such Excluded Property as of such date.
"Specified Redemption Date" means the tenth (10th) Business Day after
-------------------------
the receipt by the Managing General Partner of a Notice of Redemption; provided,
--------
however, that no Specified Redemption Date shall occur during the first Twelve-
- -------
Month Period (except pursuant to a Special Redemption).
"Stock Option Plans" means any stock option plan now or hereafter
------------------
adopted by the Partnership or the Managing General Partner.
"Subsidiary" means, with respect to any Person, any corporation or
----------
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person; provided, however, that, with respect to the
-----------------
Partnership, "Subsidiary" means solely a partnership or limited liability
----------
company (taxed, for Federal income tax purposes, as a partnership and not as an
association or publicly traded partnership taxable as a corporation, including
without limitation single member limited liability companies) of which the
Partnership is a member unless the Managing General Partner has received an
unqualified opinion from independent counsel of recognized standing, or a ruling
from the IRS, that the ownership of
22
<PAGE>
shares of stock of a corporation or other entity will not jeopardize WEA's
status as a REIT or any Special Limited Partner's status as a "qualified REIT
subsidiary" (within the meaning of Code Section 856(i)(2)), in which event the
term "Subsidiary" shall include the corporation or other entity which is the
----------
subject of such opinion or ruling.
"Substituted Limited Partner" means a Person who is admitted as a
---------------------------
Limited Partner to the Partnership pursuant to Section 11.4 hereof.
"Tax Items" has the meaning set forth in Section 6.4.A hereof.
---------
"Tendered Units" has the meaning set forth in Section 16.1.A hereof.
--------------
"Tendering Party" has the meaning set forth in Section 16.1.A hereof.
---------------
"Terminating Capital Transaction" means any sale or other disposition
-------------------------------
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Transfer" means any sale, assignment, bequest, conveyance, devise,
--------
gift (outright or in trust), Pledge, encumbrance, hypothecation, mortgage,
exchange, transfer or other disposition or act of alienation, whether voluntary
or involuntary or by operation of law; provided, however, that when the term is
-----------------
used in Article 11 and Section 13.7 hereof, "Transfer" does not include (a) any
--------
Redemption of Partnership Common Units or Investor Unit Rights by the
Partnership, or acquisition of Tendered Units by WEA, pursuant to Section 16.1
hereof or (b) any redemption of Partnership Units pursuant to any Partnership
Unit Designation or of Investor Unit Rights pursuant to any Investor Unit Right
Designation or (c) any termination of Investor Unit Rights pursuant to Section
13.10. The terms "Transferred" and "Transferring" have correlative meanings.
"Twelve-Month Period" means (a) as to an Original Limited Partner or
-------------------
any successor-in-interest that is a Qualifying Party, a twelve-month period
ending on the day before the first (1st) anniversary of the date of this
Agreement or on the day before a subsequent anniversary thereof and (b) as to
any other Qualifying Party, a twelve-month period ending on the day before the
first (1st) anniversary of such Qualifying Party's first becoming a Holder of
Partnership Common Units or Investor Unit Rights, as applicable, or on the day
before a subsequent anniversary thereof; provided, however, that the Managing
-------- -------
General Partner may, in its sole and absolute discretion, by written agreement
with a Qualifying Party, shorten or lengthen the first Twelve-Month Period to a
period of shorter or longer than twelve (12) months with respect to a Qualifying
Party other than an Original Limited Partner or successor-in-interest.
23
<PAGE>
"Valuation Date" means the date of receipt by the Managing General
--------------
Partner of a Notice of Redemption or, if such date is not a Business Day, the
immediately preceding Business Day.
"Value" means, on any Valuation Date with respect to a REIT Share, the
-----
average of the daily market prices for ten (10) consecutive trading days
immediately preceding the Valuation Date (except that, as provided in Section
4.4.C. hereof, the market price for the trading day immediately preceding the
date of exercise of a stock option under the Stock Option Plans shall be
substituted for such average of daily market prices for purposes of Section 4.4
hereof). The market price for any such trading day shall be:
(i) if the REIT Shares are listed or admitted to trading on any
securities exchange or The NASDAQ Stock Market's National Market System,
the closing price, regular way, on such day, or if no such sale takes place
on such day, the average of the closing bid and asked prices on such day,
in either case as reported in the principal consolidated transaction
reporting system,
(ii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or The NASDAQ Stock Market's National Market System,
the last reported sale price on such day or, if no sale takes place on such
day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the Managing General
Partner, or
(iii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or The NASDAQ Stock Market's National Market System and
no such last reported sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked prices on
such day, as reported by a reliable quotation source designated by the
Managing General Partner, or if there shall be no bid and asked prices on
such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than ten (10) days prior to the date in
question) for which prices have been so reported;
provided, however, that, if there are no bid and asked prices reported during
- -------- -------
the ten (10) days prior to the date in question, the Value of the REIT Shares
shall be determined by the Managing General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate. In the event that the REIT Shares Amount
includes Rights (as defined in the definition of "REIT Shares Amount") that a
holder of REIT Shares would be entitled to receive, then the Value of such
Rights shall be determined by the Managing General Partner acting in good faith
on the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.
24
<PAGE>
"WEA" means Westfield America, Inc., a Missouri corporation.
---
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Formation. The Partnership is a limited partnership
---------
heretofore formed and continued pursuant to the provisions of the Act and upon
the terms and subject to the conditions set forth in this Agreement. Except as
expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal
property for all purposes.
Section 2.2 Name. The name of the Partnership is "Westfield
----
America Limited Partnership." The Partnership's business may be conducted under
any other name or names deemed advisable by the Managing General Partner,
including the name of the Managing General Partner or any Affiliate thereof.
The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the purposes of
complying with the laws of any jurisdiction that so requires. The Managing
General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Partners of
such change in the next regular communication to the Partners.
Section 2.3 Registered Office and Agent; Principal Office. The
---------------------------------------------
address of the registered office of the Partnership in the State of Delaware is
located at Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801 and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office is The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The principal office of the
Partnership is located at 11601 Wilshire Boulevard, Los Angeles, California
90025 or such other place as the Managing General Partner may from time to time
designate by notice to the Limited Partners and the Investors. The Partnership
may maintain offices at such other place or places within or outside the State
of Delaware as the Managing General Partner deems advisable.
Section 2.4 Power of Attorney.
-----------------
A. Each Limited Partner and Assignee hereby irrevocably constitutes
and appoints the Managing General Partner, any Liquidator, and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in each
case with full power of substitution, as its true and lawful agent and attorney-
in-fact, with full power and authority in its name, place and stead to:
25
<PAGE>
(1) execute, swear to, seal, acknowledge, deliver, file and record in
the appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate and all amendments, supplements or restatements thereof) that
the Managing General Partner or the Liquidator deems appropriate or
necessary to form, qualify or continue the existence or qualification of
the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability to the extent provided by
applicable law) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (b) all
instruments that the Managing General Partner or any Liquidator deems
appropriate or necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms; (c) all
conveyances and other instruments or documents that the Managing General
Partner or the Liquidator deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of
cancellation; (d) all conveyances and other instruments or documents that
the Managing General Partner or the Liquidator deems appropriate or
necessary to reflect the distribution or exchange of assets of the
Partnership pursuant to the terms of this Agreement; (e) all instruments
relating to the admission, acceptance, withdrawal, removal or substitution
of any Partner or Investor pursuant to the terms of this Agreement or the
Capital Contribution of any Partner or any Investor; and (f) all
certificates, documents and other instruments relating to the determination
of the rights, preferences and privileges relating to Partnership
Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the Managing General
Partner or any Liquidator, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action that is made or given by
the Partners hereunder or is consistent with the terms of this Agreement.
Nothing contained herein shall be construed as authorizing the Managing General
Partner or any Liquidator to amend this Agreement except in accordance with
Article 16 hereof or as may be otherwise expressly provided for in this
Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Limited Partners and Assignees will be relying upon the
power of the Managing General Partner or the Liquidator to act as contemplated
by this Agreement in any filing or other action by it on behalf of the
Partnership, and it shall survive and not be affected by the subsequent
Incapacity of any Limited Partner or Assignee and the Transfer of all or any
portion of such Person's Partnership Units or Partnership Interest (as the case
may be) and shall extend to such Person's heirs, successors, assigns and
personal representatives. Each such Limited Partner and Assignee hereby agrees
to be bound by any
26
<PAGE>
representation made by the Managing General Partner or the Liquidator, acting in
good faith pursuant to such power of attorney; and each such Limited Partner and
Assignee hereby waives any and all defenses that may be available to contest,
negate or disaffirm the action of the Managing General Partner or the
Liquidator, taken in good faith under such power of attorney. Each Limited
Partner and Assignee shall execute and deliver to the Managing General Partner
or the Liquidator, within fifteen (15) days after receipt of the Managing
General Partner's or the Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the Managing General
Partner or the Liquidator (as the case may be) deems necessary to effectuate
this Agreement and the purposes of the Partnership. Notwithstanding anything
else set forth in this Section 2.4.B, no Limited Partner shall incur any
personal liability for any action of the Managing General Partner or the
Liquidator taken under such power of attorney.
Section 2.5 Term. The term of the Partnership commenced on October
----
27, 1997, the date that the original Certificate was filed in the office of the
Secretary of State of Delaware in accordance with the Act, and shall continue
until December 31, 2097 unless the Partnership is dissolved sooner pursuant to
the provisions of Article 14 hereof or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business. The purpose and nature of the
--------------------
Partnership is to conduct any business, enterprise or activity permitted by or
under the Act, including, but not limited to, (i) to conduct the business of
ownership, construction, reconstruction, development, redevelopment, alteration,
improvement, maintenance, operation, sale, leasing, transfer, encumbrance,
conveyance and exchange of the Properties, (ii) to enter into any partnership,
joint venture, business trust arrangement, limited liability company or other
similar arrangement to engage in any business permitted by or under the Act, or
to own interests in any entity engaged in any business permitted by or under the
Act, (iii) to conduct the business of providing property and asset management
and brokerage services, whether directly or through one or more partnerships,
joint ventures, Subsidiaries, business trusts, limited liability companies or
similar arrangements, and (iv) to do anything necessary or incidental to the
foregoing; provided, however, that such business and arrangements and interests
-------- -------
may be limited to and conducted in such a manner (a) as to permit WEA, in the
sole and absolute discretion of WEA, at all times to be classified as a REIT and
(b) as will comply in all material respects with the covenants, conditions and
restrictions now or hereafter placed upon or adopted by WEA pursuant to any
agreement of WEA or applicable laws and regulations. The Partnership shall have
all powers necessary or desirable to accomplish the purposes enumerated. In
connection with the foregoing, the Partnership shall have full power and
authority to enter into, perform and carry out contracts of any kind, to borrow
and lend money and to issue evidence of indebtedness, whether or
27
<PAGE>
not secured by mortgage, deed of trust, pledge or other lien and, directly or
indirectly, to acquire and construct additional Properties necessary, useful or
desirable in connection with its business.
Section 3.2 Powers.
------
A. The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Partnership.
B. Notwithstanding any other provision in this Agreement, the
General Partner may cause the Partnership not to take, or to refrain from
taking, any action that, in the judgment of the Managing General Partner, in its
sole and absolute discretion, (i) could adversely affect the ability of WEA to
continue to qualify as a REIT, (ii) could subject WEA to any additional taxes
under Code Section 857 or Code Section 4981 or any other related or successor
provision under the Code, (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over WEA, its securities or the
Partnership or (iv) could violate in any material respects any of the covenants,
conditions or restrictions now or hereafter placed upon or adopted by WEA
pursuant to any agreement of WEA or applicable laws and regulations, unless, in
any such case, such action (or inaction) under clause (i), clause (ii), clause
(iii) or clause (iv) above shall have been specifically consented to by WEA in
writing.
Section 3.3 Partnership Only for Purposes Specified. The
---------------------------------------
Partnership shall be a limited partnership only for the purposes specified in
Section 3.1 hereof, and this Agreement shall not be deemed to create a company,
venture or partnership between or among the Partners or any other Persons with
respect to any activities whatsoever other than the activities within the
purposes of the Partnership as specified in Section 3.1 hereof. Except as
otherwise provided in this Agreement, no Partner shall have any authority to act
for, bind, commit or assume any obligation or responsibility on behalf of the
Partnership, its properties or any other Partner. No Partner, in its capacity
as a Partner under this Agreement, shall be responsible or liable for any
indebtedness or obligation of another Partner, nor shall the Partnership be
responsible or liable for any indebtedness or obligation of any Partner,
incurred either before or after the execution and delivery of this Agreement by
such Partner, except as to those responsibilities, liabilities, indebtedness or
obligations incurred pursuant to and as limited by the terms of this Agreement
and the Act.
Section 3.4 Representations and Warranties by the Partners.
----------------------------------------------
A. Each Partner that is an individual (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a
condition to becoming an Additional Limited Partner or a Substituted Limited
Partner) represents and warrants to, and covenants with,
28
<PAGE>
each other Partner and each Investor that (i) the consummation of the
transactions contemplated by this Agreement to be performed by such Partner will
not result in a breach or violation of, or a default under, any material
agreement by which such Partner or any of such Partner's property is bound, or
any statute, regulation, order or other law to which such Partner is subject,
(ii) such Partner is neither a "foreign person" within the meaning of Code
Section 1445(f) nor a "foreign partner" within the meaning of Code Section
1446(e), (iii) such Partner does not, and for so long as it is Partner will not,
own, directly or indirectly, (a) five percent (5%) or more of the total combined
voting power of all classes of stock entitled to vote, or five percent (5%) or
more of the total number of shares of all classes of stock, of any corporation
that is a tenant of either (I) WEA, any Special Limited Partner or any
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)) with
respect to WEA, (II) the Partnership or (III) any partnership, venture or
limited liability company of which WEA, the General Partner, any Special Limited
Partner, any "qualified REIT subsidiary" (within the meaning of Code Section
856(i)(2)) with respect to WEA or the Partnership is a member or (b) an interest
of five percent (5%) or more in the assets or net profits of any tenant of
either (I) WEA, any Special Limited Partner or any "qualified REIT subsidiary"
(within the meaning of Code Section 856(i)(2)) with respect to WEA, (II) the
Partnership or (III) any partnership, venture, or limited liability company of
which WEA, any Special Limited Partner, any "qualified REIT subsidiary" (within
the meaning of Code Section 856(i)(2)) with respect to WEA or the Partnership is
a member and (iv) this Agreement is binding upon, and enforceable against, such
Partner in accordance with its terms. Notwithstanding the foregoing, each
Partner may exceed any of the five percent limits (5%) set forth in clause (iii)
of the immediately preceding sentence; provided that the Partner obtains the
--------
written consent of the Managing General Partner prior to exceeding any such
limits, which consent the Managing General Partner may give or withhold in its
sole and absolute discretion; provided, further, that in no event shall the
-------- -------
Partner own, directly or indirectly, more than ten percent (10%) of the stock
described in clause (iii) (a) of the immediately preceding sentence or more than
ten percent (10%) of the assets described in clause (iii) (b) of the immediately
preceding sentence.
B. Each Partner that is not an individual (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a
condition to becoming an Additional Limited Partner or a Substituted Limited
Partner) represents and warrants to, and covenants with, each other Partner and
each Investor that (i) all transactions contemplated by this Agreement to be
performed by it have been duly authorized by all necessary action, including,
without limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or shareholder(s) (as the case may be) as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its partnership or operating agreement, trust
agreement, charter or bylaws (as the case may be) any material agreement by
which such Partner or any of such Partner's properties or any of its partners,
members, beneficiaries, trustees or shareholders (as the case may be) is or are
bound, or any statute, regulation, order or other law to which such Partner or
any of its partners, members, trustees, beneficiaries or shareholders (as the
case may be) is or are subject, (iii) such Partner is neither a "foreign person"
within the meaning of Code Section 1445(f) nor a "foreign
29
<PAGE>
partner" within the meaning of Code Section 1446(e), (iv) such Partner does not,
and for so long as it is a Partner will not, own, directly or indirectly, (a)
five percent (5%) or more of the total combined voting power of all classes of
stock entitled to vote, or five percent (5%) or more of the total number of
shares of all classes of stock, of any corporation that is a tenant of either
(I) WEA, any Special Limited Partner or any "qualified REIT subsidiary" (within
the meaning of Code Section 856(i)(2)) with respect to WEA, (II) the Partnership
or (III) any partnership, venture or limited liability company of which WEA, any
Special Limited Partner, any "qualified REIT subsidiary" (within the meaning of
Code Section 856(i)(2)) with respect to WEA or the Partnership is a member or
(b) an interest of five percent (5%) or more in the assets or net profits of any
tenant of either (I) WEA, any Special Limited Partner, or any "qualified REIT
subsidiary" (within the meaning of Code Section 856(i)(2)) with respect to WEA,
(II) the Partnership or (III) any partnership, venture or limited liability
company for which WEA, any Special Limited Partner, any "qualified REIT
subsidiary" (within the meaning of Code Section 856(i)(2)) with respect to WEA
or the Partnership is a member and (v) this Agreement is binding upon, and
enforceable against, such Partner in accordance with its terms. Notwithstanding
the foregoing, each Partner may exceed any of the five percent limits (5%) set
forth in clause (iv) of the immediately preceding sentence; provided that the
--------
Partner obtains the written consent of the Managing General Partner prior to
exceeding any such limits, which consent the Managing General Partner may give
or withhold in its sole and absolute discretion; provided, further, that in no
-------- -------
event shall the Partner own, directly or indirectly, more than ten percent (10%)
of the stock described in clause (iv) (a) of the immediately preceding sentence
or more than ten percent (10%) of the assets described in clause (iv) (b) of the
immediately preceding sentence.
C. Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner)
represents, warrants and agrees that it has acquired and continues to hold its
interest in the Partnership for its own account for investment purposes only and
not for the purpose of, or with a view toward, the resale or distribution of all
or any part thereof, and not with a view toward selling or otherwise
distributing such interest or any part thereof at any particular time or under
any predetermined circumstances. Each Partner further represents and warrants
that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Partnership in what
it understands to be a highly speculative and illiquid investment.
D. The representations and warranties contained in Sections 3.4.A,
3.4.B and 3.4.C hereof shall survive the execution and delivery of this
Agreement by each Partner (and, in the case of an Additional Limited Partner or
a Substituted Limited Partner, the admission of such Additional Limited Partner
or Substituted Limited Partner as a Limited Partner in the Partnership) and the
dissolution, liquidation and termination of the Partnership.
30
<PAGE>
E. Each Partner (including, without limitation, each Substituted
Limited Partner as a condition to becoming a Substituted Limited Partner) hereby
acknowledges that no representa tions as to potential profit, cash flows, funds
from operations or yield, if any, in respect of the Partnership or the General
Partner have been made by any Partner or any employee or representative or
Affiliate of any Partner, and that projections and any other information,
including, without limitation, financial and descriptive information and
documentation, that may have been in any manner submitted to such Partner shall
not constitute any representation or warranty of any kind or nature, express or
implied.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners. The Partners
-------------------------------------
have heretofore made Capital Contributions to the Partnership. Each Partner
owns Partnership Units in the amount set forth for such Partner on Exhibit A, as
---------
the same may be amended from time to time by the Managing General Partner to the
extent necessary to reflect accurately sales, exchanges or other Transfers,
redemptions, Capital Contributions, the issuance of additional Partnership
Units, or similar events having an effect on a Partner's ownership of
Partnership Units. Except as provided by law or in Section 4.2, 4.3, or 10.4
hereof, the Partners shall have no obligation or, except with the prior written
consent of the Managing General Partner, right to make any additional Capital
Contributions or loans to the Partnership.
Section 4.2 Issuances of Additional Partnership Interests.
---------------------------------------------
A. General. The Managing General Partner is hereby authorized to
-------
cause the Partnership to issue additional Partnership Interests, in the form of
Partnership Units, for any Partnership purpose, at any time or from time to
time, to the Partners (including the General Partner and any Special Limited
Partner) or to other Persons, and to admit such Persons as Additional Limited
Partners or as General Partners, for such consideration and on such terms and
conditions as shall be established by the Managing General Partner in its sole
and absolute discretion, all without the approval of any Limited Partner or any
other Person. Without limiting the foregoing, the Managing General Partner is
expressly authorized to cause the Partnership to issue Partnership Units (i)
upon the conversion, redemption or exchange of any Debt, Partnership Units,
Investor Unit Rights, or other securities issued by the Partnership, (ii) for
less than fair market value, so long as the Managing General Partner concludes
in good faith that such issuance is in the best interests of the Managing
General Partner and the Partnership, and (iii) in connection with any merger of
any other Person into the Partnership if the applicable merger agreement
provides that Persons are to receive Partnership Units in exchange for their
interests in the Person merging into the Partnership. Any additional Partnership
Interests may be issued in one or more classes, or one or more series of any of
such
31
<PAGE>
classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties (including, without
limitation, rights, powers and duties that may be senior or otherwise entitled
to preference over existing Partnership Units or Investor Unit Rights) as shall
be determined by the Managing General Partner, in its sole and absolute
discretion without the approval of any Limited Partner or any other Person, and
set forth in a written document thereafter attached to and made an exhibit to
this Agreement, which exhibit shall be an amendment to this Agreement and shall
be incorporated herein by this reference (each, a "Partnership Unit
----------------
Designation"), including, in the event of the admission of an Additional General
Partner, such rights, duties and obligations for such General Partner hereunder
as the Managing General Partner shall assign, delegate or permit such Additional
General Partner to exercise hereunder, in the sole and absolute discretion of
the Managing General Partner, without the approval of any Limited Partner or any
other Person. Without limiting the generality of the foregoing, the Managing
General Partner shall have authority to specify (a) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Interests; (b) the right of each such class or series of
Partnership Interests to share (on a pari passu, junior or preferred basis) in
Partner ship distributions; (c) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the Partnership; (d)
the voting rights, if any, of each such class or series of Partnership
Interests; and (e) the conversion, redemption or exchange rights applicable to
each such class or series of Partnership Interests. Upon the issuance of any
additional Partnership Interest, the Managing General Partner shall issue a
Partnership Unit Certificate evidencing such Partnership Interest and shall
amend Exhibit A and the books and records of the Partnership as appropriate to
---------
reflect such issuance. As of the date hereof, the Partnership has established
and issued Series A Partnership Preferred Units and Series B Partnership
Preferred Units, each as set forth in the respective Partnership Unit
Designations attached hereto as Exhibit H, which exhibit is incorporated herein
---------
by this reference.
B. Issuances to the General Partner or Special Limited Partners. No
------------------------------------------------------------
additional Partnership Units shall be issued to the General Partner or any
Special Limited Partner unless (i) the additional Partnership Units are issued
to all Partners in proportion to their respective Percentage Interests, (ii) (a)
the additional Partnership Units are (x) Partnership Common Units issued in
connection with an issuance of REIT Shares, or (y) Partnership Units (other than
Partnership Common Units) issued in connection with an issuance of Preferred
Shares, New Securities or other interests in WEA (other than REIT Shares), which
Preferred Shares, New Securities or other interests have designations,
preferences and other rights, terms and provisions that are substantially the
same as the designations, preferences and other rights, terms and provisions of
the additional Partnership Units issued to the General Partner or such Special
Limited Partner, and (b) the General Partner or such Special Limited Partner (as
the case may be) contributes to the Partnership the cash proceeds or other
consideration received in connection with the issuance of such REIT Shares,
Preferred Shares, New Securities or other interests in WEA, (iii) the additional
Partnership Units are issued upon the conversion, redemption or exchange of
Debt, Partnership Units, Investor Unit Rights,
32
<PAGE>
or other securities issued by the Partnership, or (iv) the additional
Partnership Units are issued pursuant to Section 4.3.B, Section 4.3.F, Section
4.4, Section 4.5 or Section 4.10.
C. No Preemptive Rights. No Person, including, without limitation,
--------------------
any Partner or Assignee, shall have any preemptive, preferential, participation
or similar right or rights to subscribe for or acquire any Partnership Interest.
Section 4.3 Additional Funds and Capital Contributions.
------------------------------------------
A. General. The Managing General Partner may, at any time and from
-------
time to time, determine that the Partnership requires additional funds
("Additional Funds") for the acquisition or development of additional
----------------
Properties, for the redemption of Partnership Units or Investor Unit Rights or
for such other purposes as the Managing General Partner may determine, in its
sole and absolute discretion. Additional Funds may be obtained by the
Partnership, at the election of the Managing General Partner, in any manner
provided in, and in accordance with, the terms of this Section 4.3 without the
approval of any Limited Partner or any other Person.
B. Additional Capital Contributions. The Managing General Partner,
--------------------------------
on behalf of the Partnership, may obtain any Additional Funds by accepting
Capital Contributions from any Partners or other Persons (other than Investors).
In connection with any such Capital Contribution (of cash or property), the
Managing General Partner is hereby authorized to cause the Partnership from time
to time to issue additional Partnership Units (as set forth in Section 4.2
above) (and shall issue additional Partnership Unit Certificates evidencing such
issuance) in consideration therefor and the Percentage Interests of the General
Partner, the Limited Partners (including the Special Limited Partners) and the
Investors shall be adjusted to reflect the issuance of such additional
Partnership Units.
C. Capital Contributions by Investors. The Managing General
----------------------------------
Partner, on behalf of the Partnership, may obtain any Additional Funds by
accepting Capital Contributions from any Investors or other Persons (other than
Partners). In connection with any such Capital Contribution (of cash or
property), the Managing General Partner is hereby authorized to cause the
Partnership from time to time to grant additional Investor Unit Rights (as set
forth in Section 13.1 below) in consideration therefor and the Percentage
Interests of the General Partner, the Limited Partners (including the Special
Limited Partners) and the Investors shall be adjusted to reflect the grant of
such additional Investor Unit Rights. The Investors shall have no obligation
or, except with the prior consent of the Managing General Partner, right to make
any additional Capital Contributions or loans to the Partnership.
D. Loans by Third Parties. The Managing General Partner, on behalf
----------------------
of the Partnership, may obtain any Additional Funds by causing the Partnership
to incur Debt to any Person
33
<PAGE>
(other than the Managing General Partner or any Special Limited Partner) upon
such terms as the Managing General Partner determines appropriate, including
making such Debt convertible, redeemable or exchangeable for Partnership Units
and/or Investor Unit Rights; provided, however, that the Partnership shall not
-------- -------
incur any such Debt if (i) a breach, violation or default of such Debt would be
deemed to occur by virtue of the Transfer of any Partnership Interest or
Investor Unit Rights, or (ii) any Partner or Investor would be personally liable
for the repayment of such Debt (unless such Partner or Investor otherwise
agrees).
E. General Partner Loans. The Managing General Partner, on behalf
---------------------
of the Partnership, may obtain any Additional Funds by causing the Partnership
to incur Debt with the General Partner or any Special Limited Partner (each, a
"General Partner Loan") if (i) such Debt is, to the extent permitted by law, on
--------------------
substantially the same terms and conditions (including interest rate, repayment
schedule, and conversion, redemption, repurchase and exchange rights) as Funding
Debt incurred by the General Partner or any Special Limited Partner, the net
proceeds of which are loaned to the Partnership to provide such Additional
Funds, or (ii) such Debt is on terms and conditions no less favorable to the
Partnership than would be available to the Partnership from any third party;
provided, however, that the Partnership shall not incur any such Debt if (a) a
- -------- -------
breach, violation or default of such Debt would be deemed to occur by virtue of
the Transfer of any Partnership Interest or Investor Unit Rights, or (b) any
Partner or Investor would be personally liable for the repayment of such Debt
(unless such Partner or Investor otherwise agrees).
F. Issuance of Securities by WEA. WEA shall not issue any
-----------------------------
additional REIT Shares, Preferred Shares, Junior Shares or New Securities unless
(i) WEA contributes the cash proceeds or other consideration received from the
issuance of such additional REIT Shares, Preferred Shares, Junior Shares or New
Securities (as the case may be) and from the exercise of the rights contained in
any such additional New Securities, to either or both of the Managing General
Partner and/or any Special Limited Partner (as designated by the Managing
General Partner in its sole discretion), and (ii) it or they (as the case may
be) contribute such cash proceeds or other consideration to the Partnership in
exchange for (x) in the case of an issuance of REIT Shares, Partnership Common
Units, or (y) in the case of an issuance of Preferred Shares, Junior Shares or
New Securities, Partnership Units with designations, preferences and other
rights, terms and provisions that are substantially the same as the
designations, preferences and other rights, terms and provisions of such
Preferred Shares, Junior Shares or New Securities; provided, however, that
-------- -------
notwithstanding the foregoing, WEA may issue REIT Shares, Preferred Shares,
Junior Shares or New Securities (a) pursuant to Section 4.4 or Section 16.1.B
hereof, (b) pursuant to a dividend or distribution (including any stock split)
of REIT Shares, Preferred Shares, Junior Shares or New Securities to all of the
holders of REIT Shares, Preferred Shares, Junior Shares or New Securities (as
the case may be) (c) upon a conversion, redemption or exchange of Preferred
Shares, (d) upon a conversion of Junior Shares into REIT Shares, (e) upon a
conversion, redemption, exchange or exercise of New Securities, or (f) in
connection with an acquisition of a property or other asset to be
34
<PAGE>
owned, directly or indirectly, by WEA if the Managing General Partner determines
that such acquisition is in the best interests of the Partnership. In the event
of any issuance of additional REIT Shares, Preferred Shares, Junior Shares or
New Securities by WEA, and the contribution to the Partnership, by the Managing
General Partner or any Special Limited Partner, of the cash proceeds or other
consideration received from such issuance, the Partnership shall pay WEA's
expenses associated with such issuance, including any underwriting discounts or
commissions.
Section 4.4 Stock Option Plans.
------------------
A. Options Granted to Persons other than Partnership Employees. If
-----------------------------------------------------------
at any time or from time to time, in connection with any Stock Option Plan, a
stock option granted to a Person other than a Partnership Employee is duly
exercised:
(1) WEA (or such Special Limited Partner as may be designated by
WEA), shall, as soon as practicable after such exercise, make a Capital
Contribution to the Partnership in an amount equal to the exercise price
paid to WEA by such exercising party in connection with the exercise of
such stock option.
(2) Notwithstanding the amount of the Capital Contribution actually
made pursuant to Section 4.4.A(1) hereof, WEA (or such Special Limited
Partner as may be designated by WEA) shall be deemed to have contributed to
the Partnership as a Capital Contribution, in consideration of an
additional Limited Partner Interest (expressed in and as additional
Partnership Common Units), an amount equal to the Value of a REIT Share as
of the date of exercise multiplied by the number of REIT Shares then being
---------- --
issued in connection with the exercise of such stock option.
(3) An equitable Percentage Interest adjustment shall be made in
which WEA (or such Special Limited Partner as may be designated by WEA)
shall be treated as having made a cash contribution equal to the amount
described in Section 4.4.A(2) hereof.
B. Options Granted to Partnership Employees. If at any time or from
----------------------------------------
time to time, in connection with any Stock Option Plan, a stock option granted
to a Partnership Employee is duly exercised:
(1) The Managing General Partner shall sell to the Partnership, and
the Partnership shall purchase from the Managing General Partner, the
number of REIT Shares as to which such stock option is being exercised. The
purchase price per REIT Share for such sale of REIT Shares to the
Partnership shall be the Value of a REIT Share as of the date of exercise
of such stock option.
35
<PAGE>
(2) The Partnership shall sell to the Optionee (or if the Optionee is
an employee of a Partnership Subsidiary, the Partnership shall sell to such
Partnership Subsidiary, which in turn shall sell to the Optionee), for a
cash price per share equal to the Value of a REIT Share at the time of the
exercise, the number of REIT Shares equal to (a) the exercise price paid to
the Managing General Partner by the exercising party in connection with the
exercise of such stock option divided by (b) the Value of a REIT Share at
------- --
the time of such exercise.
(3) The Partnership shall transfer to the Optionee (or if the
Optionee is an employee of a Partnership Subsidiary, the Partnership shall
transfer to such Partnership Subsidiary, which in turn shall transfer to
the Optionee) at no additional cost, as additional compensation, the number
of REIT Shares equal to the number of REIT Shares described in Section
4.4.B(1) hereof less the number of REIT Shares described in Section
----
4.4.B(2) hereof.
(4) The Managing General Partner shall, as soon as practicable after
such exercise, make a Capital Contribution to the Partnership of an amount
equal to all proceeds received (from whatever source, but excluding any
payment in respect of payroll taxes or other withholdings) by the Managing
General Partner or the Special Limited Partner in connection with the
exercise of such stock option. An equitable Percentage Interest adjustment
shall be made in which the Managing General Partner or such Special Limited
Partner shall be treated as having made a cash contribution equal to the
amount described in Section 4.4.B(1) hereof.
C. Special Valuation Rule. For purposes of this Section 4.4, in
----------------------
determining the Value of a REIT Share, only the trading date immediately
preceding the exercise of the relevant stock option under the Stock Option Plans
shall be considered.
D. Future Stock Incentive Plans. Nothing in this Agreement shall be
----------------------------
construed or applied to preclude or restrain the Managing General Partner or any
Special Limited Partner from adopting, modifying or terminating stock incentive
plans for the benefit of employees, directors or other business associates of
the Managing General Partner, any Special Limited Partner, the Partnership or
any of their Affiliates. The Partners acknowledge and agree that, in the event
that any such plan is adopted, modified or terminated by the Managing General
Partner or any Special Limited Partner, amendments to this Section 4.4 may
become necessary or advisable and that any approval or Consent to any such
amendments requested by the Managing General Partner or any Special Limited
Partner shall be deemed granted.
Section 4.5 Dividend Reinvestment Plan, Stock Incentive Plan or
---------------------------------------------------
Other Plan. Except as may otherwise be provided in this Article 4, all amounts
- ----------
received by the Managing General Partner in respect of any dividend reinvestment
plan, stock incentive or other stock or subscription plan or agreement, either
(a) shall be utilized by the Managing General Partner to effect open market
purchases of REIT Shares, or (b) if the Managing General Partner elects instead
to issue new REIT
36
<PAGE>
Shares with respect to such amounts, shall be contributed by the Managing
General Partner to the Partnership in exchange for additional Partnership Common
Units. Upon such contribution, the Partnership will issue to the Managing
General Partner a number of Partnership Common Units in an amount equal to the
product of (i) the Value as of the date of issuance of each REIT Share so issued
by the Managing General Partner multiplied by (ii) the number of REIT Shares so
issued.
Section 4.6 No Interest; No Return. No Partner shall be entitled to
----------------------
interest on its Capital Contribution or on such Partner's Capital Account.
Except as provided herein or by law, no Partner shall have any right to demand
or receive the return of its Capital Contribution from the Partnership.
Section 4.7 Conversion or Redemption of Preferred Shares.
--------------------------------------------
A. Conversion of Preferred Shares. If, at any time, any of the
------------------------------
Preferred Shares are converted into REIT Shares, in whole or in part, then a
number of Partnership Preferred Units equal to the number of Preferred Shares so
converted shall automatically be converted into a number of Partnership Common
Units equal to (i) the number of REIT Shares issued upon such conversion divided
-------
by (ii) the Adjustment Factor then in effect, and the Percentage Interests of
- --
the General Partner and the Limited Partners (including the Special Limited
Partners) shall be adjusted to reflect such conversion. The Partnership
Preferred Units so converted into Partnership Common Units shall be allocated
between the Managing General Partner and any Special Limited Partners at the
discretion of the Managing General Partner.
B. Redemption of Preferred Shares. If, at any time, any Preferred
------------------------------
Shares are redeemed (whether by exercise of a put or call, automatically or by
means of another arrangement) by WEA for cash, the Partnership shall,
immediately prior to such redemption of Preferred Shares, redeem an equal number
of Partnership Preferred Units held by the Managing General Partner and any
Special Limited Partners (and among the Managing General Partner and such
Special Limited Partners in such proportion as the Managing General Partner
shall determine in its sole discretion), upon the same terms and for the same
price per Partnership Preferred Unit, as such Preferred Shares are redeemed.
Section 4.8 Conversion or Redemption of Junior Shares.
-----------------------------------------
A. Conversion of Junior Shares. If, at any time, any of the Junior
---------------------------
Shares are converted into REIT Shares, in whole or in part, then a number of
Partnership Common Units equal to (i) the number of REIT Shares issued upon such
conversion divided by (ii) the Adjustment Factor then in effect shall be issued
------- --
to the Managing General Partner and/or any Special Limited Partner(s) (as
determined by the Managing General Partner in its sole discretion), and the
Percentage Interests
37
<PAGE>
of the General Partner and the Limited Partners (including the Special Limited
Partners) shall be adjusted to reflect such conversion.
B. Redemption of Junior Shares. If, at any time, any Junior Shares
---------------------------
are redeemed (whether by exercise of a put or call, automatically or by means of
another arrangement) by WEA for cash, the Partnership shall, immediately prior
to such redemption of Junior Shares, redeem an equal number of Partnership
Junior Units held by the Managing General Partner and any Special Limited
Partners (and among the Managing General Partner and such Special Limited
Partners in such proportion as the Managing General Partner shall determine in
its sole discretion), upon the same terms and for the same price per Partnership
Junior Unit, as such Junior Shares are redeemed.
Section 4.9 Other Contribution Provisions. In the event that any
-----------------------------
Partner is admitted to the Partnership and is given a Capital Account in
exchange for services rendered to the Partnership, such transaction shall be
treated by the Partnership and the affected Partner as if the Partnership had
compensated such partner in cash and such Partner had contributed the cash to
the capital of the Partnership. In the event that any Investor is granted
Investor Unit Rights and is given a Capital Account in exchange for services
rendered to the Partnership, such transaction shall be treated by the
Partnership and the affected Investor as if the Partnership had compensated such
Investor in cash and such Investor had contributed the cash to the capital of
the Partnership. In addition, with the consent of the Managing General Partner,
one or more Partners (including the Special Limited Partners) or Investors may
enter into contribution agreements with the Partnership which have the effect of
providing a guarantee of certain obligations of the Partnership.
Section 4.10 Excluded Properties. WEA shall contribute each Excluded
--------------------
Property (or, if applicable, the proceeds (after payment of all transfer taxes
and other transaction costs) received by WEA from the sale, transfer or other
disposition of an Excluded Property to a Person who is not an Affiliate of WEA)
to the Partnership upon the earlier of (i) such time as it is commercially
practicable to contribute such property to the Partnership without adverse tax
or other economic consequence to WEA and (ii) any sale, transfer or other
disposition of an Excluded Property to a Person who is not an Affiliate of WEA.
Upon any such contribution of an Excluded Property or the proceeds therefrom,
WEA shall receive in exchange for such contribution, notwithstanding the actual
value of such Excluded Property or the amount of such proceeds (as the case may
be), an amount of Partnership Common Units equal to the Specified Partnership
Common Unit Amount. Such Partnership Common Units shall be allocated between the
Managing General Partner and any Special Limited Partners at the discretion of
the Managing General Partner.
38
<PAGE>
ARTICLE 9
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions.
-------------------------------------------------
Subject to the terms of any Partnership Unit Designation or Investor Unit Right
Designation, the Managing General Partner shall cause the Partnership to
distribute quarterly all, or such portion as the Managing General Partner may in
its sole and absolute discretion determine, of Available Cash generated by the
Partnership during such quarter to the Holders on the Partnership Record Date
with respect to such quarter: (i) first, with respect to any Partnership Units
or Investor Unit Rights that are entitled to any preference in distribution, in
accordance with the rights of such class(es) of Partnership Units or Investor
Unit Rights (and, within such class(es), among the Holders pro rata in
proportion to their respective Percentage Interests on such Partnership Record
Date), and (ii) second, with respect to any Partnership Units or Investor Unit
Rights that are not entitled to any preference in distribution, in accordance
with the rights of such class of Partnership Units or Investor Unit Rights, as
applicable (and, within such class, among the Holders pro rata in proportion to
their respective Percentage Interests on such Partnership Record Date).
Distributions payable with respect to any Partnership Units or Investor Unit
Rights that were not outstanding during the entire quarterly period in respect
of which any distribution is made shall be prorated based on the portion of the
period that such Partnership Units or Investor Unit Rights were outstanding.
Notwithstanding the foregoing, the Managing General Partner, in its sole and
absolute discretion, may distribute Available Cash to the Holders on a more or
less frequent basis than quarterly and provide for an appropriate record date.
The Managing General Partner shall make such reasonable efforts, as determined
by it in its sole and absolute discretion and consistent with WEA's
qualification as a REIT, to cause the Partnership to distribute sufficient
amounts to enable (i) any Special Limited Partner to transfer funds to WEA and
(ii) WEA to pay shareholder dividends that will (a) satisfy the requirements for
qualifying as a REIT under the Code and Regulations (the "REIT Requirements")
-----------------
and (b) avoid any Federal income or excise tax liability of WEA.
Notwithstanding the foregoing, in the event any Excluded Property (or
the proceeds therefrom) has not been contributed to the Partnership pursuant to
Section 4.10, the distributions provided for above shall be calculated, to the
extent possible, based on Adjusted Available Cash and as if each Excluded
Property had been contributed to the Partnership in exchange for Partnership
Common Units pursuant to Section 4.10; provided, however, that in the event any
-------- -------
Excluded Property (or the proceeds therefrom) has not been contributed to the
Partnership pursuant to Section 4.10, any distributions to be made with respect
to the Managing General Partner's Partnership Units and the Special Limited
Partners' Partnership Units shall in the aggregate be reduced to the extent of
any REIT Available Cash (such aggregate reduction in distributions to be
allocated between the Managing General Partner and the Special Limited Partners,
and among their respective Partnership Common Units and Partnership Preferred
Units, in the sole discretion of the Managing General Partner).
39
<PAGE>
Subject to the applicable Partner Unit Designation, each Limited
Partner shall receive a pro rata share of Distributions under Article 5 hereof
in an amount equal to the distributions such Limited Partner would have received
if such Limited Partner held one REIT Share (bearing the same designations as
the actual Partner Unit Right held by such Limited Partner) for each of such
Limited Partner's Unit Rights.
Section 5.2 Distributions in Kind. No right is given to any Holder
---------------------
to demand and receive property other than cash as provided in this Agreement.
The Managing General Partner may determine, in its sole and absolute discretion,
to make a distribution in kind of Partnership assets to the Holders, and such
assets shall be distributed in such a fashion as to ensure that the fair market
value is distributed and allocated in accordance with Articles 5, 6 and 10
hereof; provided that the Managing General Partner shall not make a distribution
--------
in kind to any Holder unless the Holder has been given 90 days prior written
notice of such distribution.
Section 5.3 Amounts Withheld. All amounts withheld pursuant to the
----------------
Code or any provisions of any state or local tax law and Section 10.4 hereof
with respect to any allocation, payment or distribution to any Holder shall be
treated as amounts paid or distributed to such Holder pursuant to Section 5.1
hereof for all purposes under this Agreement.
Section 5.4 Distributions Upon Liquidation. Notwithstanding the
------------------------------
other provisions of this Article 5, net proceeds from a Terminating Capital
Transaction, and any other cash received or reductions in reserves made after
commencement of the liquidation of the Partnership, shall be distributed to the
Holders in accordance with Section 14.2 hereof.
Section 5.5 Distributions to Reflect Additional Partnership Units
-----------------------------------------------------
or Investor Unit Rights. In the event that the Partnership issues additional
- -----------------------
Partnership Units or grants additional Investor Unit Rights pursuant to the
provisions of Article 4 or Article 13 hereof, the Managing General Partner is
hereby authorized to make such revisions to this Article 5 as it determines are
necessary or desirable to reflect the issuance of such additional Partnership
Units or grants of Investor Unit Rights, including, without limitation, making
preferential distributions to certain classes of Partnership Units or Investor
Unit Rights.
Section 5.6 Restricted Distributions. Notwithstanding any provision
------------------------
to the contrary contained in this Agreement, neither the Partnership nor the
General Partner, on behalf of the Partnership, shall make a distribution to any
Holder if such distribution would violate Section 17-607 of the Act or other
applicable law.
40
<PAGE>
ARTICLE 6
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and Net
------------------------------------------------------
Loss. Net Income and Net Loss of the Partnership shall be determined and
- ----
allocated with respect to each Partnership Year of the Partnership as of the end
of each such year. Except as otherwise provided in this Article 6, and subject
to Section 11.6.C and Section 13.7.D(2) hereof, an allocation to a Holder of a
share of Net Income or Net Loss shall be treated as an allocation of the same
share of each item of income, gain, loss or deduction that is taken into account
in computing Net Income or Net Loss.
Section 6.2 General Allocations.
-------------------
A. In General. Subject to the terms of any Partnership Unit
----------
Designation and any Investor Unit Right Designation, and except as otherwise
provided in this Article 6 and subject to Section 11.7.C and Section 13.7.D(2)
hereof, Net Income and Net Loss shall be allocated to each of the Holders in
accordance with their respective Percentage Interests at the end of each
Partnership Year.
B. Allocations to Reflect Issuance of Additional Partnership Units.
---------------------------------------------------------------
In the event that the Partnership issues additional Partnership Units pursuant
to the provisions of Article 4, the Managing General Partner is hereby
authorized to make such revisions to this Section 6.2 as it determines are
necessary or desirable to reflect the terms of the issuance of such additional
Partnership Units, including, without limitation, making preferential
allocations to certain classes of Partnership Units.
C. Allocations to Reflect Grant of Additional Investor Unit Rights.
---------------------------------------------------------------
In the event that the Partnership grants additional Investor Unit Rights
pursuant to the provisions of Article 13, the Managing General Partner is hereby
authorized to make such revisions to this Section 6.2 as it determines are
necessary or desirable to reflect the terms of the grant of such additional
Investor Unit Rights, including, without limitation, making preferential
allocations to certain classes of Investor Unit Rights.
Section 6.3 Additional Allocation Provisions. Notwithstanding the
--------------------------------
foregoing provisions of this Article 6:
A. Special Allocations Regarding Partnership Preferred Units. If any
---------------------------------------------------------
Partnership Preferred Units are redeemed pursuant to Section 4.7.B hereof
(treating a full liquidation of the Managing General Partner Interest or of such
Special Limited Partner's Limited Partner Interest for purposes of this Section
6.3.A as including a redemption of any then outstanding Partnership
41
<PAGE>
Preferred Units pursuant to Section 4.7.B hereof), for the Partnership Year that
includes such redemption (and, if necessary, for subsequent Partnership Years)
(a) gross income and gain (in such relative proportions as the Managing General
Partner in its discretion shall determine) shall be allocated to the Managing
General Partner and such Special Limited Partner(s) to the extent that the
Redemption Amounts paid or payable with respect to the Partnership Preferred
Units so redeemed (or treated as redeemed) exceeds the aggregate Capital Account
Balances (net of liabilities assumed or taken subject to by the Partnership) per
Partnership Preferred Unit allocable to the Partnership Preferred Units so
redeemed (or treated as redeemed) and (b) deductions and losses (in such
relative proportions as the Managing General Partner in its discretion shall
determine) shall be allocated to the Managing General Partner and such Special
Limited Partner(s) to the extent that the aggregate Capital Account Balances
(net of liabilities assumed or taken subject to by the Partnership) per
Partnership Preferred Unit allocable to the Partnership Preferred Units so
redeemed (or treated as redeemed) exceeds the Redemption Amount paid or payable
with respect to the Partnership Preferred Units so redeemed (or treated as
redeemed).
B. Regulatory Allocations.
----------------------
(i) Minimum Gain Chargeback. Except as otherwise provided in
-----------------------
Regulations Section 1.704-2(f), notwithstanding the provisions of Section
6.2 hereof, or any other provision of this Article 6, if there is a net
decrease in Partnership Minimum Gain during any Partnership Year, each
Holder shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to
such Holder's share of the net decrease in Partnership Minimum Gain, as
determined under Regulations Section 1.704-2(g). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Holder pursuant thereto. The items to be
allocated shall be determined in accordance with Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.B(i) is intended to
qualify as a "minimum gain chargeback" within the meaning of Regulations
Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Except as otherwise
-------------------------------
provided in Regulations Section 1.704-2(i)(4) or in Section 6.3.B(i)
hereof, if there is a net decrease in Partner Minimum Gain attributable to
a Partner Nonrecourse Debt during any Partnership Year, each Holder who has
a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section 1.704-
2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to
such Holder's respective share of the net decrease in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance
with
42
<PAGE>
Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to
be allocated to each Holder pursuant thereto. The items to be so allocated
shall be determined in accordance with Regulations Sections 1.704-2(i)(4)
and 1.704-2(j)(2). This Section 6.3.B(ii) is intended to qualify as a
"chargeback of partner nonrecourse debt minimum gain" within the meaning of
Regulations Section 1.704-2(i) and shall be interpreted consistently
therewith.
(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions.
---------------------------------------------------------
Any Nonrecourse Deductions for any Partnership Year shall be specially
allocated to the Holders in accordance with their respective Percentage
Interests. Any Partner Nonrecourse Deductions for any Partnership Year
shall be specially allocated to the Holder(s) who bears the economic risk
of loss with respect to the Partner Nonre course Debt to which such Partner
Nonrecourse Deductions are attributable, in accordance with Regulations
Section 1.704-2(i).
(iv) Qualified Income Offset. If any Holder unexpectedly
-----------------------
receives an adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income
and gain shall be allocated, in accordance with Regulations Section 1.704-
1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient to
eliminate, to the extent required by such Regulations, the Adjusted
Capital Account Deficit of such Holder as quickly as possible, provided
that an allocation pursuant to this Section 6.3.B(iv) shall be made if and
only to the extent that such Holder would have an Adjusted Capital Account
Deficit after all other allocations provided in this Article 6 have been
tentatively made as if this Section 6.3.B(iv) were not in the Agreement. It
is intended that this Section 6.3.B(iv) qualify and be construed as a
"qualified income offset" within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(v) Gross Income Allocation. In the event that any Holder has
-----------------------
a deficit Capital Account at the end of any Partnership Year that is in
excess of the sum of (1) the amount (if any) that such Holder is obligated
to restore to the Partnership upon complete liquidation of such Holder's
Partnership Interest (including, the Holder's interest in outstanding
Partnership Preferred Units and other Partnership Units) or Investor Unit
Rights (as the case may be) and (2) the amount that such Holder is deemed
to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder
shall be specially allocated items of Partnership income and gain in the
amount of such excess to eliminate such deficit as quickly as possible,
provided that an allocation pursuant
43
<PAGE>
to this Section 6.3.B(v) shall be made if and only to the extent that such
Holder would have a deficit Capital Account in excess of such sum after all
other allocations provided in this Article 6 have been tentatively made as
if this Section 6.3.B(v) and Section 6.3.B(iv) hereof were not in the
Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent that
------------------------------------
any allocation of Net Loss would cause or increase an Adjusted Capital
Account Deficit as to any Holder, such allocation of Net Loss shall be
reallocated among the other Holders in accordance with their respective
Percentage Interests, subject to the limitations of this Section 6.3.B(vi).
(vii) Section 754 Adjustment. To the extent that an adjustment
----------------------
to the adjusted tax basis of any Partnership asset pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2) (iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to
be taken into account in determining Capital Accounts as the result of a
distribution to a Holder of Partnership Common Units in complete
liquidation of its interest in the Partnership or to any Investor in
complete liquidation of its Investor Unit Rights, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated
to the Holders in accordance with their respective Percentage Interests in
the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to
the Holder(s) to whom such distribution was made in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocations. The allocations set forth in
--------------------
Sections 6.3.B(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the
"Regulatory Allocations") are intended to comply with certain regulatory
----------------------
requirements, including the requirements of Regulations Sections 1.704-1(b)
and 1.704-2. Notwithstanding the provisions of Section 6.1 hereof, the
Regulatory Allocations shall be taken into account in allocating other
items of income, gain, loss and deduction among the Holders of Partnership
Common Units and the Investors so that to the extent possible without
violating the requirements giving rise to the Regulatory Allocations, the
net amount of such allocations of other items and the Regulatory
Allocations to each Holder of a Partnership Common Unit and to each
Investor shall be equal to the net amount that would have been allocated to
each such Holder and Investor if the Regulatory Allocations had not
occurred.
C. Special Allocations Upon Liquidation. Notwithstanding any
------------------------------------
provision in this Article 6 to the contrary, in the event that the Partnership
disposes of all or substantially all of its
44
<PAGE>
assets in a transaction that will lead to a liquidation of the Partnership
pursuant to Article 14 hereof, then any Net Income or Net Loss realized in
connection with such transaction and thereafter (and, if necessary, constituent
items of income, gain, loss and deduction) shall be specially allocated for such
Partnership Year (and to the extent permitted by Section 761(c) of the Code, for
the immediately preceding Partnership Year) among the Holders as required so as
to cause liquidating distributions pursuant to Section 14.2.A(4) hereof to be
made in the same amounts and proportions as would have resulted had such
distributions instead been made pursuant to Article 5 hereof.
D. Allocation of Excess Nonrecourse Liabilities. For purposes of
--------------------------------------------
determining a Holder's proportional share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Regulations Section 1.752-
3(a)(3), each Holder's and each Investor's respective interest in Partnership
profits shall be equal to such Holder's share and each Investor's share of the
aggregate sum of Partnership Common Units and Investor Unit Rights.
Section 6.4 Tax Allocations.
---------------
A. In General. Except as otherwise provided in this Section 6.4,
----------
for income tax purposes under the Code and the Regulations each Partnership item
of income, gain, loss and deduction (collectively, "Tax Items") shall be
---------
allocated among the Holders in the same manner as its correlative item of "book"
income, gain, loss or deduction is allocated pursuant to Sections 6.2 and 6.3
hereof.
B. Allocations Respecting Section 704(c) Revaluations.
--------------------------------------------------
Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that is
contributed to the Partnership with a Gross Asset Value that varies from its
basis in the hands of the contributing Partner or Investor (as the case may be)
immediately preceding the date of contribution shall be allocated among the
Holders for income tax purposes pursuant to Regulations promulgated under Code
Section 704(c) so as to take into account such variation. The Partnership shall
account for such variation under any method approved under Code Section 704(c)
and the applicable Regulations as chosen by the Managing General Partner. In
the event that the Gross Asset Value of any partnership asset is adjusted
pursuant to subsection (b) of the definition of "Gross Asset Value" (provided in
Article 1 hereof), subsequent allocations of Tax Items with respect to such
asset shall take account of the variation, if any, between the adjusted basis of
such asset and its Gross Asset Value in the same manner as under Code Section
704(c) and the applicable Regulations and using the method chosen by the
Managing General Partner.
45
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ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management.
----------
A. Except as otherwise expressly provided in this Agreement or as
delegated or provided to an Additional General Partner by the Managing General
Partner pursuant to Section 4.2.A and Section 11.2 hereof, all management powers
over the business and affairs of the Partnership are and shall be exclusively
vested in the Managing General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Partners, with or without cause, except with the consent of the Managing
General Partner. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or that are granted to the
General Partner under any other provision of this Agreement, the Managing
General Partner, subject to the other provisions hereof including Section 7.3,
shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership, to exercise all
powers set forth in Section 3.2 hereof and to effectuate the purposes set forth
in Section 3.1 hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of
money or selling assets (including, without limitation, making prepayments
on loans and borrowing money to permit the Partnership to make
distributions to the Holders in such amounts as will permit WEA (so long as
WEA qualifies as a REIT) to avoid the payment of any Federal income tax
(including, for this purpose, any excise tax pursuant to Code Section 4981)
and to make distributions to its shareholders sufficient to permit WEA to
maintain REIT status or otherwise to satisfy the REIT Requirements), the
assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness (including the
securing of same by deed to secure debt, mortgage, deed of trust or other
lien or encumbrance on the Partnership's assets) and the incurring of any
obligations that it deems necessary for the conduct of the activities of
the Partnership;
(2) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, sale, transfer, exchange or other
disposition of any, all or substantially all of the assets of the
Partnership (including, but not limited to, the exercise or grant of any
conversion, option, privilege or subscription right or any other right
available in connection with any assets at any time held by the
Partner-
46
<PAGE>
ship) or the merger, consolidation, reorganization or other combination of
the Partnership with or into another entity;
(4) the mortgage, pledge, encumbrance or hypothecation of any
assets of the Partnership, the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose consistent
with the terms of this Agreement and on any terms that it sees fit,
including, without limitation, the financing of the operations and
activities of the Managing General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
(including, without limitation, the Managing General Partner and/or the
Partnership's Subsidiar ies) and the repayment of obligations of the
Partnership, its Subsidiaries and any other Person in which the Partnership
has an equity investment, and the making of capital contributions to and
equity investments in the Partnership's Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition, replacement or improvement of any Property,
including, without limitation, any Contributed Property, or other asset of
the Partnership or any Subsidiary, whether pursuant to a Management
Agreement or otherwise;
(6) the negotiation, execution and performance of any contracts,
leases, conveyances or other instruments that the Managing General Partner
considers useful or necessary to the conduct of the Partnership's
operations or the implementation of the Managing General Partner's powers
under this Agreement, including contracting with contractors, developers,
consultants, accountants, legal counsel, other professional advisors and
other agents (including, without limitation, the Advisor, the Developer and
the Property Manager) and the payment of their expenses and compensation
out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement, the holding, management,
investment and reinvestment of cash and other assets of the Partnership,
and the collection and receipt of revenues, rents and income of the
Partnership;
(8) the selection and dismissal of employees of the Partnership
(if any) or the Managing General Partner (including, without limitation,
employees having titles or offices such as "president," "vice president,"
"secretary" and "treasurer"), and agents, outside attorneys, accountants,
consultants and contractors of the Partnership or the Managing General
Partner and the determination of their compen sation and other terms of
employment or hiring;
47
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(9) the maintenance of such insurance for the benefit of the
Partnership and the Partners and Investors as it deems necessary or
appropriate;
(10) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general partnerships,
limited liability companies, joint ventures or other relationships that it
deems desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to, any Subsidiary and any
other Person in which it has an equity investment from time to time);
provided, however, that, as long as WEA has determined to continue to
-------- -------
qualify as a REIT, the Managing General Partner will not engage in any such
formation, acquisition or contribution that would cause WEA to fail to
qualify as a REIT;
(11) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute resolution, or
abandonment, of any claim, cause of action, liability, debt or damages, due
or owing to or from the Partnership, the commencement or defense of suits,
legal proceedings, administrative proceedings, arbitrations or other forms
of dispute resolution, and the representation of the Partnership in all
suits or legal proceedings, administrative proceedings, arbitrations or
other forms of dispute resolution, the incurring of legal expense, and the
indemnification of any Person against liabilities and contingencies to the
extent permitted by law;
(12) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Subsidiary or any other
Person (including, without limitation, the contribution or loan of funds by
the Partnership to such Persons);
(13) the determination of the fair market value of any
Partnership property distributed in kind using such reasonable method of
valuation as it may adopt; provided that such methods are otherwise
--------
consistent with the requirements of this Agreement;
(14) the enforcement of any rights against any Partner pursuant
to representations, warranties, covenants and indemnities relating to such
Partner's contribution of property or assets to the Partnership;
(15) the enforcement of any rights against any Investor pursuant
to representations, warranties, covenants and indemnities relating to such
Investor's contribution of property or assets to the Partnership;
48
<PAGE>
(16) the exercise, directly or indirectly, through any attorney-
in-fact acting under a general or limited power of attorney, of any right,
including the right to vote, appurtenant to any asset or investment held by
the Partnership;
(17) the exercise of any of the powers of the Managing General
Partner enumerated in this Agreement on behalf of or in connection with any
Subsid iary of the Partnership or any other Person in which the
Partnership has a direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the Managing General
Partner enumerated in this Agreement on behalf of any Person in which the
Partner ship does not have an interest (including, without limitation,
WEA), pursuant to contractual or other arrangements with such Person;
(19) the making, execution and delivery of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing necessary
or appropriate in the judgment of the Managing General Partner for the
accomplishment of any of the powers of the Managing General Partner
enumerated in this Agreement;
(20) the issuance of additional Partnership Units, as
appropriate and in the Managing General Partner's sole and absolute
discretion, in connection with Capital Contributions by Additional Limited
Partners and additional Capital Contributions by Partners pursuant to
Article 4 hereof;
(21) the grant of additional Investor Unit Rights, as appropriate
and in the Managing General Partner's sole and absolute discretion, in
connection with Capital Contributions by Persons in exchange for Investor
Unit Rights and additional Capital Contributions by Investors pursuant to
Article 13 hereof; and
(22) an election to dissolve the Partnership pursuant to Section
14.1.C hereof.
B. Each of the Limited Partners agrees that, except as provided in
Section 7.3 hereof, the Managing General Partner is authorized to execute,
deliver and perform the above-mentioned agreements and transactions on behalf of
the Partnership without any further act, approval or vote of the Partners or any
other Persons, notwithstanding any other provision of the Act or any applicable
law, rule or regulation.
49
<PAGE>
C. At all times from and after the date hereof, the Managing General
Partner may cause the Partnership to obtain and maintain (i) casualty, liability
and other insurance on the Properties of the Partnership and (ii) liability
insurance for the Indemnitees hereunder.
D. At all times from and after the date hereof, the Managing General
Partner may cause the Partnership to establish and maintain working capital and
other reserves in such amounts as the Managing General Partner, in its sole and
absolute discretion, deems appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the Managing
General Partner may, but shall be under no obligation to, take into account the
tax consequences to any Partner (including the Managing General Partner) of any
action taken by it. The Managing General Partner and the Partnership shall not
have liability to a Limited Partner under any circumstances as a result of an
income tax liability incurred by such Limited Partner as a result of an action
(or inaction) by the Managing General Partner pursuant to its authority under
this Agreement.
Section 7.2 Certificate of Limited Partnership. To the extent that
----------------------------------
such action is determined by the Managing General Partner to be reasonable and
necessary or appropriate, the Managing General Partner shall file amendments to
and restatements of the Certificate and do all the things to maintain the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) under the laws of the State of Delaware and
each other state, the District of Columbia or any other jurisdiction, in which
the Partnership may elect to do business or own property. Subject to the terms
of Section 8.5.A(4) hereof, the Managing General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Limited Partner or any Investor. The Managing General
Partner shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be reasonable and necessary or appropriate for
the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited
liability to the extent provided by applicable law) in the State of Delaware and
any other state, or the District of Columbia or other jurisdiction, in which the
Partnership may elect to do business or own property.
Section 7.3 Restrictions on Managing General Partner's Authority.
----------------------------------------------------
A. The Managing General Partner may not take any action in
contravention of this Agreement, including, without limitation:
(1) take any action that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise provided in this
Agreement;
50
<PAGE>
(2) possess Partnership property, or assign any rights in
specific Partnership property, for other than a Partnership purpose except
as otherwise provided in this Agreement, including, without limitation,
Section 7.10;
(3) admit a Person as a Partner, except as otherwise provided in
this Agreement;
(4) perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or any other liability
except as provided herein or under the Act; or
(5) enter into any contract, mortgage, loan or other agreement
that prohibits the ability of (a) the Managing General Partner or the
Partnership from satisfying its obligations under Section 16.1 hereof in
full or (b) a Limited Partner or Investor from exercising its rights under
Section 16.1 hereof to effect a Redemption in full, except, in either case,
with the written consent of such Limited Partner or Investor affected by
the prohibition.
B. The Managing General Partner shall not, without the prior Consent
of the Partners holding classes or series of Partnership Interests affected by
the following actions, undertake, on behalf of the Partnership, any of such
actions or enter into any transaction that would have the effect of such
transactions:
(1) except as provided in Section 7.3.C hereof, amend, modify or
terminate this Agreement other than to reflect the admission, substitution,
termination or withdrawal of Partners pursuant to Article 11 or Article 12
hereof;
(2) make a general assignment for the benefit of creditors or
appoint or acquiesce in the appointment of a custodian, receiver or trustee
for all or any part of the assets of the Partnership; or
(3) institute any proceeding for bankruptcy on behalf of the
Partnership.
C. Notwithstanding Section 7.3.B hereof, the Managing General
Partner shall have the power, without the Consent of the Partners, to amend this
Agreement as may be required to facilitate or implement any of the following
purposes:
(1) to add to the obligations of the Managing General Partner or
surrender any right or power granted to the Managing General Partner or any
Affiliate
51
<PAGE>
of the Managing General Partner (including the delegation or surrender of
any power to any Additional General Partner admitted to the Partnership
pursuant to the terms hereof) for the benefit of the Limited Partners;
(2) to reflect the admission, substitution or withdrawal of
Partners or the termination of the Partnership in accordance with this
Agreement, and to amend Exhibit A in connection with such admission,
---------
substitution or withdrawal;
(3) to amend Exhibit B in connection with any grant, Transfer,
---------
Redemption or termination of Investor Unit Rights;
(4) to reflect a change that is of an inconsequential nature or
does not adversely affect the Limited Partners in any material respect, or
to cure any ambiguity, correct or supplement any provision in this
Agreement not inconsistent with law or with other provisions, or make other
changes with respect to matters arising under this Agreement that will not
be inconsistent with law or with the provisions of this Agreement;
(5) to satisfy any requirements, conditions or guidelines
contained in any order, directive, opinion, ruling or regulation of a
Federal or state agency or contained in Federal or state law;
(6) (a) to reflect such changes as are reasonably necessary (i)
for any Special Limited Partner to maintain its status as a "qualified
REIT subsidiary" within the meaning of Code Section 856(i)(2) or (ii) for
WEA to maintain its status as a REIT or to satisfy the REIT Requirements;
(b) to reflect the Transfer of all or any part of a Partnership Interest
among WEA, any Special Limited Partner or any other Affiliate or
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))
with respect to WEA;
(7) to modify the manner in which Capital Accounts are computed
(but only to the extent set forth in the definition of "Capital Account" or
contemplat ed by the Code or the Regulations);
(8) the issuance of additional Partnership Interests in
accordance with Section 4.2; and
(9) the grant of Investor Unit Rights in accordance with Section
13.1.
52
<PAGE>
The Managing General Partner will provide notice to the Limited Partners when
any action under this Section 7.3.C is taken.
D. Notwithstanding Sections 7.3.B and 7.3.C hereof, this Agreement
shall not be amended, and no action may be taken by the Managing General
Partner, without the consent of each Partner adversely affected thereby, if such
amendment or action would (i) convert a Limited Partner Interest in the
Partnership into a General Partner Interest (except as a result of the Managing
General Partner acquiring such Partnership Interest), (ii) modify the limited
liability of a Limited Partner, (iii) alter the rights of any Partner to
receive the distributions to which such Partner is entitled, pursuant to Article
5 or Section 14.2.A(4) hereof, or alter the allocations specified in Article 6
hereof (except, in any case, as permitted pursuant to Sections 4.2 and 7.3.C
hereof), (iv) alter or modify the Redemption rights, Cash Amount or REIT Shares
Amount as set forth in Sections 16.1 and 11.2 hereof, or amend or modify any
related definitions, or (v) amend this Section 7.3.D; provided, however, that
-------- -------
the consent of any individual Partner adversely affected shall not be required
for any amendment or action that affects all Partners holding the same class or
series of Partnership Units on a uniform or pro rata basis, if approved by a
Majority in Interests of the Partners of holding such class or series of
Partnership Units. Further, no amendment may alter the restrictions on the
Managing General Partner's authority set forth elsewhere in this Section 7.3
without the consent specified therein. Any such amendment or action consented
to by any Partner shall be effective as to that Partner, notwithstanding the
absence of such consent by any other Partner.
Section 7.4 Reimbursement of the Managing General Partner.
---------------------------------------------
A. The Managing General Partner shall not be compensated for its
services as managing general partner of the Partnership except as provided in
this Agreement (including the provisions of Articles 5 and 6 hereof regarding
distributions, payments and allocations to which it may be entitled in its
capacity as the Managing General Partner).
B. Subject to Sections 7.4.C and 16.11 hereof, the Partnership shall
be liable for, and shall reimburse the Managing General Partner on a monthly
basis, or such other basis as the Managing General Partner may determine in its
sole and absolute discretion, for all sums expended in connection with the
Partnership's business, including, without limitation, (i) expenses relating to
the ownership of interests in and management and operation of, or for the
benefit of, the Partnership, (ii) compensation of officers and employees,
including, without limitation, payments under future compensation plans of the
Managing General Partner that may provide for stock units, or phantom stock,
pursuant to which employees of the Managing General Partner will receive
payments based upon dividends on or the value of REIT Shares, (iii) director
fees and expenses and (iv) all costs and expenses of the Managing General
Partner being a public company, including costs of filings with the SEC, reports
and other distributions to its shareholders; provided, however, that the amount
-------- -------
of any reimbursement shall be reduced by any interest earned by the Managing
General Partner with respect
53
<PAGE>
to bank accounts or other instruments or accounts held by it on behalf of the
Partnership as permitted pursuant to Section 7.5 hereof. Such reimbursements
shall be in addition to any reimbursement of the Managing General Partner as a
result of indemnification pursuant to Section 7.7 hereof.
C. To the extent practicable, Partnership expenses shall be billed
directly to and paid by the Partnership and, subject to Section 16.11 hereof,
reimbursements to the Managing General Partner or any of its Affiliates by the
Partnership pursuant to this Section 7.4 shall be treated as "guaranteed
payments" within the meaning of Code Section 707(c).
Section 7.5 Outside Activities of the Managing General Partner.
--------------------------------------------------
The Managing General Partner shall not directly or indirectly enter into or
conduct any business, other than in connection with (a) the ownership,
acquisition and disposition of Partnership Interests as Managing General
Partner, (b) the management of the business of the Partnership, (c) the
operation of WEA as a reporting company with a class (or classes) of securities
registered under the Exchange Act, (d) WEA's operations as a REIT, (e) the
offering, sale, syndication, private placement or public offering of stock,
bonds, securities or other interests, (f) financing or refinancing of any type
related to the Partnership or its assets or activities, and (g) such activities
as are incidental thereto; provided, however, that the Managing General Partner
-------- -------
may, in its sole and absolute discretion, from time to time hold or acquire
assets in its own name or otherwise other than through the Partnership so long
as the Managing General Partner takes commercially reasonable measures to insure
that the economic benefits and burdens of such Property are otherwise vested in
the Partnership, whether by electing to treat such asset as an "Excluded
Property" hereunder, through assignment, mortgage loan or otherwise or, if it
is not commercially reasonable to vest such economic interests in the
Partnership, the Partners shall negotiate in good faith to amend this Agreement,
including, without limitation, the definition of "Adjustment Factor," to reflect
such activities and the direct ownership of assets by the Managing General
Partner. Nothing contained herein shall be deemed to prohibit the Managing
General Partner from executing guarantees of Partnership debt for which it would
otherwise be liable in its capacity as Managing General Partner. Subject to
Section 7.3.B hereof, the Managing General Partner, any Special Limited Partner
and all "qualified REIT subsidiaries" (within the meaning of Code Section
856(i)(2)), taken as a group, shall not own any assets or take title to assets
(other than temporarily in connection with an acquisition prior to contributing
such assets to the Partnership) other than (i) Excluded Properties, (ii)
interests in "qualified REIT subsidiaries" (within the meaning of Code Section
856(i)(2)), (iii) Partnership Interests as the Managing General Partner or
Special Limited Partner and (iv) such cash and cash equivalents, bank accounts
or similar instruments or accounts as such group deems reasonably necessary,
taking into account Section 7.1.D hereof and the requirements necessary for WEA
to qualify as a REIT and for the Managing General Partner and the Special
Limited Partners to carry out their respective responsibilities contemplated
under this Agreement and the Charter. The Managing General Partner and any
Affiliates of the Managing General Partner may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests.
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<PAGE>
Section 7.6 Transactions with Affiliates.
----------------------------
A. The Partnership may lend or contribute funds or other assets to
the Managing General Partner and its Subsidiaries or other Persons in which the
Managing General Partner has an equity investment, and such Persons may borrow
funds from the Partnership, on terms and conditions no less favorable to the
Partnership in the aggregate than would be available from unaffiliated third
parties as determined by the Managing General Partner in good faith. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person. It is expressly acknowledged and agreed by each
Partner and each Investor that WEA may, in its sole and absolute discretion, (i)
borrow funds from the Partnership in order to redeem, at any time or from time
to time, options or warrants previously or hereafter issued by WEA, including,
without limitation, warrants for the acquisition of REIT Shares issued by WEA to
Westfield America Trust, an Australian public property trust, (ii) put to the
Partnership, for cash, any rights, options, warrants or convertible or
exchangeable securities that WEA may desire or be required to purchase or redeem
or (iii) borrow funds from the Partnership to acquire assets that become
Excluded Assets or will be contributed to the Partnership for Partnership Units.
