UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 11
TO
SCHEDULE 13D
Under the Securities Exchange Act of 1934
CENTER TRUST, INC.
(formerly, Center Trust Retail Properties, Inc.;
formerly, Alexander Haagen Properties, Inc.)
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
40443E100
(CUSIP Number)
Scott D. Hoffman, Esq. Marjorie L. Reifenberg, Esq.
Lazard Freres & Co. LLC Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza LF Strategic Realty Investors L.P.
New York, NY 10020 Prometheus Western Retail Trust
(212) 632-6000 Prometheus Western Retail, L.L.C.
30 Rockefeller Plaza
New York, NY 10020
(212) 632-6000
with a copy to:
Mario Ponce, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
(212) 455-2000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
November 17, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box /_/.
<PAGE>
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act.
(Continued on following pages)
-2-
<PAGE>
SCHEDULE 13D
CUSIP No. 40443E100 Page 3 of 24 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lazard Freres Real Estate Investors L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF
SHARES 15,666,666
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY None
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 15,666,666
WITH
10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,666,666
-3-
<PAGE>
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59.9%
14 TYPE OF REPORTING PERSON
OO
-4-
<PAGE>
SCHEDULE 13D
CUSIP No. 40443E100 Page 5 of 24 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lazard Freres Real Estate Investors L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF
SHARES 15,666,666
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY None
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 15,666,666
WITH
10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,666,666
-5-
<PAGE>
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59.9%
14 TYPE OF REPORTING PERSON
OO
-6-
<PAGE>
SCHEDULE 13D
CUSIP No. 40443E100 Page 7 of 24 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LF Strategic Realty Investors L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 15,666,666
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY None
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 15,666,666
WITH
10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,666,666
-7-
<PAGE>
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59.9%
14 TYPE OF REPORTING PERSON
PN (limited partnership)
-8-
<PAGE>
SCHEDULE 13D
CUSIP No. 40443E100 Page 9 of 24 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prometheus Western Retail Trust
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
7 SOLE VOTING POWER
NUMBER OF
SHARES 15,666,666
BENEFICIAL 8 SHARED VOTING POWER
LY OWNED
BY None
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 15,666,666
WITH
10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,666,666
-9-
<PAGE>
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59.9%
14 TYPE OF REPORTING PERSON
OO
-10-
<PAGE>
SCHEDULE 13D
CUSIP No. 40443E100 Page 11 of 24 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prometheus Western Retail, LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 15,666,666
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY None
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 15,666,666
WITH
10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,666,666
-11-
<PAGE>
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59.9%
14 TYPE OF REPORTING PERSON
OO
-12-
<PAGE>
Page 13 of 24
This Amendment No. 11, dated November 17, 1999, is filed by Lazard
Freres & Co. LLC, a New York limited liability company ("Lazard"), Lazard
Freres Real Estate Investors L.L.C., a New York limited liability company
("LFREI"), LF Strategic Realty Investors L.P., a Delaware limited partnership
("LF Realty"), Prometheus Western Retail Trust, a Maryland real estate
investment trust ("Trust"), and Prometheus Western Retail, L.L.C., a Delaware
limited liability company ("Prometheus", and together with Lazard, LFREI, LF
Realty, and Trust, the "Reporting Persons"). Capitalized terms used herein
but not defined shall have the meanings ascribed thereto in the Schedule 13D
dated June 10, 1997, as amended, filed by Prometheus and LF Realty (as
amended, the "Initial Schedule 13D"). This Amendment hereby amends and
supplements the Initial Schedule 13D. All items not described herein remain
as previously reported in the Initial Schedule 13D.
Item 2. Identity and Background
(a), (b), (c) and (f). Lazard joins the other Reporting Persons in
filing this Statement. Lazard continues to disclaim any beneficial ownership
of any of the shares of Common Stock reported in this Statement. The
principal business office of Lazard is 30 Rockefeller Plaza, New York, New
York, 10020. Lazard, a New York limited liability company, is the managing
member of LFREI. Lazard's activities consist principally of financial
advisory services. The name, business address and principal occupation or
employment of the persons that could be viewed as controlling Lazard are set
forth on Schedule 1 hereto and are incorporated by reference herein.
The name, business address and principal occupation or employment
of the executive officers of LFREI and Trust are set forth on Schedule 2
hereto and are incorporated by reference herein. Each executive officer
listed on Schedule 2 is a citizen of the United States.
(d) and (e). During the last five years, no Reporting Person nor,
to the best knowledge of any Reporting Person, any of the persons listed on
Schedules 1 or 2 (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) nor (ii) has been a party to any
civil proceeding of a judicial or administrative body of competent
jurisdiction, and is or was, as a result of such proceeding, subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
Item 4. Purpose of Transaction
Prometheus may contemplate from time to time the disposition of all
or a portion of the securities described in this Statement subject to any
applicable contractual limitations.
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<PAGE>
Page 14 of 24
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
As previously reported in Amendment No. 10 to the Schedule 13D
dated June 10, 1997, Prometheus, Merrill Lynch International ("MLI") and
Merrill Lynch International Bank Limited ("MLIB") entered into a facility
agreement dated May 27, 1998 (as amended June 30, 1999) (the "Old Facility"),
in connection with which shares of common stock, par value $0.01 per share,
of Center Trust Inc. (the "Common Stock") owned by Prometheus were pledged as
security and deposited into a collateral account set up by MLI (the "Old
Collateral Account").
As discussed below, 13,166,666 shares of Common Stock owned by
Prometheus have been pledged as collateral under a credit facility certain of
the proceeds of which were used, together with cash on hand, to repay the Old
Facility.
Pursuant to the terms of a facility letter, an amendment thereto,
and the terms sheet thereto, dated November 17, 1999 (the "Facility"), as of
November 17, 1999 a credit facility was made available by MLI to Prometheus,
Commonwealth Atlantic Properties Investors Trust, a Maryland real estate
investment trust ("CAPIT"), and Prometheus Investment Holding Corp., a
Delaware corporation ("PIHC", and together with Prometheus and CAPIT, the
"Borrowers"), jointly and severally as co-borrowers. In accordance with the
terms of the Facility, LF Realty and Prometheus AAPT Holdings, L.L.C., a
Delaware limited liability company ("Holdings", and together with the LF
Realty, the "Guarantors," and together with the Borrowers and LF Realty, the
"Obligors") entered into a Collateralised Guarantee with MLI (the
"Collateralised Guarantee") on November 17, 1999 pursuant to which the
Guarantors became co-guarantors jointly and severally of the obligations of
the Borrowers arising under the Facility. The total amount available to the
Borrowers under the Facility is $44,000,000.