If the Managing General Partner acquires a corporation in which the Partnership
does not hold an interest, in whole or in part, with the proceeds (whether
comprised of cash or other assets) of a loan from the Partnership to Managing
General Partner, the Partnership shall issue to such corporation an interest in
the Partnership that (i) entitles the holder thereof to receive distributions in
amounts and at the same times as interest payments on such loan (with
appropriate reductions in such distributions if any portion of the loan is
repaid), (ii) entitles the holder thereof to receive, if and to the extent that
any portion of such loan is repaid, a number of Partnership Units equal to the
quotient obtained by dividing the principal amount of the loan repaid by the
market price of REIT Shares at the date of repayment (it being understood and
agreed that if the loan is repaid with funds contributed to such corporation by
the Managing General Partner from the proceeds of a sale of REIT Shares, the
market price of REIT Shares at the date of repayment shall be deemed to be the
net price per share at which such shares were sold), and (iii) is automatically
redeemed for no consideration upon the repayment in full of such loan.
B. Except as provided in Section 7.5 hereof and subject to Section
3.1 hereof, the Partnership may transfer assets to joint ventures, limited
liability companies, partnerships, corporations, business trusts or other
business entities in which it is or thereby becomes a participant upon such
terms and subject to such conditions consistent with this Agreement and
applicable law as the Managing General Partner, believes, in good faith, to be
advisable.
C. The Managing General Partner and its Affiliates may sell,
transfer or convey any property to the Partnership, directly or indirectly, on
terms and conditions no less favorable to the Partnership in the aggregate than
would be available from unaffiliated third parties as determined by the Managing
General Partner in good faith.
55
<PAGE>
D. The Managing General Partner, in its sole and absolute discretion
and without the approval of the Partners or any of them or any other Persons,
may propose and adopt on behalf of the Partnership employee benefit plans funded
by the Partnership for the benefit of employees of the Managing General Partner,
the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them
(including, without limitation, the Property Manager, the Advisor and the
Developer) in respect of services performed, directly or indirectly, for the
benefit of WEA, the Partnership or any of the Partnership's Subsidiaries.
E. The Managing General Partner is expressly authorized to enter
into, amend, modify, restate, supplement, terminate or extend, in the name and
on behalf of the Partnership, any Management Agreement with Affiliates of either
the Managing General Partner or the Partnership on such terms as the Managing
General Partner, in its sole and absolute discretion, believes are advisable,
for the benefit of WEA, the Partnership or any of the Partnership's
Subsidiaries.
F. The Managing General Partner is expressly authorized to enter
into, amend, modify, restate, supplement, terminate or extend, in the name and
on behalf of the Partnership, a right of first opportunity arrangement and other
conflict avoidance agreements with various Affiliates of the Partnership and the
Managing General Partner, on such terms as the Managing General Partner, in its
sole and absolute discretion, believes are advisable, for the benefit of WEA,
the Partnership or any of the Partnership's Subsidiaries.
G. The Managing General Partner is expressly authorized to enter
into, amend, modify, restate, supplement, terminate or extend, in the name and
on behalf of the Partnership, any advisory or development agreements with
various Affiliates of the Partnership or the Managing General Partner,
including, without limitation, the Advisor and the Developer, on such terms as
the Managing General Partner, in its sole and absolute discretion, believes are
advisable, for the benefit of WEA, the Partnership or any of the Partnership's
Subsidiaries.
Section 7.7 Indemnification.
---------------
A. To the fullest extent permitted by applicable law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorney's fees and other legal fees and expenses), judgments,
fines, settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership ("Actions") as set forth in
-------
this Agreement in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise; provided, however, that the Partnership shall
-------- -------
not indemnify an Indemnitee (i) for willful misconduct or a knowing violation of
the law or (ii) for any transaction for which such Indemnitee received an
improper personal benefit in violation or breach of any provision of this
Agreement. Without limitation, the foregoing indemnity shall extend
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to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise,
for any indebtedness of the Partnership or any Subsidiary of the Partnership
(including, without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken subject to), and the Managing
General Partner is hereby authorized and empowered, on behalf of the
Partnership, to enter into one or more indemnity agreements consistent with the
provisions of this Section 7.7 in favor of any Indemnitee having or potentially
having liability for any such indebtedness. It is the intention of this Section
7.7.A that the Partnership indemnify each Indemnitee to the fullest extent
permitted by law. The termination of any proceeding by judgment, order or
settlement does not create a presumption that the Indemnitee did not meet the
requisite standard of conduct set forth in this Section 7.7.A. The termination
of any proceeding by conviction of an Indemnitee or upon a plea of nolo
contendere or its equivalent by an Indemnitee, or an entry of an order of
probation against an Indemnitee prior to judgment, does not create a presumption
that such Indemnitee acted in a manner contrary to that specified in this
Section 7.7.A with respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and neither the Managing General Partner nor any
other Holder shall have any obligation to contribute to the capital of the
Partnership or otherwise provide funds to enable the Partnership to fund its
obligations under this Section 7.7.
B. To the fullest extent permitted by law, expenses incurred by an
Indemnitee who is a party to a proceeding or otherwise subject to or the focus
of or is involved in any Action shall be paid or reimbursed by the Partnership
as incurred by the Indemnitee in advance of the final disposition of the Action
upon receipt by the Partnership of (i) a written affirmation by the Indemnitee
of the Indemnitee's good faith belief that the standard of conduct necessary for
indemnification by the Partnership as authorized in this Section 7.7.A has been
met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay
the amount if it shall ultimately be determined that the standard of conduct has
not been met.
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnitee unless otherwise provided in a
written agreement with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of any of the Indemnitees and such other Persons
as the Managing General Partner shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
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E. Any liabilities which an Indemnitee incurs as a result of acting
on behalf of the Partnership or the Managing General Partner (whether as a
fiduciary or otherwise) in connection with the operation, administration or
maintenance of an employee benefit plan or any related trust or funding
mechanism (whether such liabilities are in the form of excise taxes assessed by
the IRS, penalties assessed by the Department of Labor, restitutions to such a
plan or trust or other funding mechanism or to a participant or beneficiary of
such plan, trust or other funding mechanism, or otherwise) shall be treated as
liabilities or judgments or fines under this Section 7.7, unless such
liabilities arise as a result of (i) such Indemnitee's intentional misconduct or
knowing violation of the law, or (ii) any transaction in which such Indemnitee
received a personal benefit in violation or breach of any provision of this
Agreement or applicable law.
F. In no event may an Indemnitee subject any of the Holders to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
I. It is the intent of the parties that any amounts paid by the
Partnership to the Managing General Partner pursuant to this Section 7.7 shall
be treated as "guaranteed payments" within the meaning of Code Section 707(c).
Section 7.8 Liability of the Managing General Partner.
-----------------------------------------
A. Notwithstanding anything to the contrary set forth in this
Agreement, neither the Managing General Partner nor any of its directors or
officers shall be liable or accountable in damages or otherwise to the
Partnership, any Partners, any Investors or any Assignees for losses sustained,
liabilities incurred or benefits not derived as a result of errors in judgment
or mistakes of fact or law or of any act or omission if the Managing General
Partner or such director or officer acted in good faith.
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B. The Limited Partners expressly acknowledge that the Managing
General Partner is acting for the benefit of the Partnership, the Limited
Partners and the Managing General Partner's shareholders collectively and that
the Managing General Partner is under no obligation to give priority to the
separate interests of the Limited Partners, or the Managing General Partner's
shareholders (including, without limitation, the tax consequences to Limited
Partners, Assignees or the Managing General Partner's shareholders) in deciding
whether to cause the Partnership to take (or decline to take) any actions.
C. Subject to its obligations and duties as Managing General Partner
set forth in Section 7.1.A hereof, the Managing General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its employees or
agents (subject to the supervision and control of the Managing General Partner).
The Managing General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the Managing General Partner's, and its officers' and directors',
liability to the Partnership and the Limited Partners or Investors under this
Section 7.8 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
E. Notwithstanding anything herein to the contrary, except for
fraud, willful misconduct or gross negligence, or pursuant to any express
indemnities given to the Partnership by any Partner pursuant to any other
written instrument, no Partner shall have any personal liability whatsoever, to
the Partnership or to the other Partners or Investors, for the debts or
liabilities of the Partnership or the Partnership's obligations hereunder, and
the full recourse of the other Partner(s) and/or Investor(s) shall be limited to
the interest of that Partner in the Partnership or, in the case of an Investor,
that Investor in its Investor Unit Rights. To the fullest extent permitted by
law, no officer, director or shareholder of the Managing General Partner shall
be liable to the Partnership for money damages except for (i) active and
deliberate dishonesty established by a non-appealable final judgment or (ii)
actual receipt of an improper benefit or profit in money, property or services.
With out limitation of the foregoing, and except for fraud, willful misconduct
or gross negligence, or pursuant to any such express indemnity, no property or
assets of any Partner, other than its interest in the Partnership, or any
Investor, other than its interest in its Investor Unit Rights, shall be subject
to levy, execution or other enforcement procedures for the satisfaction of any
judgment (or other judicial process) in favor of any other Partner(s) or
Investor(s) and arising out of, or in connection with, this Agreement. This
Agreement is executed by the officers of the Managing General Partner solely as
officers of the same and not in their own individual capacities.
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F. To the extent that, at law or in equity, the Managing General
Partner has duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or the Limited Partners, the Managing General Partner shall
not be liable to the Partnership or to any other Partner for its good faith
reliance on the provisions of this Agreement. The provisions of this Agreement,
to the extent that they restrict the duties and liabilities of the Managing
General Partner otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of such Managing General
Partner.
G. Whenever in this Agreement the Managing General Partner is
permitted or required to make a decision (i) in its "sole discretion" or
"discretion" or under a grant of similar authority or latitude, the Managing
General Partner shall be entitled to consider only such interests and factors as
it desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest or factors affecting the Partnership or
the Partners or any of them, or (ii) in its "good faith" or under another
expressed standard, the Managing General partner shall act under such express
standard and shall not be subject to any other or different standards imposed by
this Agreement or any other agreement contemplated herein or by relevant
provisions of law or in equity or otherwise. If any question should arise with
respect to the operation of the Partnership, which is not otherwise specifically
provided for in this Agreement or the Act, or with respect to the interpretation
of this Agreement, the Managing General Partner is hereby authorized to make a
final determination with respect to any such question and to interpret this
Agreement in such a manner as it shall deem, in its sole discretion, to be fair
and equitable, and its determination and interpretations so made shall be final
and binding on all parties. The Managing General Partner's "sole discretion"
and "discretion" under this Agreement shall be exercised in good faith.
Section 7.9 Other Matters Concerning the Managing General Partner.
-----------------------------------------------------
A. The Managing General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture or
other paper or document believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties.
B. The Managing General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it, and any act taken or omitted to be taken in reliance upon the opinion of
such Persons as to matters that the Managing General Partner reasonably believes
to be within such Person's professional or expert competence shall be
conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
C. The Managing General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly
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appointed attorney or attorneys-in-fact. Each such attorney shall, to the extent
provided by the Managing General Partner in the power of attorney, have full
power and authority to do and perform all and every act and duty that is
permitted or required to be done by the Managing General Partner hereunder.
D. Notwithstanding any other provision of this Agreement or the Act,
any action of the Managing General Partner on behalf of the Partnership or any
decision of the Managing General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of WEA to continue to
qualify as a REIT, (ii) for WEA otherwise to satisfy the REIT Requirements,
(iii) to avoid WEA incurring any taxes under Code Section 857 or Code Section
4981 or (iv) for any Special Limited Partner to continue to qualify as a
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
Section 7.10 Title to Partnership Assets. Title to Partnership
---------------------------
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no Partner ,
individually or collectively with other Partners, Investors or Persons, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the Managing General Partner or one or more nominees, as the
Managing General Partner may determine, including Affiliates of the Managing
General Partner. The Managing General Partner hereby declares and warrants that
any Partnership assets for which legal title is held in the name of the Managing
General Partner or any nominee or Affiliate of the Managing General Partner
shall be held by the Managing General Partner for the use and benefit of the
Partnership in accordance with the provisions of this Agreement. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
Section 7.11 Reliance by Third Parties. Notwithstanding anything to
-------------------------
the contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the Managing General Partner has full power and
authority, without the consent or approval of any other Partner, Investor or
Person, to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any contracts on behalf of the Partnership,
and take any and all actions on behalf of the Partnership, and such Person shall
be entitled to deal with the Managing General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner and each Investor hereby waives any and all defenses or other
remedies that may be available against such Person to contest, negate or
disaffirm any action of the Managing General Partner in connection with any such
dealing. In no event shall any Person dealing with the Managing General Partner
or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expediency
of any act or action of the
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Managing General Partner or its representatives. Each and every certificate,
document or other instrument executed on behalf of the Partnership by the
Managing General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability. No Limited Partner shall have
-----------------------
any liability under this Agreement except as expressly provided in this
Agreement (including, without limitation, Section 10.4 hereof) or under the Act.
Section 8.2 Management of Business. No Limited Partner or Assignee
----------------------
(other than the Managing General Partner, any of its Affiliates or any officer,
director, member, employee, partner, agent or trustee of the Managing General
Partner, the Partnership or any of their Affiliates, in their capacity as such)
shall take part in the operations, management or control (within the meaning of
the Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. The transaction of any such business by the Managing General
Partner, any of its Affiliates or any officer, director, member, employee,
partner, agent, representative, or trustee of the Managing General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners. Subject to any
--------------------------------------
agreements entered into pursuant to Section 7.6 hereof and any other agreements
entered into by a Limited Partner or any of its Affiliates with the Managing
General Partner, the Partnership or a Subsidiary (including, without limitation,
any employment agreement), any Limited Partner and any Assignee, officer,
director, employee, agent, trustee, Affiliate, member or shareholder of any
Limited Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities that are in direct or indirect
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partner shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee. Subject to such agreements, none of the Limited Partners nor any
other Person shall have any rights by virtue of this Agreement or the
partnership
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relationship established hereby in any business ventures of any other Person
(other than the Managing General Partner, to the extent expressly provided
herein), and such Person shall have no obligation pursuant to this Agreement,
subject to Section 7.6 hereof and any other agreements entered into by a Limited
Partner or its Affiliates with the Managing General Partner, the Partnership or
a Subsidiary, to offer any interest in any such business ventures to the
Partnership, any Limited Partner, any Investor or any such other Person, even if
such opportunity is of a character that, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
Notwithstanding any other provision of this Agreement, including without
limitation Section 7.1.A and Section 7.5, one or more Affiliates of WEA may own
membership interests or similar equity interests in one or more Subsidiaries,
provided that the aggregate amount of such interests owned by the Affiliates of
WEA in any one Subsidiary shall not exceed 5% of such Subsidiary's outstanding
membership or similar equity interests and provided further that, at or promptly
following the acquisition by such Affiliates of WEA of such interests, such
interest(s) are listed as Excluded Properties on Exhibit G hereto.
Section 8.4 Return of Capital. Except pursuant to the rights of
-----------------
Redemption set forth in Section 16.1 hereof, no Limited Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the
extent of distributions made pursuant to this Agreement or upon termination of
the Partnership as provided herein. Except to the extent provided in Article 6
hereof or otherwise expressly provided in this Agreement, no Limited Partner or
Assignee shall have priority over any other Limited Partner or Assignee either
as to the return of Capital Contributions or as to profits, losses or
distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership.
------------------------------------------------------
A. In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, the Managing General Partner
shall deliver to each Limited Partner a copy of any information mailed to the
common shareholders of WEA as soon as practicable after such mailing.
B. The Partnership shall notify any Limited Partner that is a
Qualifying Party, on request, of the then current Adjustment Factor or any
change made to the Adjustment Factor.
C. Notwithstanding any other provision of this Section 8.5, the
Managing General Partner may keep confidential from the Limited Partners (or any
of them), for such period of time as the Managing General Partner determines in
its sole and absolute discretion to be reasonable, any information that (i) the
Managing General Partner believes to be in the nature of trade secrets or other
information the disclosure of which the Managing General Partner in good faith
believes is not in the best interests of the Partnership or the Managing General
Partner or (ii) the Partnership or the Managing General Partner is required by
law or by agreement to keep confidential.
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Section 8.6 Partnership Right to Call Limited Partner Interests.
---------------------------------------------------
Notwithstanding any other provision of this Agreement, on and after the date on
which the aggregate Percentage Interests of the Limited Partners (other than the
Special Limited Partners) are less than one percent (1%), the Partnership shall
have the right, but not the obligation, from time to time and at any time to
redeem any and all outstanding Limited Partner Interests (other than the Special
Limited Partners' Limited Partner Interests) by treating any Limited Partner as
a Tendering Party who has delivered a Notice of Redemption pursuant to Section
16.1 hereof for the amount of Partnership Common Units to be specified by the
Managing General Partner, in its sole and absolute discretion, by notice to such
Limited Partner that the Partnership has elected to exercise its rights under
this Section 8.6. Such notice given by the Managing General Partner to a Limited
Partner pursuant to this Section 8.6 shall be treated as if it were a Notice of
Redemption delivered to the Managing General Partner by such Limited Partner.
For purposes of this Section 8.6, (a) any Limited Partner (whether or not
otherwise a Qualifying Party) may, in the Managing General Partner's sole and
absolute discretion, be treated as a Qualifying Party that is a Tendering Party
and (b) the provisions of Sections 16.1.D(1), 16.1.F(2) and 16.1.F(3) hereof
shall not apply, but the remainder of Section 16.1 hereof shall apply, mutatis
-------
mutandis.
- --------
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting.
----------------------
A. The Managing General Partner shall keep or cause to be kept at
the principal office of the Partnership those records and documents required to
be maintained by the Act and other books and records deemed by the Managing
General Partner to be appropriate with respect to the Partnership's business,
including, without limitation, all books and records necessary to provide to the
Limited Partners and the Investors any information, lists and copies of
documents required to be provided pursuant to Section 8.5.A, Section 9.3 or
Article 13 hereof. Any records maintained by or on behalf of the Partnership in
the regular course of its business may be kept on, or be in the form for, punch
cards, magnetic tape, photographs, micrographics or any other information
storage device, provided that the records so maintained are convertible into
clearly legible written form within a reasonable period of time.
B. The books of the Partnership shall be maintained, for financial
and tax reporting purposes, on an accrual basis in accordance with generally
accepted accounting principles, or on such other basis as the Managing General
Partner determines to be necessary or appropriate. To the extent permitted by
sound accounting practices and principles, the Partnership and the Managing
General Partner may operate with integrated or consolidated accounting records,
operations and principles.
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Section 9.2 Partnership Year. The Partnership Year of the
----------------
Partnership shall be the calendar year.
Section 9.3 Reports.
-------
A. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each Partnership Year, the Managing General
Partner shall cause to be mailed to each Limited Partner of record as of the
close of the Partnership Year, an annual report containing financial statements
of the Partnership, or of WEA if such statements are prepared solely on a
consolidated basis with WEA, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
Managing General Partner.
B. As soon as practicable, but in no event later than sixty (60)
days after the close of each calendar quarter (except the last calendar quarter
of each year), the Managing General Partner shall cause to be mailed to each
Limited Partner of record as of the last day of the calendar quarter, a report
containing unaudited financial statements of the Partnership, or of WEA if such
statements are prepared solely on a consolidated basis with WEA, and such other
information as may be required by applicable law or regulation or as the
Managing General Partner determines to be appropriate. At the request of any
Limited Partner, the Managing General Partner shall provide access to the books,
records and workpapers upon which the reports required by this Section 9.3 are
based, to the extent required by the Act.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns. The Managing General
--------------------------
Partner shall arrange for the preparation and timely filing of all returns with
respect to Partnership income, gains, deductions, losses and other items
required of the Partnership for Federal and state income tax purposes and shall
use all reasonable effort to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
and the Investors for Federal and state income tax reporting purposes. The
Limited Partners and the Investors shall promptly provide the Managing General
Partner with such information relating to the Contributed Properties, including
tax basis and other relevant information, as may be reasonably requested by the
Managing General Partner from time to time.
Section 10.2 Tax Elections. Except as otherwise provided herein,
-------------
the Managing General Partner shall, in its sole and absolute discretion,
determine whether to make any available election pursuant to the Code,
including, but not limited to, the election under Code Section 754 and
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the election to use the "recurring item" method of accounting provided under
Code Section 461(h) with respect to property taxes imposed on the Partnership's
Properties; provided, however, that, if the "recurring item" method of
-------- -------
accounting is elected with respect to such property taxes, the Partnership
shall pay the applicable property taxes prior to the date provided in Code
Section 461(h) for purposes of determining economic performance. The Managing
General Partner shall have the right to seek to revoke any such election
(including, without limitation, any election under Code Sections 461(h) and 754)
upon the Managing General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners and
Investors.
Section 10.3 Tax Matters Partner.
-------------------
A. The Managing General Partner shall be the "tax matters partner"
of the Partnership for Federal income tax purposes. The tax matters partner
shall receive no compensation for its services. All third-party costs and
expenses incurred by the tax matters partner in performing its duties as such
(including legal and accounting fees and expenses) shall be borne by the
Partnership in addition to any reimbursement pursuant to Section 7.4 hereof.
Nothing herein shall be construed to restrict the Partnership from engaging an
accounting firm to assist the tax matters partner in discharging its duties
hereunder, so long as the compensation paid by the Partnership for such services
is reasonable. At the request of any Limited Partner or any Investor, the
Managing General Partner agrees to inform such Limited Partner or Investor
regarding the preparation and filing of any returns and with respect to any
subsequent audit or litigation relating to such returns; provided, however, that
-------- -------
the filing of such returns shall be in the sole and absolute discretion of the
Managing General Partner.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of Partnership
items required to be taken into account by a Partner or an Investor for
income tax purposes (such administrative proceedings being referred to as a
"tax audit" and such judicial proceedings being referred to as "judicial
--------- --------
review"), and in the settlement agreement the tax matters partner may
------
expressly state that such agreement shall bind all Partners and Investors,
except that such settlement agreement shall not bind any Partner or
Investor (i) who (within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing that the tax matters
partner shall not have the authority to enter into a settlement agreement
on behalf of such Partner or such Investor (as the case may be) or (ii) who
is a "notice partner" (as defined in Code Section 6231) or a member of a
"notice group" (as defined in Code Section 6223(b)(2));
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(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner or an Investor for tax purposes (a "final adjustment")
----------------
is mailed to the tax matters partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with the
United States Tax Court or the United States Claims Court, or the filing of
a complaint for refund with the District Court of the United States for the
district in which the Partnership's principal place of business is located;
(3) to intervene in any action brought by any other Partner or
any Investor for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the
IRS at any time and, if any part of such request is not allowed by the IRS,
to file an appropriate pleading (petition or complaint) for judicial review
with respect to such request;
(5) to enter into an agreement with the IRS to extend the period
for assessing any tax that is attributable to any item required to be taken
into account by a Partner or an Investor for tax purposes, or an item
affected by such item; and
(6) to take any other action on behalf of the Partners and the
Investors or any of them in connection with any tax audit or judicial
review proceeding to the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax matters
partner in connection with any such proceeding, except to the extent required by
law, is a matter in the sole and absolute discretion of the tax matters partner
and the provisions relating to indemnification of the Managing General Partner
set forth in Section 7.7 hereof shall be fully applicable to the tax matters
partner in its capacity as such.
Section 10.4 Withholding. Each Limited Partner and each Investor
-----------
hereby authorizes the Partnership to withhold from or pay on behalf of or with
respect to such Limited Partner and such Investor any amount of Federal, state,
local or foreign taxes that the Managing General Partner determines that the
Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner or such Investor pursuant to
this Agreement, including, without limitation, any taxes required to be withheld
or paid by the Partnership pursuant to Code Section 1441, Code Section 1442,
Code Section 1445 or Code Section 1446. Any amount paid on behalf of or with
respect to a Limited Partner or Investor shall constitute a loan by the
Partnership to such Limited Partner or such Investor, which loan shall be repaid
by such Limited Partner or such Investor within fifteen (15) days after notice
from the Managing General Partner that such payment must be made unless (i) the
Partnership withholds such payment from a distribution that
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would otherwise be made to the Limited Partner or Investor or (ii) the Managing
General Partner determines, in its sole and absolute discretion, that such
payment may be satisfied out of the Available Cash of the Partnership that
would, but for such payment, be distributed to the Limited Partner or Investor.
Each Limited Partner and each Investor hereby unconditionally and irrevocably
grants to the Partnership a security interest in such Limited Partner's
Partnership Interest, in the case of Limited Partners and in such Investor's
Investor Unit Right, in the case of an Investor, to secure such Limited
Partner's or such Investor's (as the case may be) obligation to pay to the
Partnership any amounts required to be paid pursuant to this Section 10.4. In
the event that a Limited Partner or an Investor fails to pay any amounts owed to
the Partnership pursuant to this Section 10.4 when due, the Managing General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner or Investor, and in
such event shall be deemed to have loaned such amount to such defaulting Limited
Partner or Investor (as the case may be) and shall succeed to all rights and
remedies of the Partnership as against such defaulting Limited Partner or
Investor (as the case may be) (including, without limitation, the right to
receive distributions). Any amounts payable by a Limited Partner or an Investor
hereunder shall bear interest at the base rate on corporate loans at large
United States money center commercial banks, as published from time to time in
the Wall Street Journal, plus four (4) percentage points (but not higher than
-------------------
the maximum lawful rate) from the date such amount is due (i.e., fifteen (15)
----
days after demand) until such amount is paid in full. Each Limited Partner and
each Investor shall take such actions as the Partnership or the Managing General
Partner shall request in order to perfect or enforce the security interest
created hereunder.
Section 10.5 Organizational Expenses. The Partnership shall elect
-----------------------
to deduct expenses, if any, incurred by it in organizing the Partnership ratably
over a 60 month period as provided in Section 709 of the Code.
ARTICLE 11
PARTNER TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.
--------
A. No part of the interest of a Partner shall be subject to the
claims of any creditor, to any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.
B. No Partnership Interest shall be Transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any Transfer or purported Transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void ab initio.
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C. Notwithstanding the other provisions of this Article 11 (other
than Section 11.7.D hereof), the respective Partnership Interests of the
Managing General Partner and the Special Limited Partners may be Transferred, in
whole or in part, at any time or from time to time, to or among the Managing
General Partner, the Special Limited Partners, and any other Person that is, at
the time of such Transfer, an Affiliate of WEA, including any "qualified REIT
--------------
subsidiary" (within the meaning of Code Section 856(i)(2)) with respect to WEA.
- ----------
Any transferee of the entire Managing General Partner Interest pursuant to this
Section 11.1.C shall, upon compliance with Section 12.1.A hereof, become,
without further action or consent of any Partners or other Persons, the sole
Managing General Partner of the Partnership, subject to all the rights,
privileges, duties and obligations under this Agreement and the Act relating to
a Managing General Partner. Any transferee of a Limited Partner Interest
pursuant to this Section 11.1.C shall, upon its execution of a counterpart of
this Agreement, become, without further action or consent of any Partner or any
other Person, a Substituted Limited Partner. Upon any Transfer of the Managing
General Partner's entire General Partner Interest (other than a pledge,
hypothecation, encumbrance or mortgage) permitted by this Section 11.1.C, the
transferor Partner shall be relieved of all its obligations under this Agreement
from and after the date of such Transfer. The provisions of Section 11.2.B
(other than the last sentence thereof), 11.3, 11.4.A and 11.5 hereof shall not
apply to any Transfer permitted by this Section 11.1.C.
D. No Transfer of any Partnership Interest may be made to a lender
to the Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability, without the consent of the Managing General
Partner in its sole and absolute discretion; provided that as a condition to
-------------
such consent, the lender will be required to enter into an arrangement with the
Partnership and the Managing General Partner to redeem or exchange for the REIT
Shares Amount any Partnership Units in which a security interest is held by such
lender simultaneously with the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.
Section 11.2 Transfer of General Partner's Partnership Interest.
--------------------------------------------------
A. The Managing General Partner may not Transfer any of its Managing
General Partner Interest or withdraw from the Partnership except as provided in
Sections 11.1.C, 11.2.B and 11.2.C hereof.
B. Except as provided in Section 11.1.C and Section 11.2.C hereof,
the Managing General Partner shall not withdraw from the Partnership and shall
not Transfer all of its interest in the Partnership (whether by sale,
disposition, statutory merger or consolidation, liquidation or other wise)
without the Consent of the Partners. Upon any Transfer of such a Partnership
Interest pursuant to the Consent of the Partners and otherwise in accordance
with the provisions of this Section 11.2.B,
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the transferee shall become a successor Managing General Partner for all
purposes herein, and shall be vested with the powers and rights of the
transferor Managing General Partner, and shall be liable for all obligations and
responsible for all duties of the Managing General Partner, once such transferee
has executed such instruments as may be necessary to effectuate such admission
and to confirm the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired. It is a condition to any Transfer otherwise permitted hereunder that
the transferee assumes, by operation of law or express agreement, all of the
obligations of the transferor Managing General Partner under this Agreement with
respect to such Transferred Partnership Interest, and such Transfer shall
relieve the transferor Managing General Partner of its obligations under this
Agreement without the Consent of the Partners. In the event that the Managing
General Partner withdraws from the Partnership, in violation of this Agreement
or otherwise, or otherwise dissolves or terminates, or upon the bankruptcy of
the Managing General Partner, a Majority in Interest of the Partners may elect
to continue the Partnership business by selecting a successor Managing General
Partner in accordance with Section 14.1.A hereof. The Managing General Partner
may Transfer any portion (but not all) of its interest in the Partnership
(whether by sale, disposition, statutory merger or consolidation, liquidation or
otherwise) without the Consent of the Partners and such transferee shall become
an Additional General Partner of the Partnership, with such rights, duties and
obligations and transfer restrictions hereunder as may be delegated or provided
to such Additional General Partner by the Managing General Partner in connection
with such Transfer, all without the Consent of the Partners.
C. The Managing General Partner may merge with another entity if
immediately after such merger substantially all the assets of the surviving
entity, other than the General Partner Interest held by the Managing General
Partner, are contributed to the Partnership as a Capital Contribution in
exchange for Partnership Units or Investor Unit Rights.
D. No Additional General Partner shall Transfer any of its General
Partner Interest or withdraw from the Partnership except with the consent of the
Managing General Partner.
Section 11.3 Limited Partners' Rights to Transfer.
------------------------------------
A. General. Prior to the end of the first Twelve-Month Period and
-------
except as provided in Section 11.1.C hereof, no Limited Partner shall Transfer
all or any portion of its Partnership Interest to any transferee without the
consent of the Managing General Partner, which consent may be withheld in its
sole and absolute discretion; provided, however, that any Limited Partner may,
-------- -------
at any time, without the consent of the Managing General Partner, (i) Transfer
all or part of its Partnership Interest to any Family Member, any Charity, any
Controlled Entity or any Affiliate, provided that (A) any such Transfer is not a
"sale" within the meaning of Section 2(3) of the Securities Act, (B) the
transferee is a Qualified Transferee, or (C) the Managing General Partner
receives an opinion of counsel to the same effect as the opinion described in
Section 11.3.A(2) of this
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Agreement, (ii) upon the death of a Limited Partner, the Limited Partner's
estate may Transfer such Limited Partner's Partnership Interests in any Transfer
that is not a "sale" within the meaning of Section 2(3) of the Securities Act or
(iii) pledge (a "Pledge") all or any portion of its Partnership Interest to a
------
lending institution, that is not an Affiliate of such Limited Partner, as
collateral or security for a bona fide loan or other extension of credit, and
Transfer such pledged Partnership Interest to such lending institution in
connection with the exercise of remedies under such loan or extension or credit
(any Transfer or Pledge permitted by this proviso is hereinafter referred to as
a "Permitted Transfer"). After such first Twelve-Month Period, each Limited
------------------
Partner, and each transferee of Partnership Units or Assignee pursuant to a
Permitted Transfer, shall have the right to Transfer all or any portion of its
Partnership Interest to any Person, subject to the provisions of Section 11.4
hereof and to satisfaction of each of the following conditions:
(1) Managing General Partner Right of First Refusal. The
-----------------------------------------------
transferring Partner (or the Partner's estate in the event of the Partner's
death) shall give written notice of the proposed Transfer to the Managing
General Partner, which notice shall state (i) the identity of the proposed
transferee and (ii) the amount and type of consideration proposed to be
received for the Transferred Partnership Units. The Managing General
Partner shall have ten (10) Business Days upon which to give the
Transferring Partner notice of its election to acquire the Partnership
Units on the terms set forth in such notice. If it so elects, it shall
purchase the Partnership Units on such terms within ten (10) Business Days
after giving notice of such election; provided, however, that in the event
-------- -------
that the proposed terms involve a purchase for cash, the Managing General
Partner may at its election deliver in lieu of all or any portion of such
cash a note payable to the Transferring Partner at a date as soon as
reasonably practicable, but in no event later than one hundred eighty (180)
days after such purchase, and bearing interest at an annual rate equal to
the total dividends declared with respect to one (1) REIT Share for the
four (4) preceding fiscal quarters of the Managing General Partner, divided
-------
by the Value as of the closing of such purchase; provided, further, that
-- -------- -------
such closing may be deferred to the extent necessary to effect compliance
with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, if
applicable, and any other applicable requirements of law. If it does not
so elect, the Transferring Partner may Transfer such Partnership Units to a
third party, on terms no more favorable to the transferee than the proposed
terms, subject to the other conditions of this Section 11.3 or, in the
event of the Limited Partner's death, the Limited Partner's estate may
Transfer such Limited Partner's Partnership Interests in any Transfer that
is not a "sale" within the meaning of Section 2(3) of the Securities Act.
(2) Opinion of Counsel. The Transferor shall deliver or cause to
------------------
be delivered to the Managing General Partner an opinion of counsel
reasonably satisfactory to it to the effect that the proposed Transfer may
be effected without registration under the Securities Act and will not
otherwise violate the registration provisions of the Securities Act
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and the regulations promulgated thereunder or violate any state securities
laws or regulations applicable to the Partnership or the Partnership
Interests Transferred; provided that the Managing General Partner may, in
--------
its sole discretion, waive this condition upon the request of the
Transferor. If, in the opinion of such counsel, such Transfer would require
the filing of a registration statement under the Securities Act or would
otherwise violate any Federal or state securities laws or regulations
applicable to the Partnership or the Partnership Units, the Managing
General Partner may prohibit any Transfer otherwise permitted under this
Section 11.3 by a Limited Partner of Partnership Interests.
(3) Minimum Transfer Restriction. Any Transferring Partner must
----------------------------
Transfer not less than the lesser of (i) five hundred (500) Partnership
Units or (ii) all of the remaining Partnership Units owned by such
Transferring Partner; provided, however, that, for purposes of determining
-------- -------
compliance with the foregoing restriction, all Partnership Units owned by
Affiliates of a Limited Partner shall be considered to be owned by such
Limited Partner.
(4) Transferee Agreement to Effect a Redemption. Any proposed
-------------------------------------------
transferee shall deliver to the Managing General Partner a written
agreement reasonably satisfactory to the Managing General Partner to the
effect that the transferee will, within six (6) months after consummation
of a Partnership Common Units Transfer, tender its Partnership Common
Units for Redemption in accordance with the terms of the Redemption rights
provided in Section 16.1 hereof.
(5) No Further Transfers. The transferee shall not be permitted
--------------------
to effect any further Transfer of the Partnership Units, other than to the
Managing General Partner.
(6) Exception for Permitted Transfers. The conditions of
---------------------------------
Sections 11.3.A(1) through 11.3.A(5) hereof shall not apply in the case of
a Permitted Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or not
such Transfer is effected during or after the first Twelve-Month Period) that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such Transferred Partnership Interest, and no such Transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under
this Agreement without the approval of the Managing General Partner, in its sole
and absolute discretion. Notwithstanding the foregoing, any transferee of any
Transferred Partnership Interest shall be subject to any and all ownership
limitations (including, without limitation, the Ownership Limit) contained in
the Charter that may limit or restrict such transferee's ability to exercise its
Redemption rights, including, without limitation, the Ownership Limit. Any
transferee,
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whether or not admitted as a Substituted Limited Partner, shall take subject to
the obligations of the transferor hereunder. Unless admitted as a Substituted
Limited Partner, no transferee, whether by a voluntary Transfer, by operation of
law or otherwise, shall have any rights hereunder, other than the rights of an
Assignee as provided in Section 11.5 hereof.
B. Incapacity. If a Limited Partner is subject to Incapacity, the
----------
executor, administrator, trustee, committee, guardian, conservator or receiver
of such Limited Partner's estate shall have all the rights of a Limited Partner,
but not more rights than those enjoyed by other Limited Partners, for the
purpose of settling or managing the estate, and such power as the Incapacitated
Limited Partner possessed to Transfer all or any part of its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. Adverse Tax Consequences. No Transfer by a Limited Partner of
------------------------
its Partnership Interests (including any Redemption, any other acquisition of
Partnership Units by the Managing General Partner or any acquisition of
Partnership Units by the Partnership) may be made to or by any Person if (i) in
the opinion of legal counsel for the Partnership, it would result in the
Partnership being treated as an association taxable as a corporation or would
result in a termination of the Partnership under Code Section 708, or (ii) such
Transfer would be effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Code Section 7704.
Section 11.4 Substituted Limited Partners.
----------------------------
A. No Limited Partner shall have the right to substitute a
transferee (including any transferees pursuant to Transfers permitted by Section
11.3 hereof) as a Limited Partner in its place. A transferee of the interest of
a Limited Partner may be issued Partnership Unit Certificates and admitted as a
Substituted Limited Partner only with the consent of the Managing General
Partner, which consent may be given or withheld by the Managing General Partner
in its sole and absolute discretion. The failure or refusal by the Managing
General Partner to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or the Managing General Partner. Subject to the foregoing, an
Assignee shall not be admitted as a Substituted Limited Partner until and unless
it furnishes to the Managing General Partner (i) evidence of acceptance, in form
and substance satisfactory to the Managing General Partner, of all the terms,
conditions and applicable obligations of this Agreement, (ii) a counterpart
signature page to this Agreement executed by such Assignee and (iii) such other
documents and instruments as may be required or advisable, in the sole and
absolute discretion of the Managing General Partner, to effect such Assignee's
admission as a Substituted Limited Partner.
B. Concurrently with, and as evidence of, the admission of a
Substituted Limited Partner, the Managing General Partner shall (i) upon
delivery of the transferring Limited Partner's
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transferred Partnership Unit Certificates, issue to the Person being admitted as
a Substituted Limited Partner one or more Partnership Unit Certificates to
evidence the Partnership Interest being acquired by such Person and (ii) amend
Exhibit A and the books and records of the Partnership to reflect the name,
- ---------
address and number of Partnership Units of such Substituted Limited Partner and
to eliminate or adjust, if necessary, the name, address and number of
Partnership Units of the predecessor of such Substituted Limited Partner.
C. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
Section 11.5 Assignees. If the Managing General Partner, in its
---------
sole and absolute discretion, does not consent to the admission of any permitted
transferee under Section 11.3 hereof as a Substituted Limited Partner, as
described in Section 11.4 hereof, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be entitled to all
the rights of an assignee of a limited partnership interest under the Act,
including the right to receive distributions from the Partnership and the share
of Net Income, Net Losses and other items of income, gain, loss, deduction and
credit of the Partnership attributable to the Partnership Units assigned to such
transferee and the rights to Transfer the Partnership Units provided in this
Article 11, but shall not be deemed to be a holder of Partnership Units for any
other purpose under this Agreement (other than as expressly provided in Section
16.1 hereof with respect to a Qualifying Party that becomes a Tendering Party),
and shall not be entitled to effect a Consent or vote with respect to such
Partnership Units on any matter presented to the Limited Partners for approval
(such right to Consent or vote, to the extent provided in this Agreement or
under the Act, fully remaining with the transferor Limited Partner). In the
event that any such transferee desires to make a further assignment of any such
Partnership Units, such transferee shall be subject to all the provisions of
this Article 11 to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions.
------------------
A. No Limited Partner may withdraw from the Partnership other than
as a result of a permitted Transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11, with respect to which the transferee
becomes a Substituted Limited Partner, or pursuant to a redemption (or
acquisition by WEA) of all of its Partnership Units pursuant to a Redemption
under Section 16.1 hereof and/or pursuant to any Partnership Unit Designation.
B. Any Limited Partner who shall Transfer all of its Partnership
Units in a Transfer (i) permitted pursuant to this Article 11 where such
transferee was admitted as a Substituted Limited Partner, (ii) pursuant to the
exercise of its rights to effect a redemption of all of its
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Partnership Units pursuant to a Redemption under Section 16.1 hereof and/or
pursuant to any Partnership Unit Designation or (iii) to the Managing General
Partner, whether or not pursuant to Section 16.1.B hereof, shall cease to be a
Limited Partner.
C. If any Partnership Unit is Transferred in compliance with the
provisions of this Article 11, or is redeemed by the Partnership, or acquired by
WEA pursuant to Section 16.1 hereof, on any day other than the first day of a
Partnership Year, then Net Income, Net Losses, each item thereof and all other
items of income, gain, loss, deduction and credit attributable to such
Partnership Unit for such Partnership Year shall be allocated to the transferor
Partner or the Tendering Party (as the case may be) and, in the case of a
Transfer or assignment other than a Redemption, to the transferee Partner
(including, without limitation, any Special Limited Partner as transferees of
WEA in the case of an acquisition of Partnership Common Units pursuant to
Section 16.1 hereof), by taking into account their varying interests during the
Partnership Year in accordance with Code Section 706(d), using the "interim
closing of the books" method or another permissible method selected by the
Managing General Partner. Solely for purposes of making such allocations, each
of such items for the calendar month in which a Transfer occurs shall be
allocated to the transferee Partner and none of such items for the calendar
month in which a Transfer or a Redemption occurs shall be allocated to the
transferor Partner, or the Tendering Party (as the case may be) if such Transfer
occurs on or before the fifteenth (15th) day of the month, otherwise such items
shall be allocated to the transferor. All distributions of Available Cash
attributable to such Partnership Unit with respect to which the Partnership
Record Date is before the date of such Transfer, assignment or Redemption shall
be made to the transferor Partner or the Tendering Party (as the case may be)
and, in the case of a Transfer other than a Redemption, all distributions of
Available Cash thereafter attributable to such Partnership Unit shall be made to
the transferee Partner.
D. In addition to any other restrictions on Transfer herein
contained, in no event may any Transfer or assignment of a Partnership Interest
by any Partner (including any Redemption, any acquisition of Partnership Units
by WEA or any other acquisition of Partnership Units by the Partnership) be made
(i) to any person or entity who lacks the legal right, power or capacity to own
a Partnership Interest; (ii) in violation of applicable law; (iii) of any
component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest; (iv) in the event that such Transfer would cause either
(a) WEA to cease to comply with the REIT Requirements or (b) any Special Limited
Partner to cease to qualify as a "qualified REIT subsidiary" (within the meaning
of Code Section 856(i)(2); (v) if such Transfer would, in the opinion of counsel
to the Partnership or the Managing General Partner, cause a termination of the
Partnership for Federal or state income tax purposes (except as a result of the
Redemption (or acquisition by WEA) of all Partnership Common Units held by all
Limited Partners (other than the Special Limited Partners); (vi) if such
Transfer would, in the opinion of legal counsel to the Partnership, cause the
Partnership to cease to be classified as a partnership for Federal income tax
purposes (except as a result of the Redemption (or acquisition by WEA) of all
Partnership
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Common Units held by all Limited Partners (other than the Special Limited
Partners); (vii) if such Transfer would cause the Partnership to become, with
respect to any employee benefit plan subject to Title I of ERISA, a "party-in-
interest" (as defined in ERISA Section 3(14)) or a "disqualified person" (as
defined in Code Section 4975(c)); (viii) if such Transfer would, in the opinion
of legal counsel to the Partnership, cause any portion of the assets of the
Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.2-101; (ix) if such Transfer
requires the registration of such Partnership Interest pursuant to any
applicable Federal or state securities laws; (x) if such Transfer causes the
Partnership to become a "publicly traded partnership," as such term is defined
in Code Section 469(k)(2) or Code 7704(b); (xi) if such Transfer would cause the
Partnership to have more than one hundred (100) partners for tax purposes
(including as partners those persons indirectly owning an interest in the
Partnership through a partnership, limited liability company, subchapter S
corporation or grantor trust); (xii) if such Transfer causes the Partnership (as
opposed to the Managing General Partner) to become a reporting company under the
Exchange Act; or (xiii) if such Transfer subjects the Partnership to regulation
under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or
ERISA, each as amended.
E. Transfers pursuant to this Article 11 may only be made on the
first day of a fiscal quarter of the Partnership, unless the Managing General
Partner otherwise agrees.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor Managing General Partner and
---------------------------------------------------
Additional General Partners.
- ---------------------------
A. A successor to all of the Managing General Partner's Managing
General Partner Interest pursuant to Section 11.1.C or Section 11.2 hereof who
is proposed to be admitted as a successor Managing General Partner shall be
admitted to the Partnership as the Managing General Partner, effective
immediately prior to such Transfer. Any such successor shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor Managing General Partner executing and
delivering to the Partnership an acceptance of all of the terms and conditions
of this Agreement and such other documents or instruments as may be required to
effect the admission.
B. A successor to a portion of the Managing General Partner's
Managing General Partner Interest pursuant to Section 11.2.B hereof or any
Person to be admitted as an Additional General Partner pursuant to Section 4.2.A
hereof who is proposed to be admitted as an Additional General Partner shall be
admitted to the Partnership as a General Partner, effective immediately prior to
such Transfer. Any such Additional General Partner shall carry on the business
of the Partnership
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without dissolution. In each case, the admission shall be subject to the
Additional General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission.
Concurrently with, and as evidence of, the admission of an Additional General
Partner, the Managing General Partner shall (A) Transfer to or issue to (as
applicable) such Additional General Partner Partnership Unit Certificates to
evidence the Partnership Interest of such Additional General Partner and (B)
amend Exhibit A and the books and records of the Partnership to reflect the
---------
name, address and number of Partnership Units of such Additional General
Partner.
Section 12.2 Admission of Additional Limited Partners.
----------------------------------------
A. After the admission to the Partnership of an Original Limited
Partner on the date hereof, a Person (other than an existing Partner) who makes
a Capital Contribution to the Partnership in exchange for Partnership Units and
in accordance with this Agreement shall be issued Partnership Unit Certificates
and be admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the Managing General Partner (i) evidence of acceptance, in form
and substance satisfactory to the Managing General Partner, of all of the terms
and conditions of this Agreement, including, without limitation, the power of
attorney granted in Section 2.4 hereof, (ii) a counterpart signature page to
this Agreement executed by such Person and (iii) such other documents or
instruments as may be required in the sole and absolute discretion of the
Managing General Partner in order to effect such Person's admission as an
Additional Limited Partner. Concurrently with, and as evidence of, the admission
of an Additional Limited Partner, the Managing General Partner shall (A) issue
to such Additional Limited Partner Partnership Unit Certificates to evidence the
Partnership Interest of such Additional Limited Partner and (B) amend Exhibit A
---------
and the books and records of the Partnership to reflect the name, address and
number of Partnership Units of such Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the Managing General Partner, which consent may be given or withheld in the
Managing General Partner's sole and absolute discretion. The admission of any
Person as an Additional Limited Partner shall become effective on the date upon
which the name of such Person is recorded on the books and records of the
Partnership, following the consent of the Managing General Partner to such
admission and the satisfaction of all the conditions set forth in Section
12.2.A.
C. If any Additional Limited Partner is admitted to the Partnership
on any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items of income, gain, loss, deduction
and credit allocable among Holders for such Partnership Year shall be allocated
among such Additional Limited Partner and all other Holders by taking into
account their varying interests during the Partnership Year in accordance with
Code
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Section 706(d), using the "interim closing of the books" method or another
permissible method selected by the Managing General Partner. Solely for purposes
of making such allocations, each of such items for the calendar month in which
an admission of any Additional Limited Partner occurs shall be allocated among
all the Holders including such Additional Limited Partner, in accordance with
the principles described in Section 11.6.C hereof. All distributions of
Available Cash with respect to which the Partnership Record Date is before the
date of such admission shall be made solely to Partners and Assignees other than
the Additional Limited Partner, and all distributions of Available Cash
thereafter shall be made to all the Partners and Assignees including such
Additional Limited Partner.
D. Any Additional Limited Partner admitted to the Partnership that
is an Affiliate of the Managing General Partner shall be deemed to be a "Special
Limited Partner" hereunder and shall be reflected as such on Exhibit A and the
books and records of the Partnership.
Section 12.3 Amendment of Agreement and Certificate of Limited
-------------------------------------------------
Partnership. For the admission to the Partnership of any Partner, the Managing
- -----------
General Partner shall take all steps necessary and appropriate under the Act to
amend the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
---------
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
Section 12.4 Limit on Number of Partners. Unless otherwise
---------------------------
permitted by the Managing General Partner in its sole and absolute discretion,
no Person shall be admitted to the Partnership as an Additional Limited Partner
if the effect of such admission would be to cause the Partnership to have a
number of Partners (including as Partners for this purpose those Persons
indirectly owning an interest in the Partnership through another partnership, a
limited liability company, a subchapter S corporation or a grantor trust) that
would cause the Partnership to become a reporting company under the Exchange
Act.
Section 12.5 Admission. A Person shall be admitted to the
---------
Partnership as a limited partner of the Partnership or a general partner of the
Partnership only upon strict compliance, and not upon substantial compliance,
with the requirements set forth in this Agreement for admission to the
Partnership as a Limited Partner or a General Partner.
Section 12.6 Representation and Warranty of the General Partners.
---------------------------------------------------
Each of the Managing General Partner and any Additional General Partner
represents, warrants and covenants that, other than for United States Federal,
state and local tax purposes, it will not, and will not cause or permit the
Partnership to, treat any Investor as a partner of the Partnership.
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ARTICLE 13
INVESTORS
Section 13.1 Grants of Investor Unit Rights.
------------------------------
A. General. The Managing General Partner is hereby authorized to
-------
cause the Partnership to grant Investor Unit Rights, for any Partnership
purpose, at any time or from time to time, to any Persons (other than Partners)
for such consideration and on such terms and conditions as shall be established
by the Managing General Partner in its sole and absolute discretion, all without
the approval of any Limited Partner or any other Person; provided, however, that
-------- -------
no Investor Unit Right shall be a "partnership interest" as defined in the Act
and no Investor shall be a partner of the Partnership (however it is
acknowledged that an Investor shall be treated as a partner for United States
tax purposes). Without limiting the foregoing, the Managing General Partner is
expressly authorized to cause the Partnership to grant Investor Unit Rights (i)
pursuant to Article 4 hereof, (ii) upon the conversion, redemption or exchange
of any Debt, Partnership Units, Investor Unit Rights, or other securities issued
by the Partnership, (iii) for less than fair market value, so long as the
Managing General Partner concludes in good faith that such grant is in the best
interests of the Managing General Partner and the Partnership, and (iv) in
connection with any merger of any other Person into the Partnership if the
applicable merger agreement provides that Persons are to receive Investor Unit
Rights in exchange for their interests in the Person merging into the
Partnership. Investor Unit Rights may be granted in one or more classes, or one
or more series of any of such classes, with such designations, preferences and
relative, participating, optional or other special rights, powers and duties
(including, without limitation, rights, powers and duties that may be senior or
otherwise entitled to preference over existing Partnership Units and/or Investor
Unit Rights) as shall be determined by the Managing General Partner, in its sole
and absolute discretion without the approval of any Limited Partner or any other
Person, and set forth in a written document attached to and made an exhibit to
this Agreement, which exhibit shall be an amendment to this Agreement and shall
be incorporated herein by this reference (each, a "Investor Unit Right
--------------------
Designation"); provided, however, that no Investor Unit Right shall be a
- ----------- -------- -------
"partnership interest" as defined in the Act and no Investor shall be a partner
of the Partnership (however it is acknowledged that an Investor shall be treated
as a partner for United States tax purposes). Without limiting the generality of
the foregoing, the Managing General Partner shall have authority to specify (a)
the allocations of items of Partnership income, gain, loss, deduction and credit
to each such class or series of Investor Unit Rights; (b) the right of each such
class or series of Investor Unit Rights to share (on a pari passu, junior or
preferred basis) in Partnership distributions; (c) the rights of each such class
or series of Investor Unit Rights upon dissolution and liquidation of the
Partnership; (d) the voting rights, if any, of each such class or series of
Investor Unit Rights; and (e) the conversion, redemption or exchange rights
applicable to each such class or series of Investor Unit Rights. Upon the grant
of any additional Investor Unit Right, the Managing General Partner shall amend
Exhibit B as appropriate to reflect such grant. As of the date hereof, the
- ---------
Partnership has established the Class A Investor Unit Rights,
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as set forth in the Investor Unit Right Designation attached hereto as Exhibit
-------
I, which exhibit is incorporated herein by this reference.
- -
B. Issuances to the General Partner or Limited Partners. No
----------------------------------------------------
Investor Unit Rights shall be granted to the General Partner or any Limited
Partner; provided, however, that the Managing General Partner may subsequently
-------- -------
acquire Investor Unit Rights from Investors as provided pursuant to, and in
accordance with the terms of, this Agreement. Investor Unit Rights are separate
and distinct from Partnership Interests, including Partnership Units, and
Investor Unit Rights do not become Partnership Interests, including Partnership
Units, when held by a Partner. A Person may have the dual status of Partner and
Investor and such Person shall, in its capacity as a Partner, have the rights
and powers, and be subject to the restrictions and liabilities, of a Partner
and, in its capacity as an Investor, have the rights and powers, and be subject
to the restrictions and liabilities, of an Investor.
C. No Preemptive Rights. No Investor shall have any preemptive,
--------------------
preferential, participation or similar right or rights to subscribe for or
acquire any Investor Unit Right.
Section 13.2 Nature of Investors and Investor Unit Rights. Except
--------------------------------------------
as permitted pursuant to Section 13.10 hereof, no Investor shall be or be
admitted as a Partner or joint venturer of the Partnership or any Partner of the
Partnership for purposes of the Act or for any other purpose; provided, however,
-------- -------
each Investor, in its capacity as an Investor, shall be treated as a partner of
the Partnership for the purposes of United States Federal, state and local tax
laws and the regulations now or hereafter promulgated thereunder and the
Partnership's income tax return will characterize each Investor as a "limited
partner" and not as a "general partner". It is expressly acknowledged and
agreed by each of the Partners and Investors that no Investor shall be a
"limited partner" or a "general partner" as such terms are defined in the Act or
for any other purpose, including for any purpose of this Agreement, or at law or
in equity, and shall have no rights, powers or obligations as a "partner" as
such term is defined in the Act or otherwise at law or in equity. Further, it
is expressly acknowledged and agreed that no Investor shall have any right to
participate in or exercise control or management power over the business and
affairs of the Partnership. Investor Unit Rights shall be personal property for
all purposes. The interest of an Investor in its Investor Unit Rights shall be
treated as an "interest" in the Partnership for purposes of United States
Federal, state and local tax laws and the regulations now or hereafter
promulgated thereunder, but shall not constitute a "partnership interest" as
such term is defined in the Act.
Section 13.3 Acceptance of Additional Investors.
----------------------------------
A. A Person (other than an existing Partner) who makes a Capital
Contribution to the Partnership in exchange for Investor Unit Rights and in
accordance with this Agreement shall be accepted as an Investor hereunder only
upon furnishing to the Managing General Partner (i)
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evidence of acceptance, in form and substance satisfactory to the Managing
General Partner, of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted in Section 13.8
hereof, (ii) a counterpart signature page to this Agreement executed by such
Person and (iii) such other documents or instruments as may be required in the
sole and absolute discretion of the Managing General Partner in order to effect
such Person's status as an Investor.
B. Notwithstanding anything to the contrary in this Section 13.3, no
Person shall be accepted as an Investor without the consent of the Managing
General Partner, which consent may be given or withheld in the Managing General
Partner's sole and absolute discretion. The acceptance of any Person as an
Investor shall become effective on the date upon which the name of such Person
is recorded as an Investor on the books and records of the Partnership,
following the consent of the Managing General Partner to such acceptance.
C. If any Investor is accepted by the Partnership on any day other
than the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items of income, gain, loss, deduction and credit
allocable among Holders for such Partnership Year shall be allocated among such
Investor and all other Holders by taking into account their varying interests
during the Partnership Year in accordance with Code Section 706(d), using the
"interim closing of the books" method or another permissible method selected by
the Managing General Partner. Solely for purposes of making such allocations,
each of such items for the calendar month in which an admission of any Investor
occurs shall be allocated among all the Holders including such new Investor, in
accordance with the principles described in Section 13.7.D(2) hereof. All
distributions of Available Cash with respect to which the Partnership Record
Date is before the date of such admission shall be made solely to Investors
other than the new Investor, and all distributions of Available Cash thereafter
shall be made to all the Investors including such new Investor.
Section 13.4 Representations and Warranties by the Investors.
-----------------------------------------------
A. Each Investor (including, without limitation, each transferee of
an Investor) that is an individual represents and warrants to, and covenants
with, each Partner and each Investor that (i) the consummation of the
transactions contemplated by this Agreement to be performed by such Investor
will not result in a breach or violation of, or a default under, any material
agreement by which such Investor or any of such Investor's property is bound, or
any statute, regulation, order or other law to which such Investor is subject,
(ii) such Investor is neither a "foreign person" within the meaning of Code
Section 1445(f) nor a "foreign partner" within the meaning of Code Section
1446(e), (iii) such Investor does not, and for so long as it is an Investor will
not, own, directly or indirectly, (a) five percent (5%) or more of the total
combined voting power of all classes of stock entitled to vote, or five percent
(5%) or more of the total number of shares of all classes of stock, of any
corporation that is a tenant of either (I) WEA, any Special Limited Partner or
any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))
with respect to WEA, (II) the
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Partnership or (III) any partnership, venture or limited liability company of
which WEA, the General Partner, any Special Limited Partner, any "qualified REIT
subsidiary" (within the meaning of Code Section 856(i)(2)) with respect to WEA
or the Partnership is a member or (b) an interest of five percent (5%) or more
in the assets or net profits of any tenant of either (I) WEA, any Special
Limited Partner or any "qualified REIT subsidiary" (within the meaning of Code
Section 856(i)(2)) with respect to WEA, (II) the Partnership or (III) any
partnership, venture, or limited liability company of which WEA, any Special
Limited Partner, any "qualified REIT subsidiary" (within the meaning of Code
Section 856(i)(2)) with respect to WEA or the Partnership is a member and (iv)
this Agreement is binding upon, and enforceable against, such Investor in
accordance with its terms. Notwithstanding the foregoing, the Investor may
exceed any of the five percent limits (5%) set forth in clause (iii) of the
immediately preceding sentence; provided that the Investor obtains the written
--------
consent of the Managing General Partner prior to exceeding any such limits,
which consent the Managing General Partner may give or withhold in its sole and
absolute discretion; provided, further, that in no event shall the Investor own,
-------- -------
directly or indirectly, more than ten percent (10%) of the stock described in
clause (iii) (a) of the immediately preceding sentence or more than ten percent
(10%) of the assets described in clause (iii) (b) of the immediately preceding
sentence.
B. Each Investor that is not an individual (including, without
limitation, each transferee of an Investor) represents and warrants to, and
covenants with, each Partner and each Investor that (i) all transactions
contemplated by this Agreement to be performed by it have been duly authorized
by all necessary action, including, without limitation, that of its general
partner(s), committee(s), trustee(s), beneficiaries, directors and/or
shareholder(s) (as the case may be) as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its partnership or operating agreement, trust agreement, charter or bylaws (as
the case may be) any material agreement by which such Investor or any of such
Investor's properties or any of its partners, members, beneficiaries, trustees
or shareholders (as the case may be) is or are bound, or any statute,
regulation, order or other law to which such Investor or any of its partners,
members, trustees, beneficiaries or shareholders (as the case may be) is or are
subject, (iii) such Investor is neither a "foreign person" within the meaning of
Code Section 1445(f) nor a "foreign partner" within the meaning of Code Section
1446(e), (iv) such Investor does not, and for so long as it is an Investor will
not, own, directly or indirectly, (a) five percent (5%) or more of the total
combined voting power of all classes of stock entitled to vote, or five percent
(5%) or more of the total number of shares of all classes of stock, of any
corporation that is a tenant of either (I) WEA, any Special Limited Partner or
any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))
with respect to WEA, (II) the Partnership or (III) any partnership, venture or
limited liability company of which WEA, any Special Limited Partner, any
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)) with
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respect to WEA or the Partnership is a member or (b) an interest of five percent
(5%) or more in the assets or net profits of any tenant of either (I) WEA, any
Special Limited Partner, or any "qualified REIT subsidiary" (within the meaning
of Code Section 856(i)(2)) with respect to WEA, (II) the Partnership or (III)
any partnership, venture or limited liability company for which WEA, any Special
Limited Partner, any "qualified REIT subsidiary" (within the meaning of Code
Section 856(i)(2)) with respect to WEA or the Partnership is a member and (v)
this Agreement is binding upon, and enforceable against, such Investor in
accordance with its terms. Notwithstanding the foregoing, the Investor may
exceed any of the five percent limits (5%) set forth in clause (iv) of the
immediately preceding sentence; provided that the Investor obtains the written
--------
consent of the Managing General Partner prior to exceeding any such limits,
which consent the Managing General Partner may give or withhold in its sole and
absolute discretion; provided, further, that in no event shall the Investor own,
-------- -------
directly or indirectly, more than ten percent (10%) of the stock described in
clause (iv) (a) of the immediately preceding sentence or more than ten percent
(10%) of the assets described in clause (iv) (b) of the immediately preceding
sentence.
C. Each Investor (including, without limitation, each transferee of
an Investor) represents, warrants and covenants that it has acquired and
continues to hold its Investor Unit Rights for its own account for investment
purposes only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, and not with a view toward selling or
otherwise distributing such Investor Unit Rights or any part thereof at any
particular time or under any predetermined circumstances. Each Investor further
represents and warrants that it is a sophisticated investor, able and accustomed
to handling sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Partnership in what
it understands to be a highly speculative and illiquid investment.
D. Each Investor (i) represents, warrants and covenants that it
will not hold itself out as a partner in the Partnership for any purpose or to
any Person other than for United States Federal, state and local tax purposes
and (ii) acknowledges and agrees that other than for United States Federal,
state and local tax purposes, the Partnership will not treat the Investor as a
partner.
E. The representations and warranties contained in Sections 13.4.A,
13.4.B, 13.4.C and 13.4.D hereof shall survive the execution and delivery of
this Agreement by each Investor (and, in the case of an transferee, the transfer
of the Investor Unit Rights to such transferee) and the dissolution, liquidation
and termination of the Partnership.
F. Each Investor (including, without limitation, each transferee of
an Investor) hereby acknowledges that, except as set forth in Section 13.5.A of
this Agreement, no representa tions as to potential profit, cash flows, funds
from operations or yield, if any, in respect of the Investor's Investor Unit
Rights, the Partnership or the General Partner have been made by any Partner or
any employee or representative or Affiliate of any Partner, and that projections
and any other information, including, without limitation, financial and
descriptive information and documentation, that may have
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been in any manner submitted to such Investor shall not constitute any
representation or warranty of any kind or nature, express or implied.
Section 13.5 Rights of Investors.
-------------------
A. Right to Receive Distributions. Subject to the applicable
------------------------------
Investor Unit Right Designation, each Investor shall receive a pro rata share of
Distributions under Article 5 hereof in an amount equal to the Distributions
such Investor would have received if such Investor held one Partnership Unit
(bearing the same designations as the actual Investor Unit Right held by such
Investor) for each of such Investor's Investor Unit Rights. Subject to the
applicable Investor Unit Right Designation, each Investor shall receive a pro
rata share of Distributions under Article 5 hereof in an amount equal to the
distributions such Investor would have received if such Investor held one REIT
Share (bearing the same designations as the actual Investor Unit Right held by
such Investor) for each of such Investor's Investor Unit Rights.
B. Right to Receive Allocations. Subject to the applicable Investor
----------------------------
Unit Right Designation, each Investor shall be allocated its pro rata share of
all items of Net Income and Net Loss of the Partnership in the manner set forth
under Article 6 hereof.
C. Voting and Consent Rights. Subject to the applicable Investor
-------------------------
Unit Right Designation, Investors shall have no right to vote upon or consent to
any matter relating to the Partnership or this Agreement and shall have no right
to consent to any matter, whether such matter requires a vote, approval or
consent of the Partners under this Agreement, provided, however, the Managing
-------- -------
General Partner shall not, without the prior consent of a Majority in Interest
of the Investors holding each class or series of Investor Unit Rights affected
by such amendment, amend, modify or terminate this Agreement; provided, further,
-------- -------
that the Managing General Partner shall have the power, without the consent of a
Majority in Interest of the Investors, to amend this Agreement as may be
required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the Managing General Partner or
surrender any right or power granted to the Managing General Partner or any
Affiliate of the Managing General Partner (including the delegation or
surrender of any power to any Additional General Partner admitted to the
Partnership pursuant to the terms hereof) for the benefit of the Limited
Partners;
(2) to reflect the admission, substitution or withdrawal of
Partners or the termination of the Partnership in accordance with this
Agreement, and to amend Exhibit A in connection with such admission,
---------
substitution or withdrawal;
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(3) to amend Exhibit B in connection with any grant, Transfer,
---------
Redemption or termination of Investor Unit Rights;
(4) to reflect a change that is of an inconsequential nature or
does not adversely affect in any material respect the Investors holding the
respective class or series of Investor Unit Rights, or to cure any
ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other changes with
respect to matters arising under this Agreement that will not be
inconsistent with law or with the provisions of this Agreement;
(5) to satisfy any requirements, conditions or guidelines
contained in any order, directive, opinion, ruling or regulation of a
Federal or state agency or contained in Federal or state law;
(6) (a) to reflect such changes as are reasonably necessary (i)
for any Special Limited Partner to maintain its status as a "qualified
REIT subsidiary" within the meaning of Code Section 856(i)(2) or (ii) for
WEA to maintain its status as a REIT or to satisfy the REIT Requirements;
(b) to reflect the Transfer of all or any part of a Partnership Interest
among WEA, any Special Limited Partner or any other Affiliate or
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))
with respect to WEA;
(7) to modify the manner in which Capital Accounts are computed
(but only to the extent set forth in the definition of "Capital Account" or
contemplat ed by the Code or the Regulations);
(8) to reflect the issuance of additional Partnership Interests
in accordance with Section 4.2; and
(9) to reflect the grant of Investor Unit Rights in accordance
with Section 13.1.
The Managing General Partner will provide notice to Investors entitled to act
thereon when any action under this Section 13.5.C is taken.
Notwithstanding the foregoing, this Agreement shall not be amended,
and no action may be taken by the Managing General Partner, without the consent
of each Investor adversely affected thereby, if such amendment or action would
(i) convert an Investor into a Partner hereunder, (ii) modify the limited
liability of an Investor, (iii) alter the rights of any Investor to receive the
distributions to which such Investor is entitled, or alter the allocations
specified in this Agreement,
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(iv) alter or modify the Redemption rights, Cash Amount or REIT Shares Amount as
set forth in this Agreement or amend or modify any related definitions or (v)
amend this Section 13.5.C; provided, however, that the consent of any individual
-------- -------
Investor adversely affected shall not be required for any amendment or action
that affects all Investors holding the same class or series of Investor Unit
Rights on a uniform or pro rata basis, if approved by a Majority in Interest of
the Investors holding such class or series of Investor Unit Rights. Any such
amendment or action consented to by an Investor shall be effective as to that
Investor, notwithstanding the absence of such consent by any other Investor.
Investors shall receive notices of meetings of the Partners held pursuant to
Article 15 hereof, but shall not be entitled to vote on any matter presented at
such meeting for a vote of the Partners.
Each of the Investors agrees that, except as provided above in this
Section 13.5.C, the Managing General Partner is authorized to execute, deliver
and perform the agreements and transactions described in Article 7 hereof
(including, without limitation, those agreements described in Section 7.6
hereof) on behalf of the Partnership and to exercise each and every of its
rights, duties and obligations hereunder, all without any further act, approval
or vote of the Investors, notwithstanding any other provision of this Agreement,
the Act or any applicable law, rule or regulation. The execution, delivery or
performance by the Managing General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the Managing General Partner of any duty that the Managing General Partner may
owe the Partnership, the Investors, or any other Persons under this Agreement or
of any duty stated or implied by law or equity.
Except as provided in this Section 13.5.C, the Managing General
Partner shall not withdraw from the Partnership and shall not Transfer all of
its interest in the Partnership (whether by sale, disposition, statutory merger
or consolidation, liquidation or otherwise) without the consent of a Majority in
Interest of the Investors. Notwithstanding anything else set forth in this
Section 13.5, the respective Partnership Interests of the Managing General
Partner may be Transferred, in whole or in part, at any time or from time to
time, to or among the Managing General Partner, the Special Limited Partners,
and any other Person that is, at the time of such Transfer, an Affiliate of WEA,
including any "qualified REIT subsidiary" (within the meaning of Code Section
-------------------------
856(i)(2)) with respect to WEA. Any transferee of the entire Managing General
Partner Interest pursuant to this Section 13.5.C and Section 11.1.C hereof
shall, upon compliance with Section 12.1.A hereof, become, without further
action or consent of any Investors or other Persons, the sole Managing General
Partner of the Partnership, subject to all the rights, privileges, duties and
obligations under this Agreement and the Act relating to a Managing General
Partner. Upon any Transfer of the Managing General Partner's entire General
Partner Interest (other than a pledge, hypothecation, encumbrance or mortgage)
permitted by this Section 13.5.C and Section 11.1.C hereof, the transferor
Partner shall be relieved of all its obligations under this Agreement. The
Managing General Partner may merge with another entity if immediately after such
merger substantially all the assets of the
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surviving entity, other than the General Partner Interest held by the Managing
General Partner, are contributed to the Partnership as a Capital Contribution in
exchange for Partnership Units or Investor Unit Rights.
D. Information Rights.
------------------
(1) As soon as practicable, but in no event later than one
hundred five (105) days after the close of each Partnership Year, the Managing
General Partner shall cause to be mailed to each Investor of record as of the
close of the Partnership Year, an annual report containing financial statements
of the Partnership, or of WEA if such statements are prepared solely on a
consolidated basis with WEA, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
Managing General Partner.
(2) As soon as practicable, but in no event later than sixty
(60) days after the close of each calendar quarter (except the last calendar
quarter of each year), the Managing General Partner shall cause to be mailed to
each Investor of record as of the last day of the calendar quarter, a report
containing unaudited financial statements of the Partnership, or of WEA if such
statements are prepared solely on a consolidated basis with WEA, and such other
information as may be required by applicable law or regulation or as the
Managing General Partner determines to be appropriate. At the request of any
Investor, the Managing General Partner shall provide access to the books,
records and workpapers upon which the reports required by this Section 13.5.D(2)
are based, to the extent required by the Act to be provided to partners of a
limited partnership.
(3) The Managing General Partner shall deliver to each Investor
a copy of any information mailed to the common shareholders of WEA as soon as
practicable after such mailing and a copy of all other information required to
be delivered to the Investors under applicable law.
(4) The Partnership shall notify any Investor that is a
Qualifying Party, on request, of the then current Adjustment Factor or any
change made to the Adjustment Factor.
(5) Notwithstanding any other provision of this Section 13.5,
the Managing General Partner may keep confidential from the Investors (or any of
them), for such period of time as the Managing General Partner determines in its
sole and absolute discretion to be reasonable, any information that (i) the
Managing General Partner believes to be in the nature of trade secrets or other
information the disclosure of which the Managing General Partner in good faith
believes is not in the best interests of the Partnership or the Managing General
Partner or (ii) the Partnership or the Managing General Partner is required by
law or by agreement with another Person to keep confidential.
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(E) Limitation of Liability. No Investor shall have any liability
-----------------------
under this Agreement except as expressly provided in this Agreement (including,
without limitation, Section 10.4 hereof).
Section 13.6 No Interest; No Return. No Investor shall be entitled
----------------------
to interest on its Capital Contribution or on such Investor's Capital Account.
Except as provided herein or by law, no Investor shall have any right to demand
or receive the return of its Capital Contribution from the Partnership.
Section 13.7 Investors' Rights to Transfer.
-----------------------------
A. General. Prior to the end of the first Twelve-Month Period, no
-------
Investor shall Transfer all or any portion of its Investor Unit Rights to any
transferee without the consent of the Managing General Partner, which consent
may be withheld in its sole and absolute discretion; provided, however, that any
-------- -------
Investor may, at any time, without the consent of the Managing General Partner,
(i) Transfer all or part of its Investor Unit Rights to any Family Member, any
Charity, any Controlled Entity, any Affiliate or any other Person to whom the
Managing General Partner may consent in its sole and absolute discretion,
provided that (A) any such Transfer is not a "sale" within the meaning of
Section 2(3) of the Securities Act, (B) the transferee is a Qualified Transferee
or (C) the Managing General Partner receives an opinion of counsel to the same
effect as the opinion described in Section 13.7.A(2) of this Agreement, (ii)
upon the death of an Investor, the Investor's estate may Transfer such
Investor's Investor Unit Rights in any Transfer that is not a "sale" within the
meaning of Section 2(3) of the Securities Act or (iii) Pledge all or any portion
of its Investor Unit Rights to a lending institution, that is not an Affiliate
of such Investor, as collateral or security for a bona fide loan or other
extension of credit, and Transfer such pledged Investor Unit Rights to such
lending institution in connection with the exercise of remedies under such loan
or extension or credit (any Transfer or Pledge permitted by this proviso is
hereinafter referred to as a "Permitted Investor Rights Transfer"). After such
----------------------------------
first Twelve-Month Period, each Investor, and each transferee of Investor Unit
Rights or transferee pursuant to a Permitted Investor Rights Transfer, shall
have the right to Transfer all or any portion of its Investor Unit Rights to any
Person, subject to the provisions of this Section 13.7 and to satisfaction of
each of the following conditions:
(1) Managing General Partner Right of First Refusal. The
-----------------------------------------------
transferring Investor (or the Investor's estate in the event of the
Investor's death) shall give written notice of the proposed Transfer to the
Managing General Partner, which notice shall state (i) the identity of the
proposed transferee and (ii) the amount and type of consideration proposed
to be received for the Transferred Investor Unit Rights. The Managing
General Partner shall have ten (10) Business Days upon which to give the
Transferring Investor notice of its election to acquire the Investor Unit
Rights on the terms set forth in such notice. If it so elects, it shall
purchase the Investor Unit Rights on such terms within ten (10) Business
Days
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after giving notice of such election; provided, however, that in the
-------- -------
event that the proposed terms involve a purchase for cash, the Managing
General Partner may at its election deliver in lieu of all or any portion
of such cash a note payable to the Transferring Investor at a date as soon
as reasonably practicable, but in no event later than one hundred eighty
(180) days after such purchase, and bearing interest at an annual rate
equal to the total dividends declared with respect to one (1) REIT Share
for the four (4) preceding fiscal quarters of the Managing General Partner,
divided by the Value as of the closing of such purchase; provided, further,
------- -- -------- -------
that such closing may be deferred to the extent necessary to effect
compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
if applicable, and any other applicable requirements of law. If the
Managing General Partner does not so elect, the Transferring Investor may
Transfer such Investor Unit Rights to a third party, on terms no more
favorable to the transferee than the proposed terms, subject to the other
conditions of this Section 13.7 or, in the event of the Investor's death,
the Investor's estate may Transfer such Investor's Investor Unit Rights in
any Transfer that is not a "sale" within the meaning of Section 2(3) of the
Securities Act.
(2) Opinion of Counsel. The Transferor shall deliver or cause to
------------------
be delivered to the Managing General Partner an opinion of counsel
reasonably satisfactory to it to the effect that the proposed Transfer may
be effected without registration under the Securities Act and will not
otherwise violate any the registration provisions of the Securities Act and
the regulations promulgated thereunder or violate any state securities laws
or regulations applicable to the Partnership or the Investor Unit Rights
Transferred; provided, that the Managing General Partner may, in its sole
--------
discretion, waive this condition upon the request of the Transferor. If,
in the opinion of such counsel, such Transfer would require the filing of a
registration statement under the Securities Act or would otherwise violate
any Federal or state securities laws or regulations applicable to the
Partnership or the Investor Unit Rights, the Managing General Partner may
prohibit any Transfer otherwise permitted under this Section 13.7 by an
Investor.
(3) Minimum Transfer Restriction. Any Transferring Investor must
----------------------------
Transfer not less than the lesser of (i) five hundred (500) Investor Unit
Rights or (ii) all of the remaining Investor Unit Rights owned by such
Transferring Investor; provided, however, that, for purposes of determining
-------- -------
compliance with the foregoing restriction, all Investor Unit Rights owned
by Affiliates of an Investor shall be considered to be owned by such
Investor.
(4) Transferee Agreement to Effect a Redemption. Any proposed
-------------------------------------------
transferee shall deliver to the Managing General Partner a written
agreement reasonably satisfactory to the Managing General Partner to the
effect that the transferee will, within six (6) months after consummation
of an Investor Unit
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Right Transfer, tender its Investor Unit Rights for Redemption in
accordance with the terms of the Redemption rights provided in Section 16.1
hereof.
(5) No Further Transfers. The transferee shall not be permitted
--------------------
to effect any further Transfer of the Investor Unit Rights, other than to
the Managing General Partner.
(6) Exception for Permitted Investor Rights Transfers. The
-------------------------------------------------
conditions of Sections 13.7.A(1) through 13.7.A(5) hereof shall not apply
in the case of a Permitted Investor Rights Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or not
such Transfer is effected during or after the first Twelve-Month Period) that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Investor under this Agreement with respect to such
Transferred Investor Unit Right, and no such Transfer (other than pursuant to a
statutory merger or consolidation wherein all obligations and liabilities of the
transferor Investor are assumed by a successor corporation by operation of law)
shall relieve the transferor Investor of its obligations under this Agreement
without the approval of the Managing General Partner, in its sole and absolute
discretion; any Transfer made without such an assumption by the transferee shall
be null, void and of no force or effect. In addition, any transferee of any
Transferred Investor Unit Right shall be subject to any and all ownership
limitations (including, without limitation, the Ownership Limit) contained in
the Charter that may limit or restrict such transferee's ability to exercise its
Redemption rights, including, without limitation, the Ownership Limit.
B. Incapacity. If an Investor is subject to Incapacity, the
----------
executor, administrator, trustee, committee, guardian, conservator or receiver
of such Investor's estate shall have all the rights of an Investor, but not more
rights than those enjoyed by other Investors, for the purpose of settling or
managing the estate, and such power as the Incapacitated Investor possessed to
Transfer all or any part of its interest in the Investor Unit Rights. The
Incapacity of an Investor, in and of itself, shall not dissolve or terminate the
Partnership.
C. Adverse Tax Consequences. No Transfer by an Investor of its
------------------------
Investor Unit Rights (including any Redemption, any other acquisition of
Investor Unit Rights by the Managing General Partner or any acquisition of
Investor Unit Rights by the Partnership) may be made to or by any Person if (i)
in the opinion of legal counsel for the Partnership, it would result in the
Partnership being treated as an association taxable as a corporation or would
result in a termination of the Partnership under Code Section 708, or (ii) such
Transfer would be effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Code Section 7704.
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D. Additional Transfer Provisions.
------------------------------
(1) Any Investor who shall Transfer all of its Investor Unit
Rights shall cease to be an Investor.
(2) If any Investor Unit Right is Transferred in compliance with
the provisions of this Section, or is redeemed by the Partnership, or acquired
by WEA pursuant to Section 16.1 hereof, on any day other than the first day of a
Partnership Year, then Net Income, Net Losses, each item thereof and all other
items of income, gain, loss, deduction and credit attributable to such Investor
Unit Right for such Partnership Year shall be allocated to the transferor
Investor, or the Tendering Party (as the case may be) and, in the case of a
Transfer or assignment other than a Redemption, to the transferee Investor, by
taking into account their varying interests during the Partnership Year in
accordance with Code Section 706(d), using the "interim closing of the books"
method or another permissible method selected by the Managing General Partner.
Solely for purposes of making such allocations, each of such items for the
calendar month in which a Transfer occurs shall be allocated to the transferee
Investor and none of such items for the calendar month in which a Transfer or a
Redemption occurs shall be allocated to the transferor Investor, or the
Tendering Party (as the case may be) if such Transfer occurs on or before the
fifteenth (15th) day of the month, otherwise such items shall be allocated to
the transferor. All distributions of Available Cash attributable to such
Investor Unit Rights with respect to which the Partnership Record Date is before
the date of such Transfer, assignment or Redemption shall be made to the
transferor the transferor Investor, or the Tendering Party (as the case may be)
and, in the case of a Transfer other than a Redemption, all distributions of
Available Cash thereafter attributable to such Investor Unit Right shall be made
to the transferee Investor.
(3) In addition to any other restrictions on Transfer herein
contained, in no event may any Transfer or assignment of an Investor Unit Right
by any Investor (including any Redemption, any acquisition of Partnership Units
by WEA or any other acquisition of Partnership Units by the Partnership) be made
(i) to any person or entity who lacks the legal right, power or capacity to own
an Investor Unit Right; (ii) in violation of applicable law; (iii) of any
component portion of an Investor Unit Right, such as the Capital Account, or
rights to distributions, separate and apart from all other components of an
Investor Unit Right; (iv) in the event that such Transfer would cause either (a)
WEA to cease to comply with the REIT Requirements or (b) any Special Limited
Partner to cease to qualify as a "qualified REIT subsidiary" (within the meaning
of Code Section 856(i)(2); (v) if such Transfer would, in the opinion of counsel
to the Partnership or the Managing General Partner, cause a termination of the
Partnership for Federal or state income tax purposes; (vii) if such Transfer
would cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of ERISA, a "party-in-interest" (as defined in ERISA Section
3(14)) or a "disqualified person" (as defined in Code Section 4975(c)); (viii)
if such Transfer would, in the opinion of legal counsel to the Partnership,
cause any portion of the assets of the Partnership to
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constitute assets of any employee benefit plan pursuant to Department of Labor
Regulations Section 2510.2-101; (ix) if such Transfer requires the registration
of such Investor Unit Right pursuant to any applicable Federal or state
securities laws; (x) if such Transfer causes the Partnership to become a
"publicly traded partnership," as such term is defined in Code Section 469(k)(2)
or Code 7704(b); (xi) if such Transfer would cause the Partnership to have more
than one hundred (100) partners for tax purposes (other than Assignees)
(including as Holders those persons indirectly owning an interest in the
Partnership or Investor Units Rights (as the case may be) through a partnership,
limited liability company, subchapter S corporation or grantor trust); (xii) if
such Transfer causes the Partnership (as opposed to the Managing General
Partner) to become a reporting company under the Exchange Act; or (xiii) if such
Transfer subjects the Partnership to regulation under the Investment Company Act
of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended.
(4) Transfers pursuant to this Section may only be made on the
first day of a fiscal quarter of the Partnership, unless the Managing General
Partner otherwise agrees.
Section 13.8 Power of Attorney.
-----------------
A. Each Investor hereby irrevocably constitutes and appoints the
Managing General Partner, any Liquidator, and authorized officers and attorneys-
in-fact of each, and each of those acting singly, in each case with full power
of substitution, as its true and lawful agent and attorney-in-fact, with full
power and authority in its name, place and stead to:
(1) execute, swear to, seal, acknowledge, deliver, file and record in
the appropriate public offices (a) all instruments that the Managing
General Partner or any Liquidator deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (b) all conveyances and other instruments or
documents that the Managing General Partner or the Liquidator deems
appropriate or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation; (c) all conveyances and other
instruments or documents that the Managing General Partner or the
Liquidator deems appropriate or necessary to reflect the distribution or
exchange of assets of the Partnership pursuant to the terms of this
Agreement; (d) all instruments relating to the admission, acceptance,
withdrawal, removal or substitution of any Partner or Investor pursuant to
the terms of this Agreement or the Capital Contribution of any Partner or
any Investor; and (e) all certificates, documents and other instruments
relating to the determination of the rights, preferences and privileges
relating to Partnership Interests or Investor Unit Rights; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute
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discretion of the Managing General Partner or any Liquidator, to make,
evidence, give, confirm or ratify any vote, consent, approval, agreement or
other action that is made or given by the Investors hereunder or is
consistent with the terms of this Agreement.
Nothing contained herein shall be construed as authorizing the Managing General
Partner or any Liquidator to amend this Agreement except in accordance with
Article 16 hereof or as may be otherwise expressly provided for in this
Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Investors will be relying upon the power of the Managing
General Partner or the Liquidator to act as contemplated by this Agreement in
any filing or other action by it on behalf of the Partnership, and it shall
survive and not be affected by the subsequent Incapacity of any Investor and the
Transfer of all or any portion of such Investor's Investor Unit Rights and shall
extend to such Investor's heirs, successors, assigns and personal
representatives. Each such Investor hereby agrees to be bound by any
representation made by the Managing General Partner or the Liquidator, acting in
good faith pursuant to such power of attorney; and each such Investor hereby
waives any and all defenses that may be available to contest, negate or
disaffirm the action of the Managing General Partner or the Liquidator, taken in
good faith under such power of attorney. Each Investor shall execute and
deliver to the Managing General Partner or the Liquidator, within fifteen (15)
days after receipt of the Managing General Partner's or the Liquidator's request
therefor, such further designation, powers of attorney and other instruments as
the Managing General Partner or the Liquidator (as the case may be) deems
necessary to effectuate this Agreement and the purposes of the Partnership.
Notwithstanding anything set forth in this Section 13.8.B, no Investor shall
incur any personal liability for any action of the Managing General Partner or
the Liquidator taken under such power of attorney.
Section 13.9 Liability of the Managing General Partner.
-----------------------------------------
A. Notwithstanding anything to the contrary set forth in this
Agreement, neither the Managing General Partner nor any of its directors or
officers shall be liable or accountable in damages or otherwise to the
Partnership, or any Investors for losses sustained, liabilities incurred or
benefits not derived as a result of errors in judgment or mistakes of fact or
law or of any act or omission if the Managing General Partner or such director
or officer acted in good faith. This Agreement is executed by the officers of
the Managing General Partner solely as officers of the same and not in their own
individual capacities.
B. The Investors expressly acknowledge that the Managing General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the Investors and the Managing General Partner's shareholders collectively and
that the Managing General Partner is under no obligation to give priority to the
separate interests of the Limited Partners, the Investors, or the
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Managing General Partner's shareholders (including, without limitation, the tax
consequences to Limited Partners, Investors, Assignees or the Managing General
Partner's shareholders) in deciding whether to cause the Partnership to take (or
decline to take) any actions.
C. Subject to its obligations and duties as Managing General Partner
set forth in Section 7.1.A hereof, the Managing General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its employees or
agents (subject to the supervision and control of the Managing General Partner).
The Managing General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 13.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the Managing General Partner's, and its officers' and directors',
liability to the Partnership and the Limited Partners or Investors under this
Section 13.8 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
E. To the fullest extent permitted by law, no officer, director or
shareholder of the Managing General Partner shall be liable to any Investor for
money damages except for (i) active and deliberate dishonesty established by a
non-appealable final judgment or (ii) actual receipt of an improper benefit or
profit in money, property or services. Notwithstanding anything herein to the
contrary, except for fraud, willful misconduct or gross negligence, or pursuant
to any express indemnities given to the Partnership by any Partner or Investor
pursuant to any other written instrument, no Partner or Investor shall have any
personal liability whatsoever, to the Partnership or to the other Partners or
Investors or to other persons, for the debts or liabilities of the Partnership
or the Partnership's obligations hereunder, and the full recourse of the other
Partner(s) and/or Investor(s) and/or third person(s) shall be limited to the
interest of that Partner in the Partnership or, in the case of an Investor, that
Investor in its Investor Unit Rights. Without limitation of the foregoing, and
except for fraud, willful misconduct or gross negligence, or pursuant to any
such express indemnity, no property or assets of any Partner, other than its
interest in the Partnership, or any Investor, other than its interest in its
Investor Unit Rights, shall be subject to levy, execution or other enforcement
procedures for the satisfaction of any judgment (or other judicial process) in
favor of any other Partner(s) or Investor(s) or third person(s) and arising out
of, or in connection with, this Agreement or any Partner's or Investor's status
as such.
F. To the extent that, at law or in equity, the Managing General
Partner has duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or the Investors, the Managing General Partner shall not be
liable to the Partnership or to any Investor for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that
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they restrict the duties and liabilities of the Managing General Partner
otherwise existing at law or in equity, are agreed by each Investors to replace
such other duties and liabilities of such Managing General Partner.
G. Whenever in this Agreement the Managing General Partner is
permitted or required to make a decision (i) in its "sole discretion" or
"discretion" or under a grant of similar authority or latitude, the Managing
General Partner shall be entitled to consider only such interests and factors as
it desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest or factors affecting the Partnership or
the Investors or any of them, or (ii) in its "good faith" or under another
expressed standard, the Managing General Partner shall act under such express
standard and shall not be subject to any other or different standards imposed by
this Agreement or any other agreement contemplated herein or by relevant
provisions of law or in equity or otherwise. If any question should arise with
respect to the operation of the Partnership, which is not otherwise specifically
provided for in this Agreement or the Act, or with respect to the interpretation
of this Agreement, the Managing General Partner is hereby authorized to make a
final determination with respect to any such question and to interpret this
Agreement in such a manner as it shall deem, in its sole discretion, to be fair
and equitable, and its determination and interpretations so made shall be final
and binding on all parties. The Managing General Partner's "sole discretion"
and "discretion" under this Agreement shall be exercised in good faith.
Section 13.10 Partnership Right to Terminate Investor Unit Rights.
---------------------------------------------------
Notwithstanding any other provision of this Agreement, the Partnership shall
have the right, but not the obligation, in the sole and absolute discretion of
the Managing General Partner, from time to time and at any time upon notice to
an Investor, to elect to terminate any or all outstanding Investor Unit Rights
by causing such Investor Units Rights to be redeemed by the Partnership in
exchange for an equal number of Partnership Units that are Limited Partner
Interests, each with such Partnership Unit Designations as would conform to the
Investor Unit Right Designation applicable to the Investor Unit Right so
terminated; provided, however, that no such termination will occur unless and
-------- -------
until the Partnership has received the consent of the affected Investor to such
termination, which consent may be granted or withheld in the sole and absolute
discretion of the affected Investor. Upon any such termination, the Holder of
such Investor Unit Rights shall be issued Partnership Unit Certificates
evidencing the Partnership Units so issued in redemption of the terminated
Investor Unit Rights and shall be admitted to the Partnership as an Additional
Limited Partner upon compliance with the conditions for admission to the
Partnership as an Additional Limited Partner, as set forth in this Agreement.
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ARTICLE 14
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 14.1 Dissolution. The Partnership shall not be dissolved by
-----------
the admission of Substituted Limited Partners or Additional Limited Partners, by
the admission of a successor Managing General Partner or an Additional General
Partner in accordance with the terms of this Agreement, or by the issuance of
Investor Unit Rights to any Person. Upon the withdrawal of the Managing General
Partner, any successor Managing General Partner shall continue the business of
the Partnership without dissolution. However, the Partnership shall dissolve,
and its affairs shall be wound up, upon the first to occur of any of the
following (each a "Liquidating Event"):
-----------------
A. an event of withdrawal, as defined in the Act (including, without
limitation, bankruptcy), of the sole Managing General Partner unless, within
ninety (90) days after the withdrawal, a Majority in Interest of the Partners
agree in writing, in their sole and absolute discretion, to continue the
business of the Partnership and to the appointment, effective as of the date of
withdrawal, of a successor Managing General Partner:
B. an election to dissolve the Partnership made by the Managing
General Partner in its sole and absolute discretion, with or without the Consent
of the Partners;
C. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
D. the occurrence of a Terminating Capital Transaction;
E. the Redemption (or acquisition by the Managing General Partner
and/or any Special Limited Partner) of all Partnership Common Units other than
Partnership Common Units held by the Managing General Partner or any Special
Limited Partner and all Investor Unit Rights; or
F. the Redemption (or acquisition by the Managing General Partner)
of all Partnership Units other than Partnership Units held by the Managing
General Partner and all Investor Unit Rights.
Section 14.2 Winding Up.
----------
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets and satisfying the claims of its creditors and the
Holders. After the occurrence of a Liquidating Event, no Holder shall take any
action that is inconsistent with, or not necessary to or appropriate for, the
winding up of the Partnership's business and affairs. The Managing General
Partner (or, in the event
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that there is no remaining Managing General Partner or the Managing General
Partner has dissolved, become bankrupt within the meaning of the Act or ceased
to operate, any Person elected by a Majority in Interest of the Partners (the
Managing General Partner or such other Person being referred to herein as the
"Liquidator")) shall be responsible for overseeing the winding up and
----------
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property, and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the Managing General
Partner, include shares of stock in WEA) shall be applied and distributed in the
following order:
(1) First, to the satisfaction of all of the Partnership's debts
and liabilities to creditors other than the Holders (whether by payment or
the making of reasonable provision for payment thereof);
(2) Second, to the satisfaction of all of the Partnership's debts
and liabilities to the Managing General Partner (whether by payment or the
making of reasonable provision for payment thereof), including, but not
limited to, amounts due as reimbursements under Section 7.4 hereof;
(3) Third, to the satisfaction of all of the Partnership's debts
and liabilities to the other Holders (whether by payment or the making of
reasonable provision for payment thereof); and
(4) Subject to the terms of any Partnership Unit Designation or
any Investor Unit Right Designation, the balance, if any, to the Holders in
accordance with and in proportion to their positive Capital Account
balances, after giving effect to all contributions, distributions and
allocations for all periods.
The Managing General Partner shall not receive any additional compensation for
any services performed pursuant to this Article 14.
B. Notwithstanding the provisions of Section 14.2.A hereof that
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership, the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Holders, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Holders as creditors) and/or
distribute to the Holders, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 14.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if,
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in the good faith judgment of the Liquidator, such distributions in kind are in
the best interest of the Holders, and shall be subject to such conditions
relating to the disposition and management of such properties as the Liquidator
deems reasonable and equitable and to any agreements governing the operation of
such properties at such time. The Liquidator shall determine the fair market
value of any property distributed in kind using such reasonable method of
valuation as it may adopt.
C. In the event that the Partnership is "liquidated" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made
pursuant to this Article 14 to the Holders that have positive Capital Accounts
in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2) to the extent of,
and in proportion to, positive Capital Account balances. If any Holder has a
deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Holder shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever. In the sole
and absolute discretion of the Managing General Partner or the Liquidator, a pro
rata portion of the distributions that would otherwise be made to the Holders
pursuant to this Article 14 may be:
(1) distributed to a trust established for the benefit of the
Managing General Partner and the Holders for the purpose of liquidating
Partnership assets, collecting amounts owed to the Partnership, and paying any
contingent or unforeseen liabilities or obligations of the Partnership or of the
Managing General Partner arising out of or in connection with the Partnership
and/or Partnership activities. The assets of any such trust shall be distributed
to the Holders, from time to time, in the reasonable discretion of the Managing
General Partner, in the same proportions and amounts as would otherwise have
been distributed to the Holders pursuant to this Agreement; or
(2) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership, provided that
such withheld or escrowed amounts shall be distributed to the Holders in the
manner and order of priority set forth in Section 14.2.A hereof as soon as
practicable.
Section 14.3 Deemed Contribution and Distribution. Notwithstanding
------------------------------------
any other provision of this Article 14, in the event that the Partnership is
liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), but
no Liquidating Event has occurred, the Partnership's Property shall not be
liquidated, the Partnership's liabilities shall not be paid or discharged and
the Partnership's affairs shall not be wound up. Instead, for Federal income
tax purposes the Partnership shall be deemed to have contributed all of its
assets and liabilities to a new partnership in exchange for an interest in the
new partnership; and immediately thereafter, distributed Partnership Units to
the Partners and Investor Unit Rights to the Investors, in each case in the new
partnership in accordance
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with their respective Capital Accounts in liquidation of the Partnership, and
the new partnership is deemed to continue the business of the Partnership.
Nothing in this Section 14.3 shall be deemed to have constituted any Assignee or
Investor as a Substituted Limited Partner without compliance with the provisions
of Section 11.4 or Section 13.3 hereof.
Section 14.4 Rights of Holders. Except as otherwise provided in
-----------------
this Agreement, (a) each Holder shall look solely to the assets of the
Partnership for the return of its Capital Contribution, (b) no Holder shall have
the right or power to demand or receive property other than cash from the
Partnership and (c) no Holder shall have priority over any other Holder as to
the return of its Capital Contributions, distributions or allocations.
Section 14.5 Notice of Dissolution. In the event that a Liquidating
---------------------
Event occurs or an event occurs that would, but for an election or objection by
one or more Partners pursuant to Section 14.1 hereof, result in a dissolution of
the Partnership, the Managing General Partner shall, within thirty (30) days
thereafter, provide written notice thereof to each of the Holders and, in the
Managing General Partner's sole and absolute discretion or as required by the
Act, to all other parties with whom the Partnership regularly conducts business
(as determined in the sole and absolute discretion of the Managing General
Partner), and the Managing General Partner may, or, if required by the Act,
shall, publish notice thereof in a newspaper of general circulation in each
place in which the Partnership regularly conducts business (as determined in the
sole and absolute discretion of the Managing General Partner).
Section 14.6 Cancellation of Certificate of Limited Partnership.
--------------------------------------------------
Upon the completion of the liquidation of the Partnership cash and property as
provided in Section 14.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed with the State of Delaware, all
qualifications of the Partnership as a foreign limited partnership or
association in jurisdictions other than the State of Delaware shall be
cancelled, and such other actions as may be necessary to terminate the
Partnership shall be taken.
Section 14.7 Reasonable Time for Winding-Up. A reasonable time
------------------------------
shall be allowed for the orderly winding-up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Section 14.2 hereof,
in order to minimize any losses otherwise attendant upon such winding-up, and
the provisions of this Agreement shall remain in effect between and among the
Partners and the Investors during the period of liquidation.
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ARTICLE 15
PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS
Section 15.1 Procedures for Actions and Consents of Partners. The
-----------------------------------------------
actions requiring consent or approval of Partners pursuant to this Agreement,
including Section 7.3 hereof, or otherwise pursuant to applicable law, are
subject to the procedures set forth in this Article 15.
Section 15.2 Amendments. Amendments to this Agreement may be
----------
proposed only by the Managing General Partner. Following such proposal, the
Managing General Partner shall submit to the Partners any proposed amendment
that, pursuant to the terms of this Agreement, requires the Consent of the
Partners holding Partnership Interests entitled to vote at the meeting. The
Managing General Partner shall seek the written Consent of the Partners on any
such proposed amendment or shall call a meeting to vote thereon and to transact
any other business that the Managing General Partner may deem appropriate. For
purposes of obtaining a written Consent, the Managing General Partner may
require a response within a reasonable specified time, but not less than fifteen
(15) days, and failure to respond in such time period shall constitute a Consent
that is consistent with the Managing General Partner's recommendation with
respect to the proposal; provided, however, that an action shall become
-------- -------
effective at such time as requisite Consents are received even if prior to such
specified time.
Section 15.3 Meetings of the Partners.
------------------------
A. Meetings of the Partners may be called only by the Managing
General Partner. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners entitled
to act at the meeting not less than seven (7) days nor more than thirty (30)
days prior to the date of such meeting. Partners may vote in person or by proxy
at such meeting. Whenever the vote or Consent of Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in Section
15.3.B hereof.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement
for the action in question) entitled to act at the meeting. Such consent may be
in one instrument or in several instruments, and shall have the same force and
effect as a vote of a majority of the Percentage Interests of the Partners (or
such other percentage as is expressly required by this Agreement) entitled to
act at the meeting. Such consent shall be filed with the Managing General
Partner. An action so taken shall be deemed to have been taken at a meeting
held on the effective date so certified.
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C. Each Partner entitled to act at the meeting may authorize any
Person or Persons to act for it by proxy on all matters in which a Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Partner or its
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy (or there is
receipt of a proxy authorizing a later date). Every proxy shall be revocable at
the pleasure of the Partner executing it, such revocation to be effective upon
the Partnership's receipt of written notice of such revocation from the Partner
executing such proxy.
D. Each meeting of Partners shall be conducted by the Managing
General Partner or such other Person as the Managing General Partner may appoint
pursuant to such rules for the conduct of the meeting as the Managing General
Partner or such other Person deems appropriate in its sole and absolute
discretion. Without limitation, meetings of Partners may be conducted in the
same manner as meetings of the Managing General Partner's shareholders and may
be held at the same time as, and as part of, the meetings of the Managing
General Partner's shareholders.
ARTICLE 16
GENERAL PROVISIONS
Section 16.1 Redemption Rights of Qualifying Parties.
---------------------------------------
A. After the applicable Twelve-Month Period, a Qualifying Party
shall have the right (subject to the terms and conditions set forth herein) to
require the Partnership to redeem all or a portion of the Partnership Common
Units or Investor Unit Rights (as the case may be) held by such Tendering Party
(Partnership Common Units or Investor Unit Rights (as the case may be) that have
in fact been tendered for redemption being hereafter referred to as "Tendered
--------
Units") in exchange (a "Redemption") for the Cash Amount payable on the
- ----- ----------
Specified Redemption Date. The Partnership may, in the Managing General
Partner's sole and absolute discretion, redeem Tendered Units at the request of
the Holder prior to the end of the applicable Twelve-Month Period (subject to
the terms and conditions set forth herein) (a "Special Redemption"); provided
--------
that the Managing General Partner first receives a legal opinion to the same
effect as the legal opinion described in Section 16.1.G(4) of this Agreement.
Any Redemption shall be exercised pursuant to a Notice of Redemption delivered
to the Managing General Partner by the Qualifying Party when exercising the
Redemption right (the "Tendering Party"). The Partnership's obligation to
---------------
effect a Redemption, however, shall not arise or be binding against the
Partnership (i) until and unless the Managing General Partner declines or fails
to exercise its purchase rights pursuant to Section 16.1.B hereof following
receipt of a Notice of Redemption (a "Declination") and (ii) before the Business
Day following the Cut-Off Date. In the event of a Redemption, the Cash Amount
shall be delivered as a certified check payable to the Tendering
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<PAGE>
Party or, in the Managing General Partner's sole and absolute discretion, in
immediately available funds on or before the 90/th/ day following the date on
which the Managing General Partner receives a Notice of Redemption from the
Tendering Party.
B. Notwithstanding the provisions of Section 16.1.A hereof, on or
before the close of business on the Cut-Off Date, the Managing General Partner
may, in its sole and absolute discretion but subject to the Ownership Limit and
the transfer restrictions and other limitations of the Charter, elect to acquire
some or all (such percentage being referred to as the "Applicable Percentage")
---------------------
of the Tendered Units from the Tendering Party in exchange for the REIT Shares
Amount calculated based on the portion of Tendered Units it elects to acquire in
exchange for REIT Shares. In making such election to acquire Tendered Units,
the Managing General Partner shall act in a fair, equitable and reasonable
manner that neither prefers one group or class of Qualifying Parties over
another nor discriminates against a group or class of Qualifying Parties. If
the Managing General Partner so elects, on the Specified Redemption Date the
Tendering Party shall sell such number of the Tendered Units to the Managing
General Partner in exchange for a number of REIT Shares equal to the product of
the REIT Shares Amount and the Applicable Percentage. The Tendering Party shall
submit (i) such information, certification or affidavit as WEA may reasonably
require in connection with the application of the Ownership Limit and other
restrictions and limitations of the Charter to any such acquisition and (ii)
such written representations, investment letters, legal opinions or other
instruments necessary, in WEA's view, to effect compliance with the Securities
Act. In the event of a purchase of the Tendered Units by the Managing General
Partner pursuant to this Section 16.1.B, the Tendering Party shall no longer
have the right to cause the Partnership to effect a Redemption of such Tendered
Units, and, upon notice to the Tendering Party by the Managing General Partner,
given on or before the close of business on the Cut-Off Date, that the Managing
General Partner has elected to acquire some or all of the Tendered Units
pursuant to this Section 16.1.B, the obligation of the Partnership to effect a
Redemption of the Tendered Units as to which the Managing General Partner's
notice relates shall not accrue or arise. The product of the Applicable
Percentage and the REIT Shares Amount, if applicable, shall be delivered by the
Managing General Partner as duly authorized, validly issued, fully paid and non-
assessable REIT Shares and, if applicable, Rights, free of any pledge, lien,
encumbrance or restriction, other than the Ownership Limit and other
restrictions provided in the Charter, the Bylaws of WEA, the Securities Act and
relevant state securities or "blue sky" laws. Neither any Tendering Party whose
Tendered Units are acquired by the Managing General Partner pursuant to this
Section 16.1.B, any Partner, any Investor, any Assignee nor any other interested
Person shall have any right to require or cause WEA to register, qualify or list
any REIT Shares owned or held by such Person, whether or not such REIT Shares
are issued pursuant to this Section 16.1.B, with the SEC, with any state
securities commissioner, department or agency, under the Securities Act or the
Exchange Act or with any stock exchange; provided, however, that this limitation
-------- -------
shall not be in derogation of any registration or similar rights granted
pursuant to any other written agreement between WEA and any
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<PAGE>
such Person. Notwithstanding any delay in such delivery, the Tendering Party
shall be deemed the owner of such REIT Shares and Rights for all purposes,
including, without limitation, rights to vote or consent, receive dividends, and
exercise rights, as of the Specified Redemption Date. REIT Shares issued upon an
acquisition of the Tendered Units by the Managing General Partner pursuant to
this Section 16.1.B may contain such legends regarding restrictions under the
Securities Act and applicable state securities laws as WEA in good faith
determines to be necessary or advisable in order to ensure compliance with such
laws.
C. Notwithstanding the provisions of Section 16.1.A and 16.1.B
hereof, the Tendering Parties shall have no rights under this Agreement that
would otherwise be prohibited under the Charter with respect to the Ownership
Limit. To the extent that any attempted Redemption or acquisition of the
Tendered Units by the Managing General Partner pursuant to Section 16.1.B hereof
would be in violation of this Section 16.1.C, it shall be null and void ab
initio, and the Tendering Party shall not acquire any rights or economic
interests in REIT Shares otherwise issuable by WEA under Section 16.1.B hereof.
D. In the event of a Declination:
(1) The Managing General Partner shall give notice of such
Declination to the Tendering Party on or before the close of business
on the Cut-Off Date. The failure of the Managing General Partner to
give notice of such Declination by the close of business on the Cut-
Off Date shall be deemed to be an election by the Managing General
Partner to acquire the Tendered Units in exchange for REIT Shares.
(2) The Partnership may elect to raise funds for the payment of
the Cash Amount either (a) by requiring that the Managing General
Partner contribute to the Partnership funds from the proceeds of a
registered public offering by WEA of REIT Shares sufficient to
purchase the Tendered Units or (b) from any other sources (including,
but not limited to, the sale of any Property and the incurrence of
additional Debt) available to the Partnership. Any proceeds from a
public offering that are in excess of the Cash Amount shall be for the
sole benefit of WEA. The Managing General Partner (and/or any Special
Limited Partner designated by the Managing General Partner) shall make
a Capital Contribution of such amounts to the Partnership for an
additional Managing General Partner Interest and/or Limited Partner
Interest. Any such contribution shall entitle the Managing General
Partner and any such Special Limited Partner (as the case may be) to
an equitable Percentage Interest adjustment.
103
<PAGE>
(3) If the Cash Amount is not paid on or before the Specified
Redemption Date, interest shall accrue with respect to the Cash
Amount from the day after the Specified Redemption Date to and
including the date on which the Cash Amount is paid at a rate equal to
the Applicable Federal Short-Term Rate as published monthly by the
IRS.
E. Notwithstanding the provisions of Section 16.1.B hereof, the
Managing General Partner shall not, under any circumstances, elect to acquire
Tendered Units in exchange for the REIT Shares Amount if such exchange would be
prohibited under the Charter.
F. Notwithstanding anything herein to the contrary (but subject to
Section 16.1.C hereof), with respect to any Redemption (or any tender of
Partnership Common Units or Investor Unit Rights (as the case may be) for
Redemption if the Tendered Units are acquired by the Managing General Partner
pursuant to Section 16.1.B hereof) pursuant to this Section 16.1:
(1) All Partnership Common Units or Investor Unit Rights (as the
case may be) acquired by the Managing General Partner pursuant to
Section 16.1.B hereof shall be contributed by the Managing General
Partner (and/or any Special Limited Partner(s) designated by the
Manag ing General Partner) in such proportions as the Managing General
Partner shall determine. Any Partnership Common Units or Investor Unit
Rights so contributed by the Managing General Partner shall
automatically, and without further action required, be converted into
and deemed to be a Managing General Partner Interest comprised of the
same number of Partnership Common Units. Any Partnership Common Units
so contributed by any Special Limited Partner shall remain
outstanding and any Investor Unit Rights shall automatically, and
without further action required, be converted into and deemed to be a
Limited Partner Interest comprised of the same number of Partnership
Common Units.
(2) Subject to the Ownership Limit, no Tendering Party may effect
a Redemption for less than two thousand (2,000) Partnership Common
Units or less than two thousand (2,000) Investor Unit Rights (as the
case may be) or, if such Tendering Party holds (as a Limited Partner,
an Investor, or, economically, as an Assignee) less than two thousand
(2,000) Partnership Common Units or Investor Unit Rights (as the case
may be), all of the Partnership Common Units or Investor Unit Rights
held by such Tendering Party.
104
<PAGE>
(3) Each Tendering Party (a) may effect a Redemption only once in
each fiscal quarter of a Twelve-Month Period and (b) may not effect a
Redemption during the period after the Partnership Record Date with
respect to a distribution and before the record date established by
WEA for a distribution to its shareholders of some or all of its
portion of such Partnership distribution.
(4) The consummation of such Redemption (or an acquisition of
Tendered Units by the Managing General Partner pursuant to Section
16.1.B hereof, as the case may be) shall be subject to the expiration
or termination of the applicable waiting period, if any, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
(5) The Tendering Party shall continue to own (subject, in the
case of an Assignee, to the provision of Section 11.5 hereof) all
Partner ship Common Units or Investor Unit Rights (as the case may
be) subject to any Redemption, and be treated as a Limited Partner, an
Investor, or an Assignee, as applicable, with respect to such
Partnership Common Units or Investor Unit Rights for all purposes of
this Agreement, until such Partnership Common Units or Investor Unit
Rights are either paid for by the Partnership pursuant to Section
16.1.A hereof or transferred to the Managing General Partner (or
directly to the Managing General Partner or Special Limited Partner)
and paid for, by the issuance of the REIT Shares, pursuant to Section
16.1.B hereof on the Specified Redemption Date. Until a Specified
Redemption Date and an acquisition of the Tendered Units by the
Managing General Partner pursuant to Section 16.1.B hereof, the
Tendering Party shall have no rights as a shareholder of WEA with
respect to the REIT Shares issuable in connection with such
acquisition.
G. In connection with an exercise of Redemption rights pursuant to
this Section 16.1, the Tendering Party shall submit the following to the
Managing General Partner, in addition to the Notice of Redemption:
(1) A written affidavit, dated the same date as the Notice of
Redemption, (a) disclosing the actual and constructive ownership, as
determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT
Shares by (i) such Tendering Party and (ii) to the best of their
knowledge any Related Party and (b) representing that, after giving
effect to the Redemption or an acquisition of the Tendered Units by
the Managing General Partner pursuant to Section 16.1.B hereof,
neither the Tendering
105
<PAGE>
Party nor to the best of their knowledge any Related Party will own
REIT Shares in excess of the Ownership Limit;
(2) A written representation that neither the Tendering Party nor
to the best of their knowledge any Related Party has any intention to
acquire any additional REIT Shares prior to the closing of the
Redemption or an acquisition of the Tendered Units by the Managing
General Partner pursuant to Section 16.1.B hereof on the Specified
Redemption Date; and
(3) An undertaking to certify, at and as a condition to the
closing of (i) the Redemption or (ii) the acquisition of the Tendered
Units by the Managing General Partner pursuant to Section 16.1.B
hereof on the Specified Redemption Date, that either (a) the actual
and constructive ownership of REIT Shares by the Tendering Party and
to the best of their knowledge any Related Party remain unchanged from
that disclosed in the affidavit required by Section 16.1.G(1) or (b)
after giving effect to the Redemption or an acquisition of the
Tendered Units by the Managing General Partner pursuant to Section
16.1.B hereof, neither the Tendering Party nor to the best of their
knowledge any Related Party shall own REIT Shares in violation of the
Ownership Limit.
(4) In connection with any Special Redemption, the Managing
General Partner shall have the right to receive an opinion of counsel
reasonably satisfactory to it to the effect that the proposed Special
Redemption will not cause the Partnership, the Managing General
Partner or WEA to violate any Federal or state securities laws or
regulations applicable to the Special Redemption, the issuance and
sale of the Tendered Units to the Tendering Party or the issuance and
sale of REIT Shares to the Tendering Party pursuant to Section 16.1.B
of this Agreement.
Section 16.2 Addresses and Notice. Any notice, demand, request or
--------------------
report required or permitted to be given or made to a Partner, Investor or
Assignee under this Agreement shall be in writing and shall be deemed given or
made when delivered in person or when sent by first class United States mail or
by other means of written communication (including by telecopy, facsimile, or
commercial courier service) to the Partner, Investor or Assignee at the address
set forth in Exhibit A or Exhibit B (as applicable) or such other address of
--------- ---------
which the Partner or Investor shall notify the Managing General Partner in
writing.
Section 16.3 Titles and Captions. All article or section titles or
-------------------
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no
106
<PAGE>
way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" or
"Sections" are to Articles and Sections of this Agreement.
Section 16.4 Pronouns and Plurals. Whenever the context may
--------------------
require, any pronouns used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.
---- -----
Section 16.5 Further Action. The parties shall execute and deliver
--------------
all documents, provide all information and take or refrain from taking action
as may be necessary or appropriate to achieve the purposes of this Agreement.
Section 16.6 Binding Effect. This Agreement shall be binding upon
--------------
and inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
Section 16.7 Waiver.
------
A. No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
B. The restrictions, conditions and other limitations on the rights
and benefits of the Limited Partners or the Investors contained in this
Agreement, and the duties, covenants and other requirements of performance or
notice by the Limited Partners or the Investors, are for the benefit of the
Partnership and, except for an obligation to pay money to the Partnership, may
be waived or relinquished by the Managing General Partner, in its sole and
absolute discretion, on behalf of the Partnership in one or more instances from
time to time and at any time; provided, however, that any such waiver or
-------- -------
relinquishment may not be made if it would have the effect of (i) creating
liability for any other Limited Partner or Investor, (ii) causing the Partner
ship to cease to qualify as a limited partnership, (iii) reducing the amount of
cash otherwise distributable to the Limited Partners and Investors, (iv)
resulting in the classification of the Partnership as an association or publicly
traded partnership taxable as a corporation or (v) violating the Securities Act,
the Exchange Act or any state "blue sky" or other securities laws; provided,
--------
further, that any waiver relating to compliance with the Ownership Limit or
- -------
other restrictions in the Charter shall be made and shall be effective only as
provided in the Charter.
107
<PAGE>
Section 16.8 Counterparts. This Agreement may be executed in
------------
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto.
Section 16.9 Applicable Law. This Agreement shall be construed and
--------------
enforced in accordance with and governed by the laws of the State of Delaware,
without regard to the principles of conflicts of law. In the event of a
conflict between any provision of this Agreement and any non-mandatory provision
of the Act, the provisions of this Agreement shall control and take precedence.
Section 16.10 Entire Agreement. This Agreement contains all of the
----------------
understandings and agreements between and among the Partners and the Investors
with respect to the subject matter of this Agreement and the rights, interests
and obligations of the Partners and the Investors with respect to the
Partnership. Notwithstanding the immediately preceding sentence, the Partners
and the Investors hereby acknowledge and agree that the Managing General
Partner, without the approval of any Limited Partner or Investor, may enter into
side letters or similar written agreements with Limited Partners or Investors
that are not Affiliates of the Managing General Partner or WEA, executed
contemporaneously with the admission of such Limited Partner or Investor to the
Partnership, affecting the terms hereof, as negotiated with such Limited Partner
or Investor and which the Managing General Partner in its sole discretion deems
necessary, desirable or appropriate. The parties hereto agree that any terms,
conditions or provisions contained in such side letters or similar written
agreements with a Limited Partner or Investor shall govern with respect to such
Limited Partner or Investor notwithstanding the provisions of this Agreement.
Section 16.11 Invalidity of Provisions. If any provision of this
------------------------
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
Section 16.12 Limitation to Preserve REIT Status. Notwithstanding
----------------------------------
anything else in this Agreement, to the extent that the amount paid, credited,
distributed or reimbursed by the Partnership to any REIT Partner or its
officers, directors, employees or agents, whether as a reimbursement, fee,
expense or indemnity (a "REIT Payment"), would constitute gross income to the
------------
REIT Partner for purposes of Code Section 856(c)(2) or Code Section 856(c)(3),
then, notwithstanding any other provision of this Agreement, the amount of such
REIT Payments, as selected by the Managing General Partner in its discretion
from among items of potential distribution, reimbursement, fees, expenses and
indemnities, shall be reduced for any Partnership Year so that the REIT
Payments, as so reduced, for or with respect to such REIT Partner shall not
exceed the lesser of:
108
<PAGE>
(i) an amount equal to the excess, if any, of (a) four and nine-
tenths percent (4.9%) of the REIT Partner's total gross income (but
excluding the amount of any REIT Payments) for the Partnership Year that is
described in subsections (A) through (H) of Code Section 856(c)(2) over (b)
the amount of gross income (within the meaning of Code Section 856(c)(2))
derived by the REIT Partner from sources other than those described in
subsections (A) through (H) of Code Section 856(c)(2) (but not including
the amount of any REIT Payments); or
(ii) an amount equal to the excess, if any, of (a) twenty-four percent
(24%) of the REIT Partner's total gross income (but excluding the amount of
any REIT Payments) for the Partnership Year that is described in
subsections (A) through (I) of Code Section 856(c)(3) over (b) the amount
of gross income (within the meaning of Code Section 856(c)(3)) derived by
the REIT Partner from sources other than those described in subsections (A)
through (I) of Code Section 856(c)(3) (but not including the amount of any
REIT Payments);
provided, however, that REIT Payments in excess of the amounts set forth in
- -------- -------
clauses (i) and (ii) above may be made if the Managing General Partner, as a
condition precedent, obtains an opinion of tax counsel that the receipt of such
excess amounts shall not adversely affect the REIT Partner's ability to qualify
as a REIT. To the extent that REIT Payments may not be made in a Partnership
Year as a consequence of the limitations set forth in this Section 16.11, such
REIT Payments shall carry over and shall be treated as arising in the following
Partnership Year. The purpose of the limitations contained in this Section
16.11 is to prevent any REIT Partner from failing to qualify as a REIT under the
Code by reason of such REIT Partner's share of items, including distributions,
reimbursements, fees, expenses or indemnities, receivable directly or indirectly
from the Partnership, and this Section 16.11 shall be interpreted and applied to
effectuate such purpose.
Section 16.13 No Partition. No Partner or Investor nor any
------------
successor-in-interest to a Partner or Investor shall have the right while this
Agreement remains in effect to have any property of the Partnership partitioned,
or to file a complaint or institute any proceeding at law or in equity to have
such property of the Partnership partitioned, and each Partner and each
Investor, on behalf of itself and its successors and assigns hereby waives any
such right. It is the intention of the Partners and the Investors that the
rights of the parties hereto and their successors-in-interest to Partnership
property, as among themselves, shall be governed by the terms of this Agreement,
and that the rights of the Partners and the Investors and their respective
successors-in-interest shall be subject to the limitations and restrictions as
set forth in this Agreement.
Section 16.14 No Third-Party Rights Created Hereby. The provisions
------------------------------------
of this Agreement are solely for the purpose of defining the interests of the
Holders, inter se; and no
----- --
109
<PAGE>
other person, firm or entity (i.e., a party who is not a signatory hereto or a
----
permitted successor to such signatory hereto) shall have any right, power, title
or interest by way of subrogation or otherwise, in and to the rights, powers,
title and provisions of this Agreement. No creditor or other third party having
dealings with the Partnership (other than as expressly set forth herein with
respect to Indemnitees) shall have the right to enforce the right or obligation
of any Partner or Investor to make Capital Contributions or loans to the
Partnership or to pursue any other right or remedy hereunder or at law or in
equity. None of the rights or obligations of the Partners or Investors herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may any such rights or obligations be sold, transferred or
assigned by the Partnership or pledged or encumbered by the Partnership to
secure any debt or other obligation of the Partnership or any of the Partners or
Investors.
Section 16.15 No Rights as Stockholders. Nothing contained in this
-------------------------
Agreement shall be construed as conferring upon the Holders of Partnership Units
or Investor Unit Rights any rights whatsoever as stockholders of WEA, including
without limitation any right to receive dividends or other distributions made to
stockholders of WEA or to vote or to consent or receive notice as stockholders
in respect of any meeting of stockholders for the election of directors of WEA
or any other matter.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above.
MANAGING GENERAL PARTNER:
WESTFIELD AMERICA, INC.
By: /s/ Irv Hepner
---------------
Name: Irv Hepner
Title: Secretary
SPECIAL LIMITED PARTNERS:
By: WESTFIELD AMERICA, INC.,
as attorney-in-fact
By: /s/ Irv Hepner
---------------
Name: Irv Hepner
Title: Secretary
110
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of December 9, 1998.
JCP REALTY, INC.,
a Delaware Corporation
By: /s/ John P. Garvey
--------------------------------------
Name: John P. Garvey
Title: Vice President
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of December 9, 1998.
CORDANO ASSOCIATES,
a California Limited Partnership
By: /s/ James J. Cordano, Jr.
--------------------------------------
Name: James J. Cordano, Jr., Trustee
of the James J. Cordano, Jr.,
Children's Trust, initially
created May 19, 1992
Title: Managing General Partner
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
WHEATON REAL ESTATE HOLDINGS, LLC
By: /s/ Arlene G. Kaufman
----------------------------------
Arlene G. Kaufman, Managing Member
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
THE TRUST F/B/O ARLENE G. KAUFMAN
By: /s/ Arlene G. Kaufman
-----------------------------
Arlene G. Kaufman, Co-Trustee
By: NATIONSBANK, N.A., Co-Trustee
By: /s/ James P. Buchanan
-----------------------------
Name: James P. Buchanan
Title: Vice President
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
THE TRUST F/B/O THE BERTHA
GUDELSKY GRANDCHILDREN
By: /s/ Arlene G. Kaufman
-----------------------------
Arlene G. Kaufman, Co-Trustee
By: NATIONSBANK, N.A., Co-Trustee
By: /s/ James P. Buchanan
-----------------------------
Name: James P. Buchanan
Title: Vice President
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
THE LAURA BRYNA GUDELSKY MULITZ
TRUST, DATED MAY 7, 1996
By: /s/ Shelley Mulitz
----------------------------
Shelley Mulitz, Trustee
By: /s/ Philip N. Margolius
----------------------------
Philip N. Margolius, Trustee
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
THE ISADORE MORTON GUDELSKY TRUST
By: /s/ Shelley Mulitz
----------------------------
Shelley Mulitz, Trustee
By: /s/ Philip N. Margolius
----------------------------
Philip N. Margolius, Trustee
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
STUART R. SHERMAN
By: /s/ Stuart R. Sherman
---------------------
Stuart R. Sherman
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
THE EDWARD B. SHERMAN
IRREVOCABLE TRUST
By: /s/ Douglas W. Sherman
---------------------------
Douglas W. Sherman, Trustee
By: /s/ Stuart R. Sherman
---------------------------
Stuart R. Sherman, Trustee
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
THE DOUGLAS W. SHERMAN
IRREVOCABLE TRUST
By: /s/ Richard Barron
--------------------------
Richard Barron, Trustee
By: /s/ Stuart R. Sherman
--------------------------
Stuart R. Sherman, Trustee
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
THE CAROL S. BARRON
IRREVOCABLE TRUST
By: /s/ Jeffrey W. Barron
--------------------------
Jeffrey W. Barron, Trustee
<PAGE>
IN WITNESS WHEREOF, this attachment counterpart signature page to this
Agreement has been executed as of January 1, 1999.
CAROL S. BARRON
By: /s/ Carol S. Barron
-------------------
Carol S. Barron
<PAGE>
Exhibit A
PARTNERS AND PARTNERSHIP UNITS
<TABLE>
<CAPTION>
====================================================================================================
Names and Addresses of Partners Partnership Units (Type and Amount)
- ----------------------------------------------------------------------------------------------------
<S> <C>
Managing General Partner:
- ----------------------------------------------------------------------------------------------------
Westfield America, Inc. 654,375 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 8,387 Series A Partnership Preferred Units
Los Angeles, California 90025 2,409 Series B Partnership Preferred Units
3,718 Series C Partnership Preferred Units
6,196 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Special Limited Partners:
- ----------------------------------------------------------------------------------------------------
Westfield America, Inc. 34,559,213 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 442,964 Series A Partnership Preferred Units
Los Angeles, California 90025 127,233 Series B Partnership Preferred Units
196,346 Series C Partnership Preferred Units
327,246 Series D Partnership Preferred Units
138,889 Series C-1 Partnership Preferred Units
138,889 Series C-2 Partnership Preferred Units
138,889 Series D-1 Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westfield America of Annapolis, Inc. 4,846,235 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 62,116 Series A Partnership Preferred Units
Los Angeles, California 90025 17,842 Series B Partnership Preferred Units
27,534 Series C Partnership Preferred Units
45,890 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
WEA Meriden Square, Inc. 789,495 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 10,119 Series A Partnership Preferred Units
Los Angeles, California 90025 2,907 Series B Partnership Preferred Units
4,486 Series C Partnership Preferred Units
7,476 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------
Westfield America Meriden Square, Inc. 7,975 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 102 Series A Partnership Preferred Units
Los Angeles, California 90025 29 Series B Partnership Preferred Units
45 Series C Partnership Preferred Units
76 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westfield America of Missouri, Inc. 6,168,358 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 79,062 Series A Partnership Preferred Units
Los Angeles, California 90025 22,709 Series B Partnership Preferred Units
35,045 Series C Partnership Preferred Units
58,409 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westfield America-Wheaton, Inc. 2,366,763 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 30,336 Series A Partnership Preferred Units
Los Angeles, California 90025 8,713 Series B Partnership Preferred Units
13,447 Series C Partnership Preferred Units
22,411 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Montgomery Mall Properties, Inc. 1,719,997 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 22,046 Series A Partnership Preferred Units
Los Angeles, California 90025 6,332 Series B Partnership Preferred Units
9,772 Series C Partnership Preferred Units
16,287 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
South County Properties, Inc. 31 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor
Los Angeles, California 90025
- ----------------------------------------------------------------------------------------------------
Topanga Centers, Inc. 1,216,461 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 15,592 Series A Partnership Preferred Units
Los Angeles, California 90025 4,479 Series B Partnership Preferred Units
6,911 Series C Partnership Preferred Units
11,519 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
West Park Mall, Inc. 10,929 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 140 Series A Partnership Preferred Units
Los Angeles, California 90025 40 Series B Partnership Preferred Units
62 Series C Partnership Preferred Units
103 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------
Mid-Rivers Office Development I, Inc. 31 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor
Los Angeles, California 90025
- ----------------------------------------------------------------------------------------------------
Eagle Rock Properties, Inc. 428,516 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 5,492 Series A Partnership Preferred Units
Los Angeles, California 90025 1,578 Series B Partnership Preferred Units
2,435 Series C Partnership Preferred Units
4,058 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westfield America of Bonita, Inc. 2,073,831 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 26,581 Series A Partnership Preferred Units
Los Angeles, California 90025 7,635 Series B Partnership Preferred Units
11,782 Series C Partnership Preferred Units
19,637 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westfield America of West Covina, Inc. 2,397,992 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 30,736 Series A Partnership Preferred Units
Los Angeles, California 90025 8,828 Series B Partnership Preferred Units
13,624 Series C Partnership Preferred Units
22,707 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westfield Management, Inc. 93,534 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 1,199 Series A Partnership Preferred Units
Los Angeles, California 90025 344 Series B Partnership Preferred Units
531 Series C Partnership Preferred Units
886 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westland Partners, Inc. 2,050,969 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 26,288 Series A Partnership Preferred Units
Los Angeles, California 90025 7,551 Series B Partnership Preferred Units
11,653 Series C Partnership Preferred Units
19,421 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westland Shopping Center, L.P. 5,115,183 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 65,563 Series A Partnership Preferred Units
Los Angeles, California 90025 18,832 Series B Partnership Preferred Units
29,062 Series C Partnership Preferred Units
48,436 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
</TABLE>
A-3
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------
Residential Rentals and Investments, Inc. 83,540 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 1,071 Series A Partnership Preferred Units
Los Angeles, California 90025 308 Series B Partnership Preferred Units
475 Series C Partnership Preferred Units
791 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westland Properties, Inc. 59,967 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 769 Series A Partnership Preferred Units
Los Angeles, California 90025 221 Series B Partnership Preferred Units
341 Series C Partnership Preferred Units
568 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
Westfield America of Vancouver, Inc. 794,106 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor 10,178 Series A Partnership Preferred Units
Los Angeles, California 90025 2,924 Series B Partnership Preferred Units
4,512 Series C Partnership Preferred Units
7,520 Series D Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
WPI Meriden Square, Inc. 0 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor
Los Angeles, California 90025
- ----------------------------------------------------------------------------------------------------
Westland Milford Properties, Inc. 0 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor
Los Angeles, California 90025
- ----------------------------------------------------------------------------------------------------
Westfield Mission Valley Corporation 0 Partnership Common Units
11601 Wilshire Boulevard, 12th Floor
Los Angeles, California 90025
- ----------------------------------------------------------------------------------------------------
TOTALS -- Special Limited Partners:
- ----------------------------------------------------------------------------------------------------
64,783,125 Partnership Common Units
830,354 Series A Partnership Preferred Units
238,506 Series B Partnership Preferred Units
368,063 Series C Partnership Preferred Units
613,440 Series D Partnership Preferred Units
138,889 Series C-1 Partnership Preferred Units
138,889 Series C-2 Partnership Preferred Units
138,889 Series D-1 Partnership Preferred Units
- ----------------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------
TOTALS -- Managing General Partner & Special
Limited Partners:
- ----------------------------------------------------------------------------------------------------
65,437,500 Partnership Common Units
838,741 Series A Partnership Preferred Units
240,915 Series B Partnership Preferred Units
371,781 Series C Partnership Preferred Units
619,636 Series D Partnership Preferred Units
138,889 Series C-1 Partnership Preferred Units
138,889 Series C-2 Partnership Preferred Units
138,889 Series D-1 Partnership Preferred Units
====================================================================================================
</TABLE>
A-5
<PAGE>
As of January 1, 1999
Exhibit B
INVESTORS AND INVESTOR UNIT RIGHTS
<TABLE>
<CAPTION>
Names and Addresses of Investors Investor Unit Rights (Type and
Amount)
- ---------------------------------------------------------------------
<S> <C>
JCP Realty, Inc. 489,189.000 Class A Investor
6501 Legacy Drive, M5 2102 Unit Rights
Plano, Texas 75024
- ---------------------------------------------------------------------
Cordano Associates 489,189.000 Class A Investor
1112 11/th/ Street Unit Rights
Sacramento, California 95814
- ---------------------------------------------------------------------
Wheaton Real Estate Holdings, LLC 450,258.111 Class A Investor
c/o Arlene G. Kaufman Units Rights
5610 Wisconsin Avenue # 1607
Chevy Chase, Maryland 20815
- ---------------------------------------------------------------------
The Trust f/b/o the Bertha 183,440.247 Class A Investor
Gudelsky Units Rights
Grandchildren
c/o Arlene G. Kaufman
5610 Wisconsin Avenue # 1607
Chevy Chase, Maryland 20815
- ---------------------------------------------------------------------
The Trust f/b/o Arlene G. Kaufman 183,440.247 Class A Investor
c/o Arlene G. Kaufman Units Rights
5610 Wisconsin Avenue # 1607
Chevy Chase, Maryland 20815
- ---------------------------------------------------------------------
The Isadore Morton Gudelsky Trust 91,714.194 Class A Investor
c/o Margolius, Mallios, Davis, Units Rights
Rider & Tomar, LLP
1828 L Street, N.W., Suite 500
Washington, D.C. 20036
Attn: Philip N. Margolius, Esq.
- ---------------------------------------------------------------------
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
Names and Addresses of Investors Investor Unit Rights (Type and
Amount)
- ---------------------------------------------------------------------
<S> <C>
The Laura Bryna Gudelsky Mulitz 91,714.194 Class A Investor
Trust Units Rights
c/o Margolius, Mallios, Davis,
Rider & Tomar, LLP
1828 L Street, N.W., Suite 500
Washington, D.C. 20036
Attn: Philip N. Margolius, Esq.
- ---------------------------------------------------------------------
Stuart R. Sherman 46,319.582 Class A Investor
c/o Douglas W. Sherman Units Rights
8401 Virginia Manor Road
Beltsville, Maryland 20705
- ---------------------------------------------------------------------
The Edward B. Sherman 46,319.582 Class A Investor
Irrevocable Trust Units Rights
c/o Douglas W. Sherman
8401 Virginia Manor Road
Beltsville, Maryland 20705
- ---------------------------------------------------------------------
The Douglas W. Sherman 46,319.582 Class A Investor
Irrevocable Trust Units Rights
c/o Douglas W. Sherman
8401 Virginia Manor Road
Beltsville, Maryland 20705
- ---------------------------------------------------------------------
The Carol S. Barron Irrevocable 37,615.389 Class A Investor
Trust Units Rights
c/o Douglas W. Sherman
8401 Virginia Manor Road
Beltsville, Maryland 20705
- ---------------------------------------------------------------------
Carol S. Barron 8,716.051 Class A Investor
c/o Douglas W. Sherman Units Rights
8401 Virginia Manor Road
Beltsville, Maryland 20705
- ---------------------------------------------------------------------
TOTALS: 2,164,235.179 Class A
Investor Unit Rights
- ---------------------------------------------------------------------
</TABLE>
B-2
<PAGE>
Exhibit C
EXAMPLES REGARDING ADJUSTMENT FACTOR
For purposes of the following examples, it is assumed that (a) the
Adjustment Factor in effect on June 30, 1998 is 1.0 and (b) on July 1, 1998 (the
"Partnership Record Date" for purposes of these examples), prior to the events
-----------------------
described in the examples, there are 100 REIT Shares issued and outstanding.
Example 1
---------
On the Partnership Record Date, WEA declares a dividend on its
outstanding REIT Shares in REIT Shares. The amount of the dividend is one REIT
Share paid in respect of each REIT Share owned. Pursuant to Paragraph (i) of
the definition of "Adjustment Factor," the Adjustment Factor shall be adjusted
on the Partnership Record Date, effective immediately after the stock dividend
is declared, as follows:
1.0 * 200/100 = 2.0
Accordingly, the Adjustment Factor after the stock dividend is
declared is 2.0.
Example 2
---------
On the Partnership Record Date, WEA distributes options to purchase
REIT Shares to all holders of its REIT Shares. The amount of the distribution
is one option to acquire one REIT Share in respect of each REIT Share owned.
The strike price is $4.00 a share. The Value of a REIT Share on the Partnership
Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the definition of
"Adjustment Factor," the Adjustment Factor shall be adjusted on the Partnership
Record Date, effective immediately after the options are distributed, as
follows:
1.0 * (100 + 100)/(100 + [100 * $4.00/$5.00]) = 1.1111
Accordingly, the Adjustment Factor after the options are distributed
is 1.1111. If the options expire or become no longer exercisable, then the
retroactive adjustment specified in Paragraph (ii) of the definition of
"Adjustment Factor" shall apply.
Example 3
---------
On the Partnership Record Date, WEA distributes assets to all holders
of its REIT Shares. The amount of the distribution is one asset with a fair
market value (as determined by the Managing General Partner) of $1.00 in respect
of each REIT Share owned. It is also assumed that the assets do not relate to
assets received by the Managing General Partner pursuant to a pro rata
distribution by the Partnership. The Value of a REIT Share on the Partnership
Record Date is $5.00 a share. Pursuant to Paragraph (iii) of the definition of
"Adjustment Factor," the Adjustment Factor shall be adjusted on the Partnership
Record Date, effective immediately after the assets are distributed, as follows:
1.0 * $5.00/($5.00 - $1.00) = 1.25
Accordingly, the Adjustment Factor after the assets are distributed is
1.25.
C-1
<PAGE>
Exhibit D
SUB-ALLOCATION OF GROSS FAIR MARKET VALUES
D-1
<PAGE>
Exhibit E
NOTICE OF REDEMPTION
To: Westfield America, Inc.
c/o ___________________
_______________________
_______________________
_______________________
The undersigned Limited Partner, Investor or Assignee hereby
irrevocably tenders for Redemption [_______ Partnership Common Units/
_____________________________ Investor Unit Rights] in Westfield America Limited
Partnership in accordance with the terms of the First Amended and Restated
Agreement of Limited Partnership of Westfield America Limited Partnership, dated
as of _______, 1998 as amended (the "Agreement"), and the Redemption rights
---------
referred to therein. The undersigned Limited Partner, Investor or Assignee:
(a) undertakes (i) to surrender such [Partnership Common
Units/Investor Unit Rights] and any certificate therefor at the closing of
the Redemption and (ii) to furnish to WEA, prior to the Specified
Redemption Date, the documentation, instruments and information required
under Section 16.1.G of the Agreement;
(b) directs that the certified check representing the Cash Amount
deliverable upon the closing of such Redemption be delivered to the address
specified below;
(c) represents, warrants, certifies and agrees that:
(i) the undersigned Limited Partner, Investor or Assignee is a
Qualifying Party,
(ii) the undersigned Limited Partner, Investor or Assignee has,
and at the closing of the Redemption will have, good, marketable and
unencumbered title to such [Partnership Common Units/Investor Unit
Rights], free and clear of the rights or interests of any other person
or entity,
(iii) the undersigned Limited Partner, Investor or Assignee has,
and at the closing of the Redemption will have, the full right,
E-1
<PAGE>
power and authority to tender and surrender such [Partnership Common
Units/Investor Unit Rights] as provided herein, and
(iv) the undersigned Limited Partner, Investor or Assignee has
obtained the consent or approval of all persons and entities, if any,
having the right to consent to or approve such tender and surrender;
and
(d) acknowledges that he will continue to own such [Partnership
Common Units/Investor Unit Rights] until and unless either (1) such [Partnership
Common Units/Investor Unit Rights] are acquired by WEA pursuant to Section
16.1.B of the Agreement or (2) such redemption transaction closes.
All capitalized terms used herein and not otherwise defined shall have
the same meaning ascribed to them respectively in the Agreement.
Dated: __________________
Name of Limited Partner, Investor or Assignee:
____________________________________________________
____________________________________________________
(Signature of Limited Partner, Investor or Assignee)
____________________________________________________
(Street Address)
____________________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
____________________________________________________
Issue Check Payable to: ____________________________________________________
Please insert social
security or identifying
number: ____________________________________________________
E-2
<PAGE>
Exhibit F
FORM OF PARTNERSHIP UNIT CERTIFICATE
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE LIMITED
PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF WESTFIELD
AMERICA LIMITED PARTNERSHIP, DATED AS OF _________, 1998, A COPY OF WHICH MAY BE
OBTAINED FROM WESTFIELD AMERICA, INC., THE MANAGING GENERAL PARTNER, AT ITS
PRINCIPAL EXECUTIVE OFFICE.
Certificate Number ________
WESTFIELD AMERICA LIMITED PARTNERSHIP
FORMED UNDER THE LAWS OF THE STATE OF DELAWARE
This certifies that _______________________________________________________ is
the owner of _______________________________________________
FULLY PAID PARTNERSHIP COMMON UNITS
OF
WESTFIELD AMERICA LIMITED PARTNERSHIP,
transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed. This
Certificate and the Partnership Common Units represented hereby are issued and
shall be held subject to all of the provisions of the First Amended and Restated
Agreement of Limited Partnership of the Westfield America Limited Partnership,
as the same may be amended and/or supplemented from time to time.
IN WITNESS WHEREOF, the undersigned has signed this Certificate.
Dated:
By________________________________
F-1
<PAGE>
For Value Received, ___________________________________ ("Transferor")
hereby sells, assigns and transfers unto ___________________________________
Partnership Common Unit(s) represented by the within Certificate, and does
hereby irrevocably constitute and appoint the Managing General Partner as its
Attorney to transfer said Partnership Common Unit(s) on the books of the within-
named Partnership with full power of substitution in the premises.
Dated: ____________________
___________________________________________________
(Partner)
F-2
<PAGE>
Exhibit G
LIST OF EXCLUDED PROPERTIES AND SPECIFIED UNITS
1. Fee interest in the Trumbull Shopping Park, located in Trumbull,
Connecticut.
Specified Units: 21,430 Series A Partnership Preferred Units; and
6,155 Series B Partnership Preferred Units; and
9,499 Series C Partnership Preferred Units; and
15,832 Series D Partnership Preferred Units; and
1,671,951 Partnership Common Units.
2. Partnership interest relating to Meriden Square, located in Meriden,
Connecticut.
Specified Units: 32,059 Series A Partnership Preferred Units; and
9,209 Series B Partnership Preferred Units; and
14,211 Series C Partnership Preferred Units; and
23,685 Series D Partnership Preferred Units; and
2,501,269 Partnership Common Units.
3. Partnership interest relating to Connecticut Post Mall, located in Milford,
Connecticut.
Specified Units: 26,836 Series A Partnership Preferred Units; and
7,708 Series B Partnership Preferred Units; and
11,896 Series C Partnership Preferred Units; and
19,826 Series D Partnership Preferred Units; and
2,093,673 Partnership Common Units.
G-1
<PAGE>
4. Partnership interest relating to the Mission Valley Center, located in
Mission Valley, California.
Specified Units: 9,134 Series A Partnership Preferred Units; and
2,623 Series B Partnership Preferred Units; and
4,049 Series C Partnership Preferred Units; and
6,748 Series D Partnership Preferred Units; and
712,595 Partnership Common Units.
5. Partnership interest relating to Plaza Camino Real, located in San Diego
County, California.
Specified Units: 11,780 Series A Partnership Preferred Units; and
3,384 Series B Partnership Preferred Units; and
5,222 Series C Partnership Preferred Units; and
8,703 Series D Partnership Preferred Units; and
919,083 Partnership Common Units.
6. 0.10 Percent Interest in Vancouver Mall
Specified Units: 20 Series A Partnership Preferred Units; and
6 Series B Partnership Preferred Units; and
9 Series C Partnership Preferred Units; and
15 Series D Partnership Preferred Units; and
1,589 Partnership Common Units.
7. 50.0 Percent Interest in M-R St. Peters L.P.
Specified Units: 31 Partnership Common Units
8. The properties owned by CMF, Inc; the 5.055% undivided interest in the real
property known as Meriden Square, in Meriden, Connecticut; the 1.00%
interest in MBM Associates-New Partnership; the undivided interest in land
owned by WEA Annapolis, Inc. known as RREEF land at Annapolis; a 1.00%
membership interest in: WEA Crestwood Plaza LLC, Enfield Square LLC, Fox
Hills Mall LLC, Horton Plaza LLC, Los Cerritos LLC, Mid Rivers Mall LLC,
Northwest Plaza LLC, Oakridge Mall LLC, Plaza Bonita LLC, Parkway Plaza LLC
and Plaza West Covina LLC; and a 1.00% partnership interest in Capital
Mall Company, West Park Partners, L.P. and Westfield America Investor L.P.
G-2
<PAGE>
Specified Units: 0 Partnership Common Units.
G-3
<PAGE>
EXHIBIT H1
PARTNERSHIP UNIT DESIGNATION OF SERIES A
PARTNERSHIP PREFERRED UNITS OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
1. Creation, Number and Designation.
A class of Partnership Preferred Units is hereby created and designated as
"Series A Partnership Preferred Units." The number of Partnership Preferred
Units constituting the Series A Partnership Preferred Units shall be 940,000.