Certain of the proceeds of the Facility were used, together with
cash on hand, to repay the Old Facility. In accordance with the terms of the
Facility, Prometheus, LF Realty, and Holdings (together, the "Pledgors") also
entered into a Custodian Agreement with MLI (the "Custodian Agreement") on
November 17, 1999. Pursuant to the terms of the Custodian Agreement and as
contemplated by the Facility, MLI set up a collateral account (the
"Collateral Account") to hold 13,166,666 shares of Common Stock owned by
Prometheus and certain other securities owned by LF Realty and Holdings. On
November 17, 1999, (i) in connection with the repayment of the Old Facility,
MLI released from the Old Collateral Account the 13,406,434 shares of Common
Stock then held therein and (ii) the Pledgors deposited 13,166,666 shares of
Common Stock into the Collateral Account. Under the terms of the Custodian
Agreement, upon the receipt of specific instructions from the Pledgors, MLI
-14-
<PAGE>
Page 15 of 24
may, if applicable, exercise voting rights with respect to or sell the
securities, including the shares of Common Stock, deposited with MLI. MLI
has a general lien on all securities, including shares of Common Stock, held
by it as security for the obligations of the Pledgors under the Custodian
Agreement for amounts becoming due or owing for safekeeping and administration.
If the Pledgors fail to discharge any of their obligations under the Custodian
Agreement when due, MLI is entitled to sell the securities, including the
shares of Common Stock, held by it and apply the proceeds of such sale
towards the discharge of such obligations.
Pursuant to the terms of the Facility, the Obligors have pledged in
favor of MLI all of Obligors' right, title and interest in and to the
securities, including the 13,166,666 shares of Common Stock, held in the
Collateral Account, and all dividends, distributions and interest on and
other proceeds of such securities. During the term of the Facility and until
the Obligors' obligations under the Facility have been paid in full (i) none
of the monies from time to time standing to the credit of the Collateral
Account may be withdrawn, assigned or otherwise disposed of or encumbered
except with MLI's prior written consent or as otherwise specifically provided
in the Facility, (ii) the Obligors may not create or have outstanding any
call option, pledge, assignment, transfer, hypothecation, mortgage, charge,
encumbrance, security interest or lien on or affecting any of the securities,
including the 13,166,666 shares of Common Stock, credited to the Collateral
Account except with MLI's prior written consent or as contemplated by the
Facility or the Custodian Agreement, (iii) the 13,166,666 shares of Common
Stock may not be released and (iv) the loan amounts outstanding under the
Facility will become due upon the sale of the 13,166,666 shares of Common
Stock.
All references to the Facility, the Collateralised Guarantee and
the Custodian Agreement are qualified in their entirety by the full text of
such agreements, copies of which are attached hereto as Exhibits 2, 3, 4 and
5 and are incorporated by reference herein.
Item 7. Material to be Filed as Exhibits
Exhibit 1 Joint Filing Agreement.
Exhibit 2 Letter and Terms Sheet Agreement dated as of November 17,
1999, among Prometheus, CAPIT, PIHC, LF Realty, Holdings,
MLI and MLIB.
Exhibit 3 Amendment to the Letter and Terms Sheet Agreement.
-15-
<PAGE>
Page 16 of 24
Exhibit 4 Collateralised Guarantee dated as of November 17, 1999
among the Guarantors and MLI.
Exhibit 5 Custodian Agreement dated as of November 17, 1999, among
the Pledgors and MLI.
-16-
<PAGE>
Page 17 of 24
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
LAZARD FRERES & CO. LLC
By: /s/ Scott D. Hoffman
Name: Scott D. Hoffman
Title: Managing Director
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
LAZARD FRERES REAL ESTATE INVESTORS
L.L.C.
By: /s/ John A. Moore
Name: John A. Moore
Title: Chief Financial Officer
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
LF STRATEGIC REALTY INVESTORS L.P.
By: Lazard Freres Real Estate Investors
L.L.C., as general partner
By: /s/ John A. Moore
Name: John A. Moore
Title: Chief Financial Officer
-17-
<PAGE>
Page 18 of 24
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
PROMETHEUS WESTERN RETAIL TRUST
By: /s/ John A. Moore
Name: John A. Moore
Title: Vice President
and Chief Financial Officer
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
PROMETHEUS WESTERN RETAIL, L.L.C.
By: Prometheus Western Retail Trust,
its sole member
By: /s/ John A. Moore
Name: John A. Moore
Title: Vice President
and Chief Financial Officer
-18-
<PAGE>
Page 19 of 24
SCHEDULE 1
Set forth below are the names and positions of each person that could
be viewed as controlling Lazard Freres & Co. LLC. Except as otherwise
indicated, the principal occupation of each person controlling Lazard Freres
& Co. LLC is general member of Lazard Freres & Co. LLC, the business address
of each such person is 30 Rockefeller Plaza, New York, New York 10020 and
each person is a citizen of the United States. Lazard Groupement d'Interet
Economique, a partnership organized under French law whose principal business
is investments (including its investment in Lazard Freres & Co. LLC), and
Lazard Partners Limited Partnership, a Delaware limited partnership whose
principal business is serving as a holding company, also serve as general
members of Lazard Freres & Co. LLC.
Business Address and
Principal Occupation
Name of Controlling Person (if other than as indicated above) Citizenship
- -------------------------- ---------------------------------- -----------
Michel A. David-Weill France
John C. Adams Lazard Freres & Co. LLC
200 West Madison
Suite 2200
Chicago, IL 60606
Eileen D. Alexanderson
William R. Araskog
Robert A. Baer, Jr.
F. Harlan Batrus
Gerardo Braggiotti Lazard Freres & Cie. Italy
121 Boulevard Haussmann
75382 Paris Cedex 08 France
Patrick J. Callahan, Jr. Lazard Freres & Co. LLC
200 West Madison
Suite 2200
Chicago, IL 60606
John V. Doyle
Thomas F. Dunn
Norman Eig
-19-
<PAGE>
Page 20 of 24
Business Address and
Principal Occupation
Name of Controlling Person (if other than as indicated above) Citizenship
- -------------------------- ---------------------------------- -----------
Richard P. Emerson
Peter R. Ezersky
Eli H. Fink
Jonathan F. Foster
Albert H. Garner
James S. Gold
Steven J. Golub
Robert L. Goodman
Herbert W. Gullquist
Thomas R. Haack
Paul J. Haigney
Ira O. Handler
Yasushi Hatakeyama Japan
Melvin L. Heineman
Scott D. Hoffman
Robert E. Hougie United
Kingdom
Kenneth M. Jacobs
James L. Kempner
Lee O. Kraus, Jr.
Sandra A. Lamb
Robert C. Larson
William R. Loomis, Jr.
-20-
<PAGE>
Page 21 of 24
Business Address and
Principal Occupation
Name of Controlling Person (if other than as indicated above) Citizenship
- -------------------------- ---------------------------------- -----------
J. Robert Lovejoy
Matthew J. Lustig
Thomas E. Lynch
Mark T. McMaster
Michael G. Medzigian
Richard W. Moore, Jr.