2. Definitions.
For purposes of this Partnership Unit Designation, the following terms
shall have the respective meanings indicated in this Section 2, and capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement:
"Agreement" shall mean the First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership, dated as of August 3,
1998, as amended, modified, supplemented or restated, from time to time.
"Base Distribution" shall mean $8.50 per Series A Partnership Preferred
Unit per annum.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York
City, New York, are authorized or required by law, regulation or executive order
to close.
"Common Equivalent Factor" shall have the meaning set forth in the
Certificate of Designation Setting Forth "Resolution Designating Series A
Preferred Shares and Fixing Preferences and Rights Thereof" Adopted by the Board
of Directors of Westfield America, Inc.
"Distribution Payment Date" shall mean, with respect to each Distribution
Period, the date that regular quarterly cash distributions are paid on the
Partnership Common Units with respect to such Distribution Period; provided,
however, that if any Distribution Payment Date falls on any day other than a
Business Day, the distribution payable on such Distribution Payment Date shall
be paid on the Business Day immediately following such Distribution Payment
Date.
"Distribution Period" shall mean the Initial Distribution Period and,
subject to Section 3(h) below, each subsequent quarterly distribution period
commencing on and including January 1, April 1, July 1 and October 1 of each
year and ending on and including the day preceding the first day of the next
succeeding Distribution Period.
H1-1
<PAGE>
"Grant Date" shall mean August 3, 1998.
"Initial Distribution Period" shall mean the period commencing on and
including the Grant Date and ending on and including September 30, 1998.
"Junior Units" shall have the meaning set forth in Section 8(c) hereof.
"Parity Units" shall have the meaning set forth in Section 8(b) hereof.
"Partnership" shall mean Westfield America Limited Partnership, a Delaware
limited partnership.
"Series A Partnership Preferred Unit" means a Partnership Unit created
under this Partnership Unit Designation, with the designations, preferences and
relative, participating, optional or other special rights, powers and duties set
forth in this Exhibit H.
---------
"Senior Units" shall have the meaning set forth in Section 8(a) hereof.
3. Distributions.
(a) Holders of Series A Partnership Preferred Units shall not be entitled
to any distributions on the Series A Partnership Preferred Units, whether
payable in cash, property or stock, except as provided in this Exhibit H.
---------
(b) The holders of Series A Partnership Preferred Units shall be entitled
to receive, when, as and if determined by the Managing General Partner and
payable only out of Available Cash, cumulative (from the Grant Date) cash
distributions payable in arrears on each Distribution Payment Date, commencing
on the first Distribution Payment Date after the Grant Date, as follows:
(i) for the first Distribution Period of any calendar year, an amount
per Series A Partnership Preferred Unit equal to the greater of (A) 25% of
the Base Distribution or (B) the dollar amount of cash distributions paid
with respect to one Partnership Common Unit outstanding during all of the
first Distribution Period of such calendar year;
(ii) for the second Distribution Period of any calendar year, an amount
per Series A Partnership Preferred Unit such that the aggregate amount
distributed in respect of each Series A Partnership Preferred Unit
outstanding during all of the first two Distribution Periods of such
calendar year is equal to the greater of (A) 50% of the Base Distribution
or (B) the aggregate dollar amount of cash distributions paid with respect
to one Partnership Common Unit outstanding during all of the first two
Distribution Periods;
(iii) for the third Distribution Period of any calendar year, an amount
per Series A Partnership Preferred Unit such that the aggregate amount
distributed in respect of each
H1-2
<PAGE>
Series A Partnership Preferred Unit outstanding during all of the first
three Distribution Periods of such calendar year is equal to the greater of
(A) 75% of the Base Distribution or (B) the aggregate dollar amount of cash
distributions paid with respect to one Partnership Common Unit outstanding
during all of the first three Distribution Periods; and
(iv) for the final Distribution Period of any calendar year, an amount
per Series A Partnership Preferred Unit such that the aggregate amount
distributed in respect of each Series A Partnership Preferred Unit
outstanding during all of the Distribution Periods of such calendar year is
equal to the greater of (A) the Base Distribution or (B) the aggregate
dollar amount of cash distributions paid with respect to one Partnership
Common Unit outstanding during all Distribution Periods of such calendar
year;
provided, however, that if the aggregate dollar amount of cash distributions
- -------- -------
paid with respect to a Series A Partnership Preferred Unit for all Distribution
Periods of any calendar year exceeds an amount equal to the greater of (A) the
Base Distribution or (B) the aggregate dollar amount of cash distributions paid
with respect to one Partnership Common Unit outstanding during all Distribution
Periods of such calendar year, in either case, with such amount prorated based
on the portion of the year that such Series A Partnership Preferred Unit was
outstanding, then the distributions payable in respect of such Series A
Partnership Preferred Unit in subsequent calendar years shall be reduced by the
amount of such excess.
(c) Distributions paid with respect to Series A Partnership Preferred Units
shall be payable to the holders of record of the Series A Partnership Preferred
Units as they appear on Exhibit A to the Agreement at the close of business on
---------
the record date established by the Managing General Partner for such
distribution or, if no such record date is established, on the Distribution
Payment Date. Any record date established by the Managing General Partner shall
not be more than fifty (50) days prior to the applicable Distribution Payment
Date.
(d) Distributions payable with respect to any Series A Partnership
Preferred Unit that was not outstanding during the entire Distribution Period
for which such distribution is paid shall be prorated based on the portion of
the Distribution Period that such Series A Partnership Preferred Unit was
outstanding.
(e) Distributions paid on Series A Partnership Preferred Units in an
aggregate amount less than the aggregate amount then accumulated and payable
shall be allocated pro rata among all holders of Series A Partnership Preferred
Units outstanding based on the respective number of each holder's Series A
Partnership Preferred Units. Subject to the terms of the Agreement and the
rights of any holders of Senior Units, accumulated but unpaid distributions for
any prior Distribution Periods may be paid at any time, without reference to any
regularly scheduled quarterly payment date, to the holders of record of the
Series A Partnership Preferred Units as they appear on the records of the
Partnership at the close of business on the record date established by the
Managing General Partner for such distribution (which shall not be more than
fifty (50) days prior to the applicable payment date) or, if no such record date
is established, on the payment date.
H1-3
<PAGE>
(f) So long as any of the Series A Partnership Preferred Units are
outstanding, except as described in the immediately following sentence, no
distributions shall be paid by the Partnership and no other distribution of cash
or other property shall be made, directly or indirectly, by the Partnership with
respect to any class or series of Parity Units for any period unless
distributions equal to the full amount of accumulated and unpaid distributions
have been, or contemporaneously are, paid with respect to the Series A
Partnership Preferred Units for all Distribution Periods ending on or prior to
the Distribution Payment Date with respect to such class or series of Parity
Units. When the distributions provided for in Section 3(b) hereof are not paid
in full, all distributions paid with respect to the Series A Partnership
Preferred Units and all distributions paid with respect to any other class or
series of Parity Units shall be paid ratably in proportion to the respective
amounts of distributions accumulated and unpaid on the Series A Partnership
Preferred Units and accumulated and unpaid on such Parity Units.
(g) So long as any Series A Partnership Preferred Units are outstanding, no
distributions (other than distributions paid solely in Junior Units or options,
warrants or rights to subscribe for or purchase Junior Units) shall be paid by
the Partnership and no other distribution of cash or other property shall be
made, directly or indirectly, by the Partnership with respect to any Junior
Units, nor shall any Junior Units be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any such Junior Units), directly or indirectly, by
the Partnership (except by conversion into or exchange for Junior Units or REIT
Shares), nor shall any other cash or other property otherwise be paid or
distributed to or for the benefit of any holder of Junior Units in respect
thereof, directly or indirectly, by the Partnership unless in each case (i) the
full cumulative distributions (including all accumulated and unpaid
distributions) on all outstanding Series A Partnership Preferred Units and any
other Parity Units of the Partnership shall have been paid for all past
Distribution Periods with respect to the Series A Partnership Preferred Units
and all past distribution periods with respect to such Parity Units, and (ii)
the full amount of all distributions payable for the most recently-ended
Distribution Period with respect to the Series A Partnership Preferred Units and
the most recently-ended distribution period with respect to such Parity Units
have been paid or sufficient funds shall have been set apart for payment
thereof.
(h) Notwithstanding the foregoing, it is acknowledged that the Managing
General Partner may, pursuant to the Agreement, elect to make distributions on
the Partnership Common Units on a more or less frequent basis than quarterly and
provide for an appropriate record date; in the event that the Managing General
Partner elects to effect such a non-quarterly distribution, the Managing General
Partner may, in its sole and absolute discretion, cause a Distribution Period
(and related Distribution Payment Date) to be established to reflect the period
established for such Partnership Common Unit distributions and to make such
revisions to the distributions provided in Section 3(b) hereof as may be
required to reflect that more or less than four Distribution Payment Dates will
occur during the relevant calendar year.
H1-4
<PAGE>
4. Rights Upon Liquidation.
(a) In the event of any voluntary liquidation, dissolution or winding up of
affairs of the Partnership, the holders of the Series A Partnership Preferred
Units shall be entitled, before any distribution or payment is made to the
holders of any Junior Units, to be paid in full an amount per unit equal to
$100.00, together with all accrued but unpaid distributions through the end date
of the calendar quarter most recently completed prior to the date of
liquidation, dissolution or winding up of the affairs of the Partnership (any
such date, a "Series A Voluntary Liquidation Date") plus (y) 2.125 times a
fraction equal to the actual number of days elapsed from the end date of the
calendar quarter most recently completed to the relevant Series A Voluntary
Liquidation Date over ninety days. In the event of any involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, then, before any
distribution or payment is made to the holders of any Junior Units, the holders
of the Series A Partnership Preferred Units shall be entitled to be paid in full
an amount per share equal to $100.00, together with (x) all accrued and unpaid
distributions through the end date of the calendar quarter most recently
completed prior to the involuntary liquidation (any such date, a "Series A
Involuntary Liquidation Date") plus (y) $2.125 times a fraction equal to the
actual number of days elapsed from the date of the calendar quarter most
recently completed to the relevant Series A Involuntary Liquidation Date over
ninety days.
(b) Payment shall be made in full to all holders of the Series A
Partnership Preferred Units and other Parity Units, before any remaining assets
of the Partnership shall be distributed among the holders of the Junior Units,
according to their respective numbers of units. For the purposes of this
Section 4, the consolidation or merger of the Partnership with any other
corporation, partnership or other legal entity shall not be deemed to constitute
a liquidation, dissolution or winding up of the Partnership but shall, to the
extent appropriate, cause an adjustment to the Common Equivalent Factor.
(c) Upon the occurrence of any liquidation and subsequent dissolution and
winding up of the Partnership, after payment shall have been made in full to the
holders of Series A Partnership Preferred Units and any Parity Units, as
provided in Section 4(b) hereof, any other series or class or classes of Junior
Units shall, subject to the respective terms thereof, be entitled to receive any
and all assets remaining to be paid or distributed.
5. Redemption.
(a) The Partnership, at the option of the Managing General Partner, may
redeem in whole, or in part, the Series A Partnership Preferred Units at the
time outstanding at any time and from time to time from and after July 1, 2003,
upon notice given as hereinafter specified, at a redemption price for each
Series A Partnership Preferred Unit equal to $100.00 together with (i) all
accrued and unpaid distributions through the end date of the calendar quarter
most recently completed prior to the date of redemption of the Series A
Partnership Preferred Units (each a "Series A Redemption Date"); plus (ii)
$2.125 times a fraction equal to the actual number of days elapsed from the end
date of the calendar quarter most recently completed to the relevant Series A
H1-5
<PAGE>
Redemption Date over ninety days (such fraction, the "Pro Rata Adjustment");
plus (iii) a right to receive on the payment date for distributions declared on
the Common Partnership Units with respect to the calendar quarter during which
the relevant Series A Redemption Date occurs (the "Relevant Quarter"), the
excess of (x) the Common Equivalent Factor times (A) the dollar amount of the
per unit distributions declared on the Common Partnership Units for the Relevant
Quarter times the Pro Rata Adjustment plus (B) the dollar amount of the per unit
distributions declared on the Common Partnership Units from the beginning of the
calendar year in which such redemption occurs through the end date of the
calendar quarter prior to the Relevant Quarter over (y) the dollar amount
calculated in the preceding clause (ii) plus all other distributions paid on the
Preferred Units of the Partnership from the beginning of the calendar year
during which the relevant Series A Redemption Date occurs.
(b) If the Partnership shall determine to redeem less than all of the
Series A Partnership Preferred Units then outstanding, the units to be redeemed
shall be selected pro rata (as nearly as may be) so that the number of units
redeemed from each holder shall be the same proportion of all the units to be
redeemed that the total number of Series A Partnership Preferred Units then held
by such holder bears to the total number of Series A Partnership Preferred Units
then outstanding.
(c) Notice of any proposed redemption of shares of Series A Partnership
Preferred Units shall be mailed by first class mail, postage prepaid, addressed
to the holders of record of the units to be redeemed, at their respective last
addresses as they shall appear on the books of the Partnership. Such mailing
shall be at least 30 days and not more than 60 days prior to the date fixed for
such redemption. Any notice which is mailed in the manner herein provided shall
be conclusively presumed to have been duly given, whether or not the holder
receives such notice, and failure duly to give such notice by mail, or any
defect in such notice, to any holder of Series A Partnership Preferred Units
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other Series A Partnership Preferred Units.
The Managing General Partner shall have full power and authority, subject
to the provisions herein contained, to prescribe the terms and conditions upon
which Series A Partnership Preferred Units shall be redeemed.
If notice of redemption shall have been duly given, and if, on or before
the redemption date specified therein, the Partnership shall deposit all funds
necessary for such redemption with a bank or trust company in an account that is
separate and apart from its other accounts and shall hold such funds in trust
for the pro rata benefit of the holders of the units called for redemption, so
as to be and continue to be available therefor, then, notwithstanding that any
certificate for units so called for redemption shall not have been surrendered
for cancellation, all units so called for redemption shall no longer be deemed
outstanding on and after such redemption date, and all rights with respect to
such units shall forthwith on such redemption date cease and terminate, except
only the right of the holders thereof to receive the amount payable on
redemption thereof, without interest.
Any funds so deposited and unclaimed at the end of two years from such
redemption date
H1-6
<PAGE>
shall, to the extent permitted by law, be released or repaid to the Partnership,
after which repayment the holders of the shares so called for redemption shall
look only to the Partnership for payment thereof.
6. Status of Reacquired Series A Partnership Preferred Units.
All Series A Partnership Preferred Units which shall have been granted and
reacquired in any manner by the Partnership shall be deemed cancelled.
7. Conversion.
Series A Partnership Preferred Units shall be convertible as provided in
Section 4.7.A of the Agreement.
8. Ranking.
The Series A Partnership Preferred Units shall with respect to distribution
rights and rights on liquidation, dissolution and winding up of the affairs of
the Partnership, rank pari passu to the Series B Partnership Preferred Units,
----------
the Series C Partnership Preferred Units and the Series D Partnership Preferred
Units.
Each Series A Partnership Preferred Unit shall be identical in all respects
to each other Series A Partnership Preferred Unit.
Any class or series of Partnership Units or Investor Unit Rights shall be
deemed to rank:
(a) prior or senior to the Series A Partnership Preferred Units, as to the
payment of distributions and as to distributions of assets upon dissolution and
winding up of the Partnership, if the holders of such class or series of
Partnership Units or Investor Unit Rights, as the case may be, shall be entitled
to the receipt of distributions or of amounts distributable upon dissolution and
winding up of the Partnership in preference or priority to the holders of Series
A Partnership Preferred Units ("Senior Units");
(b) on a parity with the Series A Partnership Preferred Units, as to the
payment of distributions and as to distribution of assets upon dissolution and
winding up of the Partnership, whether or not the distribution rates,
distribution payment dates or redemption or liquidation prices per unit or other
denomination thereof shall be different from those of the Series A Partnership
Preferred Units, if the holders of such class or series of Partnership Units or
Investor Unit Rights, as the case may be, and the Series A Partnership Preferred
Units shall be entitled to the receipt of distributions and of amounts
distributable upon dissolution and winding up of the Partnership in proportion
to their respective amounts of accumulated and unpaid distributions per unit or
other denomination or liquidation preferences, without preference or priority
one over the other ("Parity Units"); and
H1-7
<PAGE>
(c) junior to the Series A Partnership Preferred Units, as to the payment
of distributions or as to the distribution of assets upon dissolution and
winding up of the Partnership, if such class or series of Partnership Units is
Partnership Common Units or if the holders of Series A Partnership Preferred
Units shall be entitled to receipt of distributions or of amounts distributable
upon - dissolution and winding up of the Partnership, in preference or priority
to the holders of such class or series of Partnership Units or Investor Unit
Rights ("Junior Units").
9. Allocations.
(a) For each partnership year, each Holder of a Share of Series A Preferred
Units shall be allocated Net Income of the Partnership in an amount equal to the
amount of distributions made with respect to such Holder's Series A Preferred
Units pursuant to Section 3 hereof during such Partnership Year. In no event
shall items of Net Loss of the Partnership be allocated to any Holder of Series
A Preferred Units unless such allocation is required by Section 704(b) of the
Code or Section 9(b) of this Exhibit H-1.
-----------
(b) If any Series A Partnership Preferred Units are redeemed pursuant to
Section 4.7.B of the Agreement, for the Partnership Year that includes such
redemption (and, if necessary, for subsequent Partnership Years) (a) gross
income and gain (in such relative proportions as the Managing General Partner in
its discretion shall determine) shall be allocated to the Managing General
Partner and such Special Limited Partner(s) to the extent that the redemption
amounts paid or payable with respect to the Series A Partnership Preferred Units
so redeemed (or treated as redeemed) exceeds the aggregate Capital Account
Balances (net of liabilities assumed or taken subject to by the Partnership) per
Series A Partnership Preferred Unit allocable to the Series A Partnership
Preferred Units so redeemed (or treated as redeemed) and (b) deductions and
losses (in such relative proportions as the Managing General Partner in its
discretion shall determine) shall be allocated to the Managing General Partner
and such Special Limited Partner(s) to the extent that the aggregate Capital
Account Balances (net of liabilities assumed or taken subject to by the
Partnership) per Series A Partnership Preferred Unit allocable to the Series A
Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the
redemption amount paid or payable with respect to the Series A Partnership
Preferred Units so redeemed (or treated as redeemed).
10. Voting and Consent Rights.
(a) Holders of Series A Partnership Preferred Units shall have only those
voting and consent rights specified in Section 7.3.B of the Agreement and
Section 10(b) hereof.
(b) So long as any Series A Partnership Preferred Units are outstanding, in
addition to any other vote or consent of holders of Series A Partnership
Preferred Units required by law or by the Agreement, the affirmative vote or
consent of holders of at least 50% of the outstanding Series A Partnership
Preferred Units, voting or consenting as a separate class, given in Person or by
proxy, either in writing without a meeting or by vote at any meeting called for
the purpose, shall be
H1-8
<PAGE>
necessary for effecting or validating any amendment or alteration of any of the
provisions of this Partnership Unit Designation or the Agreement that materially
and adversely affects the material powers, rights or preferences of the holders
of the Series A Partnership Preferred Units; provided, however, that the
-------- -------
amendment of the Agreement so as to authorize, create, issue or grant any class
or series of Partnership Units, including, without limitation, any such
Partnership Units that may have rights senior or superior to the Series A
Partnership Preferred Units, shall be deemed not to materially and adversely
affect the material powers, rights or preferences of the holders of Series A
Partnership Preferred Units.
(c) Except as otherwise required by applicable law or as set forth herein
or in the Agreement, the holders of the Series A Partnership Preferred Units
shall not have any relative, participating, optional or other special voting
rights or powers with respect to any matter, and the consent or approval of the
holders thereof shall not be required for the taking of any action by the
Partnership.
11. Information Rights.
Holders of Series A Partnership Preferred Units shall have only the
information rights specified in Section 8.5.A and Section 9.3 of the Agreement.
12. Restrictions on Transfer.
The Series A Partnership Preferred Units are subject to the restrictions on
transfer set forth in Article 11 of the Agreement.
13. Ambiguity.
In the case of an ambiguity in the application of any of the provisions of
this Partnership Unit Designation, the Managing General Partner shall have the
power to determine the application of the provisions of this Partnership Unit
Designation with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
14. Partnership Records.
The Managing General Partner shall amend Exhibit A to the Agreement from
---------
time to time to the extent necessary to reflect accurately the grant and any
subsequent redemption of, or other event having an effect on the ownership of,
Series A Partnership Preferred Units.
15. Governing Law.
This Exhibit H shall be construed and enforced in accordance with, and
---------
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
H1-9
<PAGE>
EXHIBIT H2
PARTNERSHIP UNIT DESIGNATION OF SERIES B
PARTNERSHIP PREFERRED UNITS OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
1. Creation, Number and Designation.
A class of Partnership Preferred Units is hereby created and designated as
"Series B Partnership Preferred Units." The number of Partnership Preferred
Units constituting the Series B Partnership Preferred Units shall be 400,000.
2. Definitions.
For purposes of this Partnership Unit Designation, the following terms
shall have the respective meanings indicated in this Section 2, and capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement:
"Agreement" shall mean the First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership, dated as of August 3,
1998, as amended, modified, supplemented or restated, from time to time.
"Base Distribution" shall mean $8.50 per Series B Partnership Preferred
Unit per annum.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York
City, New York, are authorized or required by law, regulation or executive order
to close.
"Common Equivalent Factor" shall have the meaning set forth in the
Certificate of Designation Setting Forth "Resolution Designating Series B
Preferred Shares and Fixing Preferences and Rights Thereof" Adopted by the Board
of Directors of Westfield America, Inc.
"Distribution Payment Date" shall mean, with respect to each Distribution
Period, the date that regular quarterly cash distributions are paid on the
Partnership Common Units with respect to such Distribution Period; provided,
however, that if any Distribution Payment Date falls on any day other than a
Business Day, the distribution payable on such Distribution Payment Date shall
be paid on the Business Day immediately following such Distribution Payment
Date.
"Distribution Period" shall mean the Initial Distribution Period and,
subject to Section 3(h) below, each subsequent quarterly distribution period
commencing on and including January 1, April 1, July 1 and October 1 of each
year and ending on and including the day preceding the first day of the next
succeeding Distribution Period.
H2-1
<PAGE>
"Grant Date" shall mean August 3, 1998.
"Initial Distribution Period" shall mean the period commencing on and
including the Grant Date and ending on and including September 30, 1998.
"Junior Units" shall have the meaning set forth in Section 8(c) hereof.
"Parity Units" shall have the meaning set forth in Section 8(b) hereof.
"Partnership" shall mean Westfield America Limited Partnership, a Delaware
limited partnership.
"Series B Partnership Preferred Unit" means a Partnership Unit created
under this Partnership Unit Designation, with the designations, preferences and
relative, participating, optional or other special rights, powers and duties set
forth in this Exhibit H.
---------
"Senior Units" shall have the meaning set forth in Section 8(a) hereof.
3. Distributions.
(a) Holders of Series B Partnership Preferred Units shall not be entitled
to any distributions on the Series B Partnership Preferred Units, whether
payable in cash, property or stock, except as provided in this Exhibit H.
---------
(b) The holders of Series B Partnership Preferred Units shall be entitled
to receive, when, as and if determined by the Managing General Partner and
payable only out of Available Cash, cumulative (from the Grant Date) cash
distributions payable in arrears on each Distribution Payment Date, commencing
on the first Distribution Payment Date after the Grant Date, as follows:
(i) for the first Distribution Period of any calendar year, an amount per
Series B Partnership Preferred Unit equal to the greater of (A) 25% of the
Base Distribution or (B) the dollar amount of cash distributions paid with
respect to one Partnership Common Unit outstanding during all of the first
Distribution Period of such calendar year;
(ii) for the second Distribution Period of any calendar year, an amount per
Series B Partnership Preferred Unit such that the aggregate amount
distributed in respect of each Series B Partnership Preferred Unit
outstanding during all of the first two Distribution Periods of such
calendar year is equal to the greater of (A) 50% of the Base Distribution
or (B) the aggregate dollar amount of cash distributions paid with respect
to one Partnership Common Unit outstanding during all of the first two
Distribution Periods;
(iii) for the third Distribution Period of any calendar year, an amount
per Series B Partnership Preferred Unit such that the aggregate amount
distributed in respect of each
H2-2
<PAGE>
Series B Partnership Preferred Unit outstanding during all of the first
three Distribution Periods of such calendar year is equal to the greater of
(A) 75% of the Base Distribution or (B) the aggregate dollar amount of cash
distributions paid with respect to one Partnership Common Unit outstanding
during all of the first three Distribution Periods; and
(iv) for the final Distribution Period of any calendar year, an amount per
Series B Partnership Preferred Unit such that the aggregate amount
distributed in respect of each Series B Partnership Preferred Unit
outstanding during all of the Distribution Periods of such calendar year is
equal to the greater of (A) the Base Distribution or (B) the aggregate
dollar amount of cash distributions paid with respect to one Partnership
Common Unit outstanding during all Distribution Periods of such calendar
year;
provided, however, that if the aggregate dollar amount of cash distributions
- -------- -------
paid with respect to a Series B Partnership Preferred Unit for all Distribution
Periods of any calendar year exceeds an amount equal to the greater of (A) the
Base Distribution or (B) the aggregate dollar amount of cash distributions paid
with respect to one Partnership Common Unit outstanding during all Distribution
Periods of such calendar year, in either case, with such amount prorated based
on the portion of the year that such Series B Partnership Preferred Unit was
outstanding, then the distributions payable in respect of such Series B
Partnership Preferred Unit in subsequent calendar years shall be reduced by the
amount of such excess.
(c) Distributions paid with respect to Series B Partnership Preferred Units
shall be payable to the holders of record of the Series B Partnership Preferred
Units as they appear on Exhibit A to the Agreement at the close of business on
---------
the record date established by the Managing General Partner for such
distribution or, if no such record date is established, on the Distribution
Payment Date. Any record date established by the Managing General Partner shall
not be more than fifty (50) days prior to the applicable Distribution Payment
Date.
(d) Distributions payable with respect to any Series B Partnership
Preferred Unit that was not outstanding during the entire Distribution Period
for which such distribution is paid shall be prorated based on the portion of
the Distribution Period that such Series B Partnership Preferred Unit was
outstanding.
(e) Distributions paid on Series B Partnership Preferred Units in an
aggregate amount less than the aggregate amount then accumulated and payable
shall be allocated pro rata among all holders of Series B Partnership Preferred
Units outstanding based on the respective number of each holder's Series B
Partnership Preferred Units. Subject to the terms of the Agreement and the
rights of any holders of Senior Units, accumulated but unpaid distributions for
any prior Distribution Periods may be paid at any time, without reference to any
regularly scheduled quarterly payment date, to the holders of record of the
Series B Partnership Preferred Units as they appear on the records of the
Partnership at the close of business on the record date established by the
Managing General Partner for such distribution (which shall not be more than
fifty (50) days prior to the applicable payment date) or, if no such record date
is established, on the payment date.
H2-3
<PAGE>
(f) So long as any of the Series B Partnership Preferred Units are
outstanding, except as described in the immediately following sentence, no
distributions shall be paid by the Partnership and no other distribution of cash
or other property shall be made, directly or indirectly, by the Partnership with
respect to any class or series of Parity Units for any period unless
distributions equal to the full amount of accumulated and unpaid distributions
have been, or contemporaneously are, paid with respect to the Series B
Partnership Preferred Units for all Distribution Periods ending on or prior to
the Distribution Payment Date with respect to such class or series of Parity
Units. When the distributions provided for in Section 3(b) hereof are not paid
in full, all distributions paid with respect to the Series B Partnership
Preferred Units and all distributions paid with respect to any other class or
series of Parity Units shall be paid ratably in proportion to the respective
amounts of distributions accumulated and unpaid on the Series B Partnership
Preferred Units and accumulated and unpaid on such Parity Units.
(g) So long as any Series B Partnership Preferred Units are outstanding, no
distributions (other than distributions paid solely in Junior Units or options,
warrants or rights to subscribe for or purchase Junior Units) shall be paid by
the Partnership and no other distribution of cash or other property shall be
made, directly or indirectly, by the Partnership with respect to any Junior
Units, nor shall any Junior Units be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any such Junior Units), directly or indirectly, by
the Partnership (except by conversion into or exchange for Junior Units or REIT
Shares), nor shall any other cash or other property otherwise be paid or
distributed to or for the benefit of any holder of Junior Units in respect
thereof, directly or indirectly, by the Partnership unless in each case (i) the
full cumulative distributions (including all accumulated and unpaid
distributions) on all outstanding Series B Partnership Preferred Units and any
other Parity Units of the Partnership shall have been paid for all past
Distribution Periods with respect to the Series B Partnership Preferred Units
and all past distribution periods with respect to such Parity Units, and (ii)
the full amount of all distributions payable for the most recently-ended
Distribution Period with respect to the Series B Partnership Preferred Units and
the most recently-ended distribution period with respect to such Parity Units
have been paid or sufficient funds shall have been set apart for payment
thereof.
(h) Notwithstanding the foregoing, it is acknowledged that the Managing
General Partner may, pursuant to the Agreement, elect to make distributions on
the Partnership Common Units on a more or less frequent basis than quarterly and
provide for an appropriate record date; in the event that the Managing General
Partner elects to effect such a non-quarterly distribution, the Managing General
Partner may, in its sole and absolute discretion, cause a Distribution Period
(and related Distribution Payment Date) to be established to reflect the period
established for such Partnership Common Unit distributions and to make such
revisions to the distributions provided in Section 3(b) hereof as may be
required to reflect that more or less than four Distribution Payment Dates will
occur during the relevant calendar year.
H2-4
<PAGE>
4. Rights Upon Liquidation.
(a) In the event of any voluntary liquidation, dissolution or winding up of
affairs of the Partnership, the holders of the Series B Partnership Preferred
Units shall be entitled, before any distribution or payment is made to the
holders of any Junior Units, to be paid in full an amount per unit equal to
$100.00, together with all accrued but unpaid distributions through the end date
of the calendar quarter most recently completed prior to the date of
liquidation, dissolution or winding up of the affairs of the Partnership (any
such date, a "Series B Voluntary Liquidation Date") plus (y) 2.125 times a
fraction equal to the actual number of days elapsed from the end date of the
calendar quarter most recently completed to the relevant Series B Voluntary
Liquidation Date over ninety days. In the event of any involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, then, before any
distribution or payment is made to the holders of any Junior Units, the holders
of the Series B Partnership Preferred Units shall be entitled to be paid in full
an amount per share equal to $100.00, together with (x) all accrued and unpaid
distributions through the end date of the calendar quarter most recently
completed prior to the involuntary liquidation (any such date, a "Series B
Involuntary Liquidation Date") plus (y) $2.125 times a fraction equal to the
actual number of days elapsed from the date of the calendar quarter most
recently completed to the relevant Series B Involuntary Liquidation Date over
ninety days.
(b) Payment shall be made in full to all holders of the Series B
Partnership Preferred Units and other Parity Units, before any remaining assets
of the Partnership shall be distributed among the holders of the Junior Units,
according to their respective numbers of units. For the purposes of this
Section 4, the consolidation or merger of the Partnership with any other
corporation, partnership or other legal entity shall not be deemed to constitute
a liquidation, dissolution or winding up of the Partnership but shall, to the
extent appropriate, cause an adjustment to the Common Equivalent Factor.
(c) Upon the occurrence of any liquidation and subsequent dissolution and
winding up of the Partnership, after payment shall have been made in full to the
holders of Series B Partnership Preferred Units and any Parity Units, as
provided in Section 4(b) hereof, any other series or class or classes of Junior
Units shall, subject to the respective terms thereof, be entitled to receive any
and all assets remaining to be paid or distributed.
5. Redemption.
(a) The Partnership, at the option of the Managing General Partner, may
redeem in whole, or in part, the Series B Partnership Preferred Units at the
time outstanding at any time and from time to time from and after May 21, 2004,
upon notice given as hereinafter specified, at a redemption price for each
Series B Partnership Preferred Unit equal to $100.00 together with (i) all
accrued and unpaid distributions through the end date of the calendar quarter
most recently completed prior to the date of redemption of the Series B
Partnership Preferred Units (each a "Series B Redemption Date"); plus (ii)
$2.125 times a fraction equal to the actual number of days elapsed from the end
date of the calendar quarter most recently completed to the relevant Series B
H2-5
<PAGE>
Redemption Date over ninety days (such fraction, the "Pro Rata Adjustment");
plus (iii) a right to receive on the payment date for distributions declared on
the Common Partnership Units with respect to the calendar quarter during which
the relevant Series B Redemption Date occurs (the "Relevant Quarter"), the
excess of (x) the Common Equivalent Factor times (A) the dollar amount of the
per unit distributions declared on the Common Partnership Units for the Relevant
Quarter times the Pro Rata Adjustment plus (B) the dollar amount of the per unit
distributions declared on the Common Partnership Units from the beginning of the
calendar year in which such redemption occurs through the end date of the
calendar quarter prior to the Relevant Quarter over (y) the dollar amount
calculated in the preceding clause (ii) plus all other distributions paid on the
Preferred Units of the Partnership from the beginning of the calendar year
during which the relevant Series B Redemption Date occurs.
(b) If the Partnership shall determine to redeem less than all of the
Series B Partnership Preferred Units then outstanding, the units to be redeemed
shall be selected pro rata (as nearly as may be) so that the number of units
redeemed from each holder shall be the same proportion of all the units to be
redeemed that the total number of Series B Partnership Preferred Units then held
by such holder bears to the total number of Series B Partnership Preferred Units
then outstanding.
(c) Notice of any proposed redemption of shares of Series B Partnership
Preferred Units shall be mailed by first class mail, postage prepaid, addressed
to the holders of record of the units to be redeemed, at their respective last
addresses as they shall appear on the books of the Partnership. Such mailing
shall be at least 30 days and not more than 60 days prior to the date fixed for
such redemption. Any notice which is mailed in the manner herein provided shall
be conclusively presumed to have been duly given, whether or not the holder
receives such notice, and failure duly to give such notice by mail, or any
defect in such notice, to any holder of Series B Partnership Preferred Units
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other Series B Partnership Preferred Units.
The Managing General Partner shall have full power and authority, subject
to the provisions herein contained, to prescribe the terms and conditions upon
which Series B Partnership Preferred Units shall be redeemed.
If notice of redemption shall have been duly given, and if, on or before
the redemption date specified therein, the Partnership shall deposit all funds
necessary for such redemption with a bank or trust company in an account that is
separate and apart from its other accounts and shall hold such funds in trust
for the pro rata benefit of the holders of the units called for redemption, so
as to be and continue to be available therefor, then, notwithstanding that any
certificate for units so called for redemption shall not have been surrendered
for cancellation, all units so called for redemption shall no longer be deemed
outstanding on and after such redemption date, and all rights with respect to
such units shall forthwith on such redemption date cease and terminate, except
only the right of the holders thereof to receive the amount payable on
redemption thereof, without interest.
Any funds so deposited and unclaimed at the end of two years from such
redemption date
H2-6
<PAGE>
shall, to the extent permitted by law, be released or repaid to the Partnership,
after which repayment the holders of the shares so called for redemption shall
look only to the Partnership for payment thereof.
6. Status of Reacquired Series B Partnership Preferred Units.
All Series B Partnership Preferred Units which shall have been granted and
reacquired in any manner by the Partnership shall be deemed cancelled.
7. Conversion.
Series B Partnership Preferred Units shall be convertible as provided in
Section 4.7.A of the Agreement.
8. Ranking.
The Series B Partnership Preferred Units shall with respect to distribution
rights and rights on liquidation, dissolution and winding up of the affairs of
the Partnership, rank pari passu to the Series A Partnership Preferred Units,
----------
the Series C Partnership Preferred Units and the Series D Partnership Preferred
Units.
Each Series B Partnership Preferred Unit shall be identical in all respects
to each other Series B Partnership Preferred Unit.
Any class or series of Partnership Units or Investor Unit Rights shall be
deemed to rank:
(a) prior or senior to the Series B Partnership Preferred Units, as to the
payment of distributions and as to distributions of assets upon dissolution and
winding up of the Partnership, if the holders of such class or series of
Partnership Units or Investor Unit Rights, as the case may be, shall be entitled
to the receipt of distributions or of amounts distributable upon dissolution and
winding up of the Partnership in preference or priority to the holders of Series
B Partnership Preferred Units ("Senior Units");
(b) on a parity with the Series B Partnership Preferred Units, as to the
payment of distributions and as to distribution of assets upon dissolution and
winding up of the Partnership, whether or not the distribution rates,
distribution payment dates or redemption or liquidation prices per unit or other
denomination thereof shall be different from those of the Series B Partnership
Preferred Units, if the holders of such class or series of Partnership Units or
Investor Unit Rights, as the case may be, and the Series B Partnership Preferred
Units shall be entitled to the receipt of distributions and of amounts
distributable upon dissolution and winding up of the Partnership in proportion
to their respective amounts of accumulated and unpaid distributions per unit or
other denomination or liquidation preferences, without preference or priority
one over the other ("Parity Units"); and
H2-7
<PAGE>
(c) junior to the Series B Partnership Preferred Units, as to the payment
of distributions or as to the distribution of assets upon dissolution and
winding up of the Partnership, if such class or series of Partnership Units is
Partnership Common Units or if the holders of Series B Partnership Preferred
Units shall be entitled to receipt of distributions or of amounts distributable
upon dissolution and winding up of the Partnership, in preference or priority
to the holders of such class or series of Partnership Units or Investor Unit
Rights ("Junior Units").
9. Allocations.
(a) For each partnership year, each Holder of a Share of Series B Preferred
Units shall be allocated Net Income of the Partnership in an amount equal to the
amount of distributions made with respect to such Holder's Series B Preferred
Units pursuant to Section 3 hereof during such Partnership Year. In no event
shall items of Net Loss of the Partnership be allocated to any Holder of Series
B Preferred Units unless such allocation is required by Section 704(b) of the
Code or Section 9(b) of this Exhibit H-2.
-----------
(b) If any Series B Partnership Preferred Units are redeemed pursuant to
Section 4.7.B of the Agreement, for the Partnership Year that includes such
redemption (and, if necessary, for subsequent Partnership Years) (a) gross
income and gain (in such relative proportions as the Managing General Partner in
its discretion shall determine) shall be allocated to the Managing General
Partner and such Special Limited Partner(s) to the extent that the redemption
amounts paid or payable with respect to the Series B Partnership Preferred Units
so redeemed (or treated as redeemed) exceeds the aggregate Capital Account
Balances (net of liabilities assumed or taken subject to by the Partnership) per
Series B Partnership Preferred Unit allocable to the Series B Partnership
Preferred Units so redeemed (or treated as redeemed) and (b) deductions and
losses (in such relative proportions as the Managing General Partner in its
discretion shall determine) shall be allocated to the Managing General Partner
and such Special Limited Partner(s) to the extent that the aggregate Capital
Account Balances (net of liabilities assumed or taken subject to by the
Partnership) per Series B Partnership Preferred Unit allocable to the Series B
Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the
redemption amount paid or payable with respect to the Series B Partnership
Preferred Units so redeemed (or treated as redeemed).
10. Voting and Consent Rights.
(a) Holders of Series B Partnership Preferred Units shall have only those
voting and consent rights specified in Section 7.3.B of the Agreement and
Section 10(b) hereof.
(b) So long as any Series B Partnership Preferred Units are outstanding, in
addition to any other vote or consent of holders of Series B Partnership
Preferred Units required by law or by the Agreement, the affirmative vote or
consent of holders of at least 50% of the outstanding Series B Partnership
Preferred Units, voting or consenting as a separate class, given in Person or by
proxy, either in writing without a meeting or by vote at any meeting called for
the purpose, shall be
H2-8
<PAGE>
necessary for effecting or validating any amendment or
alteration of any of the provisions of this Partnership Unit Designation or the
Agreement that materially and adversely affects the material powers, rights or
preferences of the holders of the Series B Partnership Preferred Units;
provided, however, that the amendment of the Agreement so as to authorize,
- -------- -------
create, issue or grant any class or series of Partnership Units, including,
without limitation, any such Partnership Units that may have rights senior or
superior to the Series B Partnership Preferred Units, shall be deemed not to
materially and adversely affect the material powers, rights or preferences of
the holders of Series B Partnership Preferred Units.
(c) Except as otherwise required by applicable law or as set forth herein
or in the Agreement, the holders of the Series B Partnership Preferred Units
shall not have any relative, participating, optional or other special voting
rights or powers with respect to any matter, and the consent or approval of the
holders thereof shall not be required for the taking of any action by the
Partnership.
11. Information Rights.
Holders of Series B Partnership Preferred Units shall have only the
information rights specified in Section 8.5.A and Section 9.3 of the Agreement.
12. Restrictions on Transfer.
The Series B Partnership Preferred Units are subject to the restrictions on
transfer set forth in Article 11 of the Agreement.
13. Ambiguity.
In the case of an ambiguity in the application of any of the provisions of
this Partnership Unit Designation, the Managing General Partner shall have the
power to determine the application of the provisions of this Partnership Unit
Designation with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
14. Partnership Records.
The Managing General Partner shall amend Exhibit A to the Agreement from
---------
time to time to the extent necessary to reflect accurately the grant and any
subsequent redemption of, or other event having an effect on the ownership of,
Series B Partnership Preferred Units.
15. Governing Law.
This Exhibit H shall be construed and enforced in accordance with, and
---------
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
H2-9
<PAGE>
EXHIBIT I
INVESTOR UNIT RIGHT DESIGNATION
OF THE
CLASS A INVESTOR UNIT RIGHTS
OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
1. CREATION, NUMBER AND DESIGNATION.
A class of Investor Unit Rights is hereby created and designated as "Class
A Investor Unit Rights." The number of Investor Unit Rights constituting the
Class A Investor Unit Rights shall be unlimited.
2. DEFINITIONS.
For purposes of this Investor Unit Right Designation, the following terms
shall have the respective meanings indicated in this Section 2, and capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement:
"Agreement" shall mean the First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership, dated as of August 3, 1998
as amended, modified, supplemented or restated, from time to time.
"Class A Investor Unit Right" means an Investor Unit Right created under
this Investor Unit Right Designation, with the designations, preferences and
relative, participating, optional or other special rights, powers and duties set
forth in this Exhibit I.
---------
"Distribution Payment Date" shall mean, with respect to each Distribution
Period, the date that regular quarterly cash distributions are paid on the
Partnership Common Units with respect to such Distribution Period; provided,
however, that if any Distribution Payment Date falls on any day other than a
Business Day, the distribution payable on such Distribution Payment Date shall
be paid on the Business Day immediately following such Distribution Payment
Date.
"Distribution Period" shall mean the Initial Distribution Period and each
subsequent quarterly distribution period commencing on and including January 1,
April 1, July 1 and October 1 of each year and ending on and including the day
preceding the first day of the next succeeding Distribution Period.
Notwithstanding the foregoing, it is acknowledged that the Managing General
Partner may, pursuant to the Agreement, elect to make distributions on the
Partnership Common Units on a more or less frequent basis than quarterly and
provide for an appropriate record date; in the event that the Managing General
Partner elects to effect such a non-quarterly distribution, the Managing General
Partner shall cause a Distribution Period (and related Distribution Payment
Date) with respect to the Class A Investor Unit Rights to be established to
reflect the period established for such Partnership Common Unit distributions
and to make such revisions to the distributions as may be required to reflect
that more or less than four Distribution Payment Dates will occur during the
relevant calendar year.
"Grant Date" shall mean the date Class A Investor Unit Rights initially are
sold to Investors.
I-1
<PAGE>
"Initial Distribution Period" shall mean the period commencing on and
including the Grant Date and ending on and including the next succeeding
Distribution Payment Date.
"Parity Units" shall have the meaning set forth in Section 8(b) hereof.
"Partnership" shall mean Westfield America Limited Partnership, a Delaware
limited partnership.
"Senior Units" shall have the meaning set forth in Section 8(a) hereof.
3. DISTRIBUTIONS.
In accordance with, and subject to the terms of, Section 5.1 and 13.5
of the Partnership Agreement, each holder of a Class A Investor Unit Right shall
receive, for each Distribution Period, a pro rata share of Distributions under
Article 5 of the Partnership Agreement in an amount equal to the Distributions
such Investor would have received if such Investor had been a Limited Partner
and had held one Partnership Common Unit for each of such Investor's Class A
Investor Unit Rights.
4. DISTRIBUTIONS UPON LIQUIDATION.
Upon the occurrence of a Liquidating Event and subsequent dissolution and
winding up of the Partnership, each holder of a Class A Investor Unit Right
shall be entitled to receive an amount per Class A Investor Unit Right equal to
the amount such holder would have received if the holder held one Partnership
Common Unit in accordance with clause (4) of Section 14.2 of the Agreement.
5. REDEMPTION.
Class A Investor Unit Rights shall be redeemable as provided in Section
13.10 and Section 16.1 of the Agreement. Upon any such redemption, the Managing
General Partner shall amend Exhibit A and Exhibit B to the Agreement as
--------- ---------
appropriate to reflect such redemption.
6. STATUS OF REACQUIRED CLASS A INVESTOR UNIT RIGHTS.
All Class A Investor Unit Rights which shall have been granted and
reacquired in any manner by the Partnership shall be deemed cancelled.
7. CONVERSION.
Class A Investor Unit Rights shall not be convertible by the holders
thereof or by the Partnership into any other securities of the Partnership.
8. RANKING.
Any class or series of Partnership Units or Investor Unit Rights shall be
deemed to rank:
(a) prior or senior to the Class A Investor Unit Rights, as to the payment
of distributions and as to distributions of assets upon dissolution and winding
up of the Partnership, if the holders of such class or series of Partnership
Units or Investor Unit Rights, as the case may be, shall be entitled to the
receipt of
I-2
<PAGE>
distributions or of amounts distributable upon dissolution and winding up of the
Partnership in preference or priority to the holders of Class A Investor Unit
Rights ("Senior Units"); and
(b) on a parity with the Class A Investor Unit Rights, as to the payment
of distributions and as to distributions of assets upon dissolution and winding
up of the Partnership, if such class or series of Partnership Units is
Partnership Common Units or if the holders of such class or series of
Partnership Units or Investor Unit Rights, as the case may be, and the Class A
Investor Unit Rights shall be entitled to the receipt of distributions and of
amounts distributable upon dissolution and winding up of the Partnership in
proportion to their respective amounts of accumulated and unpaid distributions
per unit or other denomination or liquidation preferences, without preference or
priority one over the other ("Parity Units").
9. ALLOCATIONS.
As provided in Article 13 of the Agreement, each holder of Class A Investor
Unit Rights shall be allocated its pro rata share of all items of Net Income and
Net Loss of the Partnership in the manner set forth in Article 6 of the
Agreement.
10. VOTING AND CONSENT RIGHTS.
(a) Holders of Class A Investor Unit Rights shall have only those voting
and consent rights specified in Section 13.5.C of the Agreement and Section
10(b) hereof.
(b) Except as otherwise required by applicable law or as set forth herein
or in the Agreement, the holders of the Class A Investor Unit Rights shall not
have any relative, participating, optional or other special voting rights or
powers with respect to any matter, and the consent or approval of the holders
thereof shall not be required for the taking of any action by the Partnership.
11. INFORMATION RIGHTS.
Holders of Class A Investor Unit Rights shall have only the information
rights specified in Section 13.5.D of the Agreement.
12. RESTRICTIONS ON TRANSFER.
The Class A Investor Unit Rights are subject to the restrictions on
transfer set forth in Section 13.7 of the Agreement.
13. AMBIGUITY.
In the case of an ambiguity in the application of any of the provisions of
this Investor Unit Right Designation, the Managing General Partner shall have
the power to determine the application of the provisions of this Investor Unit
Right Designation with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
I-3
<PAGE>
14. PARTNERSHIP RECORDS.
The Managing General Partner shall amend Exhibit B to the Agreement from
---------
time to time to the extent necessary to reflect accurately the grant and any
subsequent redemption of, or other event having an effect on the ownership of,
Class A Investor Unit Rights.
15. GOVERNING LAW.
This Exhibit I shall be construed and enforced in accordance with, and
---------
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
I-4
<PAGE>
Exhibit I-1
INVESTOR UNIT RIGHT DESIGNATION
OF THE
CLASS A-1 INVESTOR UNIT RIGHTS
OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
1. Creation, Number and Designation.
A class of Investor Unit Rights is hereby created and designated as "Class
A-1 Investor Unit Rights." The number of Investor Unit Rights constituting the
Class A-1 Investor Unit Rights shall be unlimited.
2. Definitions.
For purposes of this Investor Unit Right Designation, the following terms
shall have the respective meanings indicated in this Section 2, and capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement:
"Agreement" shall mean the First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership, dated as of August 3, 1998
as amended, modified, supplemented or restated, from time to time.
"Class A Investor Unit Right" shall mean an Investor Unit Right created
under the Investor Unit Right Designation of the Class A Investor Unit Rights of
Westfield America Limited Partnership (the "Class A Investor Unit Right
Designation"), with the designations, preferences and relative, participating,
optional or other special rights, powers and duties set forth in Exhibit I to
---------
the Agreement.
"Class A-1 Investor Unit Right" shall mean an Investor Unit Right created
under this Investor Unit Right Designation, with the designations, preferences
and relative, participating, optional or other special rights, powers and duties
set forth in this Exhibit I-1.
-----------
"Distribution Payment Date" shall mean, with respect to each Distribution
Period, the date that regular quarterly cash distributions are paid on the
Partnership Common Units with respect to such Distribution Period; provided,
however, that if any Distribution Payment Date falls on any day other than a
Business Day, the distribution
I-1-1
<PAGE>
payable on such Distribution Payment Date shall be paid on the Business Day
immediately following such Distribution Payment Date.
"Distribution Period" shall mean the Initial Distribution Period and each
subsequent quarterly distribution period commencing on and including January 1,
April 1, July 1 and October 1 of each year and ending on and including the day
preceding the first day of the next succeeding Distribution Period.
Notwithstanding the foregoing, it is acknowledged that the Managing General
Partner may, pursuant to the Agreement, elect to make distributions on the
Partnership Common Units on a more or less frequent basis than quarterly and
provide for an appropriate record date; in the event that the Managing General
Partner elects to effect such a non-quarterly distribution, the Managing General
Partner shall cause a Distribution Period (and related Distribution Payment
Date) with respect to the Class A-1 Investor Unit Rights to be established to
reflect the period established for such Partnership Common Unit distributions
and to make such revisions to the distributions as may be required to reflect
that more or less than four Distribution Payment Dates will occur during the
relevant calendar year.
"Grant Date" shall mean the date Class A-1 Investor Unit Rights initially
are sold to Investors.
"Initial Distribution Period" shall mean the period commencing on and
including the Grant Date and ending on and including the next succeeding
Distribution Payment Date.
"Parity Units" shall have the meaning set forth in Section 9(b) hereof.
"Partnership" shall mean Westfield America Limited Partnership, a Delaware
limited partnership.
"Senior Units" shall have the meaning set forth in Section 9(a) hereof.
"Special Distribution" shall have the meaning set forth in Section 4
hereof.
3. Distributions.
In accordance with, and subject to the terms of, Section 5.1 and 13.5 of
the Partnership Agreement, each holder of a Class A-1 Investor Unit Right shall
receive, for each Distribution Period, a pro rata share of Distributions under
Article 5 of the
I-1-2
<PAGE>
Partnership Agreement in an amount equal to the Distributions such Investor
would have received if such Investor had been a Limited Partner and had held one
Partnership Common Unit for each of such Investor's Class A-1 Investor Unit
Rights.
4. Special Distribution.
On January 29, 1999, each holder of a Class A-1 Investor Unit Right shall
receive a special distribution in the amount of $17.00 per each Class A-1
Investor Unit Right (the "Special Distribution").
5. Distributions Upon Liquidation.
Upon the occurrence of a Liquidating Event and subsequent dissolution and
winding up of the Partnership, each holder of a Class A-1 Investor Unit Right
shall be entitled to receive an amount per Class A-1 Investor Unit Right equal
to the amount such holder would have received if the holder held one Partnership
Common Unit in accordance with clause (4) of Section 14.2 of the Agreement.
6. Conversion.
Immediately after payment of the Special Distribution, each Class A-1
Investor Unit Right shall automatically convert into one Class A Investor Unit
Right. Upon such conversion, all rights of each holder of such Class A-1
Investor Unit Rights shall cease and each holder shall have only the rights of a
holder of Class A Investor Unit Rights as set forth in the Class A Investor Unit
Right Designation.
7. Redemption.
Class A-1 Investor Unit Rights shall be redeemable as provided in Section
13.10 and Section 16.1 of the Agreement. Upon any such redemption, the Managing
General Partner shall amend Exhibit A and Exhibit B to the Agreement as
--------- ---------
appropriate to reflect such redemption.
8. Status of Reacquired Class A-1 Investor Unit Rights.
All Class A-1 Investor Unit Rights which shall have been granted and
reacquired in any manner by the Partnership shall be deemed cancelled.
I-1-3
<PAGE>
9. Ranking.
Any class or series of Partnership Units or Investor Unit Rights shall be
deemed to rank:
(a) prior or senior to the Class A-1 Investor Unit Rights, as to the
payment of distributions and as to distributions of assets upon dissolution and
winding up of the Partnership, if the holders of such class or series of
Partnership Units or Investor Unit Rights, as the case may be, shall be entitled
to the receipt of distributions or of amounts distributable upon dissolution and
winding up of the Partnership in preference or priority to the holders of Class
A-1 Investor Unit Rights ("Senior Units"); and
(b) on a parity with the Class A-1 Investor Unit Rights, as to the payment
of distributions and as to distributions of assets upon dissolution and winding
up of the Partnership, if such class or series of Partnership Units is
Partnership Common Units or if the holders of such class or series of
Partnership Units or Investor Unit Rights, as the case may be, and the Class A-1
Investor Unit Rights shall be entitled to the receipt of distributions and of
amounts distributable upon dissolution and winding up of the Partnership in
proportion to their respective amounts of accumulated and unpaid distributions
per unit or other denomination or liquidation preferences, without preference or
priority one over the other ("Parity Units").
10. Allocations.
As provided in Article 13 of the Agreement, each holder of Class A-1
Investor Unit Rights shall be allocated its pro rata share of all items of Net
Income and Net Loss of the Partnership in the manner set forth in Article 6 of
the Agreement.
11. Voting and Consent Rights.
(a) Holders of Class A-1 Investor Unit Rights shall have only those voting
and consent rights specified in Section 13.5.C of the Agreement and Section
11(b) hereof.
(b) Except as otherwise required by applicable law or as set forth herein
or in the Agreement, the holders of the Class A-1Investor Unit Rights shall not
have any relative, participating, optional or other special voting rights or
powers with respect to any matter, and the consent or approval of the holders
thereof shall not be required for the taking of any action by the Partnership.
I-1-4
<PAGE>
12. Information Rights.
Holders of Class A-1 Investor Unit Rights shall have only the information
rights specified in Section 13.5.D of the Agreement.
13. Restrictions on Transfer.
The Class A-1 Investor Unit Rights are subject to the restrictions on
transfer set forth in Section 13.7 of the Agreement.
14. Ambiguity.
In the case of an ambiguity in the application of any of the provisions of
this Investor Unit Right Designation, the Managing General Partner shall have
the power to determine the application of the provisions of this Investor Unit
Right Designation with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
15. Partnership Records.
The Managing General Partner shall amend Exhibit B to the Agreement from
---------
time to time to the extent necessary to reflect accurately the grant and any
subsequent redemption of, or other event having an effect on the ownership of,
Class A-1 Investor Unit Rights.
16. Governing Law.
This Exhibit I-1 shall be construed and enforced in accordance with, and
-----------
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
I-1-5
<PAGE>
EXHIBIT 10.4
FIRST AMENDMENT TO THE
FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
This FIRST AMENDMENT TO THE FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF WESTFIELD AMERICA LIMITED PARTNERSHIP, dated as of August 12,
1998 (this "Amendment"), is being executed by Westfield America, Inc., a
Missouri corporation (the "Managing General Partner"), as the managing general
partner of Westfield America Limited Partnership, a Delaware limited partnership
(the "Partnership"), and on behalf of the Limited Partners pursuant to the
authority conferred on the Managing General Partner by Sections 2.4 and 12.3 of
the First Amended and Restated Agreement of Limited Partnership of Westfield
America Limited Partnership, dated as of August 3, 1998 (the "Agreement").
Capitalized terms used herein, but not otherwise defined herein, shall have the
respective meanings ascribed thereto in the Agreement.
WHEREAS, pursuant to Sections 7.1 and 12.3 of the Agreement, the Managing
General Partner is authorized to determine the designations, preferences and
relative, participating, optional or other special rights, powers and duties of
additional Partnership Units and to amend the Agreement, and the Managing
General Partner is hereby creating the Partnership Preferred Units with the
designations, preferences and other rights, terms and provisions as set forth on
Exhibit J and Exhibit K attached hereto.
- --------- ---------
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Agreement is hereby amended by the addition of a two new exhibits,
entitled "Exhibit J" and "Exhibit K" in the form attached hereto, which shall be
--------- ---------
attached to and made a part of the Agreement.
2. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and effect and, except as amended hereby, all of the terms,
covenants, provisions and conditions of the Agreement are hereby ratified and
confirmed in all respects.
3. This Amendment shall be construed and enforced in accordance with, and
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
WESTFIELD AMERICA, INC.,
Managing General Partner
By: /s/ Irv Hepner
--------------------------
Name: Irv Hepner
Title: Secretary
ALL LIMITED PARTNERS
By: Westfield America, Inc., as attorney-in-fact
pursuant to the power of attorney granted under
Section 2.4 of the Agreement.
By: /s/ Irv Hepner
--------------------------
Name: Irv Hepner
Title: Secretary
2
<PAGE>
EXHIBIT J
PARTNERSHIP UNIT DESIGNATION OF SERIES C
PARTNERSHIP PREFERRED UNITS OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
1. Creation, Number and Designation.
A class of Partnership Preferred Units is hereby created and designated as
"Series C Partnership Preferred Units." The number of Partnership Preferred
Units constituting the Series C Partnership Preferred Units shall be 416,667.
The number of Series C Partnership Preferred Units may be decreased (but not
below the aggregate number thereof then outstanding and/or which have been
reserved for issuance). Each Series C Partnership Preferred Unit shall be
identical in all respects to each other Series C Partnership Preferred Unit.
2. Definitions.
For purposes of this Partnership Unit Designation, the following terms
shall have the respective meanings indicated in this Section 2, and capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement:
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall mean
a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL"), Westfield America Trust, Frank
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
Family").
"Agreement" shall mean the First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership, dated as of August 3,
1998, as amended, modified, supplemented or restated, from time to time.
"Base Distribution" shall mean an annual distribution per Series C
Partnership Preferred Unit equal to 8.5% of the Liquidation Preference per
Series C Partnership Preferred Unit.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the capital stock of the Corporation.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York
City, New York, are authorized or required by law, regulation or executive order
to close.
J-1
<PAGE>
"Call Date" shall mean the date specified in the notice to holders required
under Section 5 (d) as the Call Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value$0.01 per share, of the
Corporation.
"Consolidated EBITDA" for any quarter shall mean the consolidated net
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the Securities
and Exchange Commission, increased by the sum of the following (without
duplication):
(a) the Corporation's pro rata share of EBITDA from unconsolidated
real estate partnerships calculated in a manner consistent with this definition
of Consolidated EBITDA,
(b) all income taxes paid or accrued according to GAAP for such
quarter (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses except to the extent that such gains were not
included in Consolidated EBITDA),
(c) all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of deferred financing
fees or amortization of original issue discount, but excluding capitalized
interest),
(d) depreciation and depletion reflected in such net income,
(e) amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only to the extent
that such amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to paragraph (c) above), goodwill, other
intangibles and management fees, and
(f) any other noncash charges, to the extent deducted from
consolidated net income (including, but not limited to, income allocated to
minority interests).
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
(a) the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner consistent with
this definition of Consolidated Fixed Charges,
(b) all interest expense paid or accrued in accordance with GAAP for
such quarter (including, without duplication, financing fees and amortization of
deferred financing fees or amortization of original issue discount),
J-2
<PAGE>
(c) distribution requirements with respect to preferred stock and any
other preferred securities for such quarter (not including any portion of
preferred stock distributions the calculation of which is based on the
distribution paid in such quarter to the holders of shares of the Corporation's
Common Stock), whether or not declared or paid,
(d) regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity) and
(e) all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e)
hereof.
"Conversion Date" shall have the meaning set forth in Section 6(a) hereof.
"Conversion Price" shall mean the conversion price per Partnership Common
Unit for which the Series C Partnership Preferred Unit is convertible, as such
Conversion Price may be adjusted pursuant to Section 6. The initial conversion
price shall be $18.00.
"Corporation" shall mean Westfield America, Inc., a Missouri corporation.
"Current Market Price" of publicly traded Common Stock or any other class
of stock or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the New York
Stock Exchange ("NYSE") or, if such security is not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"Distribution Payment Date" shall mean (i), for any Distribution Period
with respect to which the Partnership pays a distribution on the Partnership
Common Unit, the date on which such distribution is paid or (ii), for any
Distribution Period with respect to which the Partnership does not pay a
distribution on the Partnership Common Unit, a date to be set by the Managing
General Partner, which date shall not be later than the thirtieth calendar day
after the end of the applicable Distribution Period.
"Distribution Periods" shall mean quarterly distribution periods commencing
on January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first
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day of the next succeeding Distribution Period with respect to any Series C
Partnership Preferred Units (other than the initial Distribution Period, which
shall commence on the Grant Date for such Series C Partnership Preferred Units
and end on and include the last day of the calendar quarter immediately
following such Grant Date, and other than the Distribution Period during which
any Series C Partnership Preferred Units shall be redeemed pursuant to Section 5
or converted pursuant to Section 6, which shall end on and include the Call Date
or Conversion Date with respect to the Series C Partnership Preferred Units
being redeemed or converted, as applicable).
"Expiration Time" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of the Corporation's Common Stock on the five (5) consecutive
Trading Days selected by the Corporation commencing not more than 20 Trading
Days before, and ending not later than, the earlier of the day in question and
the day before the "ex date" with respect to the issuance or distribution
requiring such computation. The term "ex date," when used with respect to any
issuance or distribution, means the first day on which the Common Stock trade
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
Section 3(a) hereof.
"Fully Junior Units" shall have the meaning set forth in Section 9(d)
hereof.
"Funds from Operations" shall mean net income (loss) (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment Trusts
(NAREIT), in its White Paper dated March 1995, as such definitions may be
modified from time to time.
"Grant Date" shall mean the date on which the Series C Partnership
Preferred Units are issued.
"Junior Units" shall have the meaning set forth in Section 9(c) hereof.
"Non-Electing Share" shall have the meaning set forth in Section 6(e)
hereof.
"Partnership" shall mean Westfield America Limited Partnership, a Delaware
limited partnership.
"Parity Units" shall have the meaning set forth in Section 9(b) hereof.
"Person" shall mean any individual, firm, partnership, corporation, limited
liability company,
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trust or other entity, and shall include any successor (by merger or otherwise)
of such entity.
"Purchased Shares" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"REIT Termination Event" shall mean the earliest to occur of:
(a) the filing of a federal income tax return by the Corporation for
any taxable year on which the Corporation does not compute its income as a real
estate investment trust;
(b) the approval by the shareholders of the Corporation of a proposal
for the Corporation to cease to qualify as a real estate investment trust;
(c) a determination by the Board of Directors of the Corporation,
based on the advice of counsel, that the Corporation has ceased to qualify as a
real estate investment trust; or
(d) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real estate investment
trust.
"Securities" and "Security" shall have the meanings set forth in Section
6(d)(iii) hereof.
"Series C Partnership Preferred Unit" means a Partnership Unit created
under this Partnership Unit Designation, with the designations, preferences and
relative, participating, optional or other special rights, powers and duties set
forth in this Exhibit J.
---------
"Senior Units" shall have the meaning set forth in Section 9(a) hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Partnership in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of distributions by the Managing General Partner, the allocation of
funds to be so paid on any series or class of partnership units of the
Partnership; provided, however, that if any funds for any class or series of
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Junior Units or Fully Junior Units or any class or series of Parity Units are
placed in a separate account of the Partnership or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with respect to the
Series C Partnership Preferred Units shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on NASDAQ, or if such securities are not
quoted on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e) hereof.
"Transfer Agent" shall mean the Managing General Partner, or such other
agent or agents
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of the Partnership as may be designated by the Managing General Partner as the
transfer agent, registrar and distribution disbursing agent for the Series C
Partnership Preferred Units.
3. Distributions.
(a) Holders of Series C Partnership Preferred Units shall not be
entitled to any distributions on the Series C Partnership Preferred Units,
whether payable in cash, property or stock, except as provided in this Exhibit
-------
J.
- -
(b) Subject to the preferential rights of the holders of any
Partnership Preferred Units that rank senior in the payment of distributions to
the Series C Partnership Preferred Units and subject to paragraph (c) of this
Section 3, the holders of Series C Partnership Preferred Units shall be entitled
to receive, when, as and if declared by the Managing General Partner, but only
out of funds legally available for the payment of distributions, cumulative
preferential distributions payable in cash to holders of record on the
respective date, not exceeding 50 days preceding such distribution payment date,
fixed for the purpose by the Managing General Partner in advance of payment of
each particular distribution in an amount equal to the greater of (A) the Base
Distribution per unit per annum and (B) an amount per unit equal to the
Liquidation Preference of a Series C Partnership Preferred Unit (exclusive of
accrued but unpaid distributions) divided by the Conversion Price (the "Series C
Common Equivalent Factor") times the dollar amount of cash distributions
declared with respect to each Partnership Common Unit that does not result in an
adjustment to the Conversion Price pursuant to subparagraph (d)(iii) of Section
6 (such product, the "Series C Common Equivalent Amount") for the same annual
period; provided, however, that if as a result of the quarterly distributions
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paid in accordance with the following sentence, the holders of Series C
Partnership Preferred Units shall have received for any calendar year more
distributions than such units shall be entitled under subparagraphs (A) and (B)
above (as adjusted pursuant to the third and eighth sentences of this Section
3), the distributions payable in respect of Series C Partnership Preferred Units
in subsequent calendar years shall be reduced to the extent of such overpayment.
Subject to the proviso of the preceding sentence of this Section 3(b),
the distribution paid in respect of each quarterly period in each calendar year
shall be determined as follows (in each case, excluding any additional payment
made pursuant to the following sentence) : (1) for the first quarter, the
greater of 25% of the Base Distribution per unit and the Series C Common
Equivalent Amount for the same quarter; (2) for the second quarter, an amount
such that the aggregate amount to be received per Series C Partnership Preferred
Unit in respect of the first two quarters of such calendar year shall be the
greater of 50% of the Base Distribution per unit and the Series C Common
Equivalent Amount for the same two quarters; (3) for the third quarter, in
amount such that the aggregate amount to be received per Series C Partnership
Preferred Unit in respect of the first three quarters of such calendar year
shall be the greater of 75% of the Base Distribution per unit and the Series C
Common Equivalent Amount for the same three quarters; and (4) for the fourth
quarter, an amount such that the aggregate amount to be received per Series C
Partnership Preferred Unit in respect of such calendar year shall be the amount
provided in the preceding sentence of this Section 3(b). Notwithstanding the
foregoing, for any quarter in which a Fixed Charge Coverage Violation
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(as defined below) has occurred, the distribution payable per Series C
Partnership Preferred Unit shall be 1.20 times the amount provided in the
preceding sentence. A "Fixed Charge Coverage Violation" shall occur for any
quarter that the ratio of the Corporation's Consolidated EBITDA to its
Consolidated Fixed Charges is below 1.40 to 1.
The distributions shall begin to accrue as set forth above and shall
be fully cumulative from the first day of the applicable Distribution Period,
whether or not in any Distribution Period or Periods there shall be funds of the
Partnership legally available for the payment of such distributions, and shall
be payable quarterly, when, as and if declared by the Managing General Partner,
in arrears on the Distribution Payment Dates. Accumulated but unpaid
distributions for any past quarterly Distribution Periods may be declared and
paid at any time, without reference to any regularly scheduled quarterly
Distribution Payment Date, to holders of record on such date, not exceeding 50
days preceding such Distribution Payment Date, fixed for the purpose by the
Managing General Partner in advance of payment of each particular distribution.
Any distribution payment made on Series C Partnership Preferred Units shall
first be credited against the earliest accrued but unpaid distribution due with
respect to Series C Partnership Preferred Units which remains payable. Beginning
with the quarter in which a REIT Termination Event Occurs, all distributions
payable per Series C Partnership Preferred Unit pursuant to this Section 3 shall
be multiplied by 2.5.
(c) The initial Distribution Period for the Series C Partnership
Preferred Units will include a partial distribution for the period from the
Grant Date until the last day of the calendar quarter immediately following such
Grant Date. The amount of distributions payable for such initial period, or any
other period shorter than a full quarterly Distribution Period, on the Series C
Partnership Preferred Units shall be computed by dividing the number of days in
such period by 90 and multiplying the result by the Series C Equity distribution
determined in accordance with Section 3(b). Holders of Series C Partnership
Preferred Units shall not be entitled to any distributions, whether payable in
cash, property or partnership units, in excess of cumulative distributions, as
herein provided, on the Series C Partnership Preferred Units. No interest, or
sum of money in lieu of interest, shall be payable in respect of any
distribution payment or payments on the Series C Partnership Preferred Units
which may be in arrears.
(d) So long as any of the Series C Partnership Preferred Units are
outstanding, except as described in the immediately following sentence, no
distributions shall be declared, paid or set apart for payment by the
Partnership, and no other distribution of cash or other property shall be made,
directly or indirectly, by the Partnership with respect to any class or series
of Parity Units for any period unless distributions equal to the full amount of
accumulated and unpaid distributions have been, or contemporaneously are, paid
with respect to the Series C Partnership Preferred Units for all Distribution
Periods terminating on or prior to the Distribution Payment Date with respect to
such class or series of Parity Units. When the distributions provided for in
Section 3(b) hereof are not paid in full, all distributions paid with respect to
the Series C Partnership Preferred Units and all distributions paid with respect
to any other class or series of Parity Units shall be paid ratably in proportion
to the respective amounts of distributions accumulated and unpaid on the Series
C Partnership Preferred Units and accumulated and unpaid on such Parity Units.
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(e) So long as any Series C Partnership Preferred Units are
outstanding, no distributions (other than distributions paid solely in Fully
Junior Units or options, warrants or rights to subscribe for or purchase Fully
Junior Units) shall be paid by the Partnership, and no other distribution of
cash or other property shall be made, directly or indirectly, by the Partnership
with respect to any Junior Units, nor shall any Junior Units be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such Junior
Units), directly or indirectly, by the Partnership (except by conversion into or
exchange for Fully Junior Units), nor shall any other cash or other property
otherwise be paid or distributed to or for the benefit of any holder of Junior
Units in respect thereof, directly or indirectly, by the Partnership unless in
each case the full cumulative distributions (including all accumulated and
unpaid distributions) on all outstanding Series C Partnership Preferred Units
and any other Parity Units of the Partnership shall have been or
contemporaneously are declared and paid or declared and set apart for payment
for all past Distribution Periods with respect to the Series C Partnership
Preferred Units and all Distribution Periods terminating on or prior to the date
of payment of the Series C Partnership Preferred Units and all Distribution
Periods terminating on or prior to the date of payment on all Parity Units of
the Partnership with respect to such Parity Units. Subject to the foregoing, and
not otherwise, such distributions may be declared by the Managing General
Partner and paid on any Partnership Common Units from time to time out of funds
legally available therefor, and the Series C Partnership Preferred Units shall
not be entitled to participate in any such distributions, whether payable in
cash, partnership units or otherwise.
(f) No distributions on the Series C Partnership Preferred Units shall
be declared by the Managing General Partner or paid or set apart for payment by
the Partnership at such time as the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness, prohibits
such declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
(g) In determining whether a distribution by cash payment, redemption
or other acquisition of Units or otherwise is permitted under Delaware law, no
effect shall be given to amounts that would be needed, if the Partnership were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of holders whose preferential rights on dissolution are
superior to those receiving the distribution.
(h) Notwithstanding the foregoing, it is acknowledged that the
Managing General Partner may, pursuant to the Agreement, elect to make
distributions on the Partnership Common Units on a more or less frequent basis
than quarterly and provide for an appropriate record date; in the event that the
Managing General Partner elects to effect such a non-quarterly distribution, the
Managing General Partner may, in its sole and absolute discretion, cause a
Distribution Period (and related Distribution Payment Date) to be established to
reflect the period established for such Partnership Common Unit distributions
and to make such revisions to the distributions provided in Section 3(b) hereof
as may be required to reflect that more or less than four Distribution Payment
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Dates will occur during the relevant calendar year.
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Partnership, whether voluntary or involuntary, subject to the prior preferences
and other rights of any Senior Units, before any payment or distribution of the
assets of the Partnership (whether capital or surplus) shall be made to or set
apart for the holders of Junior Units, the holders of the Series C Partnership
Preferred Units shall be entitled to receive One Hundred Eighty Dollars
($180.00) (the "Liquidation Preference") per Series C Partnership Preferred Unit
plus an amount equal to all distributions (whether or not earned or declared)
accrued and unpaid thereon to the date of liquidation, dissolution or winding up
of the affairs of the Partnership (any such date, a "Series C Liquidation
Date"), but such holders shall not be entitled to any further payment; provided
--------
that the distribution payable with respect to the Distribution Period containing
the Series C Liquidation Date shall be equal to the distribution determined
pursuant to Section 3 above for the preceding Distribution Period times a
fraction equal to the actual number of days elapsed from the end date of the
calendar quarter most recently completed to the relevant Series C Liquidation
Date over 90 days. If, upon any liquidation, dissolution or winding up of the
Partnership, the assets of the Partnership, or proceeds thereof, distributable
among the holders of the Series C Partnership Preferred Units shall be
insufficient to pay in full the preferential amount aforesaid and liquidating
payments on any other units of any class or series of Parity Units, then such
assets, or the proceeds thereof, shall be distributed among the holders of
Series C Partnership Preferred Units and any such other Parity Units ratably in
accordance with the respective amounts that would be payable on such Series C
Partnership Preferred Units and any such other Parity Units if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Partnership with one or more corporations,
partnerships or other entities or (ii) a sale, lease or conveyance of all or
substantially all of the Partnership's property or business shall not be deemed
to be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Partnership.
(b) Subject to the rights of the holders Parity Units or Senior Units,
upon any liquidation, dissolution or winding up of the Partnership, after
payment shall have been made in full to the holders of the Series C Partnership
Preferred Units, as provided in this Section 4, the holders of Series C
Partnership Preferred Units shall have no other claim to the remaining assets of
the Partnership, and any other series or class or classes of Junior Units shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series C Partnership Preferred Units shall not be entitled to
share therein.
5. Redemption at the Option of the Corporation.
(a) The Series C Partnership Preferred Units shall not be redeemable
by the Partnership prior to August 12, 2008. On and after August 12, 2008, the
Partnership, at its option, may redeem the Series C Partnership Preferred Units,
in whole at any time or from time to time in
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part, in minimum increments of $10.0 million of aggregate Liquidation Preference
of such units, out of funds legally available therefor at a redemption price
payable in cash equal to 100% of the Liquidation Preference per Series C
Partnership Preferred Units (plus all accumulated, accrued and unpaid
distributions as provided in paragraph (b) below).
(b) Upon any redemption of Series C Partnership Preferred Units
pursuant to this Section 5, the Partnership shall pay all accrued and unpaid
distributions, if any, thereon to the Call Date, without interest. If the Call
Date falls after a distribution payment record date and prior to the
corresponding Distribution Payment Date, then each holder of Series C
Partnership Preferred Units at the close of business on such distribution
payment record date shall be entitled to the distribution payable on such units
on the corresponding Distribution Payment Date notwithstanding any redemption of
such units before such Distribution Payment Date. Except as provided above, the
Partnership shall make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series C Partnership Preferred Units called for
redemption.
(c) If full cumulative distributions on the Series C Partnership
Preferred Units and any other class or series of Parity Units of the Partnership
have not been declared and paid or declared and set apart for payment, the
Series C Partnership Preferred Units may not be redeemed under this Section 5 in
part, and the Partnership may not purchase or acquire Series C Partnership
Preferred Units, otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of Series C Partnership Preferred Units.
(d) Notice of the redemption of any Series C Partnership Preferred
Units under this Section 5 shall be mailed by first-class mail or recognized
overnight courier to each holder of record of Series C Partnership Preferred
Units to be redeemed at the address of each such holder as shown on the
Partnership's records, not less than 30 nor more than 90 days prior to the Call
Date. Neither the failure to mail any notice required by this paragraph (d), nor
any defect therein or in the mailing thereof, to any particular holder, shall
affect the sufficiency of the notice or the validity of the proceedings for
redemption with respect to the other holders. Each such mailed notice shall
state, as appropriate: (1) the Call Date; (2) the number of Series C
Partnership Preferred Units to be redeemed and, if fewer than all the units held
by such holder are to be redeemed, the number of such units to be redeemed from
such holder; (3) the redemption price; (4) the place or places at which
certificates for such units are to be surrendered; (5) the then-current
Conversion Price; and (6) that distributions on the units to be redeemed shall
cease to accrue on such Call Date except as otherwise provided herein. Notice
having been mailed as aforesaid, from and after the Call Date (unless the
Partnership shall fail to make available an amount of cash necessary to effect
such redemption), (i) except as otherwise provided herein, distributions on the
Series C Partnership Preferred Units so called for redemption shall cease to
accrue, (ii) such units shall no longer be deemed to be outstanding, and (iii)
all rights of the holders thereof as holders of Series C Partnership Preferred
Units shall cease (except the rights to receive the cash payable upon such
redemption, without interest thereon, upon surrender and endorsement of their
certificates if so required and to receive any distributions payable thereon).
The Partnership's obligation to provide cash in accordance with the preceding
sentence shall be deemed fulfilled if, on or before the Call Date, the
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Partnership shall deposit with a bank or trust company that has an office in the
Borough of Manhattan, City of New York, and that has capital and surplus of at
least $150,000,000, necessary for such redemption, in trust, with irrevocable
instructions that such cash be applied to the redemption of the Series C
Partnership Preferred Units so called for redemption. No interest shall accrue
for the benefit of the holders of Series C Partnership Preferred Units to be
redeemed on any cash so set aside by the Partnership. Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the Call Date
shall revert to the general funds of the Partnership, after which reversion the
holders of such units so called for redemption shall look only to the general
funds of the Partnership for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such units so redeemed (properly endorsed or
assigned for transfer, if the Partnership shall so require and if the notice
shall so state), such units shall be exchanged for any cash (without interest
thereon) for which such units have been redeemed. If fewer than all the
outstanding Series C Partnership Preferred Units are to be redeemed, units to be
redeemed shall be selected by the Partnership from outstanding Series C
Partnership Preferred Units not previously called for redemption pro rata (as
nearly as may be), by lot or by any other method determined by the Partnership
in its sole discretion to be equitable. If fewer than all the Series C
Partnership Preferred Units evidenced by any certificate are redeemed, then new
certificates evidencing the unredeemed Series C Partnership Preferred Units
shall be issued without cost to the holder thereof.
6. Conversion. Holders of Series C Partnership Preferred Units shall
have the right to convert all or a portion of such units into Partnership Common
Units, as follows:
(a) Subject to and upon compliance with the provisions of this Section
6, a holder of Series C Partnership Preferred Units shall have the right, at his
or her option, at any time (such time being the "Conversion Date"), to convert
all or any portion of such units into the number of Partnership Common Units
obtained by dividing the aggregate Liquidation Preference of such units
(inclusive of accrued but unpaid distributions) by the Conversion Price (as in
effect at the time and on the date provided for in the last paragraph of
paragraph (b) of this Section 6) by surrendering such units to be converted,
such surrender to be made in the manner provided in paragraph (b) of this
Section 6; provided, however, that the right to convert Series C Partnership
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Units called for redemption pursuant to Section 5 shall terminate at the close
of business on the fifth Business Day prior to the Call Date fixed for such
redemption, unless the Partnership shall default in making payment of the cash
payable upon such redemption under Section 5.
(b) In order to exercise the conversion right, the holder of each unit
of Series C Partnership Preferred Units to be converted shall surrender the
certificate representing such unit, duly endorsed or assigned to the Partnership
or in blank, at the office of the Transfer Agent, accompanied by written notice
to the Partnership that the holder thereof irrevocably elects to convert such
Series C Partnership Preferred Units. Unless the partnership units issuable on
conversion are to be issued in the same name as the name in which such Series C
Partnership Preferred Units are registered, each partnership unit surrendered
for conversion shall be accompanied by instruments of transfer, in form
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satisfactory to the Partnership, duly executed by the holder or such holder's
duly authorized attorney and an amount sufficient to pay any transfer or similar
tax (or evidence reasonably satisfactory to the Partnership demonstrating that
such taxes have been paid).
Holders of Series C Partnership Preferred Units at the close of
business on a distribution payment record date shall be entitled to receive the
distribution payable on such units on the corresponding Distribution Payment
Date notwithstanding the conversion thereof following such distribution payment
record date and prior to such Distribution Payment Date. However, Series C
Partnership Preferred Units surrendered for conversion during the period between
the close of business on any distribution payment record date and the opening of
business on the corresponding Distribution Payment Date (except units converted
after the issuance of notice of redemption with respect to a Call Date during
such period, such Series C Partnership Preferred Units being entitled to such
distribution on the Distribution Payment Date) must be accompanied by payment of
an amount equal to the distribution payable on such units on such Distribution
Payment Date. A holder of Series C Partnership Preferred Units on a
distribution payment record date who (or whose transferee) tenders any such
units for conversion into Partnership Common Units on the corresponding
Distribution Payment Date will receive the distribution payable by the
Partnership on such Series C Partnership Preferred Units on such date, and the
converting holder need not include payment of the amount of such distribution
upon surrender of Series C Partnership Preferred Units for conversion. Except
as provided above, the Partnership shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on converted units or for
distributions on the Partnership Common Units issued upon such conversion.
As promptly as practicable after the surrender of certificates for
Series C Partnership Preferred Units as aforesaid, the Partnership shall issue
and shall deliver at such office to such holder, or on his or her written order,
a certificate or certificates for the number of full Partnership Common Units
issuable upon the conversion of such units in accordance with provisions of this
Section 6, and any fractional interest in respect of a Partnership Common Unit
arising upon such conversion shall be settled as provided in paragraph (c) of
this Section 6.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for Series
C Partnership Preferred Units shall have been surrendered and such notice shall
have been received by the Partnership as aforesaid (and if applicable, payment
of an amount equal to the distribution payable on such units shall have been
received by the Corporation as described above), and the Person or Persons in
whose name or names any certificate or certificates for Partnership Common Units
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the units represented thereby at such time on such date
and such conversion shall be at the Conversion Price in effect at such time on
such date unless the transfer books of the Partnership shall be closed on that
date, in which event such Person or Persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding day
on which such transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date on which such units shall have been
surrendered and such notice received by the Partnership.
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(c) No fractional units or scrip representing fractions of Partnership
Common Units shall be issued upon conversion of the Series C Partnership
Preferred Units. Instead of any fractional interest in a Partnership Common
Unit that would otherwise be deliverable upon the conversion of a Series C
Partnership Preferred Unit, the Partnership shall pay to the holder of such unit
an amount in cash based upon the Current Market Price of the Corporation's
Common Stock on the Trading Day immediately preceding the date of conversion.
If more than one Series C Partnership Unit shall be surrendered for conversion
at one time by the same holder, the number of full Partnership Common Units
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of Series C Partnership Preferred Units so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Grant Date (A) pay a
dividend or make a distribution on its Common Equity Shares in Common
Equity Shares, (B) subdivide its outstanding Common Equity Shares into a
greater number of units, (C) combine its outstanding Common Equity Shares
into a smaller number of units or (D) issue any shares of stock by
reclassification of its Common Equity Shares, the Conversion Price in
effect at the opening of business on the day following the date fixed for
the determination of holders entitled to receive such dividend or
distribution or at the opening of business on the Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any Series C Equity Shares thereafter surrendered for
conversion shall be entitled to receive the number of Common Equity Shares
that such holder would have owned or have been entitled to receive after
the happening of any of the events described above as if such Series C
Equity Shares had been converted immediately prior to the record date in
the case of a dividend or distribution or the effective date in the case of
a subdivision, combination or reclassification. An adjustment made pursuant
to this subparagraph (i) shall become effective immediately after the
opening of business on the Business Day next following the record date
(except as provided in paragraph (h) below) in the case of a dividend or
distribution and shall become effective immediately after the opening of
business on the Business Day next following the effective date in the case
of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Grant Date
rights, options or warrants to all holders of Common Equity Shares
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase Common Equity Shares at a
price per share less than 95% (100% if a standby underwriter is used and
charges the Corporation a commission) of the Fair Market Value per share of
the Corporation's Common Stock on the record date for the determination of
holders entitled to receive such rights, options or warrants, then the
Conversion Price in effect at the opening of business on the Business Day
next following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately
prior to the opening of business on the Business Day next following the
date fixed for such
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<PAGE>
determination by (B) a fraction, the numerator of which shall be the sum of
(x) the number of Common Equity Shares outstanding on the close of business
on the date fixed for such determination and (y) the number of shares that
the aggregate proceeds to the Corporation from the exercise of such rights,
options or warrants for Common Equity Shares would purchase at 95% of such
Fair Market Value (or 100% in the case of a standby underwriting), and the
denominator of which shall be the sum of (x) the number of Common Equity
Shares outstanding on the close of business on the date fixed for such
determination and (y) the number of additional Common Equity Shares offered
for subscription or purchase pursuant to such rights, options or warrants.
Such adjustment shall become effective immediately after the opening of
business on the day next following such record date (except as provided in
paragraph (h) below). In determining whether any rights, options or
warrants entitle the holders of Common Equity Shares to subscribe for or
purchase Common Equity Shares at less than 95% of such Fair Market Value
(or 100% in the case of a standby underwriting), there shall be taken into
account any consideration received by the Corporation upon issuance and
upon exercise of such rights, options or warrants, the value of such
consideration, if other than cash, to be determined by the Board of
Directors whose determination shall be conclusive. To the extent that
Common Equity Shares are not delivered pursuant to such rights, options or
warrants, upon the expiration or termination of such rights, options or
warrants, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect had the adjustments made upon the issuance of
such rights, options or warrants been made on the basis of delivery of only
the number of Common Equity Shares actually delivered. In the event that
such rights, options or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such date fixed for the determination of shareholders entitled to
receive such rights, options or warrants had not been fixed.
(iii) If the Corporation shall distribute to all holders of its
Common Equity Shares any securities of the Corporation (other than Common
Equity Shares) or evidence of its indebtedness or assets (excluding
cumulative cash distributions paid with respect to the Common Equity Shares
after December 31, 1997 which are not in excess of the following: the sum
of (A) the Corporation's cumulative undistributed Funds from Operations at
December 31, 1997, plus (B) the cumulative amount of Funds from Operations,
as determined by the Board of Directors, after December 31, 1997, minus (C)
the cumulative amount of distributions accrued or paid in respect of the
Corporation's Series C Equity Shares or any other class or series of
preferred stock of the Corporation after the Grant Date) or rights, options
or warrants to subscribe for or purchase any of its securities (excluding
those rights, options and warrants issued to all holders of Common Equity
Shares entitling them for a period expiring within 45 days after the record
date referred to in subparagraph (ii) above to subscribe for or purchase
Common Equity Shares, which rights and warrants are referred to in and
treated under subparagraph (ii) above) (any of the foregoing being
hereinafter in this subparagraph (iii) collectively called the "Securities"
and individually a "Security"), then in each such case the Conversion Price
shall be adjusted so that it shall equal the price determined by
multiplying (x) the Conversion Price in effect immediately
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<PAGE>
prior to the close of business on the date fixed for the determination of
shareholders entitled to receive such distribution by (y) a fraction, the
numerator of which shall be the Fair Market Value per share of the
Corporation's Common Stock on the record date mentioned below less the then
Fair Market Value (as determined by the Board of Directors, whose
determination shall be conclusive) of the portion of the Securities or
assets or evidences of indebtedness so distributed or of such rights,
options or warrants applicable to one Common Equity Share, and the
denominator of which shall be the Fair Market Value per share of the
Corporation's Common Stock on the record date mentioned below. Such
adjustment shall become effective on the date of distribution retroactive
to the opening of business on the Business Day next following (except as
provided in paragraph (h) below) the record date for the determination of
shareholders entitled to receive such distribution. For the purposes of
this subparagraph (iii), the distribution of a Security, which is
distributed not only to the holders of the Common Equity Share on the date
fixed for the determination of shareholders entitled to such distribution
of such Security, but also is distributed with each Partnership Common Unit
delivered to a Person converting a share of Series C Partnership Preferred
Units after such determination date, shall not require an adjustment of the
Conversion Price pursuant to this subparagraph (iii); provided that on the
--------
date, if any, on which a Person converting a unit of Series C Partnership
Preferred Units would no longer be entitled to receive such Security with a
Partnership Common Unit (other than as a result of the termination of all
such Securities), a distribution of such Securities shall be deemed to have
occurred and the Conversion Price shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the date fixed for
the determination of the shareholders entitled to receive such
distribution" and "the record date" within the meaning of the two preceding
sentences). If any distribution of the type described in this paragraph
(iii) is declared but not so paid or made, the Conversion Price shall again
be adjusted to the Conversion Price which would then be in effect if such
distribution had not been declared.
Rights or warrants distributed by the Corporation to all holders of
Common Equity Shares entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are
deemed to be transferred with such shares of Common Equity Shares; (ii) are
not exercisable; and (iii) are also issued in respect of future issuances
of Common Equity Shares, shall be deemed not to have been distributed for
purposes of this subparagraph (iii) (and no adjustment to the Conversion
Price under this subparagraph (iii) will be required) until the occurrence
of the earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant shall
become exercisable to purchase different securities, evidences of
indebtedness or other assets or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to a new
right or warrant (and a termination or expiration of the existing right or
warrant without exercise by the holder thereof to the extent not
exercised). In addition, in the event of any distribution (or deemed
distribution) of rights
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<PAGE>
or warrants, or any Trigger Event or other event (of the type described in
the preceding sentence) with respect thereto, that resulted in an
adjustment to the Conversion Price under this subparagraph (iii), (1) in
the case of any such rights or warrants which shall all have been redeemed
or repurchased without exercise by any holders thereof, the Conversion
Price shall be readjusted upon such final redemption or repurchase to give
effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution (but not a distribution paid exclusively in
cash), equal to the per share redemption or repurchase price received by a
holder of Common Equity Shares with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all
holders of Common Equity Shares as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants all of which
shall have expired or been terminated without exercise, the Conversion
Price shall be readjusted as if such rights and warrants had never been
issued.
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the Corporation
or any subsidiary or controlled Affiliate of the Corporation for all or any
portion of the Common Equity Shares shall expire and such tender or
exchange offer shall require the payment by the Corporation or such
subsidiary or controlled Affiliate of consideration per Common Equity Share
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), at the last time (the "Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer, that exceeds the Current Market Price per share of the Corporation's
Common Stock on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction contemplated by this
subparagraph, by a fraction of which the numerator shall be the number of
Common Equity Shares outstanding (including any tendered or exchanged
shares) at the Expiration Time, multiplied by the Current Market Price per
share of the Corporation's Common Stock on the Trading Day next succeeding
the Expiration Time, and the denominator shall be the sum of (A) the fair
market value (determined as aforesaid) of the aggregate consideration
payable to shareholders based upon the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any maximum, being referred to as the
"Purchased Shares") and (B) the product of the number of Common Equity
Shares outstanding (less any Purchased Shares) at the Expiration Time and
the Current Market Price per share of the Corporation's Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following
the Expiration Time. In the event the Corporation or any subsidiary or
controlled Affiliate is obligated to purchase shares pursuant to any such
tender offer, but the Corporation or such subsidiary or controlled
Affiliate is permanently prevented by applicable law from effecting any
such purchases, or all such purchases are rescinded, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such
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<PAGE>
tender offer had not been made.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease of
at least 1% in such price; provided, however, that any adjustments that by
-------- -------
reason of this subparagraph (v) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and made
-------- -------
in accordance with the provisions of this Section 6 (other than this
subparagraph (v)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of
Partnership Common Units. Notwithstanding any other provisions of this
Section 6, the Partnership shall not be required to make any adjustment of
the Conversion Price for the issuance of any Common Equity Shares pursuant
to any plan providing for the reinvestment of dividends or interest payable
on securities of the Corporation and the investment of additional optional
amounts in Common Equity Shares under such plan. All calculations under
this Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-hundredth of a partnership unit (with .005 of
a share being rounded upward), as the case may be. Anything in this
paragraph (d) to the contrary notwithstanding, the Partnership shall be
entitled, to the extent permitted by law, to make such reductions in the
Conversion Price, in addition to those required by this paragraph (d), as
it in its discretion shall determine to be advisable in order that any
partnership unit distributions, subdivision of partnership units,
reclassification or combination of partnership units, distribution of
rights or warrants to purchase partnership units, or distribution of other
assets (other than cash distributions) hereafter made by the Partnership to
its Partners shall not be taxable. To the extent permitted by applicable
law, the Partnership from time to time may reduce the Conversion Price by
any amount for any period of time if the period is at least 20 days, the
reduction is irrevocable during the period and the Managing General Partner
shall have made a determination that such reduction would be in the best
interests of the Partnership, which determination shall be conclusive.
Whenever the Conversion Price is reduced pursuant to the preceding
sentence, the Partnership shall mail to the holder of each Series C
Partnership Preferred Unit at his or her last address shown on the
Partnership's records a notice of reduction prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period during which it will be in effect.
(e) If the Corporation shall be a party to any transaction (including,
without limitation, a merger, consolidation, statutory share exchange, self
tender offer for 40% or more of its Common Equity Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Equity Shares and excluding any transaction as to which subparagraph (d)(i) of
this Section 6 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which all or substantially all of
the Partnership Common Units are converted into the right to receive different
securities or other property (including cash or any combination thereof), each
Series C Partnership Preferred Unit which is not redeemed or converted into the
right to receive different securities or other property prior to such
Transaction
J-17
<PAGE>
shall thereafter be convertible, in lieu of Partnership Common Units into the
kind and amount of different securities and other property (including cash or
any combination thereof) receivable upon the consummation of such Transaction by
a holder of that number of Partnership Common Units into which one Series C
Partnership Preferred Unit was convertible immediately prior to such
Transaction, assuming such holder of Partnership Common Units (i) is not a
Person with which the Corporation consolidated or into which the Corporation
merged or which merged into the Corporation or to which such sale or transfer
was made, as the case may be ("Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of shares, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or amount of
shares, securities and other property (including cash) receivable upon such
Transaction is not the same for each Common Share held immediately prior to such
Transaction by other than a Constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised ("Non-
Electing Share"), then for the purpose of this paragraph (e) the kind and amount
of shares, securities and other property (including cash) receivable upon such
Transaction by each Non-Electing Share shall be deemed to be the kind and amount
so receivable per share by holders of a plurality of the Non-Electing Shares).
The Corporation shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph (e), and it
shall not consent or agree to the occurrence of any Transaction until the
Corporation has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series C
Partnership Preferred Units that will contain provisions enabling the holders of
the Series C Partnership Preferred Units that remain outstanding after such
Transaction to convert into the consideration received by holders of Partnership
Common Units at the Conversion Price in effect immediately prior to such
Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
(f) If:
(i) the Corporation shall declare a distribution (or any other
distribution) on its Common Equity Shares (other than cash distributions or
distributions paid with respect to the Common Equity Shares after December
31, 1997 not in excess of the sum of the Corporation's cumulative
undistributed Funds from Operations at December 31, 1997, plus the
cumulative amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1997, minus the cumulative amount of
distributions accrued or paid in respect of the Corporation's Series C
Equity Shares or any other class or series of preferred stock of the
Corporation after the Grant Date); or
(ii) the Corporation shall authorize the granting to all holders
of Common Equity Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or warrants;
or
(iii) there shall be any reclassification of the Common Equity
Shares (other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or
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<PAGE>
merger to which the Corporation is a party (other than a merger in which
the Corporation is the surviving entity) and for which approval of any
shareholders of the Corporation is required, or a statutory share exchange,
or a self tender offer by the Corporation for all or substantially all of
its outstanding shares of Common Stock or the sale or transfer of all or
substantially all of the assets of the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Partnership shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series C Partnership Preferred Units at
their addresses as shown on the records of the Partnership, as promptly as
possible, but at least 10 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such distribution, distribution or granting of rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Equity Shares of record to be entitled to such distribution,
distribution or rights, options or warrants are to be determined or (B) the date
on which such reclassification, consolidation, merger, statutory share exchange,
sale, transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Partnership
Common Units of record shall be entitled to exchange their Partnership Common
Units for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up. Failure to give or receive
such notice or any defect therein shall not affect the legality or validity of
the proceedings described in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Partnership shall promptly file with the Transfer Agent a certificate setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error.
Promptly after delivery of such certificate, the Partnership shall prepare a
notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the effective date of such adjustment and shall mail such
notice of such adjustment of the Conversion Price to the holder of each Series C
Partnership Preferred Unit at such holder's last address as shown on the records
of the Partnership.
(h) In any case in which paragraph (d) of this Section 6 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Partnership may defer until the occurrence of such event (A)
issuing to the holder of any Series C Partnership Preferred Unit converted after
such record date and before the occurrence of such event the additional
Partnership Common Units issuable upon such conversion by reason of the
adjustment required by such event over and above the Partnership Common Units
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount of cash in lieu of any fraction pursuant to
paragraph (c) of this Section 6.
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<PAGE>
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Equity Shares, other than action described in this Section 6, that in the
opinion of the Managing General Partner would materially and adversely affect
the conversion rights of the holders of the Series C Partnership Preferred
Units, the Conversion Price for the Series C Partnership Preferred Units may be
adjusted, to the extent permitted by law, in such manner, if any, and at such
time, as the Managing General Partner may determine to be equitable in the
circumstances.
(k) The Partnership covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Partnership Common Units, for the purpose of effecting
conversion of the Series C Partnership Preferred Units, the full number of
Partnership Common Units deliverable upon the conversion of all outstanding
Series C Partnership Preferred Units not theretofore converted. For purposes of
this paragraph (k), the number of Partnership Common Units that shall be
deliverable upon the conversion of all outstanding Series C Partnership
Preferred Units shall be computed as if at the time of computation all such
outstanding units were held by a single holder.
Any Partnership Common Units issued upon conversion of the Series C
Partnership Preferred Units shall be validly issued, fully paid and
nonassessable.
The Partnership shall use its best efforts to comply with all federal
and state securities laws and regulations thereunder in connection with the
issuance of any securities that the Partnership shall be obligated to deliver
upon conversion of the Series C Partnership Preferred Units. The certificates
evidencing such securities shall bear such legends restricting transfer thereof
in the absence of registration under applicable securities laws or an exemption
therefrom as the Partnership may in good faith deem appropriate.
(l) The Partnership will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of
Partnership Common Units or other securities or property on conversion of the
Series C Partnership Preferred Units pursuant hereto; provided, however, that
-------- -------
the Partnership shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of Partnership Common
Units or other securities or property in a name other than that of the holder of
the Series C Partnership Preferred Units to be converted, and no such issue or
delivery shall be made unless and until the Person requesting such issue or
delivery has paid to the Partnership the amount of any such tax or established,
to the reasonable satisfaction of the Partnership, that such tax has been paid.
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<PAGE>
7. Redemption at the Option of the Holder.
(a) At any time after August 12, 2008, the holders of Series C
Partnership Preferred Units shall have the right at any time that the
Corporation's Common Stock has a Current Market Price at or below the Conversion
Price per unit, to require the Partnership, to the extent the Partnership shall
have funds legally available therefor, to redeem any or all of the Series C
Partnership Preferred Units held by such holder at a repurchase price payable,
at the option of the Partnership, in either (i) cash or (ii) such number of
Partnership Common Units that shall be convertible into shares of the
Corporation's Common Stock as shall have a Current Market Price in the aggregate
on the day prior to the day such holder gives notice pursuant to Section 7(b) of
its intention to redeem, equal to in either case, 100% of the liquidation
preference thereof plus accrued and unpaid distributions whether or not
declared, if any, to the date of repurchase or the date payment is made
available (in the aggregate, the "Redemption Payment").
(b) For purposes of this Section 7, redemption at the option of the
holder shall be deemed to occur upon receipt by the Partnership of written
notice that the holder of Series C Partnership Preferred Units wishes to tender
units to be redeemed. The holders of such units to be redeemed shall then have
30 days from the date of such notice to deliver such units to the Transfer
Agent. Upon the surrender of the certificate or certificates of Series C
Partnership Preferred Units to be redeemed, duly endorsed or assigned to the
Partnership or in blank, at the office of the Transfer Agent, the Partnership
shall promptly, either (i) by wire transfer of immediately available funds to
such holder, as directed by such holder, send an amount equal to the Redemption
Payment in respect of all Series C Partnership Preferred Units or portions
thereof so tendered or (ii) issue and deliver to such holder, or on his or her
written order, a certificate or certificates for the number of full Partnership
Common Units issuable in respect of all Series C Partnership Preferred Units or
portions thereof so tendered.
8. Status of Reacquired Series C Partnership Preferred Units.
All Series C Partnership Preferred Units which shall have been granted
and reac quired in any manner by the Partnership shall be deemed cancelled.
9. Ranking.
The Series C Partnership Preferred Units shall with respect to
distribution rights and rights on liquidation, dissolution and winding up of the
affairs of the Partnership, rank pari passu to the Series A Partnership
----------
Preferred Units and the Series B Partnership Preferred Units and the Series D
Partnership Preferred Units.
Each Series C Partnership Preferred Unit shall be identical in all
respects to each other Series C Partnership Preferred Unit.
Any class or series of Partnership Units or Investor Unit Rights shall
be deemed to rank:
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<PAGE>
(a) prior or senior to the Series C Partnership Preferred Units, as to
the payment of distributions and as to distributions of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
such class or series of Partnership Units or Investor Unit Rights, as the case
may be, shall be entitled to the receipt of distributions or of amounts
distributable upon the liquidation, dissolution and winding up of the
Partnership in preference or priority to the holders of Series C Partnership
Preferred Units ("Senior Units");
(b) on a parity with the Series C Partnership Preferred Units, as to
the payment of distributions and as to distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, whether or not the
distribution rates, distribution payment dates or redemption or liquidation
prices per unit or other denomination thereof shall be different from those of
the Series C Partnership Preferred Units, if the holders of such class or series
of Partnership Units or Investor Unit Rights, as the case may be, and the Series
C Partnership Preferred Units shall be entitled to the receipt of distributions
and of amounts distributable upon the liquidation, dissolution and winding up of
the Partnership in proportion to their respective amounts of accumulated and
unpaid distributions per unit or other denomination or liquidation preferences,
without preference or priority one over the other ("Parity Units");
(c) junior to the Series C Partnership Preferred Units, as to the
payment of distributions or as to the distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
Series C Partnership Preferred Units shall be entitled to receipt of
distributions or of amounts distributable upon the liquidation, dissolution and
winding up of the Partnership, in preference or priority to the holders of such
class or series of Partnership Units or Investor Unit Rights ("Junior Units");
and
(d) junior to the Series C Partnership Preferred Units, as to the
payment of distributions and as to the distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, if such class or
series of Partnership Units is Partnership Common Units or Class A Investor Unit
Rights, as the case may be, or if the holders of Series C Partnership Preferred
Units shall be entitled to receipt of distributions and of amounts distributable
upon the liquidation, dissolution and winding up of the Partnership, in
preference or priority to the holders of such class or series of Partnership
Units or Investor Unit Rights ("Fully Junior Units").
10. Allocations.
(a) For each partnership year, each Holder of a Share of Series C
Preferred Units shall be allocated Net Income of the Partnership in an amount
equal to the amount of distributions made with respect to such Holder's Series C
Preferred Units pursuant to Section 3 hereof during such Partnership Year. In
no event shall items of Net Loss of the Partnership be allocated to any Holder
of Series C Preferred Units unless such allocation is required by Section 704(b)
of the Code or Section 10(b) of this Exhibit J.
---------
(b) If any Series C Partnership Preferred Units are redeemed pursuant
to the terms of this Exhibit J, for the Partnership Year that includes such
---------
redemption (and, if necessary, for subsequent
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<PAGE>
Partnership Years) (a) gross income and gain (in such relative proportions as
the Managing General Partner in its discretion shall determine) shall be
allocated to the Managing General Partner and such Special Limited Partner(s) to
the extent that the redemption amounts paid or payable with respect to the
Series C Partnership Preferred Units so redeemed (or treated as redeemed)
exceeds the aggregate Capital Account Balances (net of liabilities assumed or
taken subject to by the Partnership) per Series C Partnership Preferred Unit
allocable to the Series C Partnership Preferred Units so redeemed (or treated as
redeemed) and (b) deductions and losses (in such relative proportions as the
Managing General Partner in its discretion shall determine) shall be allocated
to the Managing General Partner and such Special Limited Partner(s) to the
extent that the aggregate Capital Account Balances (net of liabilities assumed
or taken subject to by the Partnership) per Series C Partnership Preferred Unit
allocable to the Series C Partnership Preferred Units so redeemed (or treated as
re deemed) exceeds the redemption amount paid or payable with respect to the
Series C Partnership Preferred Units so redeemed (or treated as redeemed).
11. Voting and Consent Rights.
(a) Holders of Series C Partnership Preferred Units shall have only
those voting and consent rights specified in Section 7.3.B of the Agreement and
Section 11(b) hereof.
(b) So long as any Series C Partnership Preferred Units are
outstanding, in addition to any other vote or consent of holders of Series C
Partnership Preferred Units required by law or by the Agreement, the affirmative
vote or consent of holders of at least 50% of the outstanding Series C
Partnership Preferred Units, voting or consenting as a separate class, given in
Person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating
any amendment or alteration of any of the provisions of this Partnership Unit
Designation or the Agreement that materially and adversely affects the material
powers, rights or preferences of the holders of the Series C Partnership
Preferred Units; provided, however, that the amendment of the Agreement so as to
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authorize, create, issue or grant any class or series of Partnership Units,
including, without limitation, any such Partnership Units that may have rights
senior or superior to the Series C Partnership Preferred Units, shall be deemed
not to materially and adversely affect the material powers, rights or
preferences of the holders of Series C Partnership Preferred Units.
(c) Except as otherwise required by applicable law or as set forth
herein or in the Agreement, the holders of the Series C Partnership Preferred
Units shall not have any relative, participating, optional or other special
voting rights or powers with respect to any matter, and the consent or approval
of the holders thereof shall not be required for the taking of any action by the
Partnership.
12. Information Rights.
Holders of Series C Partnership Preferred Units shall have only the
information rights specified in Section 8.5.A and Section 9.3 of the Agreement.
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13. Restrictions on Transfer.
The Series C Partnership Preferred Units are subject to the
restrictions on transfer set forth in Article 11 of the Agreement.
14. Ambiguity.
In the case of an ambiguity in the application of any of the
provisions of this Partnership Unit Designation, the Managing General Partner
shall have the power to determine the application of the provisions of this
Partnership Unit Designation with respect to any situation based on its
reasonable belief, understanding or knowledge of the circumstances.
15. Partnership Records.
The Managing General Partner shall amend Exhibit A to the Agreement
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from time to time to the extent necessary to reflect accurately the grant and
any subsequent redemption of, or other event having an effect on the ownership
of, Series C Partnership Preferred Units.
16. Governing Law.
This Exhibit J shall be construed and enforced in accordance with, and
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governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
J-24
<PAGE>
EXHIBIT K
PARTNERSHIP UNIT DESIGNATION OF SERIES D
PARTNERSHIP PREFERRED UNITS OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
1. Creation, Number and Designation.
A class of Partnership Preferred Units is hereby created and designated as
"Series D Partnership Preferred Units." The number of Partnership Preferred
Units constituting the Series D Partnership Preferred Units shall be 694,445.
The number of Series D Partnership Preferred Units may be decreased (but not
below the aggregate number thereof then outstanding and/or which have been
reserved for issuance). Each Series D Partnership Preferred Unit shall be
identical in all respects to each other Series D Partnership Preferred Unit.
2. Definitions.
For purposes of this Partnership Unit Designation, the following terms
shall have the respective meanings indicated in this Section 2, and capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement:
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall mean
a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL"), Westfield America Trust, Frank
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
Family").
"Agreement" shall mean the First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership, dated as of August 3,
1998, as amended, modified, supplemented or restated, from time to time.
"Base Distribution" shall mean an annual distribution per Series D
Partnership Preferred Unit equal to 8.5% of the Liquidation Preference per
Series D Partnership Preferred Unit.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the capital stock of the Corporation.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York
City, New York, are authorized or required by law, regulation or executive order
to close.
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"Call Date" shall mean the date specified in the notice to holders required
under Section 5 (d) as the Call Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value$0.01 per share, of the
Corporation.
"Consolidated EBITDA" for any quarter shall mean the consolidated net
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the Securities
and Exchange Commission, increased by the sum of the following (without
duplication):
(a) the Corporation's pro rata share of EBITDA from unconsolidated
real estate partnerships calculated in a manner consistent with this definition
of Consolidated EBITDA,
(b) all income taxes paid or accrued according to GAAP for such
quarter (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses except to the extent that such gains were not
included in Consolidated EBITDA),
(c) all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of deferred financing
fees or amortization of original issue discount, but excluding capitalized
interest),
(d) depreciation and depletion reflected in such net income,
(e) amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only to the extent
that such amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to paragraph (c) above), goodwill, other
intangibles and management fees, and
(f) any other noncash charges, to the extent deducted from
consolidated net income (including, but not limited to, income allocated to
minority interests).
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
(a) the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner consistent with
this definition of Consolidated Fixed Charges,
(b) all interest expense paid or accrued in accordance with GAAP for
such quarter (including, without duplication, financing fees and amortization of
deferred financing fees or amortization of original issue discount),
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<PAGE>
(c) distribution requirements with respect to preferred stock and any
other preferred securities for such quarter (not including any portion of
preferred stock distributions the calculation of which is based on the
distribution paid in such quarter to the holders of shares of the Corporation's
Common Stock), whether or not declared or paid,
(d) regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity) and
(e) all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e)
hereof.
"Conversion Date" shall have the meaning set forth in Section 6(a) hereof.
"Conversion Price" shall mean the conversion price per Partnership Common
Unit for which the Series D Partnership Preferred Unit is convertible, as such
Conversion Price may be adjusted pursuant to Section 6. The initial conversion
price shall be $18.00.
"Corporation" shall mean Westfield America, Inc., a Missouri corporation.
"Current Market Price" of publicly traded Common Stock or any other class
of stock or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the New York
Stock Exchange ("NYSE") or, if such security is not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"Distribution Payment Date" shall mean (i), for any Distribution Period
with respect to which the Partnership pays a distribution on the Partnership
Common Unit, the date on which such distribution is paid or (ii), for any
Distribution Period with respect to which the Partnership does not pay a
distribution on the Partnership Common Unit, a date to be set by the Managing
General Partner, which date shall not be later than the thirtieth calendar day
after the end of the applicable Distribution Period.
"Distribution Periods" shall mean quarterly distribution periods commencing
on January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Distribution
Period with respect to any Series D Partnership Preferred
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<PAGE>
Units (other than the initial Distribution Period, which shall commence on the
Grant Date for such Series D Partnership Preferred Units and end on and include
the last day of the calendar quarter immediately following such Grant Date, and
other than the Distribution Period during which any Series D Partnership
Preferred Units shall be redeemed pursuant to Section 5 or converted pursuant to
Section 6, which shall end on and include the Call Date or Conversion Date with
respect to the Series D Partnership Preferred Units being redeemed or converted,
as applicable).
"Expiration Time" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of the Corporation's Common Stock on the five (5) consecutive
Trading Days selected by the Corporation commencing not more than 20 Trading
Days before, and ending not later than, the earlier of the day in question and
the day before the "ex date" with respect to the issuance or distribution
requiring such computation. The term "ex date," when used with respect to any
issuance or distribution, means the first day on which the Common Stock trade
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
Section 3(a) hereof.
"Fully Junior Units" shall have the meaning set forth in Section 9(d)
hereof.
"Funds from Operations" shall mean net income (loss) (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment Trusts
(NAREIT), in its White Paper dated March 1995, as such definitions may be
modified from time to time.
"Grant Date" shall mean the date on which the Series D Partnership
Preferred Units are issued.
"Junior Units" shall have the meaning set forth in Section 9(c) hereof.
"Non-Electing Share" shall have the meaning set forth in Section 6(e)
hereof.
"Partnership" shall mean Westfield America Limited Partnership, a Delaware
limited partnership.
"Parity Units" shall have the meaning set forth in Section 9(b) hereof.
"Person" shall mean any individual, firm, partnership, corporation, limited
liability company, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
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<PAGE>
"Purchased Shares" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"REIT Termination Event" shall mean the earliest to occur of:
(a) the filing of a federal income tax return by the Corporation for
any taxable year on which the Corporation does not compute its income as a real
estate investment trust;
(b) the approval by the shareholders of the Corporation of a proposal
for the Corporation to cease to qualify as a real estate investment trust;
(c) a determination by the Board of Directors of the Corporation,
based on the advice of counsel, that the Corporation has ceased to qualify as a
real estate investment trust; or
(d) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real estate investment
trust.
"Securities" and "Security" shall have the meanings set forth in Section
6(d)(iii) hereof.
"Series D Partnership Preferred Unit" means a Partnership Unit created
under this Partnership Unit Designation, with the designations, preferences and
relative, participating, optional or other special rights, powers and duties set
forth in this Exhibit K.
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"Senior Units" shall have the meaning set forth in Section 9(a) hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Partnership in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of distributions by the Managing General Partner, the allocation of
funds to be so paid on any series or class of partnership units of the
Partnership; provided, however, that if any funds for any class or series of
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Junior Units or Fully Junior Units or any class or series of Parity Units are
placed in a separate account of the Partnership or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with respect to the
Series D Partnership Preferred Units shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on NASDAQ, or if such securities are not
quoted on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e) hereof.
"Transfer Agent" shall mean the Managing General Partner, or such other
agent or agents of the Partnership as may be designated by the Managing General
Partner as the transfer agent,
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<PAGE>
registrar and distribution disbursing agent for the Series D Partnership
Preferred Units and notified to the holders of the Series D Partnership
Preferred Units.
3. Distributions.
(a) Holders of Series D Partnership Preferred Units shall not be
entitled to any distributions on the Series D Partnership Preferred Units,
whether payable in cash, property or stock, except as provided in this
Exhibit K.
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(b) Subject to the preferential rights of the holders of any
Partnership Preferred Units that rank senior in the payment of distributions to
the Series D Partnership Preferred Units and subject to paragraph (c) of this
Section 3, the holders of Series D Partnership Preferred Units shall be entitled
to receive, when, as and if declared by the Managing General Partner, but only
out of funds legally available for the payment of distributions, cumulative
preferential distributions payable in cash to holders of record on the
respective date, not exceeding 50 days preceding such distribution payment date,
fixed for the purpose by the Managing General Partner in advance of payment of
each particular distribution in an amount equal to the greater of (A) the Base
Distribution per unit per annum and (B) an amount per unit equal to the
Liquidation Preference of a Series D Partnership Preferred Unit (exclusive of
accrued but unpaid distributions) divided by the Conversion Price (the "Series D
Common Equivalent Factor") times the dollar amount of cash distributions
declared with respect to each Partnership Common Unit that does not result in an
adjustment to the Conversion Price pursuant to subparagraph (d)(iii) of Section
6 (such product, the "Series D Common Equivalent Amount") for the same annual
period; provided, however, that if as a result of the quarterly distributions
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paid in accordance with the following sentence, the holders of Series D
Partnership Preferred Units shall have received for any calendar year more
distributions than such units shall be entitled under subparagraphs (A) and (B)
above (as adjusted pursuant to the third and eighth sentences of this Section
3), the distributions payable in respect of Series D Partnership Preferred Units
in subsequent calendar years shall be reduced to the extent of such overpayment.
Subject to the proviso of the preceding sentence of this Section 3(b),
the distribution paid in respect of each quarterly period in each calendar year
shall be determined as follows (in each case, excluding any additional payment
made pursuant to the following sentence) : (1) for the first quarter, the
greater of 25% of the Base Distribution per unit and the Series D Common
Equivalent Amount for the same quarter; (2) for the second quarter, an amount
such that the aggregate amount to be received per Series D Partnership Preferred
Unit in respect of the first two quarters of such calendar year shall be the
greater of 50% of the Base Distribution per unit and the Series D Common
Equivalent Amount for the same two quarters; (3) for the third quarter, in
amount such that the aggregate amount to be received per Series D Partnership
Preferred Unit in respect of the first three quarters of such calendar year
shall be the greater of 75% of the Base Distribution per unit and the Series D
Common Equivalent Amount for the same three quarters; and (4) for the fourth
quarter, an amount such that the aggregate amount to be received per Series D
Partnership Preferred Unit in respect of such calendar year shall be the amount
provided in the preceding sentence of this Section 3(b). Notwithstanding the
foregoing, for any quarter in which a Fixed Charge Coverage Violation
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<PAGE>
(as defined below) has occurred, the distribution payable per Series D
Partnership Preferred Unit shall be 1.20 times the amount provided in the
preceding sentence. A "Fixed Charge Coverage Violation" shall occur for any
quarter that the ratio of the Corporation's Consolidated EBITDA to its
Consolidated Fixed Charges is below 1.40 to 1.
The distributions shall begin to accrue as set forth above and shall
be fully cumulative from the first day of the applicable Distribution Period,
whether or not in any Distribution Period or Periods there shall be funds of the
Partnership legally available for the payment of such distributions, and shall
be payable quarterly, when, as and if declared by the Managing General Partner,
in arrears on the Distribution Payment Dates. Accumulated but unpaid
distributions for any past quarterly Distribution Periods may be declared and
paid at any time, without reference to any regularly scheduled quarterly
Distribution Payment Date, to holders of record on such date, not exceeding 50
days preceding such Distribution Payment Date, fixed for the purpose by the
Managing General Partner in advance of payment of each particular distribution.
Any distribution payment made on Series D Partnership Preferred Units shall
first be credited against the earliest accrued but unpaid distribution due with
respect to Series D Partnership Preferred Units which remains payable. Beginning
with the quarter in which a REIT Termination Event Occurs, all distributions
payable per Series D Partnership Preferred Unit pursuant to this Section 3 shall
be multiplied by 2.5.
(c) The initial Distribution Period for the Series D Partnership
Preferred Units will include a partial distribution for the period from the
Grant Date until the last day of the calendar quarter immediately following such
Grant Date. The amount of distributions payable for such initial period, or any
other period shorter than a full quarterly Distribution Period, on the Series D
Partnership Preferred Units shall be computed by dividing the number of days in
such period by 90 and multiplying the result by the Series D Equity distribution
determined in accordance with Section 3(b). Holders of Series D Partnership
Preferred Units shall not be entitled to any distributions, whether payable in
cash, property or partnership units, in excess of cumulative distributions, as
herein provided, on the Series D Partnership Preferred Units. No interest, or
sum of money in lieu of interest, shall be payable in respect of any
distribution payment or payments on the Series D Partnership Preferred Units
which may be in arrears.
(d) So long as any of the Series D Partnership Preferred Units are
outstanding, except as described in the immediately following sentence, no
distributions shall be declared, paid or set apart for payment by the
Partnership, and no other distribution of cash or other property shall be made,
directly or indirectly, by the Partnership with respect to any class or series
of Parity Units for any period unless distributions equal to the full amount of
accumulated and unpaid distributions have been, or contemporaneously are, paid
with respect to the Series D Partnership Preferred Units for all Distribution
Periods terminating on or prior to the Distribution Payment Date with respect to
such class or series of Parity Units. When the distributions provided for in
Section 3(b) hereof are not paid in full, all distributions paid with respect to
the Series D Partnership Preferred Units and all distributions paid with respect
to any other class or series of Parity Units shall be paid ratably in proportion
to the respective amounts of distributions accumulated and unpaid on the Series
D Partnership Preferred Units and accumulated and unpaid on such Parity Units.
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<PAGE>
(e) So long as any Series D Partnership Preferred Units are
outstanding, no distributions (other than distributions paid solely in Fully
Junior Units or options, warrants or rights to subscribe for or purchase Fully
Junior Units) shall be paid by the Partnership, and no other distribution of
cash or other property shall be made, directly or indirectly, by the Partnership
with respect to any Junior Units, nor shall any Junior Units be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such Junior
Units), directly or indirectly, by the Partnership (except by conversion into or
exchange for Fully Junior Units), nor shall any other cash or other property
otherwise be paid or distributed to or for the benefit of any holder of Junior
Units in respect thereof, directly or indirectly, by the Partnership unless in
each case the full cumulative distributions (including all accumulated and
unpaid distributions) on all outstanding Series D Partnership Preferred Units
and any other Parity Units of the Partnership shall have been or
contemporaneously are declared and paid or declared and set apart for payment
for all past Distribution Periods with respect to the Series D Partnership
Preferred Units and all Distribution Periods terminating on or prior to the date
of payment of the Series D Partnership Preferred Units and all Distribution
Periods terminating on or prior to the date of payment on all Parity Units of
the Partnership with respect to such Parity Units. Subject to the foregoing, and
not otherwise, such distributions may be declared by the Managing General
Partner and paid on any Partnership Common Units from time to time out of funds
legally available therefor, and the Series D Partnership Preferred Units shall
not be entitled to participate in any such distributions, whether payable in
cash, partnership units or otherwise.
(f) No distributions on the Series D Partnership Preferred Units shall
be declared by the Managing General Partner or paid or set apart for payment by
the Partnership at such time as the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness, prohibits
such declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
(g) In determining whether a distribution by cash payment, redemption
or other acquisition of Units or otherwise is permitted under Delaware law, no
effect shall be given to amounts that would be needed, if the Partnership were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of holders whose preferential rights on dissolution are
superior to those receiving the distribution.
(h) Notwithstanding the foregoing, it is acknowledged that the
Managing General Partner may, pursuant to the Agreement, elect to make
distributions on the Partnership Common Units on a more or less frequent basis
than quarterly and provide for an appropriate record date; in the event that the
Managing General Partner elects to effect such a non-quarterly distribution, the
Managing General Partner may, in its sole and absolute discretion, cause a
Distribution Period (and related Distribution Payment Date) to be established to
reflect the period established for such Partnership Common Unit distributions
and to make such revisions to the distributions provided in Section 3(b) hereof
as may be required to reflect that more or less than four Distribution Payment
Dates will occur during the relevant calendar year.
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<PAGE>
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Partnership, whether voluntary or involuntary, subject to the prior preferences
and other rights of any Senior Units, before any payment or distribution of the
assets of the Partnership (whether capital or surplus) shall be made to or set
apart for the holders of Junior Units, the holders of the Series D Partnership
Preferred Units shall be entitled to receive One Hundred Eighty Dollars
($180.00) (the "Liquidation Preference") per Series D Partnership Preferred Unit
plus an amount equal to all distributions (whether or not earned or declared)
accrued and unpaid thereon to the date of liquidation, dissolution or winding up
of the affairs of the Partnership (any such date, a "Series D Liquidation
Date"), but such holders shall not be entitled to any further payment; provided
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that the distribution payable with respect to the Distribution Period containing
the Series D Liquidation Date shall be equal to the distribution determined
pursuant to Section 3 above for the preceding Distribution Period times a
fraction equal to the actual number of days elapsed from the end date of the
calendar quarter most recently completed to the relevant Series D Liquidation
Date over 90 days. If, upon any liquidation, dissolution or winding up of the
Partnership, the assets of the Partnership, or proceeds thereof, distributable
among the holders of the Series D Partnership Preferred Units shall be
insufficient to pay in full the preferential amount aforesaid and liquidating
payments on any other units of any class or series of Parity Units, then such
assets, or the proceeds thereof, shall be distributed among the holders of
Series D Partnership Preferred Units and any such other Parity Units ratably in
accordance with the respective amounts that would be payable on such Series D
Partnership Preferred Units and any such other Parity Units if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Partnership with one or more corporations,
partnerships or other entities or (ii) a sale, lease or conveyance of all or
substantially all of the Partnership's property or business shall not be deemed
to be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Partnership.
(b) Subject to the rights of the holders Parity Units or Senior Units,
upon any liquidation, dissolution or winding up of the Partnership, after
payment shall have been made in full to the holders of the Series D Partnership
Preferred Units, as provided in this Section 4, the holders of Series D
Partnership Preferred Units shall have no other claim to the remaining assets of
the Partnership, and any other series or class or classes of Junior Units shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series D Partnership Preferred Units shall not be entitled to
share therein.
5. Redemption at the Option of the Corporation.
(a) The Series D Partnership Preferred Units shall not be redeemable
by the Partnership prior to August 12, 2008. On and after August 12, 2008, the
Partnership, at its option, may redeem the Series D Partnership Preferred Units,
in whole at any time or from time to time in part, in minimum increments of
$10.0 million of aggregate Liquidation Preference of such units, out of funds
legally available therefor at a redemption price payable in cash equal to 100%
of the
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<PAGE>
Liquidation Preference per Series D Partnership Preferred Unit (plus all
accumulated, accrued and unpaid distributions as provided in paragraph (c)
below).
(b) In the event that WHL and its subsidiaries and the trustee of
Westfield America trust on behalf of Westfield America Trust do not vote to
approve the conversion of the Corporation's Series D Equity Shares into Common
Equity Shares at the Corporation's 1999 Annual Shareholder Meeting or at any
other meeting of the Corporation's shareholders at which such proposal is
raised, the Partnership shall have the right to redeem the Series D Partnership
Preferred Units, in whole or in part, out of funds legally available therefor at
a redemption price payable in cash equal to 100% of the Liquidation Preference
per Series D Partnership Preferred Unit (plus all accumulated, accrued and
unpaid distributions as provided in paragraph (c) below).
(c) Upon any redemption of Series D Partnership Preferred Units
pursuant to this Section 5, the Partnership shall pay all accrued and unpaid
distributions, if any, thereon to the Call Date, without interest. If the Call
Date falls after a distribution payment record date and prior to the
corresponding Distribution Payment Date, then each holder of Series D
Partnership Preferred Units at the close of business on such distribution
payment record date shall be entitled to the distribution payable on such units
on the corresponding Distribution Payment Date notwithstanding any redemption of
such units before such Distribution Payment Date. Except as provided above, the
Partnership shall make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series D Partnership Preferred Units called for
redemption.
(d) If full cumulative distributions on the Series D Partnership
Preferred Units and any other class or series of Parity Units of the Partnership
have not been declared and paid or declared and set apart for payment, the
Series D Partnership Preferred Units may not be redeemed under this Section 5 in
part, and the Partnership may not purchase or acquire Series D Partnership
Preferred Units, otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of Series D Partnership Preferred Units.
(e) Notice of the redemption of any Series D Partnership Preferred
Units under this Section 5 shall be mailed by first-class mail or recognized
overnight courier to each holder of record of Series D Partnership Preferred
Units to be redeemed at the address of each such holder as shown on the
Partnership's records, not less than 30 nor more than 90 days prior to the Call
Date. Neither the failure to mail any notice required by this paragraph (e), nor
any defect therein or in the mailing thereof, to any particular holder, shall
affect the sufficiency of the notice or the validity of the proceedings for
redemption with respect to the other holders. Each such mailed notice shall
state, as appropriate: (1) the Call Date; (2) the number of Series D
Partnership Preferred Units to be redeemed and, if fewer than all the units held
by such holder are to be redeemed, the number of such units to be redeemed from
such holder; (3) the redemption price; (4) the place or places at which
certificates for such units are to be surrendered; (5) the then-current
Conversion Price; and (6) that distributions on the units to be redeemed shall
cease to accrue on such Call Date except as otherwise provided herein. Notice
having been mailed as aforesaid, from and after the Call Date (unless the
Partnership shall fail to make available an amount of cash necessary to effect
such redemption), (i) except as otherwise provided herein, distributions on the
Series D Partnership
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<PAGE>
Preferred Units so called for redemption shall cease to accrue, (ii) such units
shall no longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Series D Partnership Preferred Units shall cease (except
the rights to receive the cash payable upon such redemption, without interest
thereon, upon surrender and endorsement of their certificates if so required and
to receive any distributions payable thereon). The Partnership's obligation to
provide cash in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the Call Date, the Partnership shall deposit with a bank or
trust company that has an office in the Borough of Manhattan, City of New York,
and that has capital and surplus of at least $150,000,000, necessary for such
redemption, in trust, with irrevocable instructions that such cash be applied to
the redemption of the Series D Partnership Preferred Units so called for
redemption. Notwithstanding the foregoing, the Partnership shall, in the first
instance, send the money to any holder of Series D Partnership Preferred Units
that has notified the Partnership in writing of the location of delivery of
funds. No interest shall accrue for the benefit of the holders of Series D
Partnership Preferred Units to be redeemed on any cash so set aside by the
Partnership. Subject to applicable escheat laws, any such cash unclaimed at the
end of two years from the Call Date shall revert to the general funds of the
Partnership, after which reversion the holders of such units so called for
redemption shall look only to the general funds of the Partnership for the
payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such units so redeemed (properly endorsed or
assigned for transfer, if the Partnership shall so require and if the notice
shall so state), such units shall be exchanged for any cash (without interest
thereon) for which such units have been redeemed. If fewer than all the
outstanding Series D Partnership Preferred Units are to be redeemed, units to be
redeemed shall be selected by the Partnership from outstanding Series D
Partnership Preferred Units not previously called for redemption pro rata (as
nearly as may be), by lot or by any other method determined by the Partnership
in its sole discretion to be equitable. If fewer than all the Series D
Partnership Preferred Units evidenced by any certificate are redeemed, then new
certificates evidencing the unredeemed Series D Partnership Preferred Units
shall be issued without cost to the holder thereof.
6. Conversion.
The Series D Partnership Preferred Units shall not be convertible into
Partnership Common Units prior to (i) a vote of the shareholders of the
Corporation approving the conversion of the Corporation's Series D Equity Shares
into Common Equity Shares or (ii) the transfer of the Series D Equity Shares to
an individual to whom the Corporation is permitted to issue Common Equity Shares
without shareholder approval, in accordance with the rules of the NYSE. Subject
to the foregoing, holders of Series D Partnership Preferred Units shall have the
right to convert all or a portion of such units into Partnership Common Units,
as follows:
(a) Subject to and upon compliance with the provisions of this Section
6, a holder of Series D Partnership Preferred Units shall have the right, at his
or her option, at any time (such time being the "Conversion Date"), to convert
all or any portion of such units into the number of Partnership Common Units
obtained by dividing the aggregate Liquidation Preference of such units
(inclusive of accrued but unpaid distributions) by the Conversion Price (as in
effect at the time and
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<PAGE>
on the date provided for in the last paragraph of paragraph (b) of this Section
6) by surrendering such units to be converted, such surrender to be made in the
manner provided in paragraph (b) of this Section 6; provided, however, that the
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right to convert Series D Partnership Units called for redemption pursuant to
Section 5 shall terminate at the close of business on the fifth Business Day
prior to the Call Date fixed for such redemption, unless the Partnership shall
default in making payment of the cash payable upon such redemption under
Section 5.
(b) In order to exercise the conversion right, the holder of each unit
of Series D Partnership Preferred Units to be converted shall surrender the
certificate representing such unit, duly endorsed or assigned to the Partnership
or in blank, at the office of the Transfer Agent, accompanied by written notice
to the Partnership that the holder thereof irrevocably elects to convert such
Series D Partnership Preferred Units. Unless the partnership units issuable on
conversion are to be issued in the same name as the name in which such Series D
Partnership Preferred Units are registered, each partnership unit surrendered
for conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Partnership, duly executed by the holder or such holder's
duly authorized attorney and an amount sufficient to pay any transfer or similar
tax (or evidence reasonably satisfactory to the Partnership demonstrating that
such taxes have been paid).
Holders of Series D Partnership Preferred Units at the close of
business on a distribution payment record date shall be entitled to receive the
distribution payable on such units on the corresponding Distribution Payment
Date notwithstanding the conversion thereof following such distribution payment
record date and prior to such Distribution Payment Date. However, Series D
Partnership Preferred Units surrendered for conversion during the period between
the close of business on any distribution payment record date and the opening of
business on the corresponding Distribution Payment Date (except units converted
after the issuance of notice of redemption with respect to a Call Date during
such period, such Series D Partnership Preferred Units being entitled to such
distribution on the Distribution Payment Date) must be accompanied by payment of
an amount equal to the distribution payable on such units on such Distribution
Payment Date. A holder of Series D Partnership Preferred Units on a
distribution payment record date who (or whose transferee) tenders any such
units for conversion into Partnership Common Units on the corresponding
Distribution Payment Date will receive the distribution payable by the
Partnership on such Series D Partnership Preferred Units on such date, and the
converting holder need not include payment of the amount of such distribution
upon surrender of Series D Partnership Preferred Units for conversion. Except
as provided above, the Partnership shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on converted units or for
distributions on the Partnership Common Units issued upon such conversion.
As promptly as practicable after the surrender of certificates for
Series D Partnership Preferred Units as aforesaid, the Partnership shall issue
and shall deliver at such office to such holder, or on his or her written order,
a certificate or certificates for the number of full Partnership Common Units
issuable upon the conversion of such units in accordance with provisions of this
Section 6, and any fractional interest in respect of a Partnership Common Unit
arising upon such conversion shall be settled as provided in paragraph (c) of
this Section 6.
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<PAGE>
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for Series
D Partnership Preferred Units shall have been surrendered and such notice shall
have been received by the Partnership as aforesaid (and if applicable, payment
of an amount equal to the distribution payable on such units shall have been
received by the Corporation as described above), and the Person or Persons in
whose name or names any certificate or certificates for Partnership Common Units
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the units represented thereby at such time on such date
and such conversion shall be at the Conversion Price in effect at such time on
such date unless the transfer books of the Partnership shall be closed on that
date, in which event such Person or Persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding day
on which such transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date on which such units shall have been
surrendered and such notice received by the Partnership.
(c) No fractional units or scrip representing fractions of Partnership
Common Units shall be issued upon conversion of the Series D Partnership
Preferred Units. Instead of any fractional interest in a Partnership Common
Unit that would otherwise be deliverable upon the conversion of a Series D
Partnership Preferred Unit, the Partnership shall pay to the holder of such unit
an amount in cash based upon the Current Market Price of the Corporation's
Common Stock on the Trading Day immediately preceding the date of conversion.
If more than one Series D Partnership Unit shall be surrendered for conversion
at one time by the same holder, the number of full Partnership Common Units
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of Series D Partnership Preferred Units so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Grant Date (A) pay a
dividend or make a distribution on its Common Equity Shares in Common
Equity Shares, (B) subdivide its outstanding Common Equity Shares into a
greater number of units, (C) combine its outstanding Common Equity Shares
into a smaller number of units or (D) issue any shares of stock by
reclassification of its Common Equity Shares, the Conversion Price in
effect at the opening of business on the day following the date fixed for
the determination of holders entitled to receive such dividend or
distribution or at the opening of business on the Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any Series D Equity Shares thereafter surrendered for
conversion shall be entitled to receive the number of Common Equity Shares
that such holder would have owned or have been entitled to receive after
the happening of any of the events described above as if such Series D
Equity Shares had been converted immediately prior to the record date in
the case of a dividend or distribution or the effective date in the case of
a subdivision, combination or reclassification. An adjustment made pursuant
to this subparagraph (i) shall become effective immediately after the
opening of business on the Business Day next following the record date
(except as provided in paragraph (h) below) in the case of a dividend or
distribution and shall become
K-13
<PAGE>
effective immediately after the opening of business on the Business Day
next following the effective date in the case of a subdivision, combination
or reclassification.
(ii) If the Corporation shall issue after the Grant Date rights,
options or warrants to all holders of Common Equity Shares entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Equity Shares at a price per
share less than 95% (100% if a standby underwriter is used and charges the
Corporation a commission) of the Fair Market Value per share of the
Corporation's Common Stock on the record date for the determination of
holders entitled to receive such rights, options or warrants, then the
Conversion Price in effect at the opening of business on the Business Day
next following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately
prior to the opening of business on the Business Day next following the
date fixed for such determination by (B) a fraction, the numerator of which
shall be the sum of (x) the number of Common Equity Shares outstanding on
the close of business on the date fixed for such determination and (y) the
number of shares that the aggregate proceeds to the Corporation from the
exercise of such rights, options or warrants for Common Equity Shares would
purchase at 95% of such Fair Market Value (or 100% in the case of a standby
underwriting), and the denominator of which shall be the sum of (x) the
number of Common Equity Shares outstanding on the close of business on the
date fixed for such determination and (y) the number of additional Common
Equity Shares offered for subscription or purchase pursuant to such rights,
options or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record date
(except as provided in paragraph (h) below). In determining whether any
rights, options or warrants entitle the holders of Common Equity Shares to
subscribe for or purchase Common Equity Shares at less than 95% of such
Fair Market Value (or 100% in the case of a standby underwriting), there
shall be taken into account any consideration received by the Corporation
upon issuance and upon exercise of such rights, options or warrants, the
value of such consideration, if other than cash, to be determined by the
Board of Directors whose determination shall be conclusive. To the extent
that Common Equity Shares are not delivered pursuant to such rights,
options or warrants, upon the expiration or termination of such rights,
options or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made
upon the issuance of such rights, options or warrants been made on the
basis of delivery of only the number of Common Equity Shares actually
delivered. In the event that such rights, options or warrants are not so
issued, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such date fixed for the
determination of shareholders entitled to receive such rights, options or
warrants had not been fixed.
(iii) If the Corporation shall distribute to all holders of its
Common Equity Shares any securities of the Corporation (other than Common
Equity Shares) or evidence of its indebtedness or assets (excluding
cumulative cash distributions paid with respect to the Common Equity Shares
after December 31, 1997 which are not in excess of the following: the sum
of (A) the Corporation's cumulative undistributed Funds from Operations at
K-14
<PAGE>
December 31, 1997, plus (B) the cumulative amount of Funds from Operations,
as determined by the Board of Directors, after December 31, 1997, minus (C)
the cumulative amount of distributions accrued or paid in respect of the
Corporation's Series D Equity Shares or any other class or series of
preferred stock of the Corporation after the Grant Date) or rights, options
or warrants to subscribe for or purchase any of its securities (excluding
those rights, options and warrants issued to all holders of Common Equity
Shares entitling them for a period expiring within 45 days after the record
date referred to in subparagraph (ii) above to subscribe for or purchase
Common Equity Shares, which rights and warrants are referred to in and
treated under subparagraph (ii) above) (any of the foregoing being
hereinafter in this subparagraph (iii) collectively called the "Securities"
and individually a "Security"), then in each such case the Conversion Price
shall be adjusted so that it shall equal the price determined by
multiplying (x) the Conversion Price in effect immediately prior to the
close of business on the date fixed for the determination of shareholders
entitled to receive such distribution by (y) a fraction, the numerator of
which shall be the Fair Market Value per share of the Corporation's Common
Stock on the record date mentioned below less the then Fair Market Value
(as determined by the Board of Directors, whose determination shall be
conclusive) of the portion of the Securities or assets or evidences of
indebtedness so distributed or of such rights, options or warrants
applicable to one Common Equity Share, and the denominator of which shall
be the Fair Market Value per share of the Corporation's Common Stock on the
record date mentioned below. Such adjustment shall become effective on the
date of distribution retroactive to the opening of business on the Business
Day next following (except as provided in paragraph (h) below) the record
date for the determination of shareholders entitled to receive such
distribution. For the purposes of this subparagraph (iii), the
distribution of a Security, which is distributed not only to the holders of
the Common Equity Share on the date fixed for the determination of
shareholders entitled to such distribution of such Security, but also is
distributed with each Partnership Common Unit delivered to a Person
converting a share of Series D Partnership Preferred Units after such
determination date, shall not require an adjustment of the Conversion Price
pursuant to this subparagraph (iii); provided that on the date, if any, on
--------
which a Person converting a unit of Series D Partnership Preferred Units
would no longer be entitled to receive such Security with a Partnership
Common Unit (other than as a result of the termination of all such
Securities), a distribution of such Securities shall be deemed to have
occurred and the Conversion Price shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the date fixed for
the determination of the shareholders entitled to receive such
distribution" and "the record date" within the meaning of the two preceding
sentences). If any distribution of the type described in this paragraph
(iii) is declared but not so paid or made, the Conversion Price shall again
be adjusted to the Conversion Price which would then be in effect if such
distribution had not been declared.
Rights or warrants distributed by the Corporation to all holders of
Common Equity Shares entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are
deemed to be transferred with such shares of Common Equity Shares; (ii) are
not exercisable; and (iii) are
K-15
<PAGE>
also issued in respect of future issuances of Common Equity Shares, shall
be deemed not to have been distributed for purposes of this subparagraph
(iii) (and no adjustment to the Conversion Price under this subparagraph
(iii) will be required) until the occurrence of the earliest Trigger Event.
If such right or warrant is subject to subsequent events, upon the
occurrence of which such right or warrant shall become exercisable to
purchase different securities, evidences of indebtedness or other assets or
entitle the holder to purchase a different number or amount of the
foregoing or to purchase any of the foregoing at a different purchase
price, then the occurrence of each such event shall be deemed to be the
date of issuance and record date with respect to a new right or warrant
(and a termination or expiration of the existing right or warrant without
exercise by the holder thereof to the extent not exercised). In addition,
in the event of any distribution (or deemed distribution) of rights or
warrants, or any Trigger Event or other event (of the type described in the
preceding sentence) with respect thereto, that resulted in an adjustment to
the Conversion Price under this subparagraph (iii), (1) in the case of any
such rights or warrants which shall all have been redeemed or repurchased
without exercise by any holders thereof, the Conversion Price shall be
readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution (but not a distribution paid exclusively in cash), equal to
the per share redemption or repurchase price received by a holder of Common
Equity Shares with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Equity
Shares as of the date of such redemption or repurchase, and (2) in the case
of such rights or warrants all of which shall have expired or been
terminated without exercise, the Conversion Price shall be readjusted as if
such rights and warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the Corporation
or any subsidiary or controlled Affiliate of the Corporation for all or any
portion of the Common Equity Shares shall expire and such tender or
exchange offer shall require the payment by the Corporation or such
subsidiary or controlled Affiliate of consideration per Common Equity Share
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), at the last time (the "Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer, that exceeds the Current Market Price per share of the Corporation's
Common Stock on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction contemplated by this
subparagraph, by a fraction of which the numerator shall be the number of
Common Equity Shares outstanding (including any tendered or exchanged
shares) at the Expiration Time, multiplied by the Current Market Price per
share of the Corporation's Common Stock on the Trading Day next succeeding
the Expiration Time, and the denominator shall be the sum of (A) the fair
market value (determined as aforesaid) of the aggregate consideration
payable to shareholders based upon the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Expiration Time
(the
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<PAGE>
shares deemed so accepted, up to any maximum, being referred to as the
"Purchased Shares") and (B) the product of the number of Common Equity
Shares outstanding (less any Purchased Shares) at the Expiration Time and
the Current Market Price per share of the Corporation's Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following
the Expiration Time. In the event the Corporation or any subsidiary or
controlled Affiliate is obligated to purchase shares pursuant to any such
tender offer, but the Corporation or such subsidiary or controlled
Affiliate is permanently prevented by applicable law from effecting any
such purchases, or all such purchases are rescinded, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such tender offer had not been made.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease of
at least 1% in such price; provided, however, that any adjustments that by
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reason of this subparagraph (v) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and made
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in accordance with the provisions of this Section 6 (other than this
subparagraph (v)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of
Partnership Common Units. Notwithstanding any other provisions of this
Section 6, the Partnership shall not be required to make any adjustment of
the Conversion Price for the issuance of any Common Equity Shares pursuant
to any plan providing for the reinvestment of dividends or interest payable
on securities of the Corporation and the investment of additional optional
amounts in Common Equity Shares under such plan. All calculations under
this Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-hundredth of a partnership unit (with .005 of
a share being rounded upward), as the case may be. Anything in this
paragraph (d) to the contrary notwithstanding, the Partnership shall be
entitled, to the extent permitted by law, to make such reductions in the
Conversion Price, in addition to those required by this paragraph (d), as
it in its discretion shall determine to be advisable in order that any
partnership unit distributions, subdivision of partnership units,
reclassification or combination of partnership units, distribution of
rights or warrants to purchase partnership units, or distribution of other
assets (other than cash distributions) hereafter made by the Partnership to
its Partners shall not be taxable. To the extent permitted by applicable
law, the Partnership from time to time may reduce the Conversion Price by
any amount for any period of time if the period is at least 20 days, the
reduction is irrevocable during the period and the Managing General Partner
shall have made a determination that such reduction would be in the best
interests of the Partnership, which determination shall be conclusive.