Robert P. Morgenthau
Steven J. Niemczyk
James A. Paduano
Louis Perlmutter
Russell E. Planitzer
Steven L. Rattner
John R. Reinsberg
L. Gregory Rice
Barry W. Ridings
Luis E. Rinaldini United
Kingdom
Bruno M. Roger Lazard Capital Markets France
121 Boulevard Haussmann
75382 Paris Cedex 08 France
Michael S. Rome
Stephen H. Sands
Frank A. Savage
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<PAGE>
Page 22 of 24
Business Address and
Principal Occupation
Name of Controlling Person (if other than as indicated above) Citizenship
- -------------------------- ---------------------------------- -----------
Gary S. Shedlin
David A. Tanner
David L. Tashjian
J. Mikesell Thomas Lazard Freres & Co. LLC
200 West Madison
Suite 2200
Chicago, IL 60606
Michael P. Triguboff Lazard Asset Management Australia
Pacific Co.
Level 39
Gateway
1 Macquarie Place
Sydney NSW 2000
Australia
Donald A. Wagner
Ali E. Wambold
Michael A. Weinstock
Antonio F. Weiss
Alexander E. Zagoreos
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<PAGE>
Page 23 of 24
SCHEDULE 2
The business address for each of the following persons is
30 Rockefeller Plaza, New York, NY 10020.
Executive Officers of Lazard Freres Real Estate Investors L.L.C.
Name of Officer Present and Principal Occupation
- --------------- --------------------------------
Robert C. Larson Chariman
Michael G. Medzigian President and Chief Executive Officer
Mark S. Ticotin Chief Operating Officer
John A. Moore Principal and Chief Financial Officer
Douglas T. Healy Principal
Marjorie L. Reifenberg Principal, General Counsel
and Secretary
Henry C. Herms Controller
-23-
<PAGE>
Page 24 of 24
Executive Officers of Prometheus Western Retail Trust
Name of Officer Present and Principal Occupation
- --------------- --------------------------------
Michael G. Medzigian President
Mark S. Ticotin Vice President
John A. Moore Vice President and Chief Financial Officer
Marjorie L. Reifenberg Secretary
Henry C. Herms Treasurer
-24-
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) promulgated under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree to the joint
filing with all other Reporting Persons (as such term is defined in the
Schedule 13D referred to below) on behalf of each of them of a statement on
Schedule 13D (including amendments thereto) with respect to the Common Stock,
par value $0.01 per share, of Center Trust, Inc., a Maryland corporation, and
that this Agreement may be included as an Exhibit to such joint filing. This
Agreement may be executed in any number of counterparts, all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement
as of the 8th day of December, 1999.
LAZARD FRERES & CO. LLC
By: /s/ Scott D. Hoffman
---------------------------------------
Name: Scott D. Hoffman
Title: Managing Director
LAZARD FRERES REAL ESTATE INVESTORS L.L.C.
By: /s/ John A. Moore
---------------------------------------
Name: John A. Moore
Title: Chief Financial Officer
LF STRATEGIC REALTY INVESTORS L.P.
By: Lazard Freres Real Estate Investors
L.L.C., its general partner
By: /s/ John A. Moore
---------------------------------------
Name: John A. Moore
Title: Chief Financial Officer
<PAGE>
PROMETHEUS WESTERN RETAIL TRUST
By: /s/ John A. Moore
---------------------------------------
Name: John A. Moore
Title: Vice President and Chief
Financial Officer
PROMETHEUS WESTERN RETAIL, LLC
By: Prometheus Western Retail Trust, its
sole member
By: /s/ John A. Moore
---------------------------------------
Name: John A. Moore
Title: Vice President and Chief
Financial Officer
-2-
Merrill Lynch International
20 Farringdon Road
P.O. Box 293
London EC1M 2NH
Telephone: 0171 892 4920
Fax: 0171 892 4860
London EC1M 3NH
Telephone: 0171 892 4920
Fax: 0171 892 4860
17 November 1999
- ------
Commonwealth Atlantic Properties Investors Trust
Prometheus Investment Holding Corp.
Prometheus Western Retail LLC
c/o Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza
50th Floor
New York, NY 10020
Dear Sirs
We write to set out the terms and conditions on which Merrill Lynch
International ("MLI") offers revolving facilities (the "Facilities") to
Commonwealth Atlantic Properties Investors Trust, Prometheus Investment
Holding Corp. and Prometheus Western Retail, LLC, acting jointly and
severally, as co-borrowers (collectively, the "Borrower") under which until
further notice from MLI:
(A) MLI makes available a credit facility, under which MLI is prepared to
consider making to the Borrower cash advances (each such advance an
"Advance").
(B) MLI makes available a securities lending facility, under which MLI is
prepared to consider lending Securities to the Borrower (each such loan
a "Securities Loan").
(C) MLI makes available a guarantee facility, under which MLI is prepared to
consider issuing guarantees and/or indemnities in respect of the
obligations of the Borrower to third parties (each such guarantee and/or
indemnity ("Guarantee")), and
(D) MLI makes available such other facilities as MLI and the Borrower may
from time to time agree, all on the security of, among other things, the
collateral provided by Prometheus Western Retail, LLC as set out in the
Terms Sheet referred to below and the collateral provided by LF
Strategic Realty Investors L.P. and Prometheus AAPT Holdings, L.L.C.
<PAGE>
(collectively, the "Guarantor") as set out in the Collateralised
Guaranty dated of even date herewith executed by each Guarantor.
The spread for the purposes of the Facilities shall be 2.625% per annum.
The Facilities are subject to the terms and conditions set out in the
attached Terms Sheet, and by its execution of the enclosed copy of this
letter, the Borrower acknowledges receipt of the Terms Sheet and agrees to
the terms and conditions set out in it.
Please confirm your agreement to the above and your acceptance of the
provisions of this letter and the Terms Sheet by completing, signing and
returning the enclosed copy of this letter.
Registered in England (No. 2312079)
Registered Office: 25 Ropemaker Street,
London EC2Y 9LY
A Subsidiary of Merrill Lynch & Co., Inc.,
Delaware, U.S.A.
Regulated by The Securities and Futures
Authority Limited
Member of the London Stock Exchange
VAT No. GB 245 1224 93
Yours faithfully,
For and on behalf of
MERRILL LYNCH INTERNATIONAL
/s/ John Piccitto
............................................................................
To: Merrill Lynch International
c/o Merrill Lynch International Limited
20 Farringdon Road
P.O. Box 293
London
EC1M 3NH
Dated 17 day of November, 1999
2
<PAGE>
We accept the Facilities on the terms and conditions detailed in your letter
and the attached Terms Sheet.
Our address and other details for the purpose of Clause 19 of the Terms Sheet
are set out below.
Yours faithfully,
.............................................................................