Whenever the Conversion Price is reduced pursuant to the preceding
sentence, the Partnership shall mail to the holder of each Series D
Partnership Preferred Unit at his or her last address shown on the
Partnership's records a notice of reduction prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period during which it will be in effect.
K-17
<PAGE>
(e) If the Corporation shall be a party to any transaction (including,
without limitation, a merger, consolidation, statutory share exchange, self
tender offer for 40% or more of its Common Equity Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Equity Shares and excluding any transaction as to which subparagraph (d)(i) of
this Section 6 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which all or substantially all of
the Partnership Common Units are converted into the right to receive different
securities or other property (including cash or any combination thereof), each
Series D Partnership Preferred Unit which is not redeemed or converted into the
right to receive different securities or other property prior to such
Transaction shall thereafter be convertible, in lieu of Partnership Common Units
into the kind and amount of different securities and other property (including
cash or any combination thereof) receivable upon the consummation of such
Transaction by a holder of that number of Partnership Common Units into which
one Series D Partnership Preferred Unit was convertible immediately prior to
such Transaction, assuming such holder of Partnership Common Units (i) is not a
Person with which the Corporation consolidated or into which the Corporation
merged or which merged into the Corporation or to which such sale or transfer
was made, as the case may be ("Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of shares, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or amount of
shares, securities and other property (including cash) receivable upon such
Transaction is not the same for each Common Share held immediately prior to such
Transaction by other than a Constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised ("Non-
Electing Share"), then for the purpose of this paragraph (e) the kind and amount
of shares, securities and other property (including cash) receivable upon such
Transaction by each Non-Electing Share shall be deemed to be the kind and amount
so receivable per share by holders of a plurality of the Non-Electing Shares).
The Corporation shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph (e), and it
shall not consent or agree to the occurrence of any Transaction until the
Corporation has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series D
Partnership Preferred Units that will contain provisions enabling the holders of
the Series D Partnership Preferred Units that remain outstanding after such
Transaction to convert into the consideration received by holders of Partnership
Common Units at the Conversion Price in effect immediately prior to such
Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
(f) If:
(i) the Corporation shall declare a distribution (or any other
distribution) on its Common Equity Shares (other than cash distributions or
distributions paid with respect to the Common Equity Shares after December
31, 1997 not in excess of the sum of the Corporation's cumulative
undistributed Funds from Operations at December 31, 1997, plus the
cumulative amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1997, minus the cumulative amount of
distributions accrued or paid in respect of the Corporation's Series D
Equity Shares or any other class or series of preferred stock of the
Corporation after the Grant Date); or
K-18
<PAGE>
(ii) the Corporation shall authorize the granting to all holders
of Common Equity Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or warrants;
or
(iii) there shall be any reclassification of the Common Equity
Shares (other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or merger to which the Corporation is a party
(other than a merger in which the Corporation is the surviving entity) and
for which approval of any shareholders of the Corporation is required, or a
statutory share exchange, or a self tender offer by the Corporation for all
or substantially all of its outstanding shares of Common Stock or the sale
or transfer of all or substantially all of the assets of the Corporation as
an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Partnership shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series D Partnership Preferred Units at
their addresses as shown on the records of the Partnership, as promptly as
possible, but at least 10 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such distribution, distribution or granting of rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Equity Shares of record to be entitled to such distribution,
distribution or rights, options or warrants are to be determined or (B) the date
on which such reclassification, consolidation, merger, statutory share exchange,
sale, transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Partnership
Common Units of record shall be entitled to exchange their Partnership Common
Units for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up. Failure to give or receive
such notice or any defect therein shall not affect the legality or validity of
the proceedings described in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Partnership shall promptly file with the Transfer Agent a certificate setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error.
Promptly after delivery of such certificate, the Partnership shall prepare a
notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the effective date of such adjustment and shall mail such
notice of such adjustment of the Conversion Price to the holder of each Series D
Partnership Preferred Unit at such holder's last address as shown on the records
of the Partnership.
(h) In any case in which paragraph (d) of this Section 6 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Partnership may defer until the occurrence of such event (A)
issuing to the holder of any Series D Partnership Preferred Unit converted after
such record date and before the occurrence of such event
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<PAGE>
the additional Partnership Common Units issuable upon such conversion by reason
of the adjustment required by such event over and above the Partnership Common
Units issuable upon such conversion before giving effect to such adjustment and
(B) paying to such holder any amount of cash in lieu of any fraction pursuant to
paragraph (c) of this Section 6.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Equity Shares, other than action described in this Section 6, that in the
opinion of the Managing General Partner would materially and adversely affect
the conversion rights of the holders of the Series D Partnership Preferred
Units, the Conversion Price for the Series D Partnership Preferred Units may be
adjusted, to the extent permitted by law, in such manner, if any, and at such
time, as the Managing General Partner may determine to be equitable in the
circumstances.
(k) The Partnership covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Partnership Common Units, for the purpose of effecting
conversion of the Series D Partnership Preferred Units, the full number of
Partnership Common Units deliverable upon the conversion of all outstanding
Series D Partnership Preferred Units not theretofore converted. For purposes of
this paragraph (k), the number of Partnership Common Units that shall be
deliverable upon the conversion of all outstanding Series D Partnership
Preferred Units shall be computed as if at the time of computation all such
outstanding units were held by a single holder.
Any Partnership Common Units issued upon conversion of the Series D
Partnership Preferred Units shall be validly issued, fully paid and
nonassessable.
The Partnership shall use its best efforts to comply with all federal
and state securities laws and regulations thereunder in connection with the
issuance of any securities that the Partnership shall be obligated to deliver
upon conversion of the Series D Partnership Preferred Units. The certificates
evidencing such securities shall bear such legends restricting transfer thereof
in the absence of registration under applicable securities laws or an exemption
therefrom as the Partnership may in good faith deem appropriate.
(l) The Partnership will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of
Partnership Common Units or other securities or property on conversion of the
Series D Partnership Preferred Units pursuant hereto; provided, however, that
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the Partnership shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of Partnership Common
Units or other securities or property in a name other than that of the holder of
the Series D Partnership Preferred Units to be converted, and no such issue or
delivery shall be made unless and until the Person
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<PAGE>
requesting such issue or delivery has paid to the Partnership the amount of any
such tax or established, to the reasonable satisfaction of the Partnership, that
such tax has been paid.
7. Redemption at the Option of the Holder.
(a) At any time after August 12, 2008, the holders of Series D
Partnership Preferred Units shall have the right at any time that the
Corporation's Common Stock has a Current Market Price at or below the Conversion
Price per unit, to require the Partnership, to the extent the Partnership shall
have funds legally available therefor, to redeem any or all of the Series D
Partnership Preferred Units held by such holder at a repurchase price payable,
at the option of the Partnership, in either (i) cash or (ii) such number of
Partnership Common Units that shall be convertible into shares of the
Corporation's Common Stock as shall have a Current Market Price in the aggregate
on the day prior to the day such holder gives notice pursuant to Section 7(b) of
its intention to redeem, equal to in either case, 100% of the Liquidation
Preference thereof plus accrued and unpaid distributions whether or not
declared, if any, to the date of repurchase or the date payment is made
available (in the aggregate, the "Redemption Payment").
(b) Notwithstanding paragraph (a) of this Section 7, in the event that
WHL and its subsidiaries and the trustee of Westfield America Trust on behalf of
Westfield America Trust vote to approve the conversion of the Corporation's
Series D Equity Shares into Common Equity Shares at a meeting of shareholders at
which such proposal is raised, but the shareholders of the Corporation as a
whole reject the foregoing proposal, then from and after the later of such
rejection date and the second anniversary of the Grant Date, the Series D
Partnership Preferred Units shall be redeemable at the option of the holder, to
the extent that the Partnership shall have funds legally available therefor, at
a redemption price payable in cash equal to the product of (a) the Series D
Common Equivalent Factor times (b) the Current Market Price on the date of the
notice provided pursuant to paragraph (c) below, plus all accumulated, accrued
and unpaid dividends whether or not declared, if any, to the date of repurchase
or the date payment is made available.
(c) For purposes of this Section 7, redemption at the option of the
holder shall be deemed to occur upon receipt by the Partnership of written
notice that the holder of Series D Partnership Preferred Units wishes to tender
units to be redeemed. The holders of such units to be redeemed shall then have
30 days from the date of such notice to deliver such units to the Transfer
Agent. Upon the surrender of the certificate or certificates of Series D
Partnership Preferred Units to be redeemed, duly endorsed or assigned to the
Partnership or in blank, at the office of the Transfer Agent, the Partnership
shall promptly, either (i) by wire transfer of immediately available funds to
such holder, as directed by such holder, send an amount equal to the Redemption
Payment in respect of all Series D Partnership Preferred Units or portions
thereof so tendered or (ii) issue and deliver to such holder, or on his or her
written order, a certificate or certificates for the number of full Partnership
Common Units issuable in respect of all Series D Partnership Preferred Units or
portions thereof so tendered.
K-21
<PAGE>
8. Status of Reacquired Series D Partnership Preferred Units.
All Series D Partnership Preferred Units which shall have been granted
and reac quired in any manner by the Partnership shall be deemed cancelled.
9. Ranking.
The Series D Partnership Preferred Units shall with respect to
distribution rights and rights on liquidation, dissolution and winding up of the
affairs of the Partnership, rank pari passu to the Series A Partnership
----------
Preferred Units and the Series B Partnership Preferred Units and the Series C
Partnership Preferred Units.
Each Series D Partnership Preferred Unit shall be identical in all
respects to each other Series D Partnership Preferred Unit.
Any class or series of Partnership Units or Investor Unit Rights shall
be deemed to rank:
(a) prior or senior to the Series D Partnership Preferred Units, as to
the payment of distributions and as to distributions of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
such class or series of Partnership Units or Investor Unit Rights, as the case
may be, shall be entitled to the receipt of distributions or of amounts
distributable upon the liquidation, dissolution and winding up of the
Partnership in preference or priority to the holders of Series D Partnership
Preferred Units ("Senior Units");
(b) on a parity with the Series D Partnership Preferred Units, as to
the payment of distributions and as to distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, whether or not the
distribution rates, distribution payment dates or redemption or liquidation
prices per unit or other denomination thereof shall be different from those of
the Series D Partnership Preferred Units, if the holders of such class or series
of Partnership Units or Investor Unit Rights, as the case may be, and the Series
D Partnership Preferred Units shall be entitled to the receipt of distributions
and of amounts distributable upon the liquidation, dissolution and winding up of
the Partnership in proportion to their respective amounts of accumulated and
unpaid distributions per unit or other denomination or liquidation preferences,
without preference or priority one over the other ("Parity Units");
(c) junior to the Series D Partnership Preferred Units, as to the
payment of distributions or as to the distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
Series D Partnership Preferred Units shall be entitled to receipt of
distributions or of amounts distributable upon the liquidation, dissolution and
winding up of the Partnership, in preference or priority to the holders of such
class or series of Partnership Units or Investor Unit Rights ("Junior Units");
and
(d) junior to the Series D Partnership Preferred Units, as to the
payment of distributions and as to the distribution of assets upon the
liquidation, dissolution and winding up of
K-22
<PAGE>
the Partnership, if such class or series of Partnership Units is Partnership
Common Units or Class A Investor Unit Rights, as the case may be, or if the
holders of Series D Partnership Preferred Units shall be entitled to receipt of
distributions and of amounts distributable upon the liquidation, dissolution and
winding up of the Partnership, in preference or priority to the holders of such
class or series of Partnership Units or Investor Unit Rights ("Fully Junior
Units").
10. Allocations.
(a) For each partnership year, each Holder of a Share of Series D
Preferred Units shall be allocated Net Income of the Partnership in an amount
equal to the amount of distributions made with respect to such Holder's Series D
Preferred Units pursuant to Section 3 hereof during such Partnership Year. In
no event shall items of Net Loss of the Partnership be allocated to any Holder
of Series D Preferred Units unless such allocation is required by Section 704(b)
of the Code or Section 10(b) of this Exhibit K.
---------
(b) If any Series D Partnership Preferred Units are redeemed pursuant
to the terms of this Exhibit K, for the Partnership Year that includes such
---------
redemption (and, if necessary, for subsequent Partnership Years) (a) gross
income and gain (in such relative proportions as the Managing General Partner in
its discretion shall determine) shall be allocated to the Managing General
Partner and such Special Limited Partner(s) to the extent that the redemption
amounts paid or payable with respect to the Series D Partnership Preferred Units
so redeemed (or treated as redeemed) exceeds the aggregate Capital Account
Balances (net of liabilities assumed or taken subject to by the Partnership) per
Series D Partnership Preferred Unit allocable to the Series D Partnership
Preferred Units so redeemed (or treated as redeemed) and (b) deductions and
losses (in such relative proportions as the Managing General Partner in its
discretion shall determine) shall be allocated to the Managing General Partner
and such Special Limited Partner(s) to the extent that the aggregate Capital
Account Balances (net of liabilities assumed or taken subject to by the
Partnership) per Series D Partnership Preferred Unit allocable to the Series D
Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the
redemption amount paid or payable with respect to the Series D Partnership
Preferred Units so redeemed (or treated as redeemed).
11. Voting and Consent Rights.
(a) Holders of Series D Partnership Preferred Units shall have only
those voting and consent rights specified in Section 7.3.B of the Agreement and
Section 11(b) hereof.
(b) So long as any Series D Partnership Preferred Units are
outstanding, in addition to any other vote or consent of holders of Series D
Partnership Preferred Units required by law or by the Agreement, the affirmative
vote or consent of holders of at least 50% of the outstanding Series D
Partnership Preferred Units, voting or consenting as a separate class, given in
Person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating
any amendment or alteration of any of the provisions of this Partnership Unit
Designation or the Agreement that materially and adversely affects the material
powers, rights or preferences of the holders of the Series D Partnership
Preferred Units; provided, however, that the amendment of the Agreement so as to
-------- -------
authorize, create, issue or
K-23
<PAGE>
grant any class or series of Partnership Units, including, without limitation,
any such Partnership Units that may have rights senior or superior to the Series
D Partnership Preferred Units, shall be deemed not to materially and adversely
affect the material powers, rights or preferences of the holders of Series D
Partnership Preferred Units.
(c) Except as otherwise required by applicable law or as set forth
herein or in the Agreement, the holders of the Series D Partnership Preferred
Units shall not have any relative, participating, optional or other special
voting rights or powers with respect to any matter, and the consent or approval
of the holders thereof shall not be required for the taking of any action by the
Partnership.
12. Information Rights.
Holders of Series D Partnership Preferred Units shall have only the
information rights specified in Section 8.5.A and Section 9.3 of the Agreement.
13. Restrictions on Transfer.
The Series D Partnership Preferred Units are subject to the
restrictions on transfer set forth in Article 11 of the Agreement.
14. Ambiguity.
In the case of an ambiguity in the application of any of the
provisions of this Partnership Unit Designation, the Managing General Partner
shall have the power to determine the application of the provisions of this
Partnership Unit Designation with respect to any situation based on its
reasonable belief, understanding or knowledge of the circumstances.
15. Partnership Records.
The Managing General Partner shall amend Exhibit A to the Agreement
---------
from time to time to the extent necessary to reflect accurately the grant and
any subsequent redemption of, or other event having an effect on the ownership
of, Series D Partnership Preferred Units.
16. Governing Law.
This Exhibit K shall be construed and enforced in accordance with, and
---------
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
K-24
<PAGE>
EXHIBIT 10.5
SECOND AMENDMENT TO THE
FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
This SECOND AMENDMENT TO THE FIRST AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF WESTFIELD AMERICA LIMITED PARTNERSHIP, dated as of
December 8, 1998 (this "Amendment"), is being executed by Westfield America,
Inc., a Missouri corporation (the "Managing General Partner"), as the managing
general partner of Westfield America Limited Partnership, a Delaware limited
partnership (the "Partnership"), and on behalf of the Limited Partners pursuant
to the authority conferred on the Managing General Partner by Sections 2.4 and
12.3 of the First Amended and Restated Agreement of Limited Partnership of
Westfield America Limited Partnership, dated as of August 3, 1998, as amended by
that certain First Amendment to the First Amended and Restated Agreement of
Limited Partnership of Westfield America Limited Partnership dated as of August
12, 1998 (as so amended, the "Agreement"). Capitalized terms used herein, but
not otherwise defined herein, shall have the respective meanings ascribed
thereto in the Agreement.
WHEREAS, the General Partner and the Limited Partners entered into the
Agreement specifying the rights and obligations of each of the parties thereto;
and
WHEREAS, the General Partner and the Limited Partners now desire to amend
the Agreement in the manner set forth below.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions; References. Unless otherwise specifically
------------------------
defined herein, each term used herein which is defined in the Agreement shall
have the meaning assigned to such term in the Agreement. Each reference to
"hereof," "hereunder," "herein," and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended by this Amendment.
<PAGE>
Section 2. Amendment of Definition. The definition of "Specified
------------------------ ---------
Partnership Common Unit Amount" contained in Article I is hereby deleted in its
- ------------------------------
entirety and replaced with the following definition of "Specified Partnership
---------------------
Units":
- -----
" "Specified Partnership Units" shall mean, (i) with respect to each
---------------------------
Excluded Property that is listed on Exhibit G as of the date hereof, the
number of Partnership Common Units and/or Partnership Preferred Units (as
the case may be) set forth opposite such Excluded Property on Exhibit G,
and (ii) with respect to each Excluded Property that is added to Exhibit G
from and after the date hereof, the amount of Partnership Common Units
and/or Partnership Preferred Units (as the case may be) which would have
been issued to WEA, pursuant to Section 4.3.B and 4.2 hereof, if WEA had
contributed such Excluded Property on the later to occur of (A) the date of
issuance of any Partnership Unit or grant of any Investor Unit Right to any
Person that is not an Affiliate of WEA and (B) the date that such asset was
acquired by WEA or a wholly-owned Subsidiary of WEA, in exchange for
Partnership Units equal in value to the fair market value of such Excluded
Property as of such date."
Section 3. Amendment of Section 4.10. Section 4.10 is hereby
--------------------------
amended to read in its entirety as follows:
" 4.10 Excluded Properties. WEA shall contribute each Excluded Property
-------------------
(or, if applicable, the proceeds (after payment of all transfer taxes and
other transaction costs) received by WEA from the sale, transfer or other
disposition of an Excluded Property to a Person who is not an Affiliate of
WEA) to the Partnership upon the earlier of (i) such time as it is
commercially practicable to contribute such property to the Partnership
without adverse tax or other economic consequence to WEA and (ii) any sale,
transfer or other disposition of an Excluded Property to a Person who is
not an Affiliate of WEA. Upon any such contribution of an Excluded
Property or the proceeds therefrom, WEA shall receive in exchange for such
contribution, notwithstanding the actual value of such Excluded Property or
the amount of such proceeds (as the case may be), the Specified Partnership
Units applicable to such Excluded Property. Such Specified Partnership
Units may be allocated among the Managing General Partner and any Special
Limited Partners at the discretion of the Managing General Partner."
Section 4. Amendment of Section 6.2.A. Section 6.2.A. is hereby
---------------------------
amended to read in its entirety as follows:
2
<PAGE>
" A. In General. Subject to Section 11.6.C and Section 13.7.D(2)
----------
hereof, Net Income and Net Loss shall be allocated to each of the Holders
as follows:
(i) Net Income will be allocated to Holders of Partnership Pre-
ferred Units and Investor Unit Rights (other than Class A Investor
Unit Rights) in accordance with and subject to the terms of the
Partnership Unit Designation or Investor Unit Right Designation
applicable to such Partnership Preferred Units or Investor Unit
Rights;
(ii) remaining Net Income will be allocated to the Holders of
Partnership Common Units and Class A Investor Unit Rights in
accordance with their respective Percentage Interests at the end of
each Partnership Year;
(iii) subject to the terms of any Partnership Unit Designation or
Investor Unit Right Designation, Net Loss will be allocated to the
Holders of Partnership Common Units and Class A Investor Unit Rights
in accordance with their respective Percentage Interests at the end of
each Partnership Year; and
(iv) for purposes of this Section 6.2.A, the Percentage Interests of
the Holders of Partnership Common Units and Class A Investor Unit
Rights shall be calculated based on a denominator equal to the
aggregate Partnership Common Units and Class A Investor Unit Rights
outstanding as of the date of determination."
Section 5. Amendment of Section 11.3.A. Section 11.3.A. is hereby
----------------------------
amended to read in its entirety as follows:
" A. General. Prior to the end of the first Twelve-Month Period and
-------
except as provided in Section 11.1.C hereof, no Limited Partner shall
Transfer all or any portion of its Partnership Interest to any transferee
without the consent of the Managing General Partner, which consent may be
withheld in its sole and absolute discretion; provided, however, that any
-------- -------
Limited Partner may, at any time, without the consent of the Managing
General Partner, (i) Transfer all or part of its Partnership Interest to
any Family Member, any Charity, any Controlled Entity or any Affiliate,
provided that the transferee is, in any such case, a Qualified Transferee,
or (ii) pledge (a "Pledge") all or any portion of its Partnership Interest
------
to a lending institution,
3
<PAGE>
that is not an Affiliate of such Limited Partner, as collateral or security
for a bona fide loan or other extension of credit, and Transfer such
pledged Partnership Interest to such lending institution in connection
with the exercise of remedies under such loan or extension of credit (any
Transfer or Pledge permitted by this proviso is hereinafter referred to as
a "Permitted Transfer"). After such first Twelve-Month Period, each Limited
------------------
Partner, and each trans feree of Partnership Units or Assignee pursuant to
a Permitted Transfer, shall have the right to Transfer all or any portion
of its Partnership Interest to any Person, subject to the provisions of
Section 11.4 hereof and to satisfaction of each of the following
conditions:
(1) Managing General Partner Right of First Refusal. The
-----------------------------------------------
transferring Partner (or the Partner's estate in the event of the Partner's
death) shall give written notice of the proposed Transfer to the Managing
General Partner, which notice shall state (i) the identity of the proposed
transferee and (ii) the amount and type of consideration proposed to be
received for the Transferred Partnership Units. The Managing General
Partner shall have ten (10) Business Days upon which to give the
Transferring Partner notice of its election to acquire the Partnership
Units on the terms set forth in such notice. If it so elects, it shall
purchase the Partnership Units on such terms within ten (10) Business Days
after giving notice of such election; provided, however, that in the event
-------- -------
that the proposed terms involve a purchase for cash, the Managing General
Partner may at its election deliver in lieu of all or any portion of such
cash a note payable to the Transferring Partner at a date as soon as
reasonably practicable, but in no event later than one hundred eighty (180)
days after such purchase, and bearing interest at an annual rate equal to
the total dividends declared with respect to one (1) REIT Share for the
four (4) preceding fiscal quarters of the Managing General Partner, divided
-------
by the Value as of the closing of such purchase; provided, further, that
-- -------- -------
such closing may be deferred to the extent necessary to effect compliance
with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, if
applicable, and any other applicable requirements of law. If it does not
so elect, the Transferring Partner may Transfer such Partnership Units to a
third party, on terms no more favorable to the transferee than the proposed
terms, subject to the other conditions of this Section 11.3.
(2) Qualified Transferee. Any Transfer of a Partnership Interest
--------------------
shall be made only to a single Qualified Transferee; provided, however,
-------- -------
that, for such purposes, all Qualified Transferees that are Affiliates, or
that comprise investment accounts or funds managed by a single Qualified
4
<PAGE>
Transferee and its Affiliates, shall be considered together to be a single
Qualified Transferee; provided, further, that each Transfer meeting the
-------- -------
minimum Transfer restriction of Section 11.3.A(4) hereof may be to a
separate Qualified Transferee.
(3) Opinion of Counsel. The Transferor shall deliver or cause to
------------------
be delivered to the Managing General Partner an opinion of counsel
reasonably satisfactory to it to the effect that the proposed Transfer may
be effected without registration under the Securities Act and will not
otherwise violate the registration provisions of the Securities Act and the
regulations promulgated thereunder or violate any state securities laws or
regulations applicable to the Partnership or the Partnership Interests
Transferred; provided, however, that the Managing General Partner may, in
-------- -------
its sole discretion, waive this condition upon the request of the
Transferor. If, in the opinion of such counsel, such Transfer would
require the filing of a registration statement under the Securities Act or
would otherwise violate any Federal or state securities laws or regulations
applicable to the Partnership or the Partnership Units, the Managing
General Partner may prohibit any Transfer otherwise permitted under this
Section 11.3 by a Limited Partner of Partnership Interests.
(4) Minimum Transfer Restriction. Any Transferring Partner must
----------------------------
Transfer not less than the lesser of (i) five hundred (500) Partnership
Units or (ii) all of the remaining Partnership Units owned by such
Transferring Partner; provided, however, that, for purposes of determining
-------- -------
compliance with the foregoing restriction, all Partnership Units owned by
Affiliates of a Limited Partner shall be considered to be owned by such
Limited Partner.
(5) Transferee Agreement to Effect a Redemption. Any proposed
-------------------------------------------
transferee shall deliver to the Managing General Partner a written
agreement reasonably satisfactory to the Managing General Partner to the
effect that the transferee will, within six (6) months after consummation
of a Partnership Common Units Transfer, tender its Partnership Common Units
for Redemption in accordance with the terms of the Redemption rights
provided in Section 16.1 hereof.
(6) No Further Transfers. The transferee shall not be permitted
--------------------
to effect any further Transfer of the Partnership Units, other than to the
Managing General Partner.
5
<PAGE>
(7) Exception for Permitted Transfers. The conditions of
---------------------------------
Sections 11.3.A(1) through 11.3.A(6) hereof shall not apply in the case of
a Permitted Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or not
such Transfer is effected during or after the first Twelve-Month Period) that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such Transferred Partnership Interest, and no such Transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under
this Agreement without the approval of the Managing General Partner, in its sole
and absolute discretion. Notwithstanding the foregoing, any transferee of any
Transferred Partnership Interest shall be subject to any and all ownership
limitations (including, without limitation, the Ownership Limit) contained in
the Charter that may limit or restrict such transferee's ability to exercise its
Redemption rights, including, without limitation, the Ownership Limit. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take
su bject to the obligations of the transferor hereunder. Unless admitted as a
Substituted Limited Partner, no transferee, whether by a voluntary Transfer, by
operation of law or otherwise, shall have any rights hereunder, other than the
rights of an Assignee as provided in Section 11.5 hereof."
Section 6. Amendment of Section 13.7.A. Section 13.7.A. is hereby
----------------------------
amended to read in its entirety as follows:
" A. General. Prior to the end of the first Twelve-Month Period, no
-------
Investor shall Transfer all or any portion of its Investor Unit Rights to
any transferee without the consent of the Managing General Partner, which
consent may be withheld in its sole and absolute discretion; provided,
--------
however, that any Investor may, at any time, without the consent of the
-------
Managing General Partner, (i) Transfer all or part of its Investor Unit
Rights to any Family Member, any Charity, any Controlled Entity, any
Affiliate, or any other Person to whom the Managing General Partner may
consent in its sole and absolute discretion, provided that the transferee
is, in any such case, a Qualified Transferee, or (ii) Pledge all or any
portion of its Investor Unit Rights to a lending institution, that is not
an Affiliate of such Investor, as collateral or security for a bona fide
loan or other extension of credit, and Transfer such pledged Investor Unit
Rights to such lending institution in connection with the exercise of
remedies under such loan or extension of credit; provided, further,
-------- -------
6
<PAGE>
however, that any Investor who owns Investor Unit Rights that were issued
-------
directly or indirectly in exchange for Units (as defined in the OP
Contribution Agreement, dated as of August 11, 1998 by and among the
Partnership and New Hanover Associates), may, at any time, without the
consent of the Managing General Partner, (i) Transfer all or part of such
Investor Unit Rights to any Family Member, any Charity, any Controlled
Entity, any Affiliate or any other Person to whom the Managing General
Partner may consent in its sole and absolute discretion, provided that (A)
any such Transfer is not a "sale" within the meaning of Section 2(3) of the
Securities Act, (B) the transferee is a Qualified Transferee or (C) the
Managing General Partner receives an opinion of counsel to the same effect
as the opinion described in Section 13.7.A(3) of this Agreement, (ii) upon
the death of an Investor, the Investor's estate may Transfer such Investor
Unit Rights in any Transfer that is not a "sale" within the meaning of
Section 2(3) of the Securities Act or (iii) Pledge all or any portion of
such Investor Unit Rights to a lending institution, that is not an
Affiliate of such Investor, as collateral or security for a bona fide loan
or other extension of credit, and Transfer such pledged Investor Unit
Rights to such lending institution in connection with the exercise of
remedies under such loan or extension of credit (any Transfer or Pledge
permitted by this proviso or the immediately preceding proviso is
hereinafter referred to as a "Permitted Investor Rights Transfer"). After
----------------------------------
such first Twelve-Month Period, each Investor, and each transferee of
Investor Unit Rights or transferee pursuant to a Permitted Investor Rights
Transfer, shall have the right to Transfer all or any portion of its
Investor Unit Rights to any Person, subject to the provisions of this
Section 13.7 hereof and to satisfaction of each of the following
conditions:
(1) Managing General Partner Right of First Refusal. The
-----------------------------------------------
transferring Investor (or the Investor's estate in the event of the
Investor's death) shall give written notice of the proposed Transfer to the
Managing General Partner, which notice shall state (i) the identity of the
proposed transferee and (ii) the amount and type of consideration proposed
to be received for the Transferred Investor Unit Rights. The Managing
General Partner shall have ten (10) Business Days upon which to give the
Transferring Investor notice of its election to acquire the Investor Unit
Rights on the terms set forth in such notice. If it so elects, it shall
purchase the Investor Unit Rights on such terms within ten (10) Business
Days after giving notice of such election; provided, however, that in the
-------- -------
event that the proposed terms involve a purchase for cash, the Managing
General Partner may at its election deliver in lieu of all or any portion
of such cash a note payable to the Transferring
7
<PAGE>
Investor at a date as soon as reasonably practicable, but in no event later
than one hundred eighty (180) days after such purchase, and bearing
interest at an annual rate equal to the total dividends declared with
respect to one (1) REIT Share for the four (4) preceding fiscal quarters of
the Managing General Partner, divided by the Value as of the closing of
------- --
such purchase; provided, further, that such closing may be deferred to the
-------- -------
extent necessary to effect compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, if applicable, and any other applicable
requirements of law. If the Managing General Partner does not so elect, the
Transferring Investor may Transfer such Investor Unit Rights to a third
party, on terms no more favorable to the transferee than the proposed
terms, subject to the other conditions of this Section 13.7 or, in the
event of the death of any Investor who owns Investor Unit Rights that were
issued directly or indirectly in exchange for Units, such Investor's estate
may Transfer such Investor Unit Rights in any Transfer that is not a "sale"
within the meaning of Section 2(3) of the Securities Act.
(2) Qualified Transferee. Any Transfer of an Investor Unit Right
--------------------
shall be made only to a single Qualified Transferee; provided, however,
-------- -------
that, for such purposes, all Qualified Transferees that are Affiliates, or
that comprise investment accounts or funds managed by a single Qualified
Transferee and its Affiliates, shall be considered together to be a single
Qualified Transferee; provided, further, that each Transfer meeting the
-------- -------
minimum Transfer restriction of Section 13.7.A(4) hereof may be to a
separate Qualified Transferee; provided, further, however, that the
-------- ------- -------
limitations imposed by this Section 13.7.A(2) shall not apply to the
transfer of any Investor Unit Rights that were issued directly or
indirectly in exchange for Units.
(3) Opinion of Counsel. The Transferor shall deliver or cause to
------------------
be delivered to the Managing General Partner an opinion of counsel
reasonably satisfactory to it to the effect that the proposed Transfer may
be effected without registration under the Securities Act and will not
otherwise violate any of the registration provisions of the Securities Act
and the regulations promulgated thereunder or violate any state
securities laws or regulations applicable to the Partnership or the
Investor Unit Rights Transferred; provided, that the Managing General
--------
Partner may, in its sole discretion, waive this condition upon the request
of the Transferor. If, in the opinion of such counsel, such Transfer would
require the filing of a registration statement under the Securities Act or
would otherwise violate any Federal or state securities laws or regulations
applicable to the Partnership or the Investor Unit
8
<PAGE>
Rights, the Managing General Partner may prohibit any Transfer otherwise
permitted under this Section 13.7 by an Investor.
(4) Minimum Transfer Restriction. Any Transferring Investor must
----------------------------
Transfer not less than the lesser of (i) five hundred (500) Investor Unit
Rights or (ii) all of the remaining Investor Unit Rights owned by such
Transferring Investor; provided, however, that, for purposes of determining
-------- -------
compliance with the foregoing restriction, all Investor Unit Rights owned
by Affiliates of an Investor shall be considered to be owned by such
Investor.
(5) Transferee Agreement to Effect a Redemption. Any proposed
-------------------------------------------
transferee shall deliver to the Managing General Partner a written
agreement reasonably satisfactory to the Managing General Partner to the
effect that the transferee will, within six (6) months after consummation
of an Investor Unit Right Transfer, tender its Investor Unit Rights for
Redemption in accordance with the terms of the Redemption rights provided
in Section 16.1 hereof.
(6) No Further Transfers. The transferee shall not be permitted
--------------------
to effect any further Transfer of the Investor Unit Rights, other than to
the Managing General Partner.
(7) Exception for Permitted Investor Rights Transfers. The
-------------------------------------------------
conditions of Sections 13.7.A(1) through 13.7.A(6) hereof shall not apply
in the case of a Permitted Investor Rights Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or
not such Transfer is effected during or after the first Twelve-Month
Period) that the transferee assumes by operation of law or express
agreement all of the obligations of the transferor Investor under this
Agreement with respect to such Transferred Investor Unit Right, and no such
Transfer (other than pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the transferor Investor are
assumed by a successor corporation by operation of law) shall relieve the
transferor Investor of its obligations under this Agreement without the
approval of the Managing General Partner, in its sole and absolute
discretion; any Transfer made without such an assumption by the transferee
shall be null, void and of no force or effect. In addition, any transferee
of any Transferred Investor Unit Right shall be subject to any and all
ownership limitations (including, without limitation, the Ownership Limit)
contained in the Charter that may limit or restrict such transferee's
ability to
9
<PAGE>
exercise its Redemption rights, including, without limitation, the
Ownership Limit."
Section 7. Amendment of Section 13.9.D. Section 13.9.D is hereby
---------------------------
amended to replace all references to "this Section 13.8" therein with "this
Section 13.9."
Section 8. Amendment of Exhibit G. Exhibit G to the Agreement is
----------------------
hereby replaced in its entirety with Exhibit G attached hereto and by this
reference made a part hereof.
Section 9. Applicable Law. This Amendment shall be governed by and
---------------
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of law. In the event of a conflict between any
provision of this Amendment and any non-mandatory provision of the Securities
Act, the provisions of this Amendment shall control and take precedence.
Section 10. Counterparts. This Amendment may be executed in
-------------
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Amendment immediately upon affixing its signature thereto.
10
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed as of the date
first written above.
MANAGING GENERAL PARTNER:
WESTFIELD AMERICA, INC.
By: /s/ Irv Hepner
-----------------------
Name: Irv Hepner
Title: Secretary
SPECIAL LIMITED PARTNERS:
By: WESTFIELD AMERICA, INC.,
as attorney-in-fact
By: /s/ Irv Hepner
------------------------
Name: Irv Hepner
Title: Secretary
<PAGE>
Exhibit G
LIST OF EXCLUDED PROPERTIES AND SPECIFIED UNITS
1. Fee interest in the Trumbull Shopping Park, located in Trumbull,
Connecticut.
SPECIFIED UNITS: 21,430 Series A Partnership Preferred Units; and
6,155 Series B Partnership Preferred Units; and
9,499 Series C Partnership Preferred Units; and
15,832 Series D Partnership Preferred Units; and
1,671,951 Partnership Common Units.
2. Partnership interest relating to Meriden Square, located in Meriden,
Connecticut.
SPECIFIED UNITS: 32,059 Series A Partnership Preferred Units; and
9,209 Series B Partnership Preferred Units; and
14,211 Series C Partnership Preferred Units; and
23,685 Series D Partnership Preferred Units; and
2,501,269 Partnership Common Units.
3. Fee interest in the Connecticut Post Mall, located in Milford, Connecticut.
SPECIFIED UNITS: 26,836 Series A Partnership Preferred Units; and
7,708 Series B Partnership Preferred Units; and
11,896 Series C Partnership Preferred Units; and
19,826 Series D Partnership Preferred Units; and
2,093,673 Partnership Common Units.
4. Partnership interest relating to the Mission Valley Center, located in
Mission Valley, California.
SPECIFIED UNITS: 9,134 Series A Partnership Preferred Units; and
2,623 Series B Partnership Preferred Units; and
4,049 Series C Partnership Preferred Units; and
6,748 Series D Partnership Preferred Units; and
712,595 Partnership Common Units.
G-1
<PAGE>
5. Partnership interest relating to Plaza Camino Real, located in San Diego
County, California.
SPECIFIED UNITS: 11,780 Series A Partnership Preferred Units; and
3,384 Series B Partnership Preferred Units; and
5,222 Series C Partnership Preferred Units; and
8,703 Series D Partnership Preferred Units; and
919,083 Partnership Common Units.
6. 0.10 Percent Interest in Vancouver Mall
SPECIFIED UNITS: 20 Series A Partnership Preferred Units; and
6 Series B Partnership Preferred Units; and
9 Series C Partnership Preferred Units; and
15 Series D Partnership Preferred Units; and
1,589 Partnership Common Units.
7. 50.0 Percent Interest in M-R St. Peters L.P.
SPECIFIED UNITS: 31 Partnership Common Units
G-2
<PAGE>
EXHIBIT 10.6
THIRD AMENDMENT TO THE
FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
This THIRD AMENDMENT TO THE FIRST AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF WESTFIELD AMERICA LIMITED PARTNERSHIP, dated as of
December 24, 1998 (this "Amendment"), is being executed by Westfield America,
Inc., a Missouri corporation (the "Managing General Partner"), as the managing
general partner of Westfield America Limited Partnership, a Delaware limited
partnership (the "Partnership"), and on behalf of the Limited Partners pursuant
to the authority conferred on the Managing General Partner by Sections 2.4 and
12.3 of the First Amended and Restated Agreement of Limited Partnership of
Westfield America Limited Partnership, dated as of August 3, 1998, as amended by
that certain First Amendment to the First Amended and Restated Agreement of
Limited Partnership of Westfield America Limited Partnership, dated as of August
12, 1998, and as further amended by that certain Second Amendment to the First
Amended and Restated Agreement of Limited Partnership of Westfield America
Limited Partnership, dated as of December 8, 1998 (as so amended, the
"Agreement"). Capitalized terms used herein, but not otherwise defined herein,
shall have the respective meanings ascribed thereto in the Agreement.
WHEREAS, pursuant to Sections 7.1 and 12.3 of the Agreement, the Managing
General Partner is authorized to determine the designations, preferences and
relative, participating, optional or other special rights, powers and duties of
additional Partnership Units and to amend the Agreement, and the Managing
General Partner is hereby creating the Partnership Preferred Units with the
designations, preferences and other rights, terms and provisions as set forth on
Exhibit L and Exhibit M attached hereto.
- --------- ---------
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Agreement is hereby amended by the addition of two new exhibits,
entitled "Exhibit L" and "Exhibit M" in the form attached hereto, which shall be
--------- ---------
attached to and made a part of the Agreement.
2. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and effect and, except as amended hereby, all of the terms,
covenants, provisions and conditions of the Agreement are hereby ratified and
confirmed in all respects.
3. This Amendment shall be construed and enforced in accordance with, and
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
WESTFIELD AMERICA, INC.,
Managing General Partner
By: /s/ Irv Hepner
--------------------------------------
Name: Irv Hepner
Title: Secretary
ALL LIMITED PARTNERS
By: Westfield America, Inc., as attorney-in-fact
pursuant to the power of attorney granted under
Section 2.4 of the Agreement.
By: /s/ Irv Hepner
--------------------------------------
Name: Irv Hepner
Title: Secretary
2
<PAGE>
EXHIBIT L
PARTNERSHIP UNIT DESIGNATION OF SERIES C-1
PARTNERSHIP PREFERRED UNITS OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
1. Creation, Number and Designation.
A class of Partnership Preferred Units is hereby created and designated as
"Series C-1 Partnership Preferred Units." The number of Partnership Preferred
Units constituting the Series C-1 Partnership Preferred Units shall be 138,889.
The number of Series C-1 Partnership Preferred Units may be decreased (but not
below the aggregate number thereof then outstanding and/or which have been
reserved for issuance). Each Series C-1 Partnership Preferred Unit shall be
identical in all respects to each other Series C-1 Partnership Preferred Unit.
2. Definitions.
For purposes of this Partnership Unit Designation, the following terms
shall have the respective meanings indicated in this Section 2, and capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement:
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall mean
a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL"), Westfield America Trust, Frank
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
Family").
"Agreement" shall mean the First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership, dated as of August 3,
1998, as amended, modified, supplemented or restated, from time to time.
"Base Distribution" shall mean an annual distribution per Series C-1
Partnership Preferred Unit equal to 8.5% of the Liquidation Preference per
Series C-1 Partnership Preferred Unit.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the capital stock of the Corporation.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York
City, New York, are authorized or required by law, regulation or executive order
to close.
L-1
<PAGE>
"Call Date" shall mean the date specified in the notice to holders required
under Section 5 (d) as the Call Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Equity Shares" shall mean the Common Shares and the Excess Common
Shares which are issued with respect to the Common Stock.
"Common Shares"shall mean the shares of Common Stock.
"Common Stock" means the common stock, par value $0.01 per share, of the
Corporation.
"Consolidated EBITDA" for any quarter shall mean the consolidated net
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the Securities
and Exchange Commission, increased by the sum of the following (without
duplication):
(a) the Corporation's pro rata share of EBITDA from unconsolidated
real estate partnerships calculated in a manner consistent with this definition
of Consolidated EBITDA,
(b) all income taxes paid or accrued according to GAAP for such
quarter (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses except to the extent that such gains were not
included in Consolidated EBITDA),
(c) all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of deferred financing
fees or amortization of original issue discount, but excluding capitalized
interest),
(d) depreciation and depletion reflected in such net income,
(e) amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only to the extent
that such amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to paragraph (c) above), goodwill, other
intangibles and management fees, and
(f) any other noncash charges, to the extent deducted from
consolidated net income (including, but not limited to, income allocated to
minority interests).
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
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<PAGE>
(a) the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner consistent with
this definition of Consolidated Fixed Charges,
(b) all interest expense paid or accrued in accordance with GAAP for
such quarter (including, without duplication, financing fees and amortization of
deferred financing fees or amortization of original issue discount),
(c) distribution requirements with respect to preferred stock and any
other preferred securities for such quarter (not including any portion of
preferred stock distributions the calculation of which is based on the
distribution paid in such quarter to the holders of shares of the Corporation's
Common Stock), whether or not declared or paid,
(d) regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity) and
(e) all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e)
hereof.
"Conversion Date" shall have the meaning set forth in Section 6(a) hereof.
"Conversion Price" shall mean the conversion price per Partnership Common
Unit for which the Series C-1 Partnership Preferred Unit is convertible, as such
Conversion Price may be adjusted pursuant to Section 6. The initial conversion
price shall be $18.00.
"Corporation" shall mean Westfield America, Inc., a Missouri corporation.
"Current Market Price" of publicly traded Common Stock or any other class
of stock or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the New York
Stock Exchange ("NYSE") or, if such security is not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"Distribution Payment Date" shall mean (i), for any Distribution Period
with respect to which the Partnership pays a distribution on the Partnership
Common Unit, the date on which such
L-3
<PAGE>
distribution is paid or (ii), for any Distribution Period with respect to which
the Partnership does not pay a distribution on the Partnership Common Unit, a
date to be set by the Managing General Partner, which date shall not be later
than the thirtieth calendar day after the end of the applicable Distribution
Period.
"Distribution Periods" shall mean quarterly distribution periods commencing
on January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Distribution
Period with respect to any Series C-1 Partnership Preferred Units (other than
the initial Distribution Period, which shall commence on the Grant Date for such
Series C-1 Partnership Preferred Units and end on and include the last day of
the calendar quarter immediately following such Grant Date, and other than the
Distribution Period during which any Series C-1 Partnership Preferred Units
shall be redeemed pursuant to Section 5 or converted pursuant to Section 6,
which shall end on and include the Call Date or Conversion Date with respect to
the Series C-1 Partnership Preferred Units being redeemed or converted, as
applicable).
"Excess Common Shares" shall mean shares of excess stock of the
Corporation, par value $0.01 per share, which are issued with respect to Common
Stock.
"Expiration Time" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of the Corporation's Common Stock on the five (5) consecutive
Trading Days selected by the Corporation commencing not more than 20 Trading
Days before, and ending not later than, the earlier of the day in question and
the day before the "ex date" with respect to the issuance or distribution
requiring such computation. The term "ex date," when used with respect to any
issuance or distribution, means the first day on which the Common Stock trade
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
Section 3(a) hereof.
"Fully Junior Units" shall have the meaning set forth in Section 9(d)
hereof.
"Funds from Operations" shall mean net income (loss) (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment Trusts
(NAREIT), in its White Paper dated March 1995, as such definitions may be
modified from time to time.
"Grant Date" shall mean the date on which the Series C-1 Partnership
Preferred Units are issued.
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<PAGE>
"Junior Units" shall have the meaning set forth in Section 9(c) hereof.
"Non-Electing Share" shall have the meaning set forth in Section 6(e)
hereof.
"Partnership" shall mean Westfield America Limited Partnership, a Delaware
limited partnership.
"Parity Units" shall have the meaning set forth in Section 9(b) hereof.
"Person" shall mean any individual, firm, partnership, corporation, limited
liability company, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Purchased Shares" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"REIT Termination Event" shall mean the earliest to occur of:
(a) the filing of a federal income tax return by the Corporation for
any taxable year on which the Corporation does not compute its income as a real
estate investment trust;
(b) the approval by the shareholders of the Corporation of a proposal
for the Corporation to cease to qualify as a real estate investment trust;
(c) a determination by the Board of Directors of the Corporation,
based on the advice of counsel, that the Corporation has ceased to qualify as a
real estate investment trust; or
(d) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real estate investment
trust.
"Securities" and "Security" shall have the meanings set forth in Section
6(d)(iii) hereof.
"Series C-1 Partnership Preferred Unit" means a Partnership Unit created
under this Partnership Unit Designation, with the designations, preferences and
relative, participating, optional or other special rights, powers and duties set
forth in this Exhibit L.
---------
"Senior Units" shall have the meaning set forth in Section 9(a) hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Partnership in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of distributions by the Managing General Partner, the allocation of
funds to be so paid on any series or class of partnership units of the
Partnership; provided, however, that if any funds for any class or series of
-------- -------
Junior Units or Fully Junior Units or any class or series of Parity Units are
placed in a separate account of the Partnership or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with respect
L-5
<PAGE>
to the Series C-1 Partnership Preferred Units shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on NASDAQ, or if such securities are not
quoted on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e)
hereof."Transfer Agent" shall mean the Managing General Partner, or such other
agent or agents of the Partnership as may be designated by the Managing General
Partner as the transfer agent, registrar and distribution disbursing agent for
the Series C-1 Partnership Preferred Units.
3. Distributions.
(a) Holders of Series C-1 Partnership Preferred Units shall not be
entitled to any distributions on the Series C-1 Partnership Preferred Units,
whether payable in cash, property or stock, except as provided in this
Exhibit L.
- ---------
(b) Subject to the preferential rights of the holders of any
Partnership Preferred Units that rank senior in the payment of distributions to
the Series C-1 Partnership Preferred Units and subject to paragraph (c) of this
Section 3, the holders of Series C-1 Partnership Preferred Units shall be
entitled to receive, when, as and if declared by the Managing General Partner,
but only out of funds legally available for the payment of distributions,
cumulative preferential distributions payable in cash to holders of record on
the respective date, not exceeding 50 days preceding such distribution payment
date, fixed for the purpose by the Managing General Partner in advance of
payment of each particular distribution in an amount equal to the greater of (A)
the Base Distribution per unit per annum and (B) an amount per unit equal to the
Liquidation Preference of a Series C-1 Partnership Preferred Unit (exclusive of
accrued but unpaid distributions) divided by the Conversion Price (the "Series
C-1 Common Equivalent Factor") times the dollar amount of cash distributions
declared with respect to each Partnership Common Unit that does not result in an
adjustment to the Conversion Price pursuant to subparagraph (d)(iii) of Section
6 (such product, the "Series C-1 Common Equivalent Amount") for the same annual
period; provided, however, that if as a result of the quarterly distributions
-------- -------
paid in accordance with the following sentence, the holders of Series C-1
Partnership Preferred Units shall have received for any calendar year more
distributions than such units shall be entitled under subparagraphs (A) and (B)
above (as adjusted pursuant to the third and eighth sentences of this Section
3), the distributions payable in respect of Series C-1 Partnership Preferred
Units in subsequent calendar years shall be reduced to the extent of such
overpayment.
Subject to the proviso of the preceding sentence of this Section 3(b),
the distribution paid in respect of each quarterly period in each calendar year
shall be determined as follows (in each case, excluding any additional payment
made pursuant to the following sentence): (1) for the first
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<PAGE>
quarter, the greater of 25% of the Base Distribution per unit and the Series C-1
Common Equivalent Amount for the same quarter; (2) for the second quarter, an
amount such that the aggregate amount to be received per Series C-1 Partnership
Preferred Unit in respect of the first two quarters of such calendar year shall
be the greater of 50% of the Base Distribution per unit and the Series C-1
Common Equivalent Amount for the same two quarters; (3) for the third quarter,
in amount such that the aggregate amount to be received per Series C-1
Partnership Preferred Unit in respect of the first three quarters of such
calendar year shall be the greater of 75% of the Base Distribution per unit and
the Series C-1 Common Equivalent Amount for the same three quarters; and (4) for
the fourth quarter, an amount such that the aggregate amount to be received per
Series C-1 Partnership Preferred Unit in respect of such calendar year shall be
the amount provided in the preceding sentence of this Section 3(b).
Notwithstanding the foregoing, for any quarter in which a Fixed Charge Coverage
Violation (as defined below) has occurred, the distribution payable per Series
C-1 Partnership Preferred Unit shall be 1.20 times the amount provided in the
preceding sentence. A "Fixed Charge Coverage Violation" shall occur for any
quarter that the ratio of the Corporation's Consolidated EBITDA to its
Consolidated Fixed Charges is below 1.40 to 1.
The distributions shall begin to accrue as set forth above and shall
be fully cumulative from the first day of the applicable Distribution Period,
whether or not in any Distribution Period or Periods there shall be funds of the
Partnership legally available for the payment of such distributions, and shall
be payable quarterly, when, as and if declared by the Managing General Partner,
in arrears on the Distribution Payment Dates. Accumulated but unpaid
distributions for any past quarterly Distribution Periods may be declared and
paid at any time, without reference to any regularly scheduled quarterly
Distribution Payment Date, to holders of record on such date, not exceeding 50
days preceding such Distribution Payment Date, fixed for the purpose by the
Managing General Partner in advance of payment of each particular distribution.
Any distribution payment made on Series C-1 Partnership Preferred Units shall
first be credited against the earliest accrued but unpaid distribution due with
respect to Series C-1 Partnership Preferred Units which remains payable.
Beginning with the quarter in which a REIT Termination Event Occurs, all
distributions payable per Series C-1 Partnership Preferred Unit pursuant to this
Section 3 shall be multiplied by 2.5.
(c) The initial Distribution Period for the Series C-1 Partnership
Preferred Units will include a partial distribution for the period from the
Grant Date until the last day of the calendar quarter immediately following such
Grant Date. The amount of distributions payable for such initial period, or any
other period shorter than a full quarterly Distribution Period, on the Series C-
1 Partnership Preferred Units shall be computed by dividing the number of days
in such period by 90 and multiplying the result by the Series C-1 Equity
distribution determined in accordance with Section 3(b). Holders of Series C-1
Partnership Preferred Units shall not be entitled to any distributions, whether
payable in cash, property or partnership units, in excess of cumulative
distributions, as herein provided, on the Series C-1 Partnership Preferred
Units. No interest, or sum of money in lieu of interest, shall be payable in
respect of any distribution payment or payments on the Series C-1 Partnership
Preferred Units which may be in arrears.
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<PAGE>
(d) So long as any of the Series C-1 Partnership Preferred Units are
outstanding, except as described in the immediately following sentence, no
distributions shall be declared, paid or set apart for payment by the
Partnership, and no other distribution of cash or other property shall be made,
directly or indirectly, by the Partnership with respect to any class or series
of Parity Units for any period unless distributions equal to the full amount of
accumulated and unpaid distributions have been, or contemporaneously are, paid
with respect to the Series C-1 Partnership Preferred Units for all Distribution
Periods terminating on or prior to the Distribution Payment Date with respect to
such class or series of Parity Units. When the distributions provided for in
Section 3(b) hereof are not paid in full, all distributions paid with respect to
the Series C-1 Partnership Preferred Units and all distributions paid with
respect to any other class or series of Parity Units shall be paid ratably in
proportion to the respective amounts of distributions accumulated and unpaid on
the Series C-1 Partnership Preferred Units and accumulated and unpaid on such
Parity Units.
(e) So long as any Series C-1 Partnership Preferred Units are
outstanding, no distributions (other than distributions paid solely in Fully
Junior Units or options, warrants or rights to subscribe for or purchase Fully
Junior Units) shall be paid by the Partnership, and no other distribution of
cash or other property shall be made, directly or indirectly, by the Partnership
with respect to any Junior Units, nor shall any Junior Units be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such Junior
Units), directly or indirectly, by the Partnership (except by conversion into or
exchange for Fully Junior Units), nor shall any other cash or other property
otherwise be paid or distributed to or for the benefit of any holder of Junior
Units in respect thereof, directly or indirectly, by the Partnership unless in
each case the full cumulative distributions (including all accumulated and
unpaid distributions) on all outstanding Series C-1 Partnership Preferred Units
and any other Parity Units of the Partnership shall have been or
contemporaneously are declared and paid or declared and set apart for payment
for all past Distribution Periods with respect to the Series C-1 Partnership
Preferred Units and all Distribution Periods terminating on or prior to the date
of payment of the Series C-1 Partnership Preferred Units and all Distribution
Periods terminating on or prior to the date of payment on all Parity Units of
the Partnership with respect to such Parity Units. Subject to the foregoing,
and not otherwise, such distributions may be declared by the Managing General
Partner and paid on any Partnership Common Units from time to time out of funds
legally available therefor, and the Series C-1 Partnership Preferred Units shall
not be entitled to participate in any such distributions, whether payable in
cash, partnership units or otherwise.
(f) No distributions on the Series C-1 Partnership Preferred Units
shall be declared by the Managing General Partner or paid or set apart for
payment by the Partnership at such time as the terms and provisions of any
agreement of the Partnership, including any agreement relating to its
indebtedness, prohibits such declaration, payment or setting apart for payment
or provides that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such declaration or
payment shall be restricted or prohibited by law.
(g) In determining whether a distribution by cash payment, redemption
or
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<PAGE>
other acquisition of Units or otherwise is permitted under Delaware law, no
effect shall be given to amounts that would be needed, if the Partnership were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of holders whose preferential rights on dissolution are
superior to those receiving the distribution.
(h) Notwithstanding the foregoing, it is acknowledged that the
Managing General Partner may, pursuant to the Agreement, elect to make
distributions on the Partnership Common Units on a more or less frequent basis
than quarterly and provide for an appropriate record date; in the event that the
Managing General Partner elects to effect such a non-quarterly distribution, the
Managing General Partner may, in its sole and absolute discretion, cause a
Distribution Period (and related Distribution Payment Date) to be established to
reflect the period established for such Partnership Common Unit distributions
and to make such revisions to the distributions provided in Section 3(b) hereof
as may be required to reflect that more or less than four Distribution Payment
Dates will occur during the relevant calendar year.
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Partnership, whether voluntary or involuntary, subject to the prior preferences
and other rights of any Senior Units, before any payment or distribution of the
assets of the Partnership (whether capital or surplus) shall be made to or set
apart for the holders of Junior Units, the holders of the Series C-1 Partnership
Preferred Units shall be entitled to receive One Hundred Eighty Dollars
($180.00) (the "Liquidation Preference") per Series C-1 Partnership Preferred
Unit plus an amount equal to all distributions (whether or not earned or
declared) accrued and unpaid thereon to the date of liquidation, dissolution or
winding up of the affairs of the Partnership (any such date, a "Series C-1
Liquidation Date"), but such holders shall not be entitled to any further
payment; provided that the distribution payable with respect to the Distribution
--------
Period containing the Series C-1 Liquidation Date shall be equal to the
distribution determined pursuant to Section 3 above for the preceding
Distribution Period times a fraction equal to the actual number of days elapsed
from the end date of the calendar quarter most recently completed to the
relevant Series C-1 Liquidation Date over 90 days. If, upon any liquidation,
dissolution or winding up of the Partnership, the assets of the Partnership, or
proceeds thereof, distributable among the holders of the Series C-1 Partnership
Preferred Units shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other units of any class or series of
Parity Units, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series C-1 Partnership Preferred Units and any such other
Parity Units ratably in accordance with the respective amounts that would be
payable on such Series C-1 Partnership Preferred Units and any such other Parity
Units if all amounts payable thereon were paid in full. For the purposes of
this Section 4, (i) a consolidation or merger of the Partnership with one or
more corporations, partnerships or other entities or (ii) a sale, lease or
conveyance of all or substantially all of the Partnership's property or business
shall not be deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Partnership.
(b) Subject to the rights of the holders of Parity Units or Senior
Units, upon any
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liquidation, dissolution or winding up of the Partnership, after payment shall
have been made in full to the holders of the Series C-1 Partnership Preferred
Units, as provided in this Section 4, the holders of Series C-1 Partnership
Preferred Units shall have no other claim to the remaining assets of the
Partnership, and any other series or class or classes of Junior Units shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series C-1 Partnership Preferred Units shall not be entitled
to share therein.
5. Redemption at the Option of the Partnership.
(a) The Series C-1 Partnership Preferred Units shall not be redeemable
by the Partnership prior to August 12, 2008. On and after August 12, 2008, the
Partnership, at its option, may redeem the Series C-1 Partnership Preferred
Units, in whole at any time or from time to time in part, in minimum increments
of $10.0 million of aggregate Liquidation Preference of such units, out of funds
legally available therefor at a redemption price payable in cash equal to 100%
of the Liquidation Preference per Series C-1 Partnership Preferred Units (plus
all accumulated, accrued and unpaid distributions as provided in paragraph (b)
below).
(b) Upon any redemption of Series C-1 Partnership Preferred Units
pursuant to this Section 5, the Partnership shall pay all accrued and unpaid
distributions, if any, thereon to the Call Date, without interest. If the Call
Date falls after a distribution payment record date and prior to the
corresponding Distribution Payment Date, then each holder of Series C-1
Partnership Preferred Units at the close of business on such distribution
payment record date shall be entitled to the distribution payable on such units
on the corresponding Distribution Payment Date notwithstanding any redemption of
such units before such Distribution Payment Date. Except as provided above, the
Partnership shall make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series C-1 Partnership Preferred Units called for
redemption.
(c) If full cumulative distributions on the Series C-1 Partnership
Preferred Units and any other class or series of Parity Units of the Partnership
have not been declared and paid or declared and set apart for payment, the
Series C-1 Partnership Preferred Units may not be redeemed under this Section 5
in part and may not be redeemed unless the Series C Partnership Preferred Units
and Series C-2 Partnership Preferred Units of the Partnership (the "Series C-2
Partnership Preferred Units"), if any, shall have been authorized and issued are
also redeemed in whole, and the Partnership may not purchase or acquire Series C
Partnership Preferred Units, Series C-1 Partnership Preferred Units or Series C-
2 Partnership Preferred Units, if any, otherwise than pursuant to a purchase or
exchange offer made on the same terms to all holders of Series C Partnership
Preferred Units, Series C-1 Partnership Preferred Units and Series C-2
Partnership Preferred Units, if any.
(d) Notice of the redemption of any Series C-1 Partnership Preferred
Units under this Section 5 shall be mailed by first-class mail or recognized
overnight courier to each holder of record of Series C-1 Partnership Preferred
Units to be redeemed at the address of each such holder as shown on the
Partnership's records, not less than 30 nor more than 90 days prior to the Call
Date.
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<PAGE>
Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof, to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Each such mailed notice shall state, as
appropriate: (1) the Call Date; (2) the number of Series C-1 Partnership
Preferred Units to be redeemed and, if fewer than all the units held by such
holder are to be redeemed, the number of such units to be redeemed from such
holder; (3) the redemption price; (4) the place or places at which certificates
for such units are to be surrendered; (5) the then-current Conversion Price; and
(6) that distributions on the units to be redeemed shall cease to accrue on such
Call Date except as otherwise provided herein. Notice having been mailed as
aforesaid, from and after the Call Date (unless the Partnership shall fail to
make available an amount of cash necessary to effect such redemption), (i)
except as otherwise provided herein, distributions on the Series C-1 Partnership
Preferred Units so called for redemption shall cease to accrue, (ii) such units
shall no longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Series C-1 Partnership Preferred Units shall cease (except
the rights to receive the cash payable upon such redemption, without interest
thereon, upon surrender and endorsement of their certificates if so required and
to receive any distributions payable thereon). The Partnership's obligation to
provide cash in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the Call Date, the Partnership shall deposit with a bank or
trust company that has an office in the Borough of Manhattan, City of New York,
and that has capital and surplus of at least $150,000,000, necessary for such
redemption, in trust, with irrevocable instructions that such cash be applied to
the redemption of the Series C-1 Partnership Preferred Units so called for
redemption. No interest shall accrue for the benefit of the holders of Series C-
1 Partnership Preferred Units to be redeemed on any cash so set aside by the
Partnership. Subject to applicable escheat laws, any such cash unclaimed at the
end of two years from the Call Date shall revert to the general funds of the
Partnership, after which reversion the holders of such units so called for
redemption shall look only to the general funds of the Partnership for the
payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such units so redeemed (properly endorsed or
assigned for transfer, if the Partnership shall so require and if the notice
shall so state), such units shall be exchanged for any cash (without interest
thereon) for which such units have been redeemed. If fewer than all the
outstanding Series C-1 Partnership Preferred Units are to be redeemed, units to
be redeemed shall be selected by the Partnership from outstanding Series C-1
Partnership Preferred Units not previously called for redemption pro rata (as
nearly as may be), by lot or by any other method determined by the Partnership
in its sole discretion to be equitable. If fewer than all the Series C-1
Partnership Preferred Units evidenced by any certificate are redeemed, then new
certificates evidencing the unredeemed Series C-1 Partnership Preferred Units
shall be issued without cost to the holder thereof.
6. Conversion. Holders of Series C-1 Partnership Preferred Units shall
have the right to convert all or a portion of such units into Partnership Common
Units, as follows:
(a) Subject to and upon compliance with the provisions of this Section
6, a holder
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of Series C-1 Partnership Preferred Units shall have the right, at his or her
option, at any time (such time being the "Conversion Date"), to convert all or
any portion of such units into the number of Partnership Common Units obtained
by dividing the aggregate Liquidation Preference of such units (inclusive of
accrued but unpaid distributions) by the Conversion Price (as in effect at the
time and on the date provided for in the last paragraph of paragraph (b) of this
Section 6) by surrendering such units to be converted, such surrender to be made
in the manner provided in paragraph (b) of this Section 6; provided, however,
-------- -------
that the right to convert Series C-1 Partnership Units called for redemption
pursuant to Section 5 shall terminate at the close of business on the fifth
Business Day prior to the Call Date fixed for such redemption, unless the
Partnership shall default in making payment of the cash payable upon such
redemption under Section 5.
(b) In order to exercise the conversion right, the holder of each unit
of Series C-1 Partnership Preferred Units to be converted shall surrender the
certificate representing such unit, duly endorsed or assigned to the Partnership
or in blank, at the office of the Transfer Agent, accompanied by written notice
to the Partnership that the holder thereof irrevocably elects to convert such
Series C-1 Partnership Preferred Units. Unless the partnership units issuable
on conversion are to be issued in the same name as the name in which such Series
C-1 Partnership Preferred Units are registered, each partnership unit
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Partnership, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the Partnership
demonstrating that such taxes have been paid).
Holders of Series C-1 Partnership Preferred Units at the close of
business on a distribution payment record date shall be entitled to receive the
distribution payable on such units on the corresponding Distribution Payment
Date notwithstanding the conversion thereof following such distribution payment
record date and prior to such Distribution Payment Date. However, Series C-1
Partnership Preferred Units surrendered for conversion during the period between
the close of business on any distribution payment record date and the opening of
business on the corresponding Distribution Payment Date (except units converted
after the issuance of notice of redemption with respect to a Call Date during
such period, such Series C-1 Partnership Preferred Units being entitled to such
distribution on the Distribution Payment Date) must be accompanied by payment of
an amount equal to the distribution payable on such units on such Distribution
Payment Date. A holder of Series C-1 Partnership Preferred Units on a
distribution payment record date who (or whose transferee) tenders any such
units for conversion into Partnership Common Units on the corresponding
Distribution Payment Date will receive the distribution payable by the
Partnership on such Series C-1 Partnership Preferred Units on such date, and the
converting holder need not include payment of the amount of such distribution
upon surrender of Series C-1 Partnership Preferred Units for conversion. Except
as provided above, the Partnership shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on converted units or for
distributions on the Partnership Common Units issued upon such conversion.
As promptly as practicable after the surrender of certificates for
Series C-1 Partnership Preferred Units as aforesaid, the Partnership shall issue
and shall deliver at such office
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<PAGE>
to such holder, or on his or her written order, a certificate or certificates
for the number of full Partnership Common Units issuable upon the conversion of
such units in accordance with provisions of this Section 6, and any fractional
interest in respect of a Partnership Common Unit arising upon such conversion
shall be settled as provided in paragraph (c) of this Section 6.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for Series
C-1 Partnership Preferred Units shall have been surrendered and such notice
shall have been received by the Partnership as aforesaid (and if applicable,
payment of an amount equal to the distribution payable on such units shall have
been received by the Corporation as described above), and the Person or Persons
in whose name or names any certificate or certificates for Partnership Common
Units shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the units represented thereby at such time on
such date and such conversion shall be at the Conversion Price in effect at such
time on such date unless the transfer books of the Partnership shall be closed
on that date, in which event such Person or Persons shall be deemed to have
become such holder or holders of record at the close of business on the next
succeeding day on which such transfer books are open, but such conversion shall
be at the Conversion Price in effect on the date on which such units shall have
been surrendered and such notice received by the Partnership.
(c) No fractional units or scrip representing fractions of Partnership
Common Units shall be issued upon conversion of the Series C-1 Partnership
Preferred Units. Instead of any fractional interest in a Partnership Common
Unit that would otherwise be deliverable upon the conversion of a Series C-1
Partnership Preferred Unit, the Partnership shall pay to the holder of such unit
an amount in cash based upon the Current Market Price of the Corporation's
Common Stock on the Trading Day immediately preceding the date of conversion.
If more than one Series C-1 Partnership Unit shall be surrendered for conversion
at one time by the same holder, the number of full Partnership Common Units
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of Series C-1 Partnership Preferred Units so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Grant Date (A) pay a
dividend or make a distribution on its Common Equity Shares in Common
Equity Shares, (B) subdivide its outstanding Common Equity Shares into a
greater number of units, (C) combine its outstanding Common Equity Shares
into a smaller number of units or (D) issue any shares of stock by
reclassification of its Common Equity Shares, the Conversion Price in
effect at the opening of business on the day following the date fixed for
the determination of holders entitled to receive such dividend or
distribution or at the opening of business on the Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any Series C-1 Equity Shares thereafter surrendered
for conversion shall be entitled to receive the number of Common Equity
Shares that such holder would have owned or have been entitled to receive
after the happening of any of the events described above as if such Series
C-1 Equity
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<PAGE>
Shares had been converted immediately prior to the record date in the case
of a dividend or distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made pursuant
to this subparagraph (i) shall become effective immediately after the
opening of business on the Business Day next following the record date
(except as provided in paragraph (h) below) in the case of a dividend or
distribution and shall become effective immediately after the opening of
business on the Business Day next following the effective date in the case
of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Grant Date rights,
options or warrants to all holders of Common Equity Shares entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Equity Shares at a price per
share less than 95% (100% if a standby underwriter is used and charges the
Corporation a commission) of the Fair Market Value per share of the
Corporation's Common Stock on the record date for the determination of
holders entitled to receive such rights, options or warrants, then the
Conversion Price in effect at the opening of business on the Business Day
next following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately
prior to the opening of business on the Business Day next following the
date fixed for such determination by (B) a fraction, the numerator of which
shall be the sum of (x) the number of Common Equity Shares outstanding on
the close of business on the date fixed for such determination and (y) the
number of shares that the aggregate proceeds to the Corporation from the
exercise of such rights, options or warrants for Common Equity Shares would
purchase at 95% of such Fair Market Value (or 100% in the case of a standby
underwriting), and the denominator of which shall be the sum of (x) the
number of Common Equity Shares outstanding on the close of business on the
date fixed for such determination and (y) the number of additional Common
Equity Shares offered for subscription or purchase pursuant to such rights,
options or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record date
(except as provided in paragraph (h) below). In determining whether any
rights, options or warrants entitle the holders of Common Equity Shares to
subscribe for or purchase Common Equity Shares at less than 95% of such
Fair Market Value (or 100% in the case of a standby underwriting), there
shall be taken into account any consideration received by the Corporation
upon issuance and upon exercise of such rights, options or warrants, the
value of such consideration, if other than cash, to be determined by the
Board of Directors whose determination shall be conclusive. To the extent
that Common Equity Shares are not delivered pursuant to such rights,
options or warrants, upon the expiration or termination of such rights,
options or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made
upon the issuance of such rights, options or warrants been made on the
basis of delivery of only the number of Common Equity Shares actually
delivered. In the event that such rights, options or warrants are not so
issued, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such date fixed for the
determination of shareholders entitled to receive such rights, options or
warrants had not been fixed.
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<PAGE>
(iii) If the Corporation shall distribute to all holders of its
Common Equity Shares any securities of the Corporation (other than Common
Equity Shares) or evidence of its indebtedness or assets (excluding
cumulative cash distributions paid with respect to the Common Equity Shares
after December 31, 1997 which are not in excess of the following: the sum
of (A) the Corporation's cumulative undistributed Funds from Operations at
December 31, 1997, plus (B) the cumulative amount of Funds from Operations,
as determined by the Board of Directors, after December 31, 1997, minus (C)
the cumulative amount of distributions accrued or paid in respect of the
Corporation's Series C-1 Equity Shares or any other class or series of
preferred stock of the Corporation after the Grant Date) or rights, options
or warrants to subscribe for or purchase any of its securities (excluding
those rights, options and warrants issued to all holders of Common Equity
Shares entitling them for a period expiring within 45 days after the record
date referred to in subparagraph (ii) above to subscribe for or purchase
Common Equity Shares, which rights and warrants are referred to in and
treated under subparagraph (ii) above) (any of the foregoing being
hereinafter in this subparagraph (iii) collectively called the "Securities"
and individually a "Security"), then in each such case the Conversion Price
shall be adjusted so that it shall equal the price determined by
multiplying (x) the Conversion Price in effect immediately prior to the
close of business on the date fixed for the determination of shareholders
entitled to receive such distribution by (y) a fraction, the numerator of
which shall be the Fair Market Value per share of the Corporation's Common
Stock on the record date mentioned below less the then Fair Market Value
(as determined by the Board of Directors, whose determination shall be
conclusive) of the portion of the Securities or assets or evidences of
indebtedness so distributed or of such rights, options or warrants
applicable to one Common Equity Share, and the denominator of which shall
be the Fair Market Value per share of the Corporation's Common Stock on the
record date mentioned below. Such adjustment shall become effective on the
date of distribution retroactive to the opening of business on the Business
Day next following (except as provided in paragraph (h) below) the record
date for the determination of shareholders entitled to receive such
distribution. For the purposes of this subparagraph (iii), the
distribution of a Security, which is distributed not only to the holders of
the Common Equity Share on the date fixed for the determination of
shareholders entitled to such distribution of such Security, but also is
distributed with each Partnership Common Unit delivered to a Person
converting a share of Series C-1 Partnership Preferred Units after such
determination date, shall not require an adjustment of the Conversion Price
pursuant to this subparagraph (iii); provided that on the date, if any, on
--------
which a Person converting a unit of Series C-1 Partnership Preferred Units
would no longer be entitled to receive such Security with a Partnership
Common Unit (other than as a result of the termination of all such
Securities), a distribution of such Securities shall be deemed to have
occurred and the Conversion Price shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the date fixed for
the determination of the shareholders entitled to receive such
distribution" and "the record date" within the meaning of the two preceding
sentences). If any distribution of the type described in this paragraph
(iii) is declared but not so paid or made, the Conversion Price shall again
be adjusted to the
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<PAGE>
Conversion Price which would then be in effect if such distribution had not
been declared.