Commonwealth Atlantic Properties Investors Trust,
a Maryland real estate investment trust
c/o Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: /s/ John A. Moore
-----------------------------
Name: John A. Moore
Title: Chief Financial Officer
Prometheus Investment Holding Corp.,
a Delaware corporation
c/o Lazard Freres Real Estate Investors, L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: /s/ John A. Moore
-----------------------------
Name: John A. Moore
Title: Chief Financial Officer
Prometheus Western Retail, LLC,
a Delaware limited liability company
c/o Lazard Freres Real Estate Investors, L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: Prometheus Western Retail Trust,
a Maryland real estate investment trust
its managing member
By: /s/ John A. Moore
-----------------------------
Name: John A. Moore
Title: Chief Financial Officer
3
MERRILL LYNCH INTERNATIONAL
TERMS SHEET
1 Definitions
In this Agreement:
"Base Rate" means the floating annual rate equal to the rate of interest
as quoted to MLI determined by Merrill Lynch International Bank Limited
("MLIB") to be its base rate, being calculated by reference to a
weighted average of rates (at the weighted percentage indicated below)
on the second Business Day before the first Business Day of each week at
which MLIB offers deposits in the relevant currency in the London inter-
bank market for terms of one night (25%), one week (50%) and one month
(25%), or if at any time such base rate does not accurately reflect the
cost to MLI of funding the relevant Advance or other amount, the
floating annual rate certified by MLI to be equal to its cost of funding
at the relevant time (Base Rate to change when and as the applicable
floating annual rate changes).
"Business Day" means a day on which (1) Dollar deposits may be dealt in
on the London inter-bank market, (2) if the context so requires,
deposits in any other relevant currency may be dealt in on the London
inter-bank market, (3) banks are open in London and New York City and,
if the context so requires, the principal financial centre of the
country of each other relevant currency (or, in relation to Euro, on any
day on which the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System is open), and (4) if the context so
requires, the exchange or settlement system through which Securities are
to be loaned, transferred or redelivered or Equivalent Securities are to
be returned is open to settle such transfer.
"Collateral" means all Securities, including any certificates and
documents of or evidencing title to the same (and the claim represented
thereby) and cash balances (and the debt represented thereby) in or
credited to the Collateral Account all right, title and interest in and
to which are, to the satisfaction of MLI, subject to the security
created by or pursuant to this Agreement.
"Collateral Account" means the one or more accounts, having such
designations as MLI may determine, opened or to be opened by MLI
pursuant to, or used for the purposes of, the Facilities for the
Borrower with the Custodian or any other person (including MLIB or any
other member of the Merrill Lynch Group) chosen by MLI in respect of
Collateral, all such Collateral Accounts to be maintained under the
complete discretion of MLI or such other person in each case pursuant to
the Custodian Agreement.
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"Custodian" means MLI in its capacity as such under the Custodian
Agreement.
"Custodian Agreement" means the Custodian Agreement between MLI,
Prometheus Western Retail LLC, LF Strategic Realty Investors L.P. and
Prometheus AAPT Holdings LLC, as amended from time to time.
"Dollar(s)" and "$" means lawful currency of the United States of
America.
"Equivalent Securities" or "Securities equivalent to" means securities
of an identical type, nominal value, description and amount to
particular Securities the subject of a Securities Loan (including any
certificates and other documents of or evidencing title to the same). If
and to the extent that such Securities are partly paid and a call is
made or have been converted, subdivided, consolidated, redeemed, made
the subject of a takeover, merger, capitalisation issue, rights issue or
similar, the Equivalent Securities shall be as accordingly determined by
MLI.
"Hedging Contract" means any contract entered into by the Borrower and
designated as such by the Borrower and MLI by exchange of letters
substantially in the form set out in Schedule 1.
"Letter" means the cover letter to, and forming part of, this Agreement
as amended by First Amendment to Facility Letter ("First Amendment")
dated 17 November 1999.
"Merrill Lynch Group" means Merrill Lynch & Co., Inc. together with any
company (whether now existing or hereafter formed) of which Merrill
Lynch & Co., Inc. is or becomes a Subsidiary and all companies (whether
now existing or hereafter formed or acquired) which are Subsidiaries of
Merrill Lynch & Co., Inc. or any such company including, but not limited
to, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any
partnership, association, firm or other organisation (whether now
existing or hereafter formed or acquired) which is owned or controlled
(whether directly or indirectly and whether by the ownership of share
capital, possession of voting power, contract or otherwise) by Merrill
Lynch & Co., Inc. and/or any such company and/or one or more of their
Subsidiaries including, but not limited to, Merrill Lynch International
& Co.
"Secured Liabilities" means all the Borrower's liabilities under or in
connection with this Agreement, including any Advances, Securities Loans
and Guarantees (including amounts payable under Clause 5.2).
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"Securities" means the Collateral Securities (as set forth in Schedule
2) and shall include all other investments, as defined in the Financial
Services Act 1986 (as amended or re-enacted from time to time) and
physical commodities (or any certificates or documents of or evidencing
title to any of the same) which may at any time be deposited with the
Custodian to be held on the terms of the Custodian Agreement, in each
case acceptable to MLI.
"Subsidiary" means at any time, in relation to a company, any other
company which is directly or indirectly controlled, or more than 50% of
whose issued or outstanding shares or stock having general voting power
in ordinary circumstances is beneficially owned directly or indirectly,
by that first company.
In this Terms Sheet, references to the "Agreement" or "this Agreement"
mean and include (1) the Letter, (2) this Terms Sheet, (3) all letters
(if any) exchanged in respect of Hedging Contracts and (4) all
confirmations (if any), all as amended and supplemented from time to
time, and it is acknowledged and agreed that all Advances and Securities
Loans are made and all Guarantees are issued, in reliance on the fact
that this Agreement forms a single agreement between the parties, and
that the parties would not otherwise make or do any of the foregoing.
Headings shall be ignored in construing this Agreement.
2 Credit Facility
2.1 Drawdown: Without prejudice to (A) any other requirements of MLI in
relation to any Advance, and (B) MLI's right to refuse to make an
Advance in its absolute discretion, Advances will be made as follows:
2.1.1 the Borrower may give to MLI notice satisfactory to MLI not
later than 2 p.m. (London time) on the first (in the case of a
Dollar Advance) or (in any other case) third Business Day
before the proposed date (which must itself be a Business Day)
of the relevant Advance requesting the Advance of all or part
of the unused portion of the Facilities or
2.1.2 the Borrower hereby requests and authorises MLI to make
Advances (without any further request by the Borrower) for the
purposes of financing the payment by the Custodian on behalf
of the Borrower pursuant to the Custodian Agreement for
Securities purchased by the Borrower, to reimburse MLI for any
payment which has been made by it pursuant to a Guarantee, and
for such other purposes as may be agreed by the Borrower and
MLI from time to time.
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For this purpose, the unused portion of the Facilities at any date is
the "Total Amount Available" specified in the First Amendment less the
aggregate Dollar equivalent (as determined by MLI as at that date) of
all outstanding Advances.
2.2 Repayment: The Borrower may, if it gives MLI not less than one Business
Day's notice (in the case of a Dollar Advance) or (in any other case)
three Business Days' notice (which shall be irrevocable) repay any
Advance at any time, except that any Advance which has a fixed interest
period shall be repaid (and shall, subject as otherwise provided in this
Agreement, only be repaid) on the last day of that fixed interest
period. Any such repayment must be accompanied by interest accrued on
the amount repaid.
In addition, the Borrower hereby requests and authorises MLI to apply
funds made available to it by the Custodian pursuant to the Custodian
Agreement in or towards repayment of any Advances (or any other amount
debited to the Collateral Account) in the same currency. Funds so
received which cannot be so applied will be credited to the Collateral
Account.
2.3 Interest: Interest shall be calculated on the outstanding principal
amount from time of each Advance at the rate per annum equal to the sum
of the Spread specified in the Letter and Base Rate. The Borrower shall
pay the unpaid interest accrued on each Advance monthly in arrears in
the currency in which the relevant Advance is denominated.
However, if MLI and the Borrower so agree in relation to an Advance,
that Advance shall have a fixed interest period (and shall be repaid
accordingly) and shall bear interest at the rate agreed between MLI and
the Borrower for such Advance. The Borrower shall pay the unpaid
interest accrued on any such Advance in arrears on the last day of the
interest period for which it was made and in the currency in which the
relevant Advance is denominated.
3 Securities Lending Facility
3.1 Making: MLI shall be entitled but not bound to act on the request of the
Borrower to make a Securities Loan to the Borrower.
A Securities Loan shall be effected by MLI delivering or crediting the
relevant Securities in accordance with the Borrower's instructions,
together with any appropriate instruments of transfer or the like.
3.2 Return: The Borrower shall return Securities equivalent to the
Securities the subject of a Securities Loan by delivering or crediting
those Equivalent Securities in accordance with MLI's instructions:
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3.2.1 in accordance with the terms of the request for that
Securities Loan or
3.2.2 if earlier, upon notice from MLI of not less than the standard
settlement time for those Equivalent Securities according to
the exchange or settlement system through which the Securities
the subject of the relevant Securities Loan were originally
delivered.
All returns of Equivalent Securities must be made together with any
appropriate instruments of transfer or the like, and so that all right,
title and interest in and to those Equivalent Securities shall vest in
MLI, free from all liens, charges and encumbrances.
3.3 Interest and Dividends: Where a Securities Loan is outstanding over an
income payment date or a record date for the relevant Securities, the
Borrower shall, on the date of the payment or distribution of any
interest, dividend or other distribution of any kind whatsoever (each a
"Distribution") on or with respect to any Securities the subject of a
Securities Loan, or on such other date as MLI and the Borrower may from
time to time agree (the "Relevant Payment Date") pay and deliver a sum
of money or property equivalent to the same (with any such endorsements
or assignments as shall be customary and appropriate to effect the
delivery) to MLI, irrespective of whether the Borrower received the
same. In the case of any Distribution comprising a payment, unless
agreed otherwise:
3.3.1 where and to the extent that MLI has funded a Securities Loan
with Securities borrowed by MLI under a securities loan from a
third party, the Borrower shall pay such amount and deliver
such tax vouchers as may be relevant and appropriate so as to
enable MLI (out of those payments/tax vouchers paid/delivered
by the Borrower under this Clause 3.3) to meet its own
obligations to pay amounts and/or deliver tax vouchers to the
third party in respect of those same Distributions under the
securities loan from the third party to MLI, and after taking
account of all taxes of whatever nature arising in connection
with either the payments from the Borrower to MLI under this
Clause 3.3 or the payments from MLI to the third party and
3.3.2 where and to the extent MLI has funded a Securities Loan with
Securities from MLI's own books, the Borrower shall pay to MLI
such amount and deliver such tax vouchers as may be relevant
and appropriate as shall ensure that MLI is placed in the same
after-tax position (including for these purposes and for the
avoidance of doubt any taxation arising under paragraph 4(3)
of Schedule 23A of the Income and Corporation Taxes Act 1988
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and associated provisions concerning manufactured payments,
but ignoring any taxation by reference to MLI's general
profits) as if MLI had been the Holder of the relevant
Securities at all relevant times. For the purposes of this
Clause 3.3.2 "Holder" in relation to registered securities
means the person whose name or whose nominee is shown on the
relevant register of ownership and in relation to bearer
Securities means the bearer thereof.
3.4 Fees: The Borrower shall pay such fees in respect of Securities Loans as
shall be agreed with MLI from time to time. Such fees shall be payable
monthly in arrears.
3.5 Title: Notwithstanding the use of expressions such as "Securities Loan",
"Borrower", "loan", "loaned", "borrowed", "return" and "returned" which
are used in relation to Securities Loans to reflect market terminology,
title to Securities the subject of a Securities Loan shall pass to the
Borrower, and the Borrower shall be obliged to return Equivalent
Securities.
3.6 Rights and Remedies: It is agreed in relation to legal proceedings that
neither party will seek specific performance of the other's obligation
to deliver, redeliver, credit or return Securities or Equivalent
Securities, but without prejudice to any other rights it may have.
4 Intentionally Omitted
5 Guarantee Facilities
5.1 Issue: MLI (in this Clause 5 and Clause 7 and in relation to a Guarantee
provided by it, an "Issuer") shall be entitled but not bound to act on
the request of the Borrower to provide a Guarantee.
5.2 Indemnity: The Borrower hereby unconditionally and irrevocably:
5.2.1 agrees on demand to indemnify the Issuer of any Guarantee from
and against any and all actions, proceedings, costs, claims,
demands, damages, expenses, losses, charges and liabilities
which may be brought, made or preferred against the Issuer or
which the Issuer may suffer, incur or sustain in relation to
or arising out of its providing any Guarantee (including (A)
any payment(s) which may be payable by or claimed or demanded
from the Issuer pursuant to a Guarantee, and (B) any taxes
required to be paid by the Issuer on account of which it makes
any deduction or withholding from any such payment) together
with interest on all such amounts from the date(s) on which
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the same are incurred by the Issuer in accordance with Clause
8.2
5.2.2 authorises the Issuer to rely without further enquiry on
documents presented under any Guarantee which appear on their
face to be in compliance with the terms and conditions of that
Guarantee (for which purpose the Issuer shall apply the same
standards and have the same protections as set out in the
Uniform Customs and Practice for Documentary Credits (1993
Revision, ICC Publication No. 500 or its subsequent
revisions)) and on first claim or demand to make any payment
which may or may appear to be claimed or demanded from the
Issuer in relation to or arising out of any Guarantee without
requiring or obtaining any evidence or proof that the amount
claimed or demanded is due and payable and without any notice
or reference to or the agreement of or further authority from
the Borrower and
5.2.3 agrees that any payment which the Issuer shall make in
accordance or purported accordance with a Guarantee shall be
binding on the Borrower and shall be accepted by the Borrower
as conclusive evidence of the Issuer's liability to make such
payment.
5.3 Fees: The Borrower shall pay to the Issuer of any Guarantee such fees in
respect thereof and at such times as shall be agreed with the Issuer
from time to time.
6 Security
6.1 Security Provisions:
6.1.1 The Borrower, as continuing security for the due payment of
the Secured Liabilities and with full title guarantee, and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby
irrevocably pledges, grants and creates a first priority lien
on, and security interest in favour of MLI all the Borrower's
right, title and interest in and to all Securities, and all
related documents, from time to time held by or for the
account or to the order of MLI (whether in its capacity as
Custodian under the Custodian Agreement or otherwise) or in or
credited to the Collateral Account and the claims represented
thereby and all security entitlements related thereto
(together, the "Pledged Securities"). The security created by
or pursuant to this Agreement shall affect and include all
dividends, distributions and interest on and other proceeds of
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the Pledged Securities or other property hereby pledged or
charged, whether capital or income, and all property
distributed, paid, accruing or offered at any time on, to, in
respect of or in substitution for, any of the Pledged
Securities or other property hereby pledged or charged, in
each case only to the extent that any of the foregoing are
paid or delivered to MLI for credit to the Collateral Account.