Rights or warrants distributed by the Corporation to all holders of
Common Equity Shares entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are
deemed to be transferred with such shares of Common Equity Shares; (ii) are
not exercisable; and (iii) are also issued in respect of future issuances
of Common Equity Shares, shall be deemed not to have been distributed for
purposes of this subparagraph (iii) (and no adjustment to the Conversion
Price under this subparagraph (iii) will be required) until the occurrence
of the earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant shall
become exercisable to purchase different securities, evidences of
indebtedness or other assets or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to a new
right or warrant (and a termination or expiration of the existing right or
warrant without exercise by the holder thereof to the extent not
exercised). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto,
that resulted in an adjustment to the Conversion Price under this
subparagraph (iii), (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution (but not a
distribution paid exclusively in cash), equal to the per share redemption
or repurchase price received by a holder of Common Equity Shares with
respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Common Equity Shares as of the
date of such redemption or repurchase, and (2) in the case of such rights
or warrants all of which shall have expired or been terminated without
exercise, the Conversion Price shall be readjusted as if such rights and
warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the Corporation
or any subsidiary or controlled Affiliate of the Corporation for all or any
portion of the Common Equity Shares shall expire and such tender or
exchange offer shall require the payment by the Corporation or such
subsidiary or controlled Affiliate of consideration per Common Equity Share
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), at the last time (the "Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer, that exceeds the Current Market Price per share of the Corporation's
Common Stock on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the
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<PAGE>
Conversion Price reduction contemplated by this subparagraph, by a fraction
of which the numerator shall be the number of Common Equity Shares
outstanding (including any tendered or exchanged shares) at the Expiration
Time, multiplied by the Current Market Price per share of the Corporation's
Common Stock on the Trading Day next succeeding the Expiration Time, and
the denominator shall be the sum of (A) the fair market value (determined
as aforesaid) of the aggregate consideration payable to shareholders based
upon the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not
withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any maximum, being referred to as the "Purchased Shares") and (B) the
product of the number of Common Equity Shares outstanding (less any
Purchased Shares) at the Expiration Time and the Current Market Price per
share of the Corporation's Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction to become effective immediately prior
to the opening of business on the day following the Expiration Time. In the
event the Corporation or any subsidiary or controlled Affiliate is
obligated to purchase shares pursuant to any such tender offer, but the
Corporation or such subsidiary or controlled Affiliate is permanently
prevented by applicable law from effecting any such purchases, or all such
purchases are rescinded, the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if such tender offer had
not been made.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease of
at least 1% in such price; provided, however, that any adjustments that by
-------- -------
reason of this subparagraph (v) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and made
-------- -------
in accordance with the provisions of this Section 6 (other than this
subparagraph (v)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of
Partnership Common Units. Notwithstanding any other provisions of this
Section 6, the Partnership shall not be required to make any adjustment of
the Conversion Price for the issuance of any Common Equity Shares pursuant
to any plan providing for the reinvestment of dividends or interest payable
on securities of the Corporation and the investment of additional optional
amounts in Common Equity Shares under such plan. All calculations under
this Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-hundredth of a partnership unit (with .005 of
a share being rounded upward), as the case may be. Anything in this
paragraph (d) to the contrary notwithstanding, the Partnership shall be
entitled, to the extent permitted by law, to make such reductions in the
Conversion Price, in addition to those required by this paragraph (d), as
it in its discretion shall determine to be advisable in order that any
partnership unit distributions, subdivision of partnership units,
reclassification or combination of partnership units, distribution of
rights or warrants to purchase partnership units, or distribution of other
assets (other than cash distributions) hereafter made by the Partnership to
its Partners shall not be taxable. To the extent permitted by applicable
law, the Partnership from time to time may reduce the Conversion Price by
any amount for any
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<PAGE>
period of time if the period is at least 20 days, the reduction is
irrevocable during the period and the Managing General Partner shall have
made a determination that such reduction would be in the best interests of
the Partnership, which determination shall be conclusive. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, the
Partnership shall mail to the holder of each Series C-1 Partnership
Preferred Unit at his or her last address shown on the Partnership's
records a notice of reduction prior to the date the reduced Conversion
Price takes effect, and such notice shall state the reduced Conversion
Price and the period during which it will be in effect.
(e) If the Corporation shall be a party to any transaction (including,
without limitation, a merger, consolidation, statutory share exchange, self
tender offer for 40% or more of its Common Equity Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Equity Shares and excluding any transaction as to which subparagraph (d)(i) of
this Section 6 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which all or substantially all of
the Partnership Common Units are converted into the right to receive different
securities or other property (including cash or any combination thereof), each
Series C-1 Partnership Preferred Unit which is not redeemed or converted into
the right to receive different securities or other property prior to such
Transaction shall thereafter be convertible, in lieu of Partnership Common Units
into the kind and amount of different securities and other property (including
cash or any combination thereof) receivable upon the consummation of such
Transaction by a holder of that number of Partnership Common Units into which
one Series C-1 Partnership Preferred Unit was convertible immediately prior to
such Transaction, assuming such holder of Partnership Common Units (i) is not a
Person with which the Corporation consolidated or into which the Corporation
merged or which merged into the Corporation or to which such sale or transfer
was made, as the case may be ("Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of shares, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or amount of
shares, securities and other property (including cash) receivable upon such
Transaction is not the same for each Common Equity Share held immediately prior
to such Transaction by other than a Constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised
("Non-Electing Share"), then for the purpose of this paragraph (e) the kind and
amount of shares, securities and other property (including cash) receivable upon
such Transaction by each Non-Electing Share shall be deemed to be the kind and
amount so receivable per share by holders of a plurality of the Non-Electing
Shares). The Corporation shall not be a party to any Transaction unless the
terms of such Transaction are consistent with the provisions of this paragraph
(e), and it shall not consent or agree to the occurrence of any Transaction
until the Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the holders of the
Series C-1 Partnership Preferred Units that will contain provisions enabling the
holders of the Series C-1 Partnership Preferred Units that remain outstanding
after such Transaction to convert into the consideration received by holders of
Partnership Common Units at the Conversion Price in effect immediately prior to
such Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
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<PAGE>
(f) If:
(i) the Corporation shall declare a distribution (or any other
distribution) on its Common Equity Shares (other than cash distributions or
distributions paid with respect to the Common Equity Shares after December
31, 1997 not in excess of the sum of the Corporation's cumulative
undistributed Funds from Operations at December 31, 1997, plus the
cumulative amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1997, minus the cumulative amount of
distributions accrued or paid in respect of the Corporation's Series C-1
Equity Shares or any other class or series of preferred stock of the
Corporation after the Grant Date); or
(ii) the Corporation shall authorize the granting to all
holders of Common Equity Shares of rights, options or warrants to subscribe
for or purchase any shares of any class or any other rights, options or
warrants; or
(iii) there shall be any reclassification of the Common Equity
Shares (other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or merger to which the Corporation is a party
(other than a merger in which the Corporation is the surviving entity) and
for which approval of any shareholders of the Corporation is required, or a
statutory share exchange, or a self tender offer by the Corporation for all
or substantially all of its outstanding shares of Common Stock or the sale
or transfer of all or substantially all of the assets of the Corporation as
an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Partnership shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series C-1 Partnership Preferred Units at
their addresses as shown on the records of the Partnership, as promptly as
possible, but at least 10 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such distribution, distribution or granting of rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Equity Shares of record to be entitled to such distribution,
distribution or rights, options or warrants are to be determined or (B) the date
on which such reclassification, consolidation, merger, statutory share exchange,
sale, transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Partnership
Common Units of record shall be entitled to exchange their Partnership Common
Units for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up. Failure to give or receive
such notice or any defect therein shall not affect the legality or validity of
the proceedings described in this Section 6.
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(g) Whenever the Conversion Price is adjusted as herein provided, the
Partnership shall promptly file with the Transfer Agent a certificate setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error.
Promptly after delivery of such certificate, the Partnership shall prepare a
notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the effective date of such adjustment and shall mail such
notice of such adjustment of the Conversion Price to the holder of each Series
C-1 Partnership Preferred Unit at such holder's last address as shown on the
records of the Partnership.
(h) In any case in which paragraph (d) of this Section 6 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Partnership may defer until the occurrence of such event (A)
issuing to the holder of any Series C-1 Partnership Preferred Unit converted
after such record date and before the occurrence of such event the additional
Partnership Common Units issuable upon such conversion by reason of the
adjustment required by such event over and above the Partnership Common Units
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount of cash in lieu of any fraction pursuant to
paragraph (c) of this Section 6.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Equity Shares, other than action described in this Section 6, that in the
opinion of the Managing General Partner would materially and adversely affect
the conversion rights of the holders of the Series C-1 Partnership Preferred
Units, the Conversion Price for the Series C-1 Partnership Preferred Units may
be adjusted, to the extent permitted by law, in such manner, if any, and at such
time, as the Managing General Partner may determine to be equitable in the
circumstances.
(k) The Partnership covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Partnership Common Units, for the purpose of effecting
conversion of the Series C-1 Partnership Preferred Units, the full number of
Partnership Common Units deliverable upon the conversion of all outstanding
Series C-1 Partnership Preferred Units not theretofore converted. For purposes
of this paragraph (k), the number of Partnership Common Units that shall be
deliverable upon the conversion of all outstanding Series C-1 Partnership
Preferred Units shall be computed as if at the time of computation all such
outstanding units were held by a single holder.
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<PAGE>
Any Partnership Common Units issued upon conversion of the Series C-1
Partnership Preferred Units shall be validly issued, fully paid and
nonassessable.
The Partnership shall use its best efforts to comply with all federal
and state securities laws and regulations thereunder in connection with the
issuance of any securities that the Partnership shall be obligated to deliver
upon conversion of the Series C-1 Partnership Preferred Units. The certificates
evidencing such securities shall bear such legends restricting transfer thereof
in the absence of registration under applicable securities laws or an exemption
therefrom as the Partnership may in good faith deem appropriate.
(l) The Partnership will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of
Partnership Common Units or other securities or property on conversion of the
Series C-1 Partnership Preferred Units pursuant hereto; provided, however, that
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the Partnership shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of Partnership Common
Units or other securities or property in a name other than that of the holder of
the Series C-1 Partnership Preferred Units to be converted, and no such issue or
delivery shall be made unless and until the Person requesting such issue or
delivery has paid to the Partnership the amount of any such tax or established,
to the reasonable satisfaction of the Partnership, that such tax has been paid.
7. Redemption at the Option of the Holder.
(a) At any time after August 12, 2008, the holders of Series C-1
Partnership Preferred Units shall have the right at any time that the
Corporation's Common Stock has a Current Market Price at or below the Conversion
Price per unit, to require the Partnership, to the extent the Partnership shall
have funds legally available therefor, to redeem any or all of the Series C-1
Partnership Preferred Units held by such holder at a repurchase price payable,
at the option of the Partnership, in either (i) cash or (ii) such number of
Partnership Common Units that shall be convertible into shares of the
Corporation's Common Stock as shall have a Current Market Price in the aggregate
on the day prior to the day such holder gives notice pursuant to Section 7(b) of
its intention to redeem, equal to in either case, 100% of the liquidation
preference thereof plus accrued and unpaid distributions whether or not
declared, if any, to the date of repurchase or the date payment is made
available (in the aggregate, the "Redemption Payment").
(b) For purposes of this Section 7, redemption at the option of the
holder shall be deemed to occur upon receipt by the Partnership of written
notice that the holder of Series C-1 Partnership Preferred Units wishes to
tender units to be redeemed. The holders of such units to be redeemed shall
then have 30 days from the date of such notice to deliver such units to the
Transfer Agent. Upon the surrender of the certificate or certificates of Series
C-1 Partnership Preferred Units to be redeemed, duly endorsed or assigned to the
Partnership or in blank, at the office of the Transfer Agent, the Partnership
shall promptly, either (i) by wire transfer of immediately available funds to
such holder, as directed by such holder, send an amount equal to the Redemption
Payment in respect
L-21
<PAGE>
of all Series C-1 Partnership Preferred Units or portions thereof so tendered or
(ii) issue and deliver to such holder, or on his or her written order, a
certificate or certificates for the number of full Partnership Common Units
issuable in respect of all Series C-1 Partnership Preferred Units or portions
thereof so tendered.
8. Status of Reacquired Series C-1 Partnership Preferred Units.
All Series C-1 Partnership Preferred Units which shall have been
granted and reacquired in any manner by the Partnership shall be deemed
cancelled.
9. Ranking.
The Series C-1 Partnership Preferred Units shall with respect to
distribution rights and rights on liquidation, dissolution and winding up of the
affairs of the Partnership, rank pari passu to the Series A Partnership
----------
Preferred Units, the Series B Partnership Preferred Units, the Series C
Partnership Preferred Units, the Series C-2 Partnership Preferred Units, if any,
the Series D Partnership Preferred Units and the Series D-1 Partnership
Preferred Units.
Each Series C-1 Partnership Preferred Unit shall be identical in all
respects to each other Series C-1 Partnership Preferred Unit.
Any class or series of Partnership Units or Investor Unit Rights shall
be deemed to rank:
(a) prior or senior to the Series C-1 Partnership Preferred Units, as
to the payment of distributions and as to distributions of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
such class or series of Partnership Units or Investor Unit Rights, as the case
may be, shall be entitled to the receipt of distributions or of amounts
distributable upon the liquidation, dissolution and winding up of the
Partnership in preference or priority to the holders of Series C-1 Partnership
Preferred Units ("Senior Units");
(b) on a parity with the Series C-1 Partnership Preferred Units, as to
the payment of distributions and as to distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, whether or not the
distribution rates, distribution payment dates or redemption or liquidation
prices per unit or other denomination thereof shall be different from those of
the Series C-1 Partnership Preferred Units, if the holders of such class or
series of Partnership Units or Investor Unit Rights, as the case may be, and the
Series C-1 Partnership Preferred Units shall be entitled to the receipt of
distributions and of amounts distributable upon the liquidation, dissolution and
winding up of the Partnership in proportion to their respective amounts of
accumulated and unpaid distributions per unit or other denomination or
liquidation preferences, without preference or priority one over the other
("Parity Units");
L-22
<PAGE>
(c) junior to the Series C-1 Partnership Preferred Units, as to the
payment of distributions or as to the distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
Series C-1 Partnership Preferred Units shall be entitled to receipt of
distributions or of amounts distributable upon the liquidation, dissolution and
winding up of the Partnership, in preference or priority to the holders of such
class or series of Partnership Units or Investor Unit Rights ("Junior Units");
and
(d) junior to the Series C-1 Partnership Preferred Units, as to the
payment of distributions and as to the distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, if such class or
series of Partnership Units is Partnership Common Units or Class A Investor Unit
Rights, as the case may be, or if the holders of Series C-1 Partnership
Preferred Units shall be entitled to receipt of distributions and of amounts
distributable upon the liquidation, dissolution and winding up of the
Partnership, in preference or priority to the holders of such class or series of
Partnership Units or Investor Unit Rights ("Fully Junior Units").
10. Allocations.
(a) For each partnership year, each Holder of a Share of Series C-1
Preferred Units shall be allocated Net Income of the Partnership in an amount
equal to the amount of distributions made with respect to such Holder's Series
C-1 Preferred Units pursuant to Section 3 hereof during such Partnership Year.
In no event shall items of Net Loss of the Partnership be allocated to any
Holder of Series C-1 Preferred Units unless such allocation is required by
Section 704(b) of the Code or Section 10(b) of this Exhibit L.
---------
(b) If any Series C-1 Partnership Preferred Units are redeemed
pursuant to the terms of this Exhibit L, for the Partnership Year that includes
---------
such redemption (and, if necessary, for subsequent Partnership Years) (a) gross
income and gain (in such relative proportions as the Managing General Partner in
its discretion shall determine) shall be allocated to the Managing General
Partner and such Special Limited Partner(s) to the extent that the redemption
amounts paid or payable with respect to the Series C-1 Partnership Preferred
Units so redeemed (or treated as redeemed) exceeds the aggregate Capital Account
Balances (net of liabilities assumed or taken subject to by the Partnership) per
Series C-1 Partnership Preferred Unit allocable to the Series C-1 Partnership
Preferred Units so redeemed (or treated as redeemed) and (b) deductions and
losses (in such relative proportions as the Managing General Partner in its
discretion shall determine) shall be allocated to the Managing General Partner
and such Special Limited Partner(s) to the extent that the aggregate Capital
Account Balances (net of liabilities assumed or taken subject to by the
Partnership) per Series C-1 Partnership Preferred Unit allocable to the Series
C-1 Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the
redemption amount paid or payable with respect to the Series C-1 Partnership
Preferred Units so redeemed (or treated as redeemed).
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<PAGE>
11. Voting and Consent Rights.
(a) Holders of Series C-1 Partnership Preferred Units shall have only
those voting and consent rights specified in Section 7.3.B of the Agreement and
Section 11(b) hereof.
(b) So long as any Series C-1 Partnership Preferred Units are
outstanding, in addition to any other vote or consent of holders of Series C-1
Partnership Preferred Units required by law or by the Agreement, the affirmative
vote or consent of holders of at least 50% of the outstanding Series C-1
Partnership Preferred Units, voting or consenting as a separate class, given in
Person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating
any amendment or alteration of any of the provisions of this Partnership Unit
Designation or the Agreement that materially and adversely affects the material
powers, rights or preferences of the holders of the Series C-1 Partnership
Preferred Units; provided, however, that the amendment of the Agreement so as to
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authorize, create, issue or grant any class or series of Partnership Units,
including, without limitation, any such Partnership Units that may have rights
senior or superior to the Series C-1 Partnership Preferred Units, shall be
deemed not to materially and adversely affect the material powers, rights or
preferences of the holders of Series C-1 Partnership Preferred Units.
(c) Except as otherwise required by applicable law or as set forth
herein or in the Agreement, the holders of the Series C-1 Partnership Preferred
Units shall not have any relative, participating, optional or other special
voting rights or powers with respect to any matter, and the consent or approval
of the holders thereof shall not be required for the taking of any action by the
Partnership.
12. Information Rights.
Holders of Series C-1 Partnership Preferred Units shall have only the
information rights specified in Section 8.5.A and Section 9.3 of the Agreement.
13. Restrictions on Transfer.
The Series C-1 Partnership Preferred Units are subject to the
restrictions on transfer set forth in Article 11 of the Agreement.
14. Ambiguity.
In the case of an ambiguity in the application of any of the
provisions of this Partnership Unit Designation, the Managing General Partner
shall have the power to determine the application of the provisions of this
Partnership Unit Designation with respect to any situation based on its
reasonable belief, understanding or knowledge of the circumstances.
L-24
<PAGE>
15. Partnership Records.
The Managing General Partner shall amend Exhibit A to the Agreement
---------
from time to time to the extent necessary to reflect accurately the grant and
any subsequent redemption of, or other event having an effect on the ownership
of, Series C-1 Partnership Preferred Units.
16. Governing Law.
This Exhibit L shall be construed and enforced in accordance with, and
---------
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
L-25
<PAGE>
EXHIBIT M
PARTNERSHIP UNIT DESIGNATION OF SERIES D-1
PARTNERSHIP PREFERRED UNITS OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
1. Creation, Number and Designation.
A class of Partnership Preferred Units is hereby created and designated as
"Series D-1 Partnership Preferred Units." The number of Partnership Preferred
Units constituting the Series D-1 Partnership Preferred Units shall be 138,889.
The number of Series D-1 Partnership Preferred Units may be decreased (but not
below the aggregate number thereof then outstanding and/or which have been
reserved for issuance). Each Series D-1 Partnership Preferred Unit shall be
identical in all respects to each other Series D-1 Partnership Preferred Unit.
2. Definitions.
For purposes of this Partnership Unit Designation, the following terms
shall have the respective meanings indicated in this Section 2, and capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement:
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall mean
a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL"), Westfield America Trust, Frank
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
Family").
"Agreement" shall mean the First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership, dated as of August 3,
1998, as amended, modified, supplemented or restated, from time to time.
"Base Distribution" shall mean an annual distribution per Series D-1
Partnership Preferred Unit equal to 8.5% of the Liquidation Preference per
Series D-1 Partnership Preferred Unit.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the capital stock of the Corporation.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York
City, New York, are authorized or required by law, regulation or executive order
to close.
M-1
<PAGE>
"Call Date" shall mean the date specified in the notice to holders required
under Section 5 (d) as the Call Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $0.01 per share, of the
Corporation.
"Common Equity Shares" shall mean the Common Shares and the Excess Common
Shares which are issued with respect to the Common Stock.
"Common Shares"shall mean the shares of Common Stock.
"Consolidated EBITDA" for any quarter shall mean the consolidated net
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the Securities
and Exchange Commission, increased by the sum of the following (without
duplication):
(a) the Corporation's pro rata share of EBITDA from unconsolidated
real estate partnerships calculated in a manner consistent with this definition
of Consolidated EBITDA,
(b) all income taxes paid or accrued according to GAAP for such
quarter (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses except to the extent that such gains were not
included in Consolidated EBITDA),
(c) all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of deferred financing
fees or amortization of original issue discount, but excluding capitalized
interest),
(d) depreciation and depletion reflected in such net income,
(e) amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only to the extent
that such amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to paragraph (c) above), goodwill, other
intangibles and management fees, and
(f) any other noncash charges, to the extent deducted from
consolidated net income (including, but not limited to, income allocated to
minority interests).
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
M-2
<PAGE>
(a) the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner consistent with
this definition of Consolidated Fixed Charges,
(b) all interest expense paid or accrued in accordance with GAAP for
such quarter (including, without duplication, financing fees and amortization of
deferred financing fees or amortization of original issue discount),
(c) distribution requirements with respect to preferred stock and any
other preferred securities for such quarter (not including any portion of
preferred stock distributions the calculation of which is based on the
distribution paid in such quarter to the holders of shares of the Corporation's
Common Stock), whether or not declared or paid,
(d) regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity) and
(e) all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e)
hereof.
"Conversion Date" shall have the meaning set forth in Section 6(a) hereof.
"Conversion Price" shall mean the conversion price per Partnership Common
Unit for which the Series D-1 Partnership Preferred Unit is convertible, as such
Conversion Price may be adjusted pursuant to Section 6. The initial conversion
price shall be $18.00.
"Corporation" shall mean Westfield America, Inc., a Missouri corporation.
"Current Market Price" of publicly traded Common Stock or any other class
of stock or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the New York
Stock Exchange ("NYSE") or, if such security is not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"Distribution Payment Date" shall mean (i), for any Distribution Period
with respect to which the Partnership pays a distribution on the Partnership
Common Unit, the date on which such
M-3
<PAGE>
distribution is paid or (ii), for any Distribution Period with respect to which
the Partnership does not pay a distribution on the Partnership Common Unit, a
date to be set by the Managing General Partner, which date shall not be later
than the thirtieth calendar day after the end of the applicable Distribution
Period.
"Distribution Periods" shall mean quarterly distribution periods commencing
on January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Distribution
Period with respect to any Series D-1 Partnership Preferred Units (other than
the initial Distribution Period, which shall commence on the Grant Date for such
Series D-1 Partnership Preferred Units and end on and include the last day of
the calendar quarter immediately following such Grant Date, and other than the
Distribution Period during which any Series D-1 Partnership Preferred Units
shall be redeemed pursuant to Section 5 or converted pursuant to Section 6,
which shall end on and include the Call Date or Conversion Date with respect to
the Series D-1 Partnership Preferred Units being redeemed or converted, as
applicable).
"Excess Common Shares" shall mean shares of excess stock of the
Corporation, par value $0.01 per share, which are issued with respect to Common
Stock.
"Expiration Time" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of the Corporation's Common Stock on the five (5) consecutive
Trading Days selected by the Corporation commencing not more than 20 Trading
Days before, and ending not later than, the earlier of the day in question and
the day before the "ex date" with respect to the issuance or distribution
requiring such computation. The term "ex date," when used with respect to any
issuance or distribution, means the first day on which the Common Stock trade
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
Section 3(a) hereof.
"Fully Junior Units" shall have the meaning set forth in Section 9(d)
hereof.
"Funds from Operations" shall mean net income (loss) (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment Trusts
(NAREIT), in its White Paper dated March 1995, as such definitions may be
modified from time to time.
"Grant Date" shall mean the date on which the Series D-1 Partnership
Preferred Units are issued.
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<PAGE>
"Junior Units" shall have the meaning set forth in Section 9(c) hereof.
"Non-Electing Share" shall have the meaning set forth in Section 6(e)
hereof.
"Partnership" shall mean Westfield America Limited Partnership, a Delaware
limited partnership.
"Parity Units" shall have the meaning set forth in Section 9(b) hereof.
"Person" shall mean any individual, firm, partnership, corporation, limited
liability company, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Purchased Shares" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"REIT Termination Event" shall mean the earliest to occur of:
(a) the filing of a federal income tax return by the Corporation for
any taxable year on which the Corporation does not compute its income as a real
estate investment trust;
(b) the approval by the shareholders of the Corporation of a proposal
for the Corporation to cease to qualify as a real estate investment trust;
(c) a determination by the Board of Directors of the Corporation,
based on the advice of counsel, that the Corporation has ceased to qualify as a
real estate investment trust; or
(d) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real estate investment
trust.
"Securities" and "Security" shall have the meanings set forth in Section
6(d)(iii) hereof.
"Series D-1 Partnership Preferred Unit" means a Partnership Unit created
under this Partnership Unit Designation, with the designations, preferences and
relative, participating, optional or other special rights, powers and duties set
forth in this Exhibit M.
---------
"Senior Units" shall have the meaning set forth in Section 9(a) hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Partnership in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of distributions by the Managing General Partner, the allocation of
funds to be so paid on any series or class of partnership units of the
Partnership; provided, however, that if any funds for any class or series of
-------- -------
Junior Units or Fully Junior Units or any class or series of Parity Units are
placed in a separate account of the Partnership or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with respect to the
Series D-1 Partnership Preferred Units shall mean placing such funds in a
separate account
M-5
<PAGE>
or delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on NASDAQ, or if such securities are not
quoted on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e) hereof.
"Transfer Agent" shall mean the Managing General Partner, or such other
agent or agents of the Partnership as may be designated by the Managing General
Partner as the transfer agent, registrar and distribution disbursing agent for
the Series D-1 Partnership Preferred Units and notified to the holders of the
Series D-1 Partnership Preferred Units.
3. Distributions.
(a) Holders of Series D-1 Partnership Preferred Units shall not be
entitled to any distributions on the Series D-1 Partnership Preferred Units,
whether payable in cash, property or stock, except as provided in this
Exhibit K.
(b) Subject to the preferential rights of the holders of any
Partnership Preferred Units that rank senior in the payment of distributions to
the Series D-1 Partnership Preferred Units and subject to paragraph (c) of this
Section 3, the holders of Series D-1 Partnership Preferred Units shall be
entitled to receive, when, as and if declared by the Managing General Partner,
but only out of funds legally available for the payment of distributions,
cumulative preferential distributions payable in cash to holders of record on
the respective date, not exceeding 50 days preceding such distribution payment
date, fixed for the purpose by the Managing General Partner in advance of
payment of each particular distribution in an amount equal to the greater of (A)
the Base Distribution per unit per annum and (B) an amount per unit equal to the
Liquidation Preference of a Series D-1 Partnership Preferred Unit (exclusive of
accrued but unpaid distributions) divided by the Conversion Price (the "Series
D-1 Common Equivalent Factor") times the dollar amount of cash distributions
declared with respect to each Partnership Common Unit that does not result in an
adjustment to the Conversion Price pursuant to subparagraph (d)(iii) of Section
6 (such product, the "Series D-1 Common Equivalent Amount") for the same annual
period; provided, however, that if as a result of the quarterly distributions
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paid in accordance with the following sentence, the holders of Series D-1
Partnership Preferred Units shall have received for any calendar year more
distributions than such units shall be entitled under subparagraphs (A) and (B)
above (as adjusted pursuant to the third and eighth sentences of this Section
3), the distributions payable in respect of Series D-1 Partnership Preferred
Units in subsequent calendar years shall be reduced to the extent of such
overpayment.
Subject to the proviso of the preceding sentence of this Section 3(b),
the distribution paid in respect of each quarterly period in each calendar year
shall be determined as follows (in each case, excluding any additional payment
made pursuant to the following sentence): (1) for the first
M-6
<PAGE>
quarter, the greater of 25% of the Base Distribution per unit and the Series D-1
Common Equivalent Amount for the same quarter; (2) for the second quarter, an
amount such that the aggregate amount to be received per Series D-1 Partnership
Preferred Unit in respect of the first two quarters of such calendar year shall
be the greater of 50% of the Base Distribution per unit and the Series D-1
Common Equivalent Amount for the same two quarters; (3) for the third quarter,
in amount such that the aggregate amount to be received per Series D-1
Partnership Preferred Unit in respect of the first three quarters of such
calendar year shall be the greater of 75% of the Base Distribution per unit and
the Series D-1 Common Equivalent Amount for the same three quarters; and (4) for
the fourth quarter, an amount such that the aggregate amount to be received per
Series D-1 Partnership Preferred Unit in respect of such calendar year shall be
the amount provided in the preceding sentence of this Section 3(b).
Notwithstanding the foregoing, for any quarter in which a Fixed Charge Coverage
Violation (as defined below) has occurred, the distribution payable per
Series D-1 Partnership Preferred Unit shall be 1.20 times the amount provided in
the preceding sentence. A "Fixed Charge Coverage Violation" shall occur for any
quarter that the ratio of the Corporation's Consolidated EBITDA to its
Consolidated Fixed Charges is below 1.40 to 1.
The distributions shall begin to accrue as set forth above and shall
be fully cumulative from the first day of the applicable Distribution Period,
whether or not in any Distribution Period or Periods there shall be funds of the
Partnership legally available for the payment of such distributions, and shall
be payable quarterly, when, as and if declared by the Managing General Partner,
in arrears on the Distribution Payment Dates. Accumulated but unpaid
distributions for any past quarterly Distribution Periods may be declared and
paid at any time, without reference to any regularly scheduled quarterly
Distribution Payment Date, to holders of record on such date, not exceeding 50
days preceding such Distribution Payment Date, fixed for the purpose by the
Managing General Partner in advance of payment of each particular distribution.
Any distribution payment made on Series D-1 Partnership Preferred Units shall
first be credited against the earliest accrued but unpaid distribution due with
respect to Series D-1 Partnership Preferred Units which remains payable.
Beginning with the quarter in which a REIT Termination Event Occurs, all
distributions payable per Series D-1 Partnership Preferred Unit pursuant to this
Section 3 shall be multiplied by 2.5.
(c) The initial Distribution Period for the Series D-1 Partnership
Preferred Units will include a partial distribution for the period from the
Grant Date until the last day of the calendar quarter immediately following such
Grant Date. The amount of distributions payable for such initial period, or any
other period shorter than a full quarterly Distribution Period, on the Series D-
1 Partnership Preferred Units shall be computed by dividing the number of days
in such period by 90 and multiplying the result by the Series D-1 Equity
distribution determined in accordance with Section 3(b). Holders of Series D-1
Partnership Preferred Units shall not be entitled to any distributions, whether
payable in cash, property or partnership units, in excess of cumulative
distributions, as herein provided, on the Series D-1 Partnership Preferred
Units. No interest, or sum of money in lieu of interest, shall be payable in
respect of any distribution payment or payments on the Series D-1 Partnership
Preferred Units which may be in arrears.
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(d) So long as any of the Series D-1 Partnership Preferred Units are
outstanding, except as described in the immediately following sentence, no
distributions shall be declared, paid or set apart for payment by the
Partnership, and no other distribution of cash or other property shall be made,
directly or indirectly, by the Partnership with respect to any class or series
of Parity Units for any period unless distributions equal to the full amount of
accumulated and unpaid distributions have been, or contemporaneously are, paid
with respect to the Series D-1 Partnership Preferred Units for all Distribution
Periods terminating on or prior to the Distribution Payment Date with respect to
such class or series of Parity Units. When the distributions provided for in
Section 3(b) hereof are not paid in full, all distributions paid with respect to
the Series D-1 Partnership Preferred Units and all distributions paid with
respect to any other class or series of Parity Units shall be paid ratably in
proportion to the respective amounts of distributions accumulated and unpaid on
the Series D-1 Partnership Preferred Units and accumulated and unpaid on such
Parity Units.
(e) So long as any Series D-1 Partnership Preferred Units are
outstanding, no distributions (other than distributions paid solely in Fully
Junior Units or options, warrants or rights to subscribe for or purchase Fully
Junior Units) shall be paid by the Partnership, and no other distribution of
cash or other property shall be made, directly or indirectly, by the Partnership
with respect to any Junior Units, nor shall any Junior Units be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such Junior
Units), directly or indirectly, by the Partnership (except by conversion into or
exchange for Fully Junior Units), nor shall any other cash or other property
otherwise be paid or distributed to or for the benefit of any holder of Junior
Units in respect thereof, directly or indirectly, by the Partnership unless in
each case the full cumulative distributions (including all accumulated and
unpaid distributions) on all outstanding Series D-1 Partnership Preferred Units
and any other Parity Units of the Partnership shall have been or
contemporaneously are declared and paid or declared and set apart for payment
for all past Distribution Periods with respect to the Series D-1 Partnership
Preferred Units and all Distribution Periods terminating on or prior to the date
of payment of the Series D-1 Partnership Preferred Units and all Distribution
Periods terminating on or prior to the date of payment on all Parity Units of
the Partnership with respect to such Parity Units. Subject to the foregoing,
and not otherwise, such distributions may be declared by the Managing General
Partner and paid on any Partnership Common Units from time to time out of funds
legally available therefor, and the Series D-1 Partnership Preferred Units shall
not be entitled to participate in any such distributions, whether payable in
cash, partnership units or otherwise.
(f) No distributions on the Series D-1 Partnership Preferred Units
shall be declared by the Managing General Partner or paid or set apart for
payment by the Partnership at such time as the terms and provisions of any
agreement of the Partnership, including any agreement relating to its
indebtedness, prohibits such declaration, payment or setting apart for payment
or provides that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such declaration or
payment shall be restricted or prohibited by law.
(g) In determining whether a distribution by cash payment, redemption
or other
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acquisition of Units or otherwise is permitted under Delaware law, no
effect shall be given to amounts that would be needed, if the Partnership were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of holders whose preferential rights on dissolution are
superior to those receiving the distribution.
(h) Notwithstanding the foregoing, it is acknowledged that the
Managing General Partner may, pursuant to the Agreement, elect to make
distributions on the Partnership Common Units on a more or less frequent basis
than quarterly and provide for an appropriate record date; in the event that the
Managing General Partner elects to effect such a non-quarterly distribution, the
Managing General Partner may, in its sole and absolute discretion, cause a
Distribution Period (and related Distribution Payment Date) to be established to
reflect the period established for such Partnership Common Unit distributions
and to make such revisions to the distributions provided in Section 3(b) hereof
as may be required to reflect that more or less than four Distribution Payment
Dates will occur during the relevant calendar year.
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Partnership, whether voluntary or involuntary, subject to the prior preferences
and other rights of any Senior Units, before any payment or distribution of the
assets of the Partnership (whether capital or surplus) shall be made to or set
apart for the holders of Junior Units, the holders of the Series D-1 Partnership
Preferred Units shall be entitled to receive One Hundred Eighty Dollars
($180.00) (the "Liquidation Preference") per Series D-1 Partnership Preferred
Unit plus an amount equal to all distributions (whether or not earned or
declared) accrued and unpaid thereon to the date of liquidation, dissolution or
winding up of the affairs of the Partnership (any such date, a "Series D-1
Liquidation Date"), but such holders shall not be entitled to any further
payment; provided that the distribution payable with respect to the Distribution
--------
Period containing the Series D-1 Liquidation Date shall be equal to the
distribution determined pursuant to Section 3 above for the preceding
Distribution Period times a fraction equal to the actual number of days elapsed
from the end date of the calendar quarter most recently completed to the
relevant Series D-1 Liquidation Date over 90 days. If, upon any liquidation,
dissolution or winding up of the Partnership, the assets of the Partnership, or
proceeds thereof, distributable among the holders of the Series D-1 Partnership
Preferred Units shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other units of any class or series of
Parity Units, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series D-1 Partnership Preferred Units and any such other
Parity Units ratably in accordance with the respective amounts that would be
payable on such Series D-1 Partnership Preferred Units and any such other Parity
Units if all amounts payable thereon were paid in full. For the purposes of
this Section 4, (i) a consolidation or merger of the Partnership with one or
more corporations, partnerships or other entities or (ii) a sale, lease or
conveyance of all or substantially all of the Partnership's property or business
shall not be deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Partnership.
(b) Subject to the rights of the holders of Parity Units or Senior
Units, upon any
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liquidation, dissolution or winding up of the Partnership, after payment shall
have been made in full to the holders of the Series D-1 Partnership Preferred
Units, as provided in this Section 4, the holders of Series D-1 Partnership
Preferred Units shall have no other claim to the remaining assets of the
Partnership, and any other series or class or classes of Junior Units shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series D-1 Partnership Preferred Units shall not be entitled
to share therein.
5. Redemption at the Option of the Partnership.
(a) The Series D-1 Partnership Preferred Units shall not be redeemable
by the Partnership prior to August 12, 2008. On and after August 12, 2008, the
Partnership, at its option, may redeem the Series D-1 Partnership Preferred
Units, in whole at any time or from time to time in part, in minimum increments
of $10.0 million of aggregate Liquidation Preference of such units, out of funds
legally available therefor at a redemption price payable in cash equal to 100%
of the Liquidation Preference per Series D-1 Partnership Preferred Unit (plus
all accumulated, accrued and unpaid distributions as provided in paragraph (c)
below).
(b) In the event that WHL and its subsidiaries and the trustee of
Westfield America trust on behalf of Westfield America Trust do not vote to
approve the conversion of the Corporation's Series D-1 Equity Shares into Common
Equity Shares at the Corporation's 1999 Annual Shareholder Meeting or at any
other meeting of the Corporation's shareholders at which such proposal is
raised, the Partnership shall have the right to redeem the Series D-1
Partnership Preferred Units, in whole or in part, out of funds legally available
therefor at a redemption price payable in cash equal to 100% of the Liquidation
Preference per Series D-1 Partnership Preferred Unit (plus all accumulated,
accrued and unpaid distributions as provided in paragraph (c) below).
(c) Upon any redemption of Series D-1 Partnership Preferred Units
pursuant to this Section 5, the Partnership shall pay all accrued and unpaid
distributions, if any, thereon to the Call Date, without interest. If the Call
Date falls after a distribution payment record date and prior to the
corresponding Distribution Payment Date, then each holder of Series D-1
Partnership Preferred Units at the close of business on such distribution
payment record date shall be entitled to the distribution payable on such units
on the corresponding Distribution Payment Date notwithstanding any redemption of
such units before such Distribution Payment Date. Except as provided above, the
Partnership shall make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series D-1 Partnership Preferred Units called for
redemption.
(d) If full cumulative distributions on the Series D-1 Partnership
Preferred Units and any other class or series of Parity Units of the Partnership
have not been declared and paid or declared and set apart for payment, the
Series D-1 Partnership Preferred Units may not be redeemed under this Section 5
in part and may not be redeemed unless the Series D Partnership Preferred Units
are also redeemed in whole, and the Partnership may not purchase or acquire
Series D Partnership Preferred Units or Series D-1 Partnership Preferred Units,
otherwise than pursuant to a purchase or
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<PAGE>
exchange offer made on the same terms to all holders of Series D Partnership
Preferred Units and Series D-1 Partnership Preferred Units.
(e) Notice of the redemption of any Series D-1 Partnership Preferred
Units under this Section 5 shall be mailed by first-class mail or recognized
overnight courier to each holder of record of Series D-1 Partnership Preferred
Units to be redeemed at the address of each such holder as shown on the
Partnership's records, not less than 30 nor more than 90 days prior to the Call
Date. Neither the failure to mail any notice required by this paragraph (e), nor
any defect therein or in the mailing thereof, to any particular holder, shall
affect the sufficiency of the notice or the validity of the proceedings for
redemption with respect to the other holders. Each such mailed notice shall
state, as appropriate: (1) the Call Date; (2) the number of Series D-1
Partnership Preferred Units to be redeemed and, if fewer than all the units held
by such holder are to be redeemed, the number of such units to be redeemed from
such holder; (3) the redemption price; (4) the place or places at which
certificates for such units are to be surrendered; (5) the then-current
Conversion Price; and (6) that distributions on the units to be redeemed shall
cease to accrue on such Call Date except as otherwise provided herein. Notice
having been mailed as aforesaid, from and after the Call Date (unless the
Partnership shall fail to make available an amount of cash necessary to effect
such redemption), (i) except as otherwise provided herein, distributions on the
Series D-1 Partnership Preferred Units so called for redemption shall cease to
accrue, (ii) such units shall no longer be deemed to be outstanding, and (iii)
all rights of the holders thereof as holders of Series D-1 Partnership Preferred
Units shall cease (except the rights to receive the cash payable upon such
redemption, without interest thereon, upon surrender and endorsement of their
certificates if so required and to receive any distributions payable thereon).
The Partnership's obligation to provide cash in accordance with the preceding
sentence shall be deemed fulfilled if, on or before the Call Date, the
Partnership shall deposit with a bank or trust company that has an office in the
Borough of Manhattan, City of New York, and that has capital and surplus of at
least $150,000,000, necessary for such redemption, in trust, with irrevocable
instructions that such cash be applied to the redemption of the Series D-1
Partnership Preferred Units so called for redemption. Notwithstanding the
foregoing, the Partnership shall, in the first instance, send the money to any
holder of Series D-1 Partnership Preferred Units that has notified the
Partnership in writing of the location of delivery of funds. No interest shall
accrue for the benefit of the holders of Series D-1 Partnership Preferred Units
to be redeemed on any cash so set aside by the Partnership. Subject to
applicable escheat laws, any such cash unclaimed at the end of two years from
the Call Date shall revert to the general funds of the Partnership, after which
reversion the holders of such units so called for redemption shall look only to
the general funds of the Partnership for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such units so redeemed (properly endorsed or
assigned for transfer, if the Partnership shall so require and if the notice
shall so state), such units shall be exchanged for any cash (without interest
thereon) for which such units have been redeemed. If fewer than all the
outstanding Series D-1 Partnership Preferred Units are to be redeemed, units to
be redeemed shall be selected by the Partnership from outstanding Series D-1
Partnership Preferred Units not previously called for redemption pro rata (as
nearly as may be), by lot or by any other method
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<PAGE>
determined by the Partnership in its sole discretion to be equitable. If fewer
than all the Series D-1 Partnership Preferred Units evidenced by any certificate
are redeemed, then new certificates evidencing the unredeemed Series D-1
Partnership Preferred Units shall be issued without cost to the holder thereof.
6. Conversion.
The Series D-1 Partnership Preferred Units shall not be convertible
into Partnership Common Units prior to (i) a vote of the shareholders of the
Corporation approving the conversion of the Corporation's Series D-1 Equity
Shares into Common Equity Shares or (ii) the transfer of the Series D-1 Equity
Shares to an individual to whom the Corporation is permitted to issue Common
Equity Shares without shareholder approval, in accordance with the rules of the
NYSE. Subject to the foregoing, holders of Series D-1 Partnership Preferred
Units shall have the right to convert all or a portion of such units into
Partnership Common Units, as follows:
(a) Subject to and upon compliance with the provisions of this Section
6, a holder of Series D-1 Partnership Preferred Units shall have the right, at
his or her option, at any time (such time being the "Conversion Date"), to
convert all or any portion of such units into the number of Partnership Common
Units obtained by dividing the aggregate Liquidation Preference of such units
(inclusive of accrued but unpaid distributions) by the Conversion Price (as in
effect at the time and on the date provided for in the last paragraph of
paragraph (b) of this Section 6) by surrendering such units to be converted,
such surrender to be made in the manner provided in paragraph (b) of this
Section 6; provided, however, that the right to convert Series D-1 Partnership
-------- -------
Units called for redemption pursuant to Section 5 shall terminate at the close
of business on the fifth Business Day prior to the Call Date fixed for such
redemption, unless the Partnership shall default in making payment of the cash
payable upon such redemption under Section 5.
(b) In order to exercise the conversion right, the holder of each unit
of Series D-1 Partnership Preferred Units to be converted shall surrender the
certificate representing such unit, duly endorsed or assigned to the Partnership
or in blank, at the office of the Transfer Agent, accompanied by written notice
to the Partnership that the holder thereof irrevocably elects to convert such
Series D-1 Partnership Preferred Units. Unless the partnership units issuable
on conversion are to be issued in the same name as the name in which such Series
D-1 Partnership Preferred Units are registered, each partnership unit
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Partnership, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the Partnership
demonstrating that such taxes have been paid).
Holders of Series D-1 Partnership Preferred Units at the close of
business on a distribution payment record date shall be entitled to receive the
distribution payable on such units on the corresponding Distribution Payment
Date notwithstanding the conversion thereof following such distribution payment
record date and prior to such Distribution Payment Date. However, Series D-1
Partnership Preferred Units surrendered for conversion during the period between
the close of
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<PAGE>
business on any distribution payment record date and the opening of business on
the corresponding Distribution Payment Date (except units converted after the
issuance of notice of redemption with respect to a Call Date during such period,
such Series D-1 Partnership Preferred Units being entitled to such distribution
on the Distribution Payment Date) must be accompanied by payment of an amount
equal to the distribution payable on such units on such Distribution Payment
Date. A holder of Series D-1 Partnership Preferred Units on a distribution
payment record date who (or whose transferee) tenders any such units for
conversion into Partnership Common Units on the corresponding Distribution
Payment Date will receive the distribution payable by the Partnership on such
Series D-1 Partnership Preferred Units on such date, and the converting holder
need not include payment of the amount of such distribution upon surrender of
Series D-1 Partnership Preferred Units for conversion. Except as provided above,
the Partnership shall make no payment or allowance for unpaid distributions,
whether or not in arrears, on converted units or for distributions on the
Partnership Common Units issued upon such conversion.
As promptly as practicable after the surrender of certificates for
Series D-1 Partnership Preferred Units as aforesaid, the Partnership shall issue
and shall deliver at such office to such holder, or on his or her written order,
a certificate or certificates for the number of full Partnership Common Units
issuable upon the conversion of such units in accordance with provisions of this
Section 6, and any fractional interest in respect of a Partnership Common Unit
arising upon such conversion shall be settled as provided in paragraph (c) of
this Section 6.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for Series
D-1 Partnership Preferred Units shall have been surrendered and such notice
shall have been received by the Partnership as aforesaid (and if applicable,
payment of an amount equal to the distribution payable on such units shall have
been received by the Corporation as described above), and the Person or Persons
in whose name or names any certificate or certificates for Partnership Common
Units shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the units represented thereby at such time on
such date and such conversion shall be at the Conversion Price in effect at such
time on such date unless the transfer books of the Partnership shall be closed
on that date, in which event such Person or Persons shall be deemed to have
become such holder or holders of record at the close of business on the next
succeeding day on which such transfer books are open, but such conversion shall
be at the Conversion Price in effect on the date on which such units shall have
been surrendered and such notice received by the Partnership.
(c) No fractional units or scrip representing fractions of Partnership
Common Units shall be issued upon conversion of the Series D-1 Partnership
Preferred Units. Instead of any fractional interest in a Partnership Common
Unit that would otherwise be deliverable upon the conversion of a Series D-1
Partnership Preferred Unit, the Partnership shall pay to the holder of such unit
an amount in cash based upon the Current Market Price of the Corporation's
Common Stock on the Trading Day immediately preceding the date of conversion.
If more than one Series D-1 Partnership Unit shall be surrendered for conversion
at one time by the same holder, the number of full Partnership Common Units
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of Series D-1 Partnership Preferred Units so surrendered.
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<PAGE>
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Grant Date (A) pay a
dividend or make a distribution on its Common Equity Shares in Common
Equity Shares, (B) subdivide its outstanding Common Equity Shares into a
greater number of units, (C) combine its outstanding Common Equity Shares
into a smaller number of units or (D) issue any shares of stock by
reclassification of its Common Equity Shares, the Conversion Price in
effect at the opening of business on the day following the date fixed for
the determination of holders entitled to receive such dividend or
distribution or at the opening of business on the Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any Series D-1 Equity Shares thereafter surrendered
for conversion shall be entitled to receive the number of Common Equity
Shares that such holder would have owned or have been entitled to receive
after the happening of any of the events described above as if such Series
D-1 Equity Shares had been converted immediately prior to the record date
in the case of a dividend or distribution or the effective date in the case
of a subdivision, combination or reclassification. An adjustment made
pursuant to this subparagraph (i) shall become effective immediately after
the opening of business on the Business Day next following the record date
(except as provided in paragraph (h) below) in the case of a dividend or
distribution and shall become effective immediately after the opening of
business on the Business Day next following the effective date in the case
of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Grant Date rights,
options or warrants to all holders of Common Equity Shares entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Equity Shares at a price per
share less than 95% (100% if a standby underwriter is used and charges the
Corporation a commission) of the Fair Market Value per share of the
Corporation's Common Stock on the record date for the determination of
holders entitled to receive such rights, options or warrants, then the
Conversion Price in effect at the opening of business on the Business Day
next following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately
prior to the opening of business on the Business Day next following the
date fixed for such determination by (B) a fraction, the numerator of which
shall be the sum of (x) the number of Common Equity Shares outstanding on
the close of business on the date fixed for such determination and (y) the
number of shares that the aggregate proceeds to the Corporation from the
exercise of such rights, options or warrants for Common Equity Shares would
purchase at 95% of such Fair Market Value (or 100% in the case of a standby
underwriting), and the denominator of which shall be the sum of (x) the
number of Common Equity Shares outstanding on the close of business on the
date fixed for such determination and (y) the number of additional Common
Equity Shares offered for subscription or purchase pursuant to such rights,
options or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record date
(except as provided
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<PAGE>
in paragraph (h) below). In determining whether any rights, options or
warrants entitle the holders of Common Equity Shares to subscribe for or
purchase Common Equity Shares at less than 95% of such Fair Market Value
(or 100% in the case of a standby underwriting), there shall be taken into
account any consideration received by the Corporation upon issuance and
upon exercise of such rights, options or warrants, the value of such
consideration, if other than cash, to be determined by the Board of
Directors whose determination shall be conclusive. To the extent that
Common Equity Shares are not delivered pursuant to such rights, options or
warrants, upon the expiration or termination of such rights, options or
warrants, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect had the adjustments made upon the issuance of
such rights, options or warrants been made on the basis of delivery of only
the number of Common Equity Shares actually delivered. In the event that
such rights, options or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such date fixed for the determination of shareholders entitled to
receive such rights, options or warrants had not been fixed.
(iii) If the Corporation shall distribute to all holders of its
Common Equity Shares any securities of the Corporation (other than Common
Equity Shares) or evidence of its indebtedness or assets (excluding
cumulative cash distributions paid with respect to the Common Equity Shares
after December 31, 1997 which are not in excess of the following: the sum
of (A) the Corporation's cumulative undistributed Funds from Operations at
December 31, 1997, plus (B) the cumulative amount of Funds from Operations,
as determined by the Board of Directors, after December 31, 1997, minus (C)
the cumulative amount of distributions accrued or paid in respect of the
Corporation's Series D-1 Equity Shares (or any other class or series of
preferred stock of the Corporation after the Grant Date) or rights, options
or warrants to subscribe for or purchase any of its securities (excluding
those rights, options and warrants issued to all holders of Common Equity
Shares entitling them for a period expiring within 45 days after the record
date referred to in subparagraph (ii) above to subscribe for or purchase
Common Equity Shares, which rights and warrants are referred to in and
treated under subparagraph (ii) above) (any of the foregoing being
hereinafter in this subparagraph (iii) collectively called the "Securities"
and individually a "Security"), then in each such case the Conversion Price
shall be adjusted so that it shall equal the price determined by
multiplying (x) the Conversion Price in effect immediately prior to the
close of business on the date fixed for the determination of shareholders
entitled to receive such distribution by (y) a fraction, the numerator of
which shall be the Fair Market Value per share of the Corporation's Common
Stock on the record date mentioned below less the then Fair Market Value
(as determined by the Board of Directors, whose determination shall be
conclusive) of the portion of the Securities or assets or evidences of
indebtedness so distributed or of such rights, options or warrants
applicable to one Common Equity Share, and the denominator of which shall
be the Fair Market Value per share of the Corporation's Common Stock on the
record date mentioned below. Such adjustment shall become effective on the
date of distribution retroactive to the opening of business on the Business
Day next following (except as provided in paragraph (h) below) the record
date for
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the determination of shareholders entitled to receive such distribution.
For the purposes of this subparagraph (iii), the distribution of a
Security, which is distributed not only to the holders of the Common Equity
Share on the date fixed for the determination of shareholders entitled to
such distribution of such Security, but also is distributed with each
Partnership Common Unit delivered to a Person converting a share of Series
D-1 Partnership Preferred Units after such determination date, shall not
require an adjustment of the Conversion Price pursuant to this subparagraph
(iii); provided that on the date, if any, on which a Person converting a
--------
unit of Series D-1 Partnership Preferred Units would no longer be entitled
to receive such Security with a Partnership Common Unit (other than as a
result of the termination of all such Securities), a distribution of such
Securities shall be deemed to have occurred and the Conversion Price shall
be adjusted as provided in this subparagraph (iii) (and such day shall be
deemed to be "the date fixed for the determination of the shareholders
entitled to receive such distribution" and "the record date" within the
meaning of the two preceding sentences). If any distribution of the type
described in this paragraph (iii) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price which
would then be in effect if such distribution had not been declared.
Rights or warrants distributed by the Corporation to all holders of
Common Equity Shares entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are
deemed to be transferred with such shares of Common Equity Shares; (ii) are
not exercisable; and (iii) are also issued in respect of future issuances
of Common Equity Shares, shall be deemed not to have been distributed for
purposes of this subparagraph (iii) (and no adjustment to the Conversion
Price under this subparagraph (iii) will be required) until the occurrence
of the earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant shall
become exercisable to purchase different securities, evidences of
indebtedness or other assets or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to a new
right or warrant (and a termination or expiration of the existing right or
warrant without exercise by the holder thereof to the extent not
exercised). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto,
that resulted in an adjustment to the Conversion Price under this
subparagraph (iii), (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution (but not a
distribution paid exclusively in cash), equal to the per share redemption
or repurchase price received by a holder of Common Equity Shares with
respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Common Equity Shares as of the
date of such redemption or repurchase, and (2) in the case of such
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rights or warrants all of which shall have expired or been terminated
without exercise, the Conversion Price shall be readjusted as if such
rights and warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the Corporation
or any subsidiary or controlled Affiliate of the Corporation for all or any
portion of the Common Equity Shares shall expire and such tender or
exchange offer shall require the payment by the Corporation or such
subsidiary or controlled Affiliate of consideration per Common Equity Share
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), at the last time (the "Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer, that exceeds the Current Market Price per share of the Corporation's
Common Stock on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction contemplated by this
subparagraph, by a fraction of which the numerator shall be the number of
Common Equity Shares outstanding (including any tendered or exchanged
shares) at the Expiration Time, multiplied by the Current Market Price per
share of the Corporation's Common Stock on the Trading Day next succeeding
the Expiration Time, and the denominator shall be the sum of (A) the fair
market value (determined as aforesaid) of the aggregate consideration
payable to shareholders based upon the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any maximum, being referred to as the
"Purchased Shares") and (B) the product of the number of Common Equity
Shares outstanding (less any Purchased Shares) at the Expiration Time and
the Current Market Price per share of the Corporation's Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following
the Expiration Time. In the event the Corporation or any subsidiary or
controlled Affiliate is obligated to purchase shares pursuant to any such
tender offer, but the Corporation or such subsidiary or controlled
Affiliate is permanently prevented by applicable law from effecting any
such purchases, or all such purchases are rescinded, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such tender offer had not been made.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease of
at least 1% in such price; provided, however, that any adjustments that by
-------- -------
reason of this subparagraph (v) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and made
-------- -------
in accordance with the provisions of this Section 6 (other than this
subparagraph (v)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of
Partnership Common Units. Notwithstanding any other
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provisions of this Section 6, the Partnership shall not be required to make
any adjustment of the Conversion Price for the issuance of any Common
Equity Shares pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation and the
investment of additional optional amounts in Common Equity Shares under
such plan. All calculations under this Section 6 shall be made to the
nearest cent (with $.005 being rounded upward) or to the nearest one-
hundredth of a partnership unit (with .005 of a share being rounded
upward), as the case may be. Anything in this paragraph (d) to the contrary
notwithstanding, the Partnership shall be entitled, to the extent permitted
by law, to make such reductions in the Conversion Price, in addition to
those required by this paragraph (d), as it in its discretion shall
determine to be advisable in order that any partnership unit distributions,
subdivision of partnership units, reclassification or combination of
partnership units, distribution of rights or warrants to purchase
partnership units, or distribution of other assets (other than cash
distributions) hereafter made by the Partnership to its Partners shall not
be taxable. To the extent permitted by applicable law, the Partnership from
time to time may reduce the Conversion Price by any amount for any period
of time if the period is at least 20 days, the reduction is irrevocable
during the period and the Managing General Partner shall have made a
determination that such reduction would be in the best interests of the
Partnership, which determination shall be conclusive. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, the
Partnership shall mail to the holder of each Series D-1 Partnership
Preferred Unit at his or her last address shown on the Partnership's
records a notice of reduction prior to the date the reduced Conversion
Price takes effect, and such notice shall state the reduced Conversion
Price and the period during which it will be in effect.
(e) If the Corporation shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, self tender offer for 40% or more of its Common Equity Shares, sale of
all or substantially all of the Corporation's assets or recapitalization of the
Common Equity Shares and excluding any transaction as to which subparagraph
(d)(i) of this Section 6 applies) (each of the foregoing being referred to
herein as a "Transaction"), in each case as a result of which all or
substantially all of the Partnership Common Units are converted into the right
to receive different securities or other property (including cash or any
combination thereof), each Series D-1 Partnership Preferred Unit which is not
redeemed or converted into the right to receive different securities or other
property prior to such Transaction shall thereafter be convertible, in lieu of
Partnership Common Units into the kind and amount of different securities and
other property (including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of Partnership
Common Units into which one Series D-1 Partnership Preferred Unit was
convertible immediately prior to such Transaction, assuming such holder of
Partnership Common Units (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be
("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of shares,
securities and other property (including cash) receivable upon such Transaction
(provided that if the kind or amount of shares, securities and other property
(including
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<PAGE>
cash) receivable upon such Transaction is not the same for each Common Equity
Share held immediately prior to such Transaction by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("Non-Electing Share"), then for the purpose of
this paragraph (e) the kind and amount of shares, securities and other property
(including cash) receivable upon such Transaction by each Non-Electing Share
shall be deemed to be the kind and amount so receivable per share by holders of
a plurality of the Non-Electing Shares). The Corporation shall not be a party to
any Transaction unless the terms of such Transaction are consistent with the
provisions of this paragraph (e), and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Series D-1 Partnership Preferred Units that will
contain provisions enabling the holders of the Series D-1 Partnership Preferred
Units that remain outstanding after such Transaction to convert into the
consideration received by holders of Partnership Common Units at the Conversion
Price in effect immediately prior to such Transaction. The provisions of this
paragraph (e) shall similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a distribution (or any other
distribution) on its Common Equity Shares (other than cash distributions or
distributions paid with respect to the Common Equity Shares after December
31, 1997 not in excess of the sum of the Corporation's cumulative
undistributed Funds from Operations at December 31, 1997, plus the
cumulative amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1997, minus the cumulative amount of
distributions accrued or paid in respect of the Corporation's Series D-1
Equity Shares or any other class or series of preferred stock of the
Corporation after the Grant Date); or
(ii) the Corporation shall authorize the granting to all holders
of Common Equity Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or warrants;
or
(iii) there shall be any reclassification of the Common Equity
Shares (other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or merger to which the Corporation is a party
(other than a merger in which the Corporation is the surviving entity) and
for which approval of any shareholders of the Corporation is required, or a
statutory share exchange, or a self tender offer by the Corporation for all
or substantially all of its outstanding shares of Common Stock or the sale
or transfer of all or substantially all of the assets of the Corporation as
an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Partnership shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series D-1 Partnership Preferred Units at
their addresses as shown on the records of
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<PAGE>
the Partnership, as promptly as possible, but at least 10 days prior to the
applicable date hereinafter specified, a notice stating (A) the date on which a
record is to be taken for the purpose of such distribution, distribution or
granting of rights, options or warrants, or, if a record is not to be taken, the
date as of which the holders of Common Equity Shares of record to be entitled to
such distribution, distribution or rights, options or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Partnership Common Units of record shall be entitled to
exchange their Partnership Common Units for securities or other property, if
any, deliverable upon such reclassification, consolidation, merger, statutory
share exchange, sale, transfer, liquidation, dissolution or winding up. Failure
to give or receive such notice or any defect therein shall not affect the
legality or validity of the proceedings described in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Partnership shall promptly file with the Transfer Agent a certificate setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error.
Promptly after delivery of such certificate, the Partnership shall prepare a
notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the effective date of such adjustment and shall mail such
notice of such adjustment of the Conversion Price to the holder of each Series
D-1 Partnership Preferred Unit at such holder's last address as shown on the
records of the Partnership.
(h) In any case in which paragraph (d) of this Section 6 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Partnership may defer until the occurrence of such event (A)
issuing to the holder of any Series D-1 Partnership Preferred Unit converted
after such record date and before the occurrence of such event the additional
Partnership Common Units issuable upon such conversion by reason of the
adjustment required by such event over and above the Partnership Common Units
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount of cash in lieu of any fraction pursuant to
paragraph (c) of this Section 6.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Equity Shares, other than action described in this Section 6, that in the
opinion of the Managing General Partner would materially and adversely affect
the conversion rights of the holders of the Series D-1 Partnership Preferred
Units, the Conversion Price for the Series D-1 Partnership Preferred Units may
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<PAGE>
be adjusted, to the extent permitted by law, in such manner, if any, and at such
time, as the Managing General Partner may determine to be equitable in the
circumstances.
(k) The Partnership covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Partnership Common Units, for the purpose of effecting
conversion of the Series D-1 Partnership Preferred Units, the full number of
Partnership Common Units deliverable upon the conversion of all outstanding
Series D-1 Partnership Preferred Units not theretofore converted. For purposes
of this paragraph (k), the number of Partnership Common Units that shall be
deliverable upon the conversion of all outstanding Series D-1 Partnership
Preferred Units shall be computed as if at the time of computation all such
outstanding units were held by a single holder.
Any Partnership Common Units issued upon conversion of the Series D-1
Partnership Preferred Units shall be validly issued, fully paid and
nonassessable.
The Partnership shall use its best efforts to comply with all federal
and state securities laws and regulations thereunder in connection with the
issuance of any securities that the Partnership shall be obligated to deliver
upon conversion of the Series D-1 Partnership Preferred Units. The certificates
evidencing such securities shall bear such legends restricting transfer thereof
in the absence of registration under applicable securities laws or an exemption
therefrom as the Partnership may in good faith deem appropriate.
(l) The Partnership will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of
Partnership Common Units or other securities or property on conversion of the
Series D-1 Partnership Preferred Units pursuant hereto; provided, however, that
-------- -------
the Partnership shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of Partnership Common
Units or other securities or property in a name other than that of the holder of
the Series D-1 Partnership Preferred Units to be converted, and no such issue or
delivery shall be made unless and until the Person requesting such issue or
delivery has paid to the Partnership the amount of any such tax or established,
to the reasonable satisfaction of the Partnership, that such tax has been paid.
7. Redemption at the Option of the Holder.
(a) At any time after August 12, 2008, the holders of Series D-1
Partnership Preferred Units shall have the right at any time that the
Corporation's Common Stock has a Current Market Price at or below the Conversion
Price per unit, to require the Partnership, to the extent the Partnership shall
have funds legally available therefor, to redeem any or all of the Series D-1
Partnership Preferred Units held by such holder at a repurchase price payable,
at the option of the Partnership, in either (i) cash or (ii) such number of
Partnership Common Units that shall be convertible into shares of the
Corporation's Common Stock as shall have a Current Market Price in the aggregate
on the day prior to the day such holder gives notice pursuant to Section 7(b) of
its intention to redeem, equal to in either case, 100% of the Liquidation
Preference thereof plus accrued and unpaid distributions whether or not
declared, if any, to the date of repurchase or the date payment is made
available (in the aggregate, the "Redemption Payment").
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<PAGE>
(b) Notwithstanding paragraph (a) of this Section 7, in the event that
WHL and its subsidiaries and the trustee of Westfield America Trust on behalf of
Westfield America Trust vote to approve the conversion of the Corporation's
Series D-1 Equity Shares into Common Equity Shares at a meeting of shareholders
at which such proposal is raised, but the shareholders of the Corporation as a
whole reject the foregoing proposal, then from and after the later of such
rejection date and the second anniversary of the Grant Date, the Series D-1
Partnership Preferred Units shall be redeemable at the option of the holder, to
the extent that the Partnership shall have funds legally available therefor, at
a redemption price payable in cash equal to the product of (a) the Series D-1
Common Equivalent Factor times (b) the Current Market Price on the date of the
notice provided pursuant to paragraph (c) below, plus all accumulated, accrued
and unpaid dividends whether or not declared, if any, to the date of repurchase
or the date payment is made available.
(c) For purposes of this Section 7, redemption at the option of the
holder shall be deemed to occur upon receipt by the Partnership of written
notice that the holder of Series D-1 Partnership Preferred Units wishes to
tender units to be redeemed. The holders of such units to be redeemed shall
then have 30 days from the date of such notice to deliver such units to the
Transfer Agent. Upon the surrender of the certificate or certificates of Series
D-1 Partnership Preferred Units to be redeemed, duly endorsed or assigned to the
Partnership or in blank, at the office of the Transfer Agent, the Partnership
shall promptly, either (i) by wire transfer of immediately available funds to
such holder, as directed by such holder, send an amount equal to the Redemption
Payment in respect of all Series D-1 Partnership Preferred Units or portions
thereof so tendered or (ii) issue and deliver to such holder, or on his or her
written order, a certificate or certificates for the number of full Partnership
Common Units issuable in respect of all Series D-1 Partnership Preferred Units
or portions thereof so tendered.
8. Status of Reacquired Series D-1 Partnership Preferred Units.
All Series D-1 Partnership Preferred Units which shall have been
granted and reac quired in any manner by the Partnership shall be deemed
cancelled.
9. Ranking.
The Series D-1 Partnership Preferred Units shall with respect to
distribution rights and rights on liquidation, dissolution and winding up of the
affairs of the Partnership, rank pari passu to the Series A Partnership
----------
Preferred Units, the Series B Partnership Preferred Units, the Series C
Partnership Preferred Units, the Series C-1 Partnership Preferred Units, the
Series D Partnership Preferred Units and the Series C-2 Partnership Preferred
Units of the Partnership, if any, shall have been authorized and issued.
Each Series D-1 Partnership Preferred Unit shall be identical in all
respects to each other Series D-1 Partnership Preferred Unit.
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<PAGE>
Any class or series of Partnership Units or Investor Unit Rights shall
be deemed to rank:
(a) prior or senior to the Series D-1 Partnership Preferred Units, as
to the payment of distributions and as to distributions of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
such class or series of Partnership Units or Investor Unit Rights, as the case
may be, shall be entitled to the receipt of distributions or of amounts
distributable upon the liquidation, dissolution and winding up of the
Partnership in preference or priority to the holders of Series D-1 Partnership
Preferred Units ("Senior Units");
(b) on a parity with the Series D-1 Partnership Preferred Units, as to
the payment of distributions and as to distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, whether or not the
distribution rates, distribution payment dates or redemption or liquidation
prices per unit or other denomination thereof shall be different from those of
the Series D-1 Partnership Preferred Units, if the holders of such class or
series of Partnership Units or Investor Unit Rights, as the case may be, and the
Series D-1 Partnership Preferred Units shall be entitled to the receipt of
distributions and of amounts distributable upon the liquidation, dissolution and
winding up of the Partnership in proportion to their respective amounts of
accumulated and unpaid distributions per unit or other denomination or
liquidation preferences, without preference or priority one over the other
("Parity Units");
(c) junior to the Series D-1 Partnership Preferred Units, as to the
payment of distributions or as to the distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
Series D-1 Partnership Preferred Units shall be entitled to receipt of
distributions or of amounts distributable upon the liquidation, dissolution and
winding up of the Partnership, in preference or priority to the holders of such
class or series of Partnership Units or Investor Unit Rights ("Junior Units");
and
(d) junior to the Series D-1 Partnership Preferred Units, as to the
payment of distributions and as to the distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, if such class or
series of Partnership Units is Partnership Common Units or Class A Investor Unit
Rights, as the case may be, or if the holders of Series D-1 Partnership
Preferred Units shall be entitled to receipt of distributions and of amounts
distributable upon the liquidation, dissolution and winding up of the
Partnership, in preference or priority to the holders of such class or series of
Partnership Units or Investor Unit Rights ("Fully Junior Units").
10. Allocations.
(a) For each partnership year, each Holder of a Share of Series D-1
Preferred Units shall be allocated Net Income of the Partnership in an amount
equal to the amount of distributions made with respect to such Holder's Series
D-1 Preferred Units pursuant to Section 3 hereof during such Partnership Year.
In no event shall items of Net Loss of the Partnership be allocated to any
Holder of Series D-1 Preferred Units unless such allocation is required by
Section 704(b) of the Code or Section 10(b) of this Exhibit M.
---------
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<PAGE>
(b) If any Series D-1 Partnership Preferred Units are redeemed
pursuant to the terms of this Exhibit M, for the Partnership Year that includes
---------
such redemption (and, if necessary, for subsequent Partnership Years) (a) gross
income and gain (in such relative proportions as the Managing General Partner in
its discretion shall determine) shall be allocated to the Managing General
Partner and such Special Limited Partner(s) to the extent that the redemption
amounts paid or payable with respect to the Series D-1 Partnership Preferred
Units so redeemed (or treated as redeemed) exceeds the aggregate Capital Account
Balances (net of liabilities assumed or taken subject to by the Partnership) per
Series D-1 Partnership Preferred Unit allocable to the Series D-1 Partnership
Preferred Units so redeemed (or treated as redeemed) and (b) deductions and
losses (in such relative proportions as the Managing General Partner in its
discretion shall determine) shall be allocated to the Managing General Partner
and such Special Limited Partner(s) to the extent that the aggregate Capital
Account Balances (net of liabilities assumed or taken subject to by the
Partnership) per Series D-1 Partnership Preferred Unit allocable to the Series
D-1 Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the
redemption amount paid or payable with respect to the Series D-1 Partnership
Preferred Units so redeemed (or treated as redeemed).
11. Voting and Consent Rights.
(a) Holders of Series D-1 Partnership Preferred Units shall have only
those voting and consent rights specified in Section 7.3.B of the Agreement and
Section 11(b) hereof.