6.1.2 The Borrower, as continuing security for the due payment of
the Secured Liabilities and with full title guarantee, and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby
irrevocably pledges, grants and creates a first priority lien
on, and security interest in favour of MLI all monies and
investment property (and all the Borrower's right, title and
interest in and to such monies and the debt represented
thereby and investment property) from time to time standing to
the credit of the Collateral Account, in whatever currency,
and including any interest accrued or accruing thereon.
6.1.3 The Borrower, as continuing security for the due payment of
the Secured Liabilities and with full title guarantee, hereby
conveys and assigns absolutely to MLI the Hedging Contracts
and all its rights and benefits under or in connection with
the Hedging Contracts, including in particular all monies paid
or payable in respect thereof and all other rights or benefits
thereunder or in connection therewith (together, the "Pledged
Contracts"). Provided that, upon receipt from the Borrower of
a request made after termination of the Facilities and subject
to the Secured Liabilities (other than contingent liabilities
under (a) the Guarantees and (b) any indemnification
provisions contained in this Agreement, the Custodian
Agreement or any other document evidencing or securing the
Facilities (as defined in the Letter) (collectively, the
"Contingent Liabilities")), having been duly and properly paid
in full, MLI shall at the expense of the Borrower re-assign to
the Borrower so much (if any) of the Pledged Contracts and the
Pledged Securities as then remains and/or execute a formal
release with respect thereto.
6.1.4 None of the monies from time to time standing to the credit of
the Collateral Account (nor the Borrower's right, title and
interest in and to such monies) shall, during the continuance
of the Facilities and until the Secured Liabilities (other
than the Contingent Liabilities) have been duly and properly
paid in full, be capable of being withdrawn, assigned or
otherwise disposed of or encumbered except with MLI's prior
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written consent or as otherwise specifically provided in this
Agreement. Any such consent of MLI (and any payment whether
with or without such consent) shall operate as a release of
the relevant monies and the provisions of this Agreement shall
continue to apply to the Collateral Account and the monies
from time to time standing to the credit thereof.
6.1.5 The Borrower hereby undertakes to MLI that, at all times
during the continuance of the Facility and until the Secured
Liabilities (other than the Contingent Liabilities) have been
properly and duly paid in full:
(i) it will on demand duly pay any calls, subscription monies
and/or other monies payable on or in respect of any of the
Pledged Securities and will perform all obligations undertaken
by it under or in connection with Hedging Contracts in
accordance with their terms. If it does not do so, MLI may
(but shall not be obliged to) do so and, if MLI does so, the
Borrower shall on demand indemnify MLI against such payment or
performance and
(ii) it will not (nor will it agree, conditionally or
unconditionally, to) create or have outstanding any call
option, pledge, assignment, transfer, hypothecation, mortgage,
charge, encumbrance, security interest or lien on or affecting
any of the Pledged Securities (except as contemplated by this
Agreement or the Custodian Agreement or with MLI's prior
written consent).
MLI acknowledges that the Borrower may request consent to options,
assignments and transfers (including agreements therefor) on or of
Pledged Securities in the normal course of its trading operations
and MLI will consider any such request in good faith.
6.1.6 Without prejudice to 6.1.4 above or Clause 11.2, MLI is
authorised to debit the Secured Liabilities to any account of
the Borrower with MLI and MLI is authorised to combine or
consolidate such account with the Collateral Account and/or
set off, transfer or apply any monies standing to the credit
of the Collateral Account in or towards satisfaction of any of
the Secured Liabilities.
6.1.7 The security created by or pursuant to this Agreement shall be
a continuing security notwithstanding any intermediate payment
or settlement of account and, without prejudice to the
generality of the foregoing, shall, subject to the last
sentence of Clause 6.1.3, continue in full force and effect
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until MLI reassigns or executes a formal release with respect
to such security, which it may do in whole or from time to
time in part, and any withdrawal or other disposal of any of
the property subject to the security created by or pursuant to
this Agreement shall operate as a release of such property,
and the provisions of this Agreement shall continue to apply
to the remainder thereof. The security created by or pursuant
to this Agreement shall be in addition to and shall not
prejudice any other security, guarantee, indemnity, right or
remedy of whatever nature which MLI now or at any time has in
respect of any of the Secured Liabilities.
6.2 Further Assurance: The Borrower, at its own expense, will execute or
cause to be executed all such documents, and will do or cause to be done
all such things, which are reasonably requested by MLI (1) to enable MLI
to enjoy, exercise or enforce its rights as a secured party under the
Facilities and (2) to evidence, and to establish and maintain the
perfection and first priority of, MLI's security interest in the Pledged
Securities, the Collateral Account (and the monies for the time being
standing to the credit thereof and the debt represented thereby) and the
Pledged Contracts and the perfection of MLI's security interest in the
other property hereby pledged or charged. Without limiting the
generality of the foregoing the Borrower, at its own expense, will
execute and give or file, or both, all notices and documents (including,
but not limited to, notice of the security created by or pursuant to
this Agreement) in such manner, to such persons and at such places as
may be reasonably requested by MLI to establish and maintain the
perfection and, as appropriate, first priority of MLI's said security
interest. The Borrower irrevocably and by way of security authorises
MLI, if the Borrower does not do so, to take any step contemplated by
this Clause 6.2 (but MLI shall have no obligation to do so).
6.3 MLI's Responsibilities: Except as provided in the Custodian Agreement,
MLI shall at all times while any Collateral remains credited to the
Collateral Account use reasonable care in connection therewith but shall
not thereby be responsible for the value of the Collateral or the other
property hereby pledged or charged or, except to the extent otherwise
specifically agreed, for the collection or payment of any dividends,
distributions, interest or other receipts in respect of Pledged
Securities, other property hereby pledged or charged or Hedging
Contracts or the delivery or receipt of any securities or other property
in respect of Hedging Contracts nor to ensure the taking up of any
securities, rights, monies or other property distributed, paid, accruing
or offered at any time on, to, in respect of or in substitution for any
of the Collateral or the other property hereby pledged or charged.
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6.4 Value and Margin Calls: The Borrower hereby agrees that it will,
immediately upon MLI at any time making a request or delivering to the
Borrower (whether under this Agreement or in its capacity as Custodian
under the Custodian Agreement) a statement reflecting a shortfall in the
margin referred to below, deposit additional Securities acceptable to
MLI and/or monies with MLI for the credit of the Customer Account (as
defined in the custodian Agreement) as MLI may require in order to
ensure that the amount of the outstanding Advances divided by the
aggregate of the market value of the Securities and the monies standing
to the credit of the Customer Account will at no time exceed the
Maintenance Margin (as defined in the Letter), the Secured Liabilities
(all as determined by MLI).
6.5 MLI shall have all rights and remedies as a secured party at law or in
equity including, without limitation, the rights of a secured party
under the Uniform Commercial Code.
7 Cancellation and Repayment
7.1 General: The Borrower will (A) after an Event of Default has occurred on
demand of MLI at any time or (B) after MLI has given written notice to
the Borrower that it has determined that it is or will become unlawful
or contrary to any directive or the like of any governmental or other
regulatory body or authority for MLI to carry out all or any of its
obligations under or in connection with this Agreement on demand of MLI
at any time:
7.1.1 repay to MLI all or any Advances then outstanding together
with accrued interest thereon and any other sum then payable
under or in connection with this Agreement and/or
7.1.2 return to MLI Securities equivalent to all or any Securities
the subject of any Securities Loan(s) and/or
7.1.3 pay to the Issuer an amount (as conclusively determined by the
Issuer) equal to the Issuer's maximum outstanding liability
(whether actual or contingent) under all Guarantees provided
by it. Without prejudice to Clause 6 or any other provision of
this Agreement any amount so received by the Issuer in respect
of its liability under Guarantees may be retained by the
Issuer for the purpose of payment and/or paid in accordance
with the relevant Guarantee and/or paid into the Collateral
Account and retained there for the purpose of application
and/or applied by MLI in or towards satisfaction of the
Borrower's obligations under or in connection with this
Agreement.
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Upon the making of any such demand under (A) or (B) above the Facilities
shall be cancelled (but in each case without prejudice to rights and
obligations then existing).
7.2 Securities Loans: If the Borrower fails or is unable to MLI's
satisfaction to return any Securities equivalent to the Securities the
subject of a Securities Loan in accordance with any notice or demand
under 7.1.2 above or on such other date on which in accordance with this
Agreement it is obliged to do so, MLI shall have the right on the
Borrower's behalf to purchase from such source(s), at such time(s) and
at such price(s) as it thinks appropriate Equivalent Securities and the
Borrower shall on demand pay in the currency/ies specified by MLI to MLI
all amounts (including costs, expenses, commissions and taxes thereon)
incurred in connection with such purchase, together with interest on all
such amounts from the date(s) on which the same are incurred by MLI in
accordance with Clause 8.2. However, if for any reason MLI does not or
is unable to exercise such right, upon notice to the Borrower, the
Borrower's obligation to return the relevant Equivalent Securities will
be automatically replaced by an obligation on the Borrower to pay to MLI
an amount in cash equal to the market value of those Equivalent
Securities as derived from rates offered by a dealer reasonably chosen
by MLI or, if in MLI's reasonable belief that would not produce a
commercially reasonable result, the amount it would cost MLI to purchase
those Equivalent Securities, together with all costs, expenses,
commissions and taxes thereon which would be incurred in connection
therewith (such value or, as the case may be, amount and the currency to
be as determined by MLI).
7.3 Intentionally Omitted.
7.4 Margin Call not Required: Any action referred to in this Clause 7 may be
taken by MLI without request for additional Securities or monies by way
of margin call.
8 Payments
8.1 Taxes: All sums payable by the Borrower under or in connection with this
Agreement shall be paid free and clear of any restrictions or
conditions, without set-off or counterclaim, and free and clear of, and
(subject as hereinafter provided) without deduction for, any taxes,
deductions or withholdings of any nature. If any deduction or
withholding on account of any such tax or other amount is required by
law to be made from any such sum, the Borrower shall pay in the same
manner and at the same time such additional amounts as will result in
receipt by MLI free from any liability in respect of any such deduction
or withholding, of such amount as would have been received by it had no
such deduction or withholding been required to be made. Notwithstanding
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the foregoing, the Borrower shall not be responsible for income and
"doing business" taxes imposed upon MLI.
8.2 Default Interest: If the Borrower does not pay any sum payable under or
in connection with this Agreement when due, it shall pay interest on the
amount from time to time outstanding in respect of that overdue sum for
the period beginning on its due date and ending on the date of its
receipt by MLI(the "payee"), both before and after judgement. Such
interest shall be calculated from time to time at the rate per annum
equal to the sum of the Spread and the rate certified by the payee as
being equal to its cost of funding that overdue sum for such period(s)
as the payee may from time to time reasonably select. Such interest
shall be payable on demand. All interest payable under this Clause 8.2
which is not paid when due shall be added to the overdue sum and itself
bear interest accordingly.
8.3 Non-Business Days: If any payment falls to be made on a day which is not
a Business Day, it shall be postponed so as to fall on the next
succeeding Business Day in the same calendar month (if there is one) or
the preceding Business Day (if there is not). Interest shall be adjusted
accordingly.
9 Warranties
The Borrower represents and warrants to and for the benefit of MLI that:
9.1 the Borrower is duly organised and validly existing under the laws of
its jurisdiction of establishment and has the power and authority to own
its assets and to conduct the business which it conducts
9.2 its entry into, exercise of its rights and/or performance of or
compliance with its obligations under this Agreement do not and will not
violate (1) any law to which it is subject, (2) any of its
constitutional documents or (3) any agreement to which it is a party or
which is binding on it or its assets
9.3 it has the power to enter into, exercise its rights and perform and
comply with its obligations under this Agreement and has taken all
necessary action to authorise the execution, delivery and performance of
this Agreement
9.4 it will obtain and maintain in effect and comply with the terms of all
necessary consents, registrations and the like of or with any government
or other regulatory body or authority applicable to this Agreement
(other than any "doing business" consents, registrations and the like
which MLI is required by applicable law to obtain or maintain)
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<PAGE>
9.5 its obligations under this Agreement are valid, binding and enforceable
at law
9.6 it is not in default under any agreement to which it is a party or by
which it or its assets is or are bound and no litigation, arbitration or
administrative proceedings are current or pending, which default,
litigation, arbitration or administrative proceedings are material in
the context of this Agreement
9.7 it is not necessary or advisable in order to ensure the validity,
effectiveness, performance or enforceability of this Agreement or the
perfection of the security created by or pursuant to this Agreement that
any document be filed, registered or recorded in any public office or
elsewhere that have not already been filed, registered or recorded
9.8 except by this Agreement, the Custodian Agreement and the Collateralised
Guaranty (as defined in the Custodian Agreement), neither Prometheus
Western Retail LLC nor any Guarantor (as defined in the Letter)
(collectively, the "Securities Holders") has assigned, transferred or
otherwise disposed of the Collateral (or its rights, title and interest
to and in the Collateral) or its rights and benefits under or in
connection with the Hedging Contracts, either in whole or in part, nor
agreed to do so, and will not at any time do so or agree to do so, and
it will at all times be the sole beneficial owner of and fully guarantee
title to all Collateral and rights and benefits which are now owned by
any such Securities Holder
9.9 except for the security created by or pursuant to this Agreement, the
Custodian Agreement and the Collateralised Guaranty, no mortgage,
charge, pledge, lien, claim or other similar encumbrance or security of
any kind exists on or over the Collateral (or its right, title and
interest in and to the Collateral) or its rights and benefits under or
in connection with the Hedging Contracts, either in whole or in part,
nor has it agreed to create any such other security nor will it at any
time do so or agree to do so and
9.10 each of the above representations and warranties will be correct and
complied with in all respects during the continuance of the Facilities
and until all the Secured Liabilities (other than the Contingent
Liabilities) have been duly and properly paid in full, as if repeated
then by reference to then existing circumstances.