(b) So long as any Series D-1 Partnership Preferred Units are
outstanding, in addition to any other vote or consent of holders of Series D-1
Partnership Preferred Units required by law or by the Agreement, the affirmative
vote or consent of holders of at least 50% of the outstanding Series D-1
Partnership Preferred Units, voting or consenting as a separate class, given in
Person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating
any amendment or alteration of any of the provisions of this Partnership Unit
Designation or the Agreement that materially and adversely affects the material
powers, rights or preferences of the holders of the Series D-1 Partnership
Preferred Units; provided, however, that the amendment of the Agreement so as to
-------- -------
authorize, create, issue or grant any class or series of Partnership Units,
including, without limitation, any such Partnership Units that may have rights
senior or superior to the Series D-1 Partnership Preferred Units, shall be
deemed not to materially and adversely affect the material powers, rights or
preferences of the holders of Series D-1 Partnership Preferred Units.
(c) Except as otherwise required by applicable law or as set forth
herein or in the Agreement, the holders of the Series D-1 Partnership Preferred
Units shall not have any relative, participating, optional or other special
voting rights or powers with respect to any matter, and the consent or approval
of the holders thereof shall not be required for the taking of any action by the
Partnership.
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<PAGE>
12. Information Rights.
Holders of Series D-1 Partnership Preferred Units shall have only the
information rights specified in Section 8.5.A and Section 9.3 of the Agreement.
13. Restrictions on Transfer.
The Series D-1 Partnership Preferred Units are subject to the
restrictions on transfer set forth in Article 11 of the Agreement.
14. Ambiguity.
In the case of an ambiguity in the application of any of the
provisions of this Partnership Unit Designation, the Managing General Partner
shall have the power to determine the application of the provisions of this
Partnership Unit Designation with respect to any situation based on its
reasonable belief, understanding or knowledge of the circumstances.
15. Partnership Records.
The Managing General Partner shall amend Exhibit A to the Agreement
---------
from time to time to the extent necessary to reflect accurately the grant and
any subsequent redemption of, or other event having an effect on the ownership
of, Series D-1 Partnership Preferred Units.
16. Governing Law.
This Exhibit M shall be construed and enforced in accordance with, and
---------
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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EXHIBIT 10.7
FOURTH AMENDMENT TO THE
FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
This FOURTH AMENDMENT TO THE FIRST AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF WESTFIELD AMERICA LIMITED PARTNERSHIP, dated as of
December 29, 1998 (this "Amendment"), is being executed by Westfield America,
Inc., a Missouri corporation (the "Managing General Partner"), as the managing
general partner of Westfield America Limited Partnership, a Delaware limited
partnership (the "Partnership"), and on behalf of the Limited Partners pursuant
to the authority conferred on the Managing General Partner by Sections 2.4 and
12.3 of the First Amended and Restated Agreement of Limited Partnership of
Westfield America Limited Partnership, dated as of August 3, 1998, as amended by
that certain First Amendment to the First Amended and Restated Agreement of
Limited Partnership of Westfield America Limited Partnership, dated as of August
12, 1998, and as further amended by that certain Second Amendment to the First
Amended and Restated Agreement of Limited Partnership of Westfield America
Limited Partnership, dated as of December 8, 1998, and as further amended by
that certain Third Amendment to the First Amended and Restated Agreement of
Limited Partnership of Westfield America Limited Partnership, dated as of
December 24, 1998 (as so amended, the "Agreement"). Capitalized terms used
herein, but not otherwise defined herein, shall have the respective meanings
ascribed thereto in the Agreement.
WHEREAS, pursuant to Sections 7.1 and 12.3 of the Agreement, the Managing
General Partner is authorized to determine the designations, preferences and
relative, participating, optional or other special rights, powers and duties of
additional Partnership Units and to amend the Agreement, and the Managing
General Partner is hereby creating the Partnership Preferred Units with the
designations, preferences and other rights, terms and provisions as set forth on
Exhibit N attached hereto.
- ---------
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Agreement is hereby amended by the addition of a new exhibit,
entitled "Exhibit N" in the form attached hereto, which shall be attached to and
---------
made a part of the Agreement.
2. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and effect and, except as amended hereby, all of the terms,
covenants, provisions and conditions of the Agreement are hereby ratified and
confirmed in all respects.
<PAGE>
3. This Amendment shall be construed and enforced in accordance with, and
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
2
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
WESTFIELD AMERICA, INC.,
Managing General Partner
By: /s/ Irv Hepner
-------------------------
Name: Irv Hepner
Title: Secretary
ALL LIMITED PARTNERS
By: Westfield America, Inc., as attorney-in-fact
pursuant to the power of attorney granted under
Section 2.4 of the Agreement.
By: /s/ Irv Hepner
-------------------------
Name: Irv Hepner
Title: Secretary
3
<PAGE>
EXHIBIT N
PARTNERSHIP UNIT DESIGNATION OF SERIES C-2
PARTNERSHIP PREFERRED UNITS OF
WESTFIELD AMERICA LIMITED PARTNERSHIP
1. Creation, Number and Designation.
A class of Partnership Preferred Units is hereby created and designated as
"Series C-2 Partnership Preferred Units." The number of Partnership Preferred
Units constituting the Series C-2 Partnership Preferred Units shall be 138,889.
The number of Series C-2 Partnership Preferred Units may be decreased (but not
below the aggregate number thereof then outstanding and/or which have been
reserved for issuance). Each Series C-2 Partnership Preferred Unit shall be
identical in all respects to each other Series C-2 Partnership Preferred Unit.
2. Definitions.
For purposes of this Partnership Unit Designation, the following terms
shall have the respective meanings indicated in this Section 2, and capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement:
"Affiliate" of, or Person "Affiliated" with, a specified Person, shall mean
a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Person
specified. For purposes of the Corporation, Affiliate shall include, without
limitation, Westfield Holdings Limited ("WHL"), Westfield America Trust, Frank
Lowy, David Lowy, Peter Lowy and Steven Lowy (such individuals being the "Lowy
Family").
"Agreement" shall mean the First Amended and Restated Agreement of Limited
Partnership of Westfield America Limited Partnership, dated as of August 3,
1998, as amended, modified, supplemented or restated, from time to time.
"Base Distribution" shall mean an annual distribution per Series C-2
Partnership Preferred Unit equal to 8.5% of the Liquidation Preference per
Series C-2 Partnership Preferred Unit.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the capital stock of the Corporation.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York
City, New York, are authorized or required by law, regulation or executive order
to close.
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"Call Date" shall mean the date specified in the notice to holders required
under Section 5 (d) as the Call Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $0.01 per share, of the
Corporation.
"Common Equity Shares" shall mean the Common Shares and the Excess Common
Shares which are issued with respect to the Common Stock.
"Common Share"shall mean the shares of Common Stock.
"Consolidated EBITDA" for any quarter shall mean the consolidated net
income of the Corporation (before extraordinary income or gains and less equity
in income of unconsolidated real estate partnerships), calculated in a manner
consistent with the Corporation's financial statements filed with the Securities
and Exchange Commission, increased by the sum of the following (without
duplication):
(a) the Corporation's pro rata share of EBITDA from unconsolidated
real estate partnerships calculated in a manner consistent with this definition
of Consolidated EBITDA,
(b) all income taxes paid or accrued according to GAAP for such
quarter (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses except to the extent that such gains were not
included in Consolidated EBITDA),
(c) all interest expense paid or accrued in accordance with GAAP for
such quarter (including financing fees and amortization of deferred financing
fees or amortization of original issue discount, but excluding capitalized
interest),
(d) depreciation and depletion reflected in such net income,
(e) amortization reflected in such net income including, without
limitation, amortization of capitalized debt issuance costs (only to the extent
that such amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to paragraph (c) above), goodwill, other
intangibles and management fees, and
(f) any other noncash charges, to the extent deducted from
consolidated net income (including, but not limited to, income allocated to
minority interests).
"Consolidated Fixed Charges" for any quarter shall mean the sum of:
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(a) the Corporation's pro rata share of fixed charges from
unconsolidated real estate partnerships calculated in a manner consistent with
this definition of Consolidated Fixed Charges,
(b) all interest expense paid or accrued in accordance with GAAP for
such quarter (including, without duplication, financing fees and amortization of
deferred financing fees or amortization of original issue discount),
(c) distribution requirements with respect to preferred stock and any
other preferred securities for such quarter (not including any portion of
preferred stock distributions the calculation of which is based on the
distribution paid in such quarter to the holders of shares of the Corporation's
Common Stock), whether or not declared or paid,
(d) regularly scheduled amortization of principal of debt during such
quarter (other than any balloon payments at maturity) and
(e) all ground rent payments.
"Constituent Person" shall have the meaning set forth in Section 6(e)
hereof.
"Conversion Date" shall have the meaning set forth in Section 6(a) hereof.
"Conversion Price" shall mean the conversion price per Partnership Common
Unit for which the Series C-2 Partnership Preferred Unit is convertible, as such
Conversion Price may be adjusted pursuant to Section 6. The initial conversion
price shall be $18.00.
"Corporation" shall mean Westfield America, Inc., a Missouri corporation.
"Current Market Price" of publicly traded Common Stock or any other class
of stock or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the New York
Stock Exchange ("NYSE") or, if such security is not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market
("NASDAQ") or, if such security is not quoted on NASDAQ, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. (the "NASD")
or, if bid and asked prices for such security on such day shall not have been
reported through the NASD, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"Distribution Payment Date" shall mean (i), for any Distribution Period
with respect to which the Partnership pays a distribution on the Partnership
Common Unit, the date on which such
N-3
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distribution is paid or (ii), for any Distribution Period with respect to which
the Partnership does not pay a distribution on the Partnership Common Unit, a
date to be set by the Managing General Partner, which date shall not be later
than the thirtieth calendar day after the end of the applicable Distribution
Period.
"Distribution Periods" shall mean quarterly distribution periods commencing
on January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Distribution
Period with respect to any Series C-2 Partnership Preferred Units (other than
the initial Distribution Period, which shall commence on the Grant Date for such
Series C-2 Partnership Preferred Units and end on and include the last day of
the calendar quarter immediately following such Grant Date, and other than the
Distribution Period during which any Series C-2 Partnership Preferred Units
shall be redeemed pursuant to Section 5 or converted pursuant to Section 6,
which shall end on and include the Call Date or Conversion Date with respect to
the Series C-2 Partnership Preferred Units being redeemed or converted, as
applicable).
"Excess Common Shares" shall mean shares of excess stock of the
Corporation, par value $0.01 per share, which are issued with respect to Common
Stock.
"Expiration Time" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of the Corporation's Common Stock on the five (5) consecutive
Trading Days selected by the Corporation commencing not more than 20 Trading
Days before, and ending not later than, the earlier of the day in question and
the day before the "ex date" with respect to the issuance or distribution
requiring such computation. The term "ex date," when used with respect to any
issuance or distribution, means the first day on which the Common Stock trade
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
"Fixed Charge Coverage Violation" shall have the meaning set forth in
Section 3(a) hereof.
"Fully Junior Units" shall have the meaning set forth in Section 9(d)
hereof.
"Funds from Operations" shall mean net income (loss) (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other operating partnership interests or minority interests (as
reflected in the financial statements of the Corporation) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment Trusts
(NAREIT), in its White Paper dated March 1995, as such definitions may be
modified from time to time.
"Grant Date" shall mean the date on which the Series C-2 Partnership
Preferred Units are issued.
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"Junior Units" shall have the meaning set forth in Section 9(c) hereof.
"Non-Electing Share" shall have the meaning set forth in Section 6(e)
hereof.
"Partnership" shall mean Westfield America Limited Partnership, a Delaware
limited partnership.
"Parity Units" shall have the meaning set forth in Section 9(b) hereof.
"Person" shall mean any individual, firm, partnership, corporation, limited
liability company, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Purchased Shares" shall have the meaning set forth in Section 6(d)(iv)
hereof.
"REIT Termination Event" shall mean the earliest to occur of:
(a) the filing of a federal income tax return by the Corporation for
any taxable year on which the Corporation does not compute its income as a real
estate investment trust;
(b) the approval by the shareholders of the Corporation of a proposal
for the Corporation to cease to qualify as a real estate investment trust;
(c) a determination by the Board of Directors of the Corporation,
based on the advice of counsel, that the Corporation has ceased to qualify as a
real estate investment trust; or
(d) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real estate investment
trust.
"Securities" and "Security" shall have the meanings set forth in Section
6(d)(iii) hereof.
"Series C-2 Partnership Preferred Unit" means a Partnership Unit created
under this Partnership Unit Designation, with the designations, preferences and
relative, participating, optional or other special rights, powers and duties set
forth in this Exhibit N.
---------
"Senior Units" shall have the meaning set forth in Section 9(a) hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Partnership in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of distributions by the Managing General Partner, the allocation of
funds to be so paid on any series or class of partnership units of the
Partnership; provided, however, that if any funds for any class or series of
-------- -------
Junior Units or Fully Junior Units or any class or series of Parity Units are
placed in a separate account of the Partnership or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with respect
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<PAGE>
to the Series C-2 Partnership Preferred Units shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on NASDAQ, or if such securities are not
quoted on NASDAQ, in the securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e) hereof.
"Transfer Agent" shall mean the Managing General Partner, or such other
agent or agents of the Partnership as may be designated by the Managing General
Partner as the transfer agent, registrar and distribution disbursing agent for
the Series C-2 Partnership Preferred Units.
3. Distributions.
(a) Holders of Series C-2 Partnership Preferred Units shall not be
entitled to any distributions on the Series C-2 Partnership Preferred Units,
whether payable in cash, property or stock, except as provided in this Exhibit
-------
N.
- -
(b) Subject to the preferential rights of the holders of any
Partnership Preferred Units that rank senior in the payment of distributions to
the Series C-2 Partnership Preferred Units and subject to paragraph (c) of this
Section 3, the holders of Series C-2 Partnership Preferred Units shall be
entitled to receive, when, as and if declared by the Managing General Partner,
but only out of funds legally available for the payment of distributions,
cumulative preferential distributions payable in cash to holders of record on
the respective date, not exceeding 50 days preceding such distribution payment
date, fixed for the purpose by the Managing General Partner in advance of
payment of each particular distribution in an amount equal to the greater of (A)
the Base Distribution per unit per annum and (B) an amount per unit equal to the
Liquidation Preference of a Series C-2 Partnership Preferred Unit (exclusive of
accrued but unpaid distributions) divided by the Conversion Price (the "Series
C-2 Common Equivalent Factor") times the dollar amount of cash distributions
declared with respect to each Partnership Common Unit that does not result in an
adjustment to the Conversion Price pursuant to subparagraph (d)(iii) of Section
6 (such product, the "Series C-2 Common Equivalent Amount") for the same annual
period; provided, however, that if as a result of the quarterly distributions
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paid in accordance with the following sentence, the holders of Series C-2
Partnership Preferred Units shall have received for any calendar year more
distributions than such units shall be entitled under subparagraphs (A) and (B)
above (as adjusted pursuant to the third and eighth sentences of this Section
3), the distributions payable in respect of Series C-2 Partnership Preferred
Units in subsequent calendar years shall be reduced to the extent of such
overpayment.
Subject to the proviso of the preceding sentence of this Section 3(b),
the distribution paid in respect of each quarterly period in each calendar year
shall be determined as follows (in each case, excluding any additional payment
made pursuant to the following sentence): (1) for the first
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<PAGE>
quarter, the greater of 25% of the Base Distribution per unit and the Series C-2
Common Equivalent Amount for the same quarter; (2) for the second quarter, an
amount such that the aggregate amount to be received per Series C-2 Partnership
Preferred Unit in respect of the first two quarters of such calendar year shall
be the greater of 50% of the Base Distribution per unit and the Series C-2
Common Equivalent Amount for the same two quarters; (3) for the third quarter,
in amount such that the aggregate amount to be received per Series C-2
Partnership Preferred Unit in respect of the first three quarters of such
calendar year shall be the greater of 75% of the Base Distribution per unit and
the Series C-2 Common Equivalent Amount for the same three quarters; and (4) for
the fourth quarter, an amount such that the aggregate amount to be received per
Series C-2 Partnership Preferred Unit in respect of such calendar year shall be
the amount provided in the preceding sentence of this Section 3(b).
Notwithstanding the foregoing, for any quarter in which a Fixed Charge Coverage
Violation (as defined below) has occurred, the distribution payable per Series
C-2 Partnership Preferred Unit shall be 1.20 times the amount provided in the
preceding sentence. A "Fixed Charge Coverage Violation" shall occur for any
quarter that the ratio of the Corporation's Consolidated EBITDA to its
Consolidated Fixed Charges is below 1.40 to 1.
The distributions shall begin to accrue as set forth above and shall
be fully cumulative from the first day of the applicable Distribution Period,
whether or not in any Distribution Period or Periods there shall be funds of the
Partnership legally available for the payment of such distributions, and shall
be payable quarterly, when, as and if declared by the Managing General Partner,
in arrears on the Distribution Payment Dates. Accumulated but unpaid
distributions for any past quarterly Distribution Periods may be declared and
paid at any time, without reference to any regularly scheduled quarterly
Distribution Payment Date, to holders of record on such date, not exceeding 50
days preceding such Distribution Payment Date, fixed for the purpose by the
Managing General Partner in advance of payment of each particular distribution.
Any distribution payment made on Series C-2 Partnership Preferred Units shall
first be credited against the earliest accrued but unpaid distribution due with
respect to Series C-2 Partnership Preferred Units which remains payable.
Beginning with the quarter in which a REIT Termination Event Occurs, all
distributions payable per Series C-2 Partnership Preferred Unit pursuant to this
Section 3 shall be multiplied by 2.5.
(c) The initial Distribution Period for the Series C-2 Partnership
Preferred Units will include a partial distribution for the period from the
Grant Date until the last day of the calendar quarter immediately following such
Grant Date. The amount of distributions payable for such initial period, or any
other period shorter than a full quarterly Distribution Period, on the Series C-
2 Partnership Preferred Units shall be computed by dividing the number of days
in such period by 90 and multiplying the result by the Series C-2 Equity
distribution determined in accordance with Section 3(b). Holders of Series C-2
Partnership Preferred Units shall not be entitled to any distributions, whether
payable in cash, property or partnership units, in excess of cumulative
distributions, as herein provided, on the Series C-2 Partnership Preferred
Units. No interest, or sum of money in lieu of interest, shall be payable in
respect of any distribution payment or payments on the Series C-2 Partnership
Preferred Units which may be in arrears.
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<PAGE>
(d) So long as any of the Series C-2 Partnership Preferred Units are
outstanding, except as described in the immediately following sentence, no
distributions shall be declared, paid or set apart for payment by the
Partnership, and no other distribution of cash or other property shall be made,
directly or indirectly, by the Partnership with respect to any class or series
of Parity Units for any period unless distributions equal to the full amount of
accumulated and unpaid distributions have been, or contemporaneously are, paid
with respect to the Series C-2 Partnership Preferred Units for all Distribution
Periods terminating on or prior to the Distribution Payment Date with respect to
such class or series of Parity Units. When the distributions provided for in
Section 3(b) hereof are not paid in full, all distributions paid with respect to
the Series C-2 Partnership Preferred Units and all distributions paid with
respect to any other class or series of Parity Units shall be paid ratably in
proportion to the respective amounts of distributions accumulated and unpaid on
the Series C-2 Partnership Preferred Units and accumulated and unpaid on such
Parity Units.
(e) So long as any Series C-2 Partnership Preferred Units are
outstanding, no distributions (other than distributions paid solely in Fully
Junior Units or options, warrants or rights to subscribe for or purchase Fully
Junior Units) shall be paid by the Partnership, and no other distribution of
cash or other property shall be made, directly or indirectly, by the Partnership
with respect to any Junior Units, nor shall any Junior Units be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such Junior
Units), directly or indirectly, by the Partnership (except by conversion into or
exchange for Fully Junior Units), nor shall any other cash or other property
otherwise be paid or distributed to or for the benefit of any holder of Junior
Units in respect thereof, directly or indirectly, by the Partnership unless in
each case the full cumulative distributions (including all accumulated and
unpaid distributions) on all outstanding Series C-2 Partnership Preferred Units
and any other Parity Units of the Partnership shall have been or
contemporaneously are declared and paid or declared and set apart for payment
for all past Distribution Periods with respect to the Series C-2 Partnership
Preferred Units and all Distribution Periods terminating on or prior to the date
of payment of the Series C-2 Partnership Preferred Units and all Distribution
Periods terminating on or prior to the date of payment on all Parity Units of
the Partnership with respect to such Parity Units. Subject to the foregoing,
and not otherwise, such distributions may be declared by the Managing General
Partner and paid on any Partnership Common Units from time to time out of funds
legally available therefor, and the Series C-2 Partnership Preferred Units shall
not be entitled to participate in any such distributions, whether payable in
cash, partnership units or otherwise.
(f) No distributions on the Series C-2 Partnership Preferred Units
shall be declared by the Managing General Partner or paid or set apart for
payment by the Partnership at such time as the terms and provisions of any
agreement of the Partnership, including any agreement relating to its
indebtedness, prohibits such declaration, payment or setting apart for payment
or provides that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such declaration or
payment shall be restricted or prohibited by law.
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(g) In determining whether a distribution by cash payment, redemption
or other acquisition of Units or otherwise is permitted under Delaware law, no
effect shall be given to amounts that would be needed, if the Partnership were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of holders whose preferential rights on dissolution are
superior to those receiving the distribution.
(h) Notwithstanding the foregoing, it is acknowledged that the
Managing General Partner may, pursuant to the Agreement, elect to make
distributions on the Partnership Common Units on a more or less frequent basis
than quarterly and provide for an appropriate record date; in the event that the
Managing General Partner elects to effect such a non-quarterly distribution, the
Managing General Partner may, in its sole and absolute discretion, cause a
Distribution Period (and related Distribution Payment Date) to be established to
reflect the period established for such Partnership Common Unit distributions
and to make such revisions to the distributions provided in Section 3(b) hereof
as may be required to reflect that more or less than four Distribution Payment
Dates will occur during the relevant calendar year.
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Partnership, whether voluntary or involuntary, subject to the prior preferences
and other rights of any Senior Units, before any payment or distribution of the
assets of the Partnership (whether capital or surplus) shall be made to or set
apart for the holders of Junior Units, the holders of the Series C-2 Partnership
Preferred Units shall be entitled to receive One Hundred Eighty Dollars
($180.00) (the "Liquidation Preference") per Series C-2 Partnership Preferred
Unit plus an amount equal to all distributions (whether or not earned or
declared) accrued and unpaid thereon to the date of liquidation, dissolution or
winding up of the affairs of the Partnership (any such date, a "Series C-2
Liquidation Date"), but such holders shall not be entitled to any further
payment; provided that the distribution payable with respect to the Distribution
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Period containing the Series C-2 Liquidation Date shall be equal to the
distribution determined pursuant to Section 3 above for the preceding
Distribution Period times a fraction equal to the actual number of days elapsed
from the end date of the calendar quarter most recently completed to the
relevant Series C-2 Liquidation Date over 90 days. If, upon any liquidation,
dissolution or winding up of the Partnership, the assets of the Partnership, or
proceeds thereof, distributable among the holders of the Series C-2 Partnership
Preferred Units shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other units of any class or series of
Parity Units, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series C-2 Partnership Preferred Units and any such other
Parity Units ratably in accordance with the respective amounts that would be
payable on such Series C-2 Partnership Preferred Units and any such other Parity
Units if all amounts payable thereon were paid in full. For the purposes of
this Section 4, (i) a consolidation or merger of the Partnership with one or
more corporations, partnerships or other entities or (ii) a sale, lease or
conveyance of all or substantially all of the Partnership's property or business
shall not be deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Partnership.
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(b) Subject to the rights of the holders of Parity Units or Senior
Units, upon any liquidation, dissolution or winding up of the Partnership, after
payment shall have been made in full to the holders of the Series C-2
Partnership Preferred Units, as provided in this Section 4, the holders of
Series C-2 Partnership Preferred Units shall have no other claim to the
remaining assets of the Partnership, and any other series or class or classes of
Junior Units shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be paid
or distributed, and the holders of the Series C-2 Partnership Preferred Units
shall not be entitled to share therein.
5. Redemption at the Option of the Partnership.
(a) The Series C-2 Partnership Preferred Units shall not be redeemable
by the Partnership prior to August 12, 2008. On and after August 12, 2008, the
Partnership, at its option, may redeem the Series C-2 Partnership Preferred
Units, in whole at any time or from time to time in part, in minimum increments
of $10.0 million of aggregate Liquidation Preference of such units, out of funds
legally available therefor at a redemption price payable in cash equal to 100%
of the Liquidation Preference per Series C-2 Partnership Preferred Units (plus
all accumulated, accrued and unpaid distributions as provided in paragraph (b)
below).
(b) Upon any redemption of Series C-2 Partnership Preferred Units
pursuant to this Section 5, the Partnership shall pay all accrued and unpaid
distributions, if any, thereon to the Call Date, without interest. If the Call
Date falls after a distribution payment record date and prior to the
corresponding Distribution Payment Date, then each holder of Series C-2
Partnership Preferred Units at the close of business on such distribution
payment record date shall be entitled to the distribution payable on such units
on the corresponding Distribution Payment Date notwithstanding any redemption of
such units before such Distribution Payment Date. Except as provided above, the
Partnership shall make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series C-2 Partnership Preferred Units called for
redemption.
(c) If full cumulative distributions on the Series C-2 Partnership
Preferred Units and any other class or series of Parity Units of the Partnership
have not been declared and paid or declared and set apart for payment, the
Series C-2 Partnership Preferred Units may not be redeemed under this Section 5
in part and may not be redeemed unless the Series C Partnership Preferred Units
and Series C-1 Partnership Preferred Units are also redeemed in whole, and the
Partnership may not purchase or acquire Series C Partnership Preferred Units,
Series C-1 Partnership Preferred Units or Series C-2 Partnership Preferred
Units, otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of Series C Partnership Preferred Units, Series C-1
Partnership Preferred Units and Series C-2 Partnership Preferred Units.
(d) Notice of the redemption of any Series C-2 Partnership Preferred
Units under this Section 5 shall be mailed by first-class mail or recognized
overnight courier to each holder of record of Series C-2 Partnership Preferred
Units to be redeemed at the address of each such holder as shown on the
Partnership's records, not less than 30 nor more than 90 days prior to the Call
Date.
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Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof, to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Each such mailed notice shall state, as
appropriate: (1) the Call Date; (2) the number of Series C-2 Partnership
Preferred Units to be redeemed and, if fewer than all the units held by such
holder are to be redeemed, the number of such units to be redeemed from such
holder; (3) the redemption price; (4) the place or places at which certificates
for such units are to be surrendered; (5) the then-current Conversion Price; and
(6) that distributions on the units to be redeemed shall cease to accrue on such
Call Date except as otherwise provided herein. Notice having been mailed as
aforesaid, from and after the Call Date (unless the Partnership shall fail to
make available an amount of cash necessary to effect such redemption), (i)
except as otherwise provided herein, distributions on the Series C-2 Partnership
Preferred Units so called for redemption shall cease to accrue, (ii) such units
shall no longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Series C-2 Partnership Preferred Units shall cease (except
the rights to receive the cash payable upon such redemption, without interest
thereon, upon surrender and endorsement of their certificates if so required and
to receive any distributions payable thereon). The Partnership's obligation to
provide cash in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the Call Date, the Partnership shall deposit with a bank or
trust company that has an office in the Borough of Manhattan, City of New York,
and that has capital and surplus of at least $150,000,000, necessary for such
redemption, in trust, with irrevocable instructions that such cash be applied to
the redemption of the Series C-2 Partnership Preferred Units so called for
redemption. No interest shall accrue for the benefit of the holders of Series
C-2 Partnership Preferred Units to be redeemed on any cash so set aside by the
Partnership. Subject to applicable escheat laws, any such cash unclaimed at the
end of two years from the Call Date shall revert to the general funds of the
Partnership, after which reversion the holders of such units so called for
redemption shall look only to the general funds of the Partnership for the
payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such units so redeemed (properly endorsed or
assigned for transfer, if the Partnership shall so require and if the notice
shall so state), such units shall be exchanged for any cash (without interest
thereon) for which such units have been redeemed. If fewer than all the
outstanding Series C-2 Partnership Preferred Units are to be redeemed, units to
be redeemed shall be selected by the Partnership from outstanding Series C-2
Partnership Preferred Units not previously called for redemption pro rata (as
nearly as may be), by lot or by any other method determined by the Partnership
in its sole discretion to be equitable. If fewer than all the Series C-2
Partnership Preferred Units evidenced by any certificate are redeemed, then new
certificates evidencing the unredeemed Series C-2 Partnership Preferred Units
shall be issued without cost to the holder thereof.
6. Conversion. Holders of Series C-2 Partnership Preferred Units shall
have the right to convert all or a portion of such units into Partnership Common
Units, as follows:
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(a) Subject to and upon compliance with the provisions of this Section
6, a holder of Series C-2 Partnership Preferred Units shall have the right, at
his or her option, at any time (such time being the "Conversion Date"), to
convert all or any portion of such units into the number of Partnership Common
Units obtained by dividing the aggregate Liquidation Preference of such units
(inclusive of accrued but unpaid distributions) by the Conversion Price (as in
effect at the time and on the date provided for in the last paragraph of
paragraph (b) of this Section 6) by surrendering such units to be converted,
such surrender to be made in the manner provided in paragraph (b) of this
Section 6; provided, however, that the right to convert Series C-2 Partnership
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Units called for redemption pursuant to Section 5 shall terminate at the close
of business on the fifth Business Day prior to the Call Date fixed for such
redemption, unless the Partnership shall default in making payment of the cash
payable upon such redemption under Section 5.
(b) In order to exercise the conversion right, the holder of each unit
of Series C-2 Partnership Preferred Units to be converted shall surrender the
certificate representing such unit, duly endorsed or assigned to the Partnership
or in blank, at the office of the Transfer Agent, accompanied by written notice
to the Partnership that the holder thereof irrevocably elects to convert such
Series C-2 Partnership Preferred Units. Unless the partnership units issuable
on conversion are to be issued in the same name as the name in which such Series
C-2 Partnership Preferred Units are registered, each partnership unit
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Partnership, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the Partnership
demonstrating that such taxes have been paid).
Holders of Series C-2 Partnership Preferred Units at the close of
business on a distribution payment record date shall be entitled to receive the
distribution payable on such units on the corresponding Distribution Payment
Date notwithstanding the conversion thereof following such distribution payment
record date and prior to such Distribution Payment Date. However, Series C-2
Partnership Preferred Units surrendered for conversion during the period between
the close of business on any distribution payment record date and the opening of
business on the corresponding Distribution Payment Date (except units converted
after the issuance of notice of redemption with respect to a Call Date during
such period, such Series C-2 Partnership Preferred Units being entitled to such
distribution on the Distribution Payment Date) must be accompanied by payment of
an amount equal to the distribution payable on such units on such Distribution
Payment Date. A holder of Series C-2 Partnership Preferred Units on a
distribution payment record date who (or whose transferee) tenders any such
units for conversion into Partnership Common Units on the corresponding
Distribution Payment Date will receive the distribution payable by the
Partnership on such Series C-2 Partnership Preferred Units on such date, and the
converting holder need not include payment of the amount of such distribution
upon surrender of Series C-2 Partnership Preferred Units for conversion. Except
as provided above, the Partnership shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on converted units or for
distributions on the Partnership Common Units issued upon such conversion.
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As promptly as practicable after the surrender of certificates for
Series C-2 Partnership Preferred Units as aforesaid, the Partnership shall issue
and shall deliver at such office to such holder, or on his or her written order,
a certificate or certificates for the number of full Partnership Common Units
issuable upon the conversion of such units in accordance with provisions of this
Section 6, and any fractional interest in respect of a Partnership Common Unit
arising upon such conversion shall be settled as provided in paragraph (c) of
this Section 6.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for Series
C-2 Partnership Preferred Units shall have been surrendered and such notice
shall have been received by the Partnership as aforesaid (and if applicable,
payment of an amount equal to the distribution payable on such units shall have
been received by the Corporation as described above), and the Person or Persons
in whose name or names any certificate or certificates for Partnership Common
Units shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the units represented thereby at such time on
such date and such conversion shall be at the Conversion Price in effect at such
time on such date unless the transfer books of the Partnership shall be closed
on that date, in which event such Person or Persons shall be deemed to have
become such holder or holders of record at the close of business on the next
succeeding day on which such transfer books are open, but such conversion shall
be at the Conversion Price in effect on the date on which such units shall have
been surrendered and such notice received by the Partnership.
(c) No fractional units or scrip representing fractions of Partnership
Common Units shall be issued upon conversion of the Series C-2 Partnership
Preferred Units. Instead of any fractional interest in a Partnership Common
Unit that would otherwise be deliverable upon the conversion of a Series C-2
Partnership Preferred Unit, the Partnership shall pay to the holder of such unit
an amount in cash based upon the Current Market Price of the Corporation's
Common Stock on the Trading Day immediately preceding the date of conversion.
If more than one Series C-2 Partnership Unit shall be surrendered for conversion
at one time by the same holder, the number of full Partnership Common Units
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of Series C-2 Partnership Preferred Units so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Grant Date (A) pay a
dividend or make a distribution on its Common Equity Shares in Common
Equity Shares, (B) subdivide its outstanding Common Equity Shares into a
greater number of units, (C) combine its outstanding Common Equity Shares
into a smaller number of units or (D) issue any shares of stock by
reclassification of its Common Equity Shares, the Conversion Price in
effect at the opening of business on the day following the date fixed for
the determination of holders entitled to receive such dividend or
distribution or at the opening of business on the Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any Series C-2
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Equity Shares thereafter surrendered for conversion shall be entitled to
receive the number of Common Equity Shares that such holder would have
owned or have been entitled to receive after the happening of any of the
events described above as if such Series C-2 Equity Shares had been
converted immediately prior to the record date in the case of a dividend or
distribution or the effective date in the case of a subdivision,
combination or reclassification. An adjustment made pursuant to this
subparagraph (i) shall become effective immediately after the opening of
business on the Business Day next following the record date (except as
provided in paragraph (h) below) in the case of a dividend or distribution
and shall become effective immediately after the opening of business on the
Business Day next following the effective date in the case of a
subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Grant Date rights,
options or warrants to all holders of Common Equity Shares entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Equity Shares at a price per
share less than 95% (100% if a standby underwriter is used and charges the
Corporation a commission) of the Fair Market Value per share of the
Corporation's Common Stock on the record date for the determination of
holders entitled to receive such rights, options or warrants, then the
Conversion Price in effect at the opening of business on the Business Day
next following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately
prior to the opening of business on the Business Day next following the
date fixed for such determination by (B) a fraction, the numerator of which
shall be the sum of (x) the number of Common Equity Shares outstanding on
the close of business on the date fixed for such determination and (y) the
number of shares that the aggregate proceeds to the Corporation from the
exercise of such rights, options or warrants for Common Equity Shares would
purchase at 95% of such Fair Market Value (or 100% in the case of a standby
underwriting), and the denominator of which shall be the sum of (x) the
number of Common Equity Shares outstanding on the close of business on the
date fixed for such determination and (y) the number of additional Common
Equity Shares offered for subscription or purchase pursuant to such rights,
options or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record date
(except as provided in paragraph (h) below). In determining whether any
rights, options or warrants entitle the holders of Common Equity Shares to
subscribe for or purchase Common Equity Shares at less than 95% of such
Fair Market Value (or 100% in the case of a standby underwriting), there
shall be taken into account any consideration received by the Corporation
upon issuance and upon exercise of such rights, options or warrants, the
value of such consideration, if other than cash, to be determined by the
Board of Directors whose determination shall be conclusive. To the extent
that Common Equity Shares are not delivered pursuant to such rights,
options or warrants, upon the expiration or termination of such rights,
options or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made
upon the issuance of such rights, options or warrants been made on the
basis of delivery of only the number of Common Equity Shares actually
delivered. In the event that such rights, options or warrants
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<PAGE>
are not so issued, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such date fixed for the
determination of shareholders entitled to receive such rights, options or
warrants had not been fixed.
(iii) If the Corporation shall distribute to all holders of its
Common Equity Shares any securities of the Corporation (other than Common
Equity Shares) or evidence of its indebtedness or assets (excluding
cumulative cash distributions paid with respect to the Common Equity Shares
after December 31, 1997 which are not in excess of the following: the sum
of (A) the Corporation's cumulative undistributed Funds from Operations at
December 31, 1997, plus (B) the cumulative amount of Funds from Operations,
as determined by the Board of Directors, after December 31, 1997, minus (C)
the cumulative amount of distributions accrued or paid in respect of the
Corporation's Series C-2 Equity Shares or any other class or series of
preferred stock of the Corporation after the Grant Date) or rights, options
or warrants to subscribe for or purchase any of its securities (excluding
those rights, options and warrants issued to all holders of Common Equity
Shares entitling them for a period expiring within 45 days after the record
date referred to in subparagraph (ii) above to subscribe for or purchase
Common Equity Shares, which rights and warrants are referred to in and
treated under subparagraph (ii) above) (any of the foregoing being
hereinafter in this subparagraph (iii) collectively called the "Securities"
and individually a "Security"), then in each such case the Conversion Price
shall be adjusted so that it shall equal the price determined by
multiplying (x) the Conversion Price in effect immediately prior to the
close of business on the date fixed for the determination of shareholders
entitled to receive such distribution by (y) a fraction, the numerator of
which shall be the Fair Market Value per share of the Corporation's Common
Stock on the record date mentioned below less the then Fair Market Value
(as determined by the Board of Directors, whose determination shall be
conclusive) of the portion of the Securities or assets or evidences of
indebtedness so distributed or of such rights, options or warrants
applicable to one Common Equity Share, and the denominator of which shall
be the Fair Market Value per share of the Corporation's Common Stock on the
record date mentioned below. Such adjustment shall become effective on the
date of distribution retroactive to the opening of business on the Business
Day next following (except as provided in paragraph (h) below) the record
date for the determination of shareholders entitled to receive such
distribution. For the purposes of this subparagraph (iii), the
distribution of a Security, which is distributed not only to the holders of
the Common Equity Share on the date fixed for the determination of
shareholders entitled to such distribution of such Security, but also is
distributed with each Partnership Common Unit delivered to a Person
converting a share of Series C-2 Partnership Preferred Units after such
determination date, shall not require an adjustment of the Conversion Price
pursuant to this subparagraph (iii); provided that on the date, if any, on
--------
which a Person converting a unit of Series C-2 Partnership Preferred Units
would no longer be entitled to receive such Security with a Partnership
Common Unit (other than as a result of the termination of all such
Securities), a distribution of such Securities shall be deemed to have
occurred and the Conversion Price shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the date fixed for
the determination of the shareholders
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<PAGE>
entitled to receive such distribution" and "the record date" within the
meaning of the two preceding sentences). If any distribution of the type
described in this paragraph (iii) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price which
would then be in effect if such distribution had not been declared.
Rights or warrants distributed by the Corporation to all holders of
Common Equity Shares entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are
deemed to be transferred with such shares of Common Equity Shares; (ii) are
not exercisable; and (iii) are also issued in respect of future issuances
of Common Equity Shares, shall be deemed not to have been distributed for
purposes of this subparagraph (iii) (and no adjustment to the Conversion
Price under this subparagraph (iii) will be required) until the occurrence
of the earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant shall
become exercisable to purchase different securities, evidences of
indebtedness or other assets or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to a new
right or warrant (and a termination or expiration of the existing right or
warrant without exercise by the holder thereof to the extent not
exercised). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto,
that resulted in an adjustment to the Conversion Price under this
subparagraph (iii), (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution (but not a
distribution paid exclusively in cash), equal to the per share redemption
or repurchase price received by a holder of Common Equity Shares with
respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Common Equity Shares as of the
date of such redemption or repurchase, and (2) in the case of such rights
or warrants all of which shall have expired or been terminated without
exercise, the Conversion Price shall be readjusted as if such rights and
warrants had never been issued.
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the Corporation
or any subsidiary or controlled Affiliate of the Corporation for all or any
portion of the Common Equity Shares shall expire and such tender or
exchange offer shall require the payment by the Corporation or such
subsidiary or controlled Affiliate of consideration per Common Equity Share
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors), at the last time (the "Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer, that exceeds the Current Market Price per share of the
N-16
<PAGE>
Corporation's Common Stock on the Trading Day next succeeding the
Expiration Time, the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subparagraph, by a fraction of which the
numerator shall be the number of Common Equity Shares outstanding
(including any tendered or exchanged shares) at the Expiration Time,
multiplied by the Current Market Price per share of the Corporation's
Common Stock on the Trading Day next succeeding the Expiration Time, and
the denominator shall be the sum of (A) the fair market value (determined
as aforesaid) of the aggregate consideration payable to shareholders based
upon the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not
withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any maximum, being referred to as the "Purchased Shares") and (B) the
product of the number of Common Equity Shares outstanding (less any
Purchased Shares) at the Expiration Time and the Current Market Price per
share of the Corporation's Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction to become effective immediately prior
to the opening of business on the day following the Expiration Time. In the
event the Corporation or any subsidiary or controlled Affiliate is
obligated to purchase shares pursuant to any such tender offer, but the
Corporation or such subsidiary or controlled Affiliate is permanently
prevented by applicable law from effecting any such purchases, or all such
purchases are rescinded, the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if such tender offer had
not been made.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease of
at least 1% in such price; provided, however, that any adjustments that by
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reason of this subparagraph (v) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and made
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in accordance with the provisions of this Section 6 (other than this
subparagraph (v)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of
Partnership Common Units. Notwithstanding any other provisions of this
Section 6, the Partnership shall not be required to make any adjustment of
the Conversion Price for the issuance of any Common Equity Shares pursuant
to any plan providing for the reinvestment of dividends or interest payable
on securities of the Corporation and the investment of additional optional
amounts in Common Equity Shares under such plan. All calculations under
this Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-hundredth of a partnership unit (with .005 of
a share being rounded upward), as the case may be. Anything in this
paragraph (d) to the contrary notwithstanding, the Partnership shall be
entitled, to the extent permitted by law, to make such reductions in the
Conversion Price, in addition to those required by this paragraph (d), as
it in its discretion shall determine to be advisable in order that any
partnership unit distributions, subdivision of partnership units,
reclassification or combination of partnership units, distribution of
rights or warrants to purchase partnership
N-17
<PAGE>
units, or distribution of other assets (other than cash distributions)
hereafter made by the Partnership to its Partners shall not be taxable. To
the extent permitted by applicable law, the Partnership from time to time
may reduce the Conversion Price by any amount for any period of time if the
period is at least 20 days, the reduction is irrevocable during the period
and the Managing General Partner shall have made a determination that such
reduction would be in the best interests of the Partnership, which
determination shall be conclusive. Whenever the Conversion Price is reduced
pursuant to the preceding sentence, the Partnership shall mail to the
holder of each Series C-2 Partnership Preferred Unit at his or her last
address shown on the Partnership's records a notice of reduction prior to
the date the reduced Conversion Price takes effect, and such notice shall
state the reduced Conversion Price and the period during which it will be
in effect.
(e) If the Corporation shall be a party to any transaction (including,
without limitation, a merger, consolidation, statutory share exchange, self
tender offer for 40% or more of its Common Equity Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Equity Shares and excluding any transaction as to which subparagraph (d)(i) of
this Section 6 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which all or substantially all of
the Partnership Common Units are converted into the right to receive different
securities or other property (including cash or any combination thereof), each
Series C-2 Partnership Preferred Unit which is not redeemed or converted into
the right to receive different securities or other property prior to such
Transaction shall thereafter be convertible, in lieu of Partnership Common Units
into the kind and amount of different securities and other property (including
cash or any combination thereof) receivable upon the consummation of such
Transaction by a holder of that number of Partnership Common Units into which
one Series C-2 Partnership Preferred Unit was convertible immediately prior to
such Transaction, assuming such holder of Partnership Common Units (i) is not a
Person with which the Corporation consolidated or into which the Corporation
merged or which merged into the Corporation or to which such sale or transfer
was made, as the case may be ("Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of shares, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or amount of
shares, securities and other property (including cash) receivable upon such
Transaction is not the same for each Common Equity Share held immediately prior
to such Transaction by other than a Constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised
("Non-Electing Share"), then for the purpose of this paragraph (e) the kind and
amount of shares, securities and other property (including cash) receivable upon
such Transaction by each Non-Electing Share shall be deemed to be the kind and
amount so receivable per share by holders of a plurality of the Non-Electing
Shares). The Corporation shall not be a party to any Transaction unless the
terms of such Transaction are consistent with the provisions of this paragraph
(e), and it shall not consent or agree to the occurrence of any Transaction
until the Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the holders of the
Series C-2 Partnership Preferred Units that will contain provisions enabling the
holders of the Series C-2 Partnership Preferred Units that remain outstanding
after such Transaction to convert into the consideration
N-18
<PAGE>
received by holders of Partnership Common Units at the Conversion Price in
effect immediately prior to such Transaction. The provisions of this paragraph
(e) shall similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a distribution (or any other
distribution) on its Common Equity Shares (other than cash distributions or
distributions paid with respect to the Common Equity Shares after December
31, 1997 not in excess of the sum of the Corporation's cumulative
undistributed Funds from Operations at December 31, 1997, plus the
cumulative amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1997, minus the cumulative amount of
distributions accrued or paid in respect of the Corporation's Series C-2
Equity Shares or any other class or series of preferred stock of the
Corporation after the Grant Date); or
(ii) the Corporation shall authorize the granting to all holders
of Common Equity Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or warrants;
or
(iii) there shall be any reclassification of the Common Equity
Shares (other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or merger to which the Corporation is a party
(other than a merger in which the Corporation is the surviving entity) and
for which approval of any shareholders of the Corporation is required, or a
statutory share exchange, or a self tender offer by the Corporation for all
or substantially all of its outstanding shares of Common Stock or the sale
or transfer of all or substantially all of the assets of the Corporation as
an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Partnership shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series C-2 Partnership Preferred Units at
their addresses as shown on the records of the Partnership, as promptly as
possible, but at least 10 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such distribution, distribution or granting of rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Equity Shares of record to be entitled to such distribution,
distribution or rights, options or warrants are to be determined or (B) the date
on which such reclassification, consolidation, merger, statutory share exchange,
sale, transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Partnership
Common Units of record shall be entitled to exchange their Partnership Common
Units for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding
N-19
<PAGE>
up. Failure to give or receive such notice or any defect therein shall not
affect the legality or validity of the proceedings described in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Partnership shall promptly file with the Transfer Agent a certificate setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error.
Promptly after delivery of such certificate, the Partnership shall prepare a
notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the effective date of such adjustment and shall mail such
notice of such adjustment of the Conversion Price to the holder of each Series
C-2 Partnership Preferred Unit at such holder's last address as shown on the
records of the Partnership.
(h) In any case in which paragraph (d) of this Section 6 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Partnership may defer until the occurrence of such event (A)
issuing to the holder of any Series C-2 Partnership Preferred Unit converted
after such record date and before the occurrence of such event the additional
Partnership Common Units issuable upon such conversion by reason of the
adjustment required by such event over and above the Partnership Common Units
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount of cash in lieu of any fraction pursuant to
paragraph (c) of this Section 6.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to both paragraph (d) and paragraph (e) of this Section 6, only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Equity Shares, other than action described in this Section 6, that in the
opinion of the Managing General Partner would materially and adversely affect
the conversion rights of the holders of the Series C-2 Partnership Preferred
Units, the Conversion Price for the Series C-2 Partnership Preferred Units may
be adjusted, to the extent permitted by law, in such manner, if any, and at such
time, as the Managing General Partner may determine to be equitable in the
circumstances.
(k) The Partnership covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Partnership Common Units, for the purpose of effecting
conversion of the Series C-2 Partnership Preferred Units, the full number of
Partnership Common Units deliverable upon the conversion of all outstanding
Series C-2 Partnership Preferred Units not theretofore converted. For purposes
of this paragraph (k), the number of Partnership Common Units that shall be
deliverable upon the conversion of all
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<PAGE>
outstanding Series C-2 Partnership Preferred Units shall be computed as if at
the time of computation all such outstanding units were held by a single holder.
Any Partnership Common Units issued upon conversion of the Series C-2
Partnership Preferred Units shall be validly issued, fully paid and
nonassessable.
The Partnership shall use its best efforts to comply with all federal
and state securities laws and regulations thereunder in connection with the
issuance of any securities that the Partnership shall be obligated to deliver
upon conversion of the Series C-2 Partnership Preferred Units. The certificates
evidencing such securities shall bear such legends restricting transfer thereof
in the absence of registration under applicable securities laws or an exemption
therefrom as the Partnership may in good faith deem appropriate.
(l) The Partnership will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of
Partnership Common Units or other securities or property on conversion of the
Series C-2 Partnership Preferred Units pursuant hereto; provided, however, that
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the Partnership shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of Partnership Common
Units or other securities or property in a name other than that of the holder of
the Series C-2 Partnership Preferred Units to be converted, and no such issue or
delivery shall be made unless and until the Person requesting such issue or
delivery has paid to the Partnership the amount of any such tax or established,
to the reasonable satisfaction of the Partnership, that such tax has been paid.
7. Redemption at the Option of the Holder.
(a) At any time after August 12, 2008, the holders of Series C-2
Partnership Preferred Units shall have the right at any time that the
Corporation's Common Stock has a Current Market Price at or below the Conversion
Price per unit, to require the Partnership, to the extent the Partnership shall
have funds legally available therefor, to redeem any or all of the Series C-2
Partnership Preferred Units held by such holder at a repurchase price payable,
at the option of the Partnership, in either (i) cash or (ii) such number of
Partnership Common Units that shall be convertible into shares of the
Corporation's Common Stock as shall have a Current Market Price in the aggregate
on the day prior to the day such holder gives notice pursuant to Section 7(b) of
its intention to redeem, equal to in either case, 100% of the liquidation
preference thereof plus accrued and unpaid distributions whether or not
declared, if any, to the date of repurchase or the date payment is made
available (in the aggregate, the "Redemption Payment").
(b) For purposes of this Section 7, redemption at the option of the
holder shall be deemed to occur upon receipt by the Partnership of written
notice that the holder of Series C-2 Partnership Preferred Units wishes to
tender units to be redeemed. The holders of such units to be redeemed shall
then have 30 days from the date of such notice to deliver such units to the
Transfer Agent. Upon the surrender of the certificate or certificates of Series
C-2 Partnership Preferred Units to be redeemed, duly endorsed or assigned to the
Partnership or in blank, at the office of the Transfer
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<PAGE>
Agent, the Partnership shall promptly, either (i) by wire transfer of
immediately available funds to such holder, as directed by such holder, send an
amount equal to the Redemption Payment in respect of all Series C-2 Partnership
Preferred Units or portions thereof so tendered or (ii) issue and deliver to
such holder, or on his or her written order, a certificate or certificates for
the number of full Partnership Common Units issuable in respect of all Series C-
2 Partnership Preferred Units or portions thereof so tendered.
8. Status of Reacquired Series C-2 Partnership Preferred Units.
All Series C-2 Partnership Preferred Units which shall have been
granted and reac quired in any manner by the Partnership shall be deemed
cancelled.
9. Ranking.
The Series C-2 Partnership Preferred Units shall with respect to
distribution rights and rights on liquidation, dissolution and winding up of the
affairs of the Partnership, rank pari passu to the Series A Partnership
----------
Preferred Units, the Series B Partnership Preferred Units, the Series C
Partnership Preferred Units, the Series C-1 Partnership Preferred Units, the
Series D Partnership Preferred Units and the Series D-1 Partnership Preferred
Units.
Each Series C-2 Partnership Preferred Unit shall be identical in all
respects to each other Series C-2 Partnership Preferred Unit.
Any class or series of Partnership Units or Investor Unit Rights shall
be deemed to rank:
(a) prior or senior to the Series C-2 Partnership Preferred Units, as
to the payment of distributions and as to distributions of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
such class or series of Partnership Units or Investor Unit Rights, as the case
may be, shall be entitled to the receipt of distributions or of amounts
distributable upon the liquidation, dissolution and winding up of the
Partnership in preference or priority to the holders of Series C-2 Partnership
Preferred Units ("Senior Units");
(b) on a parity with the Series C-2 Partnership Preferred Units, as to
the payment of distributions and as to distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, whether or not the
distribution rates, distribution payment dates or redemption or liquidation
prices per unit or other denomination thereof shall be different from those of
the Series C-2 Partnership Preferred Units, if the holders of such class or
series of Partnership Units or Investor Unit Rights, as the case may be, and the
Series C-2 Partnership Preferred Units shall be entitled to the receipt of
distributions and of amounts distributable upon the liquidation, dissolution and
winding up of the Partnership in proportion to their respective amounts of
accumulated and unpaid distributions per unit or other denomination or
liquidation preferences, without preference or priority one over the other
("Parity Units");
N-22
<PAGE>
(c) junior to the Series C-2 Partnership Preferred Units, as to the
payment of distributions or as to the distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, if the holders of
Series C-2 Partnership Preferred Units shall be entitled to receipt of
distributions or of amounts distributable upon the liquidation, dissolution and
winding up of the Partnership, in preference or priority to the holders of such
class or series of Partnership Units or Investor Unit Rights ("Junior Units");
and
(d) junior to the Series C-2 Partnership Preferred Units, as to the
payment of distributions and as to the distribution of assets upon the
liquidation, dissolution and winding up of the Partnership, if such class or
series of Partnership Units is Partnership Common Units or Class A Investor Unit
Rights, as the case may be, or if the holders of Series C-2 Partnership
Preferred Units shall be entitled to receipt of distributions and of amounts
distributable upon the liquidation, dissolution and winding up of the
Partnership, in preference or priority to the holders of such class or series of
Partnership Units or Investor Unit Rights ("Fully Junior Units").
10. Allocations.
(a) For each partnership year, each Holder of a Share of Series C-2
Preferred Units shall be allocated Net Income of the Partnership in an amount
equal to the amount of distributions made with respect to such Holder's Series
C-2 Preferred Units pursuant to Section 3 hereof during such Partnership Year.
In no event shall items of Net Loss of the Partnership be allocated to any
Holder of Series C-2 Preferred Units unless such allocation is required by
Section 704(b) of the Code or Section 10(b) of this Exhibit N.
---------
(b) If any Series C-2 Partnership Preferred Units are redeemed
pursuant to the terms of this Exhibit N, for the Partnership Year that includes
---------
such redemption (and, if necessary, for subsequent Partnership Years) (a) gross
income and gain (in such relative proportions as the Managing General Partner in
its discretion shall determine) shall be allocated to the Managing General
Partner and such Special Limited Partner(s) to the extent that the redemption
amounts paid or payable with respect to the Series C-2 Partnership Preferred
Units so redeemed (or treated as redeemed) exceeds the aggregate Capital Account
Balances (net of liabilities assumed or taken subject to by the Partnership) per
Series C-2 Partnership Preferred Unit allocable to the Series C-2 Partnership
Preferred Units so redeemed (or treated as redeemed) and (b) deductions and
losses (in such relative proportions as the Managing General Partner in its
discretion shall determine) shall be allocated to the Managing General Partner
and such Special Limited Partner(s) to the extent that the aggregate Capital
Account Balances (net of liabilities assumed or taken subject to by the
Partnership) per Series C-2 Partnership Preferred Unit allocable to the Series
C-2 Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the
redemption amount paid or payable with respect to the Series C-2 Partnership
Preferred Units so redeemed (or treated as redeemed).
N-23
<PAGE>
11. Voting and Consent Rights.
(a) Holders of Series C-2 Partnership Preferred Units shall have only
those voting and consent rights specified in Section 7.3.B of the Agreement and
Section 11(b) hereof.
(b) So long as any Series C-2 Partnership Preferred Units are
outstanding, in addition to any other vote or consent of holders of Series C-2
Partnership Preferred Units required by law or by the Agreement, the affirmative
vote or consent of holders of at least 50% of the outstanding Series C-2
Partnership Preferred Units, voting or consenting as a separate class, given in
Person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating
any amendment or alteration of any of the provisions of this Partnership Unit
Designation or the Agreement that materially and adversely affects the material
powers, rights or preferences of the holders of the Series C-2 Partnership
Preferred Units; provided, however, that the amendment of the Agreement so as to
-------- -------
authorize, create, issue or grant any class or series of Partnership Units,
including, without limitation, any such Partnership Units that may have rights
senior or superior to the Series C-2 Partnership Preferred Units, shall be
deemed not to materially and adversely affect the material powers, rights or
preferences of the holders of Series C-2 Partnership Preferred Units.
(c) Except as otherwise required by applicable law or as set forth
herein or in the Agreement, the holders of the Series C-2 Partnership Preferred
Units shall not have any relative, participating, optional or other special
voting rights or powers with respect to any matter, and the consent or approval
of the holders thereof shall not be required for the taking of any action by the
Partnership.
12. Information Rights.
Holders of Series C-2 Partnership Preferred Units shall have only the
information rights specified in Section 8.5.A and Section 9.3 of the Agreement.
13. Restrictions on Transfer.
The Series C-2 Partnership Preferred Units are subject to the
restrictions on transfer set forth in Article 11 of the Agreement.
14. Ambiguity.
In the case of an ambiguity in the application of any of the
provisions of this Partnership Unit Designation, the Managing General Partner
shall have the power to determine the application of the provisions of this
Partnership Unit Designation with respect to any situation based on its
reasonable belief, understanding or knowledge of the circumstances.
N-24
<PAGE>
15. Partnership Records.
The Managing General Partner shall amend Exhibit A to the Agreement
---------
from time to time to the extent necessary to reflect accurately the grant and
any subsequent redemption of, or other event having an effect on the ownership
of, Series C-2 Partnership Preferred Units.
16. Governing Law.
This Exhibit N shall be construed and enforced in accordance with, and
---------
governed by, the laws of the State of Delaware, without regard to principles of
conflicts of law.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
N-25
<PAGE>
EXHIBIT 10.8
AMENDMENT NO. 9
AMENDMENT NO. 9, dated as of December 3, 1998 (this "AMENDMENt"),
between TrizecHahn Centers Inc., a California corporation ("THCI"), The Rouse
Company, a Maryland corporation ("ROUSE"), and Westfield America, Inc., a
Missouri corporation ("WESTFIELD" and, together with Rouse the "ACQUIRORS").
W I T N E S S E T H:
--------------------
WHEREAS, THCI, Rouse and Westfield are parties to an Asset Purchase
Agreement, dated as of April 6, 1998, as amended by the following amendments:
Amendment No. 1 dated as of July 31, 1998, Amendment No. 2 dated as of August
31, 1998, Amendment No. 3 dated as of September 22, 1998, Amendment No. 4 dated
as of September 25, 1998, Amendment No. 5 dated as of October 7, 1998, Amendment
No. 6 dated as of October 22, 1998, Amendment No. 7 dated as of October 30,1998
and Amendment No. 8 dated as of November 17, 1998 (together, the "ASSET PURCHASE
AGREEMENT"; terms not otherwise defined herein are defined in the Asset Purchase
Agreement);
WHEREAS, THCI, Rouse and Westfield desire to further amend the Asset
Purchase Agreement as set forth in this Amendment; and
WHEREAS, pursuant to Section 12.09 of the Asset Purchase Agreement,
the Asset Purchase Agreement may be amended by the parties hereto.
NOW THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
AMENDMENTS TO THE PURCHASE AGREEMENT
SECTION 1.0 Bridgewater Commons. Pursuant to that certain Purchase
and Sale Agreement (the "Bridgewater Sale Agreement"), dated July 31, 1998,
between Bridgewater Commons Associates ("BCA") and Rouse-Bridgewater Commons,
LLC ("Rouse-Bridgewater"), BCA has agreed to sell the Bridgewater Property to
Rouse-Bridgewater. Pursuant to Section 7 of the Bridgewater Sale Agreement,
except as provided to the contrary in the Bridgewater Sale Agreement, all
<PAGE>
agreements, covenants, apportionments, representations, warranties,
indemnifications and other matters pertaining to the Bridgewater Property
contained in the Asset Purchase Agreement are incorporated in the Bridgewater
Sale Agreement.
Pursuant to Agreement and Articles of Merger dated December 3, 1998
and filed on December 3, 1998, BCA was merged with and into Bridgewater Commons
Mall, LLC, a Maryland limited liability company ("BCM-LLC"). As of the date
hereof, the sole member of BCM-LLC is Bridgewater Commons Associates, a New
Jersey general partnership formed immediately after the merger ("New BCA") which
is wholly-owned by THCI and its Affiliates. New BCA shall constitute a "THCI
Partnership" and BCM-LLC shall constitute a "Partnership" for purposes of the
Asset Purchase Agreement (and the provisions thereof incorporated into the
Bridgewater Sale Agreement). In addition, the 100% membership interest held by
New BCA in BCM-LLC shall constitute a "Partnership Interest" for purposes of the
Asset Purchase Agreement (and the provisions thereof incorporated into the
Bridgewater Sale Agreement).
ARTICLE II
GENERAL PROVISIONS
SECTION 2.01 Authority; Effect on Asset Purchase Agreement.
(a) THCI hereby represents as follows:
(i) THCI has all necessary corporate power and authority to
execute and deliver this Amendment, to perform its obligations under the
Asset Purchase Agreement (as amended by this Amendment) and to consummate
the transactions contemplated by the Asset Purchase Agreement (as amended
by this Amendment).
(ii) The execution and delivery of this Amendment by THCI
and the consummation by THCI of the transactions contemplated by the Asset
Purchase Agreement have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of THCI are
necessary to authorize this Amendment or to consummate the transactions
contemplated by the Asset Purchase Agreement (as amended by this
Amendment).
<PAGE>
(iii) This Amendment has been duly and validly executed and
delivered by THCI and, assuming the due authorization, execution and
delivery by Rouse and Westfield, the Asset Purchase Agreement (as amended
by this Amendment) constitutes the legal, valid and binding obligation of
THCI, enforceable against THCI in accordance with its terms (except insofar
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or principles governing the availability of equitable remedies).
(b) Rouse and Westfield each, severally but not jointly, hereby
represents as follows:
(i) Such Acquiror has all necessary corporate power and
authority to execute and deliver this Amendment, to perform its
obligations under the Asset Purchase Agreement (as amended by this
Amendment) and to consummate the transactions contemplated by the Asset
Purchase Agreement (as amended by this Amendment).
(ii) The execution and delivery of this Amendment by such
Acquiror and the consummation by them of the transactions contemplated by
the Asset Purchase Agreement (as amended by this Amendment) have been duly
and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of such Acquiror is necessary to
authorize this Amendment or to consummate the transactions contemplated by
the Asset Purchase Agreement (as amended by this Amendment).
(iii) This Amendment has been duly and validly executed and
delivered by such Acquiror and, assuming the due authorization, execution
and delivery by THCI, the Asset Purchase Agreement (as amended by this
Amendment) constitutes the legal, valid and binding obligation of such
Acquiror, enforceable against such Acquiror in accordance with its terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or principles governing the availability of equitable
remedies).
(c) Except as amended hereby, the provisions of the Asset
Purchase Agreement are and shall remain in full force and effect.
<PAGE>
SECTION 2.02 Counterparts. This Amendment may be executed in two or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.
SECTION 2.03 Governing Law. This Amendment shall be governed in the
same manner as provided in Section 12.10 of the Asset Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, THCI, Rouse and Westfield have caused this Amendment to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
TRIZECHAHN CENTERS INC.
By: /s/ Neil Jacob
---------------------------------
Name: Neil Jacob
Title: Vice President
THE ROUSE COMPANY
By: /s/ Richard E. Galen
---------------------------------
Name: Richard E. Galen
Title: Vice President
WESTFIELD AMERICA, INC.
By: /s/ Irv Hepner
---------------------------------
Name: Irv Hepner
Title: Secretary
<PAGE>
AMENDMENT NO. 10
AMENDMENT NO. 10, dated as of December 9, 1998 (this "Amendment"),
between TrizekHahn Centers Inc., a California corporation ("THCI"), and The
Rouse Company, a Maryland corporation ("Rouse"), and Westfield America, Inc., a
Missouri corporation ("Westfield" and, together with Rouse, the "Acquirors").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, THCI, Rouse and Westfield are parties to an Asset Purchase
Agreement, dated as of April 6, 1998, as amended by Amendment No. 1 dated as of
July 31, 1998, by the letter agreement dated as of July 31, 1998, by Amendment
No. 2 dated as of August 31, 1998, by Amendment No. 3 dated as of September 23,
1998, by Amendment No. 4 dated as of September 25, 1998, by Amendment No. 5
dated as of October 7, 1998, by Amendment No. 6 dated as of October 22, 1998, by
Amendment No. 7 dated as of October 30, 1998, by Amendment No. 8 dated November
17, 1998 and by Amendment No. 9 dated December 3, 1998 (the "Asset Purchase
Agreement"; terms defined in the Asset Purchase Agreement and not otherwise
defined herein being used herein as therein defined);
WHEREAS, THCI, Rouse and Westfield desire to amend the Asset Purchase
Agreement as set forth in this Amendment; and
WHEREAS, pursuant to Section 12.09 of the Asset Purchase Agreement,
the Asset Purchase Agreement may be amended by the parties hereto.
NOW THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
AMENDMENTS TO THE ASSET PURCHASE AGREEMENT
Section 1.01 1% Capital Mall Company Partnership Interest.
(a) On October 7, 1998 (the "Initial Capital Mall Closing Date"),
THCI sold a 49% Partnership Interest in Capital Mall Company to Capital Shopping
Center LLC (a wholly owned subsidiary of Westfield). On or about December 8,
1998, THCI will sell its remaining 1% Partnership Interest in Capital Mall
Company (the "1% Interest") to Capital Shopping Center Inc., a Delaware
corporation ("CSCI") (a wholly owned subsidiary of Westfield). Notwithstanding
anything in the Asset Purchase Agreement to the contrary, for purposes of
calculating prorations pursuant to Section 2.07 of the Asset Purchase Agreement,
the
<PAGE>
sale of the 1% Interest to CSCI shall be deemed to have occurred on the Initial
Capital Mall Closing Date.
(b) At the Closing for the 1% Interest, Westfield shall cause
CSCI to pay to THCI the Adjusted Allocated Purchase Price for the 1% Interest
(which THCI and Westfield have agreed is $44,781, subject to the final
calculation of prorations pursuant to the Asset Purchase Agreement), plus 7%
interest on said Adjusted Allocated Purchase Price from the Initial Capital Mall
Closing Date to the date of said Closing.
ARTICLE II
GENERAL PROVISIONS
Section 2.01 Authority; Effect on Asset Purchase Agreement.
(a) THCI hereby represents as follows:
(i) THCI has all necessary corporate power and authority to
execute and deliver this Amendment, to perform its obligations under the
Asset Purchase Agreement (as amended by this Amendment) and to consummate
the transactions contemplated by the Asset Purchase Agreement (as amended
by this Amendment).
(ii) The execution and delivery of this Amendment by THCI
and the consummation by THCI of the transactions contemplated by the Asset
Purchase Agreement (as amended by this Amendment) have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of THCI are necessary to authorize this Amendment
or to consummate the transactions contemplated by the Asset Purchase
Agreement (as amended by this Amendment).
(iii) This Amendment has been duly and validly executed and
delivered by THCI and, assuming the due authorization, execution and
delivery by Rouse and Westfield, the Asset Purchase Agreement (as amended
by this Amendment) constitutes the legal, valid and binding obligation of
THCI, enforceable against THCI in accordance with its terms (except insofar
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or principles governing the availability of equitable remedies).
2
<PAGE>
(b) Rouse and Westfield each, severally but not jointly, hereby
represents as follows:
(i) Such Acquiror has all necessary corporate power and
authority to execute and deliver this Amendment, to perform its obligations
under the Asset Purchase Agreement (as amended by this Amendment) and to
consummate the transactions contemplated by the Asset Purchase Agreement)
as amended by this Amendment).
(ii) The execution and delivery of this Amendment by such
Acquiror and the consummation by them of the transactions contemplated by
the Asset Purchase Agreement (as amended by this Amendment) have been duly
and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Acquiror are necessary to authorize
this Amendment or to consummate the transactions contemplated by the Asset
Purchase Agreement (as amended by this Amendment).
(iii) This Amendment has been duly and validly executed and
delivered by such Acquiror and, assuming the due authorization, execution
and delivery by THCI, the Asset Purchase Agreement (as amended by this
Amendment) constitutes the legal, valid and binding obligation of such
Acquiror, enforceable against such Acquiror in accordance with its terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganiza tion, moratorium or similar laws affecting
creditors' rights generally, or principles governing the availability of
equitable remedies).
(c) Except as amended hereby, the provisions of the Asset
Purchase Agreement are and shall remain in full force and effect.
Section 2.02 Counterparts. This Amendment may be executed in two or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Amendment by telecopier shall be effective as
delivery of a manually executed counterpart of this Amendment.
[BALANCE OF THE PAGE INTENTIONALLY LEFT BLANK]
3
<PAGE>
Section 2.03 Governing Law. This Amendment shall be governed in the
same manner as provided in Section 12.10 of the Asset Purchase Agreement.
IN WITNESS WHEREOF, THCI, Rouse and Westfield have caused this
Amendment to be executed as of the date first written above by their respective
officers "hereunto duly authorized."
TRIZECHAHN CENTERS INC.
By: /s/ Neil Jacob
-----------------------
Name: Neil Jacob
Title: Vice President
THE ROUSE COMPANY
By: /s/ Richard E. Galen
-----------------------
Name: Richard E. Galen
Title: Vice President
WESTFIELD AMERICA, INC.
By: /s/ Irv Hepner
-----------------------
Name: Irv Hepner
Title: Secretary
4
<PAGE>
Section 2.03 Governing Law. This Amendment shall be governed in the
same manner as provided in Section 12.10 of the Asset Purchase Agreement.
IN WITNESS WHEREOF, THCI, Rouse and Westfield have caused this
Amendment to be executed as of the date first written above by their respective
officers "hereunto duly authorized."
TRIZECHAHN CENTERS INC.
By: /s/ Neil Jacob
-----------------------
Name: Neil Jacob
Title: Vice President
THE ROUSE COMPANY
By: /s/ Richard E. Galen
-----------------------
Name: Richard E. Galen
Title: Vice President
WESTFIELD AMERICA, INC.
By: /s/ Irv Hepner
-----------------------
Name: Irv Hepner
Title: Secretary
5
<PAGE>
Section 2.03 Governing Law. This Amendment shall be governed in the
same manner as provided in Section 12.10 of the Asset Purchase Agreement.
IN WITNESS WHEREOF, THCI, Rouse and Westfield have caused this
Amendment to be executed as of the date first written above by their respective
officers "hereunto duly authorized."
TRIZECHAHN CENTERS INC.
By: /s/ Neil Jacob
-----------------------
Name: Neil Jacob
Title: Vice President
THE ROUSE COMPANY
By: /s/ Richard E. Galen
-----------------------
Name: Richard E. Galen
Title: Vice President
WESTFIELD AMERICA, INC.
By: /s/ Irv Hepner
-----------------------
Name: Irv Hepner
Title: Secretary
6
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
December 28, 1998
FOR MORE INFORMATION,
PLEASE CONTACT,
Patricia Healey, (310) 445-2407
WESTFIELD AMERICA, INC. (NYSE:WEA) TO RAISE $75 MILLION
LOS ANGELES, CA DECEMBER 28, 1998: Westfield America, Inc. (WEA:NYSE) announced
today that it will issue $75 million in convertible preferred stock in a private
placement.
The preferred stock will be convertible into common stock at the equivalent of
$18.00 per share and will have a coupon equal to Westfield America's common
stock dividends or 8.5%, whichever is higher. Of this preferred stock, $25
million will be held by Westfield America Trust, an affiliate of Westfield
America, but will not be convertible into common stock until approved by
Westfield America's shareholders.
The preferred stock and the common stock into which it may be converted have not
been registered under the Securities Act of 1933, as amended, and may not be
offered or sold in the United States absent registration or an applicable
exemption from registration requirements.
Of the $75 million raised, $40 million will be used to acquire an additional 50%
interest in Santa Anita Fashion Park, giving Westfield America an 89.7% interest
in the super regional shopping center located in Arcadia, CA. The remaining $35
million will be used to reduce outstandings under Westfield America's corporate
credit facility.