10 Events of Default
It shall be an Event of Default if:
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<PAGE>
10.1 the Borrower does not pay any sum payable under or in connection with
this Agreement or any other agreement with MLI, MLIB or any other member
of the Merrill Lynch Group on its due date or
10.2 the Borrower does not return any Equivalent Securities required to be
returned under this Agreement on their due date or
10.3 any representation, warranty or statement by the Borrower in this
Agreement or in any document delivered under this Agreement is not
complied with or is or proves to have been incorrect in any material
respect when made or, if it had been made on any later date by reference
to the circumstances then existing, would have been incorrect in any
material respect on that later date or
10.4 the Borrower does not comply with its obligations under Clause 6.4
promptly, which may in the circumstances at MLI's discretion be
immediately, and in any event not later than MLI's close of business on
the next Business Day after the shortfall occurs or
10.5 the Borrower fails duly to perform any one or more of its other
obligations under this Agreement or any other agreement with MLI, MLIB
or any other member of the Merrill Lynch Group and, other than in the
case of Clause 6.4, if, in MLI's opinion, that default is capable of
remedy it is not, in MLI's opinion, remedied within 15 days after notice
of that default has been given to the Borrower or
10.6 any provision of this Agreement which is material to the interests of
MLI is not (or is claimed by the Borrower not to be) in full force and
effect and, other than in the case of Clause 6.4, if, in MLI's opinion,
such circumstance is capable of remedy it is not, in MLI's opinion,
remedied within 30 days after notice thereof has been given to the
Borrower or
10.7 MLI reasonably determines by written notice to the Borrower that the
security (in whole or in part) created by or pursuant to this Agreement
is not in full force and effect or does not have the priority stated
herein or
10.8 a distress, attachment, execution or other legal process is levied,
enforced or sued out on or against any item of Collateral by any third
party or
10.9 a distress, attachment, execution or other legal process is levied,
enforced or sued out on or against any other asset of the Borrower and
is not discharged or stayed within 7 days and, in MLI's conclusive
opinion, such event has or could have a material adverse effect on MLI
or
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<PAGE>
10.10 any step is taken or legal proceeding started by any person in the
bankruptcy or insolvency of the Borrower or for the appointment of
a receiver, administrator, trustee or similar of the Borrower or of
any or all of the revenues and assets of the Borrower or for the
liquidation, winding-up, administration, dissolution or
reorganisation of the Borrower or its merger with or into any other
person(s) (together "Winding-up") (except on terms approved by MLI
before that step is taken) and, in the case of any such step or
proceeding taken or started against it, the same (1) results in a
judgement of bankruptcy or insolvency or the making of any such
appointment or the making of an order for Winding-up, or (2) is not
discharged within 60 days or
10.11 any indebtedness of the Borrower in respect of monies borrowed or
raised of not less than $500,000 or its equivalent (1) is not paid
when due nor within any applicable grace period in any agreement
relating to that indebtedness, or (2) becomes due and payable
before its normal maturity by reason of a default or event of
default, however described or
10.12 the Borrower is insolvent, is unable to pay its debts as they fall
due, stops, suspends or threatens to stop or suspend payment of all
or a material part of its debts, begins negotiations or takes any
proceeding or other step with a view to readjustment, rescheduling
or deferral of all of its indebtedness or any part of its
indebtedness which it would or might otherwise be unable to pay
when due or proposes or makes a general assignment or an
arrangement or composition with or for the benefit of creditors or
10.13 any event occurs which under the laws of any relevant jurisdiction
has an effect equivalent to any of the events referred to in this
Clause 10.
If any person (the "Guarantor") has provided to MLI a guarantee or other
performance assurance (the "Performance Assurance Agreement") of the
Borrower's obligations under this Agreement and the Custodian Agreement,
then it shall also be an Event of Default if any of the events referred
to in any of Clauses 10.1, 10.3, 10.5, 10.6 and 10.9 to 10.13 (all
inclusive) occurs in relation to the Guarantor (and for this purpose
references, however expressed, to "the Borrower" and "this Agreement"
respectively shall be deemed to be references to "the Guarantor" and
"the Performance Assurance Agreement").
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<PAGE>
11 Enforcement
If the Borrower fails or is unable to MLI's satisfaction duly to comply
with any demand under Clause 7.1(B) or (C), MLI may at any time
thereafter:
11.1 without further notice to the Borrower and without prejudice to any
other right or remedy, dispose or procure the disposal, by sale or
otherwise, of all or from time to time part of the Pledged Securities
(including any securities or other property delivered or deliverable
under Clause 13, any Hedging Contracts or the Custodian Agreement) or
other property hereby pledged or charged or otherwise realise or procure
the realisation of the same, in such manner and at such price or prices
(whether payable or deliverable immediately, on a deferred basis or by
instalments) without being responsible for any loss or diminution in
price, as it may think fit, close out or liquidate any option, future,
long position or short position which the Borrower may have (by sale,
purchase or otherwise howsoever), take possession of all or from time to
time part of such Pledged Securities or other property hereby pledged or
charged and proceed forthwith to sell, assign, give options to purchase,
contract to sell or otherwise dispose of and deliver such Pledged
Securities or other property hereby pledged or charged or any part
thereof in one or more parts at public or private sale at any exchange,
broker's board or at any of MLI's offices or elsewhere at such prices
and on such terms as MLI deems appropriate, and exercise all or any
rights conferred by and collect any proceeds of and monies, securities
or other property paid or delivered under or otherwise receive and
realise the benefits of the Hedging Contracts and the Custodian
Agreement, all without demand for performance, advertisement or other
notice of any kind, and apply the proceeds thereof and all cash balances
in the Collateral Account or otherwise hereby pledged or charged as
follows:
11.1.1 first, in or towards payment of all amounts (including costs,
expenses, commissions and taxes) arising as a result thereof
11.1.2 secondly, in or towards payment and satisfaction of the
Secured Liabilities in such order and manner as MLI may
determine
11.1.3 thirdly, in payment of any surplus to the Borrower or other
person entitled thereto.
Provided always that MLI shall not be obliged to apply any part of such
proceeds in accordance with sub-clause 11.1.3 until all Secured
Liabilities (other than the Contingent Liabilities) have been discharged
to the satisfaction of MLI and until after each of them has exercised
all set-offs and other rights which it is expressed to be entitled to
make or exercise under this Agreement. Until such time such proceeds and
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<PAGE>
compensation shall be held in or credited to the Collateral Account or
such other account with MLI as MLI may (in its absolute discretion)
decide.
Upon any disposal of any such Pledged Securities or other property
hereby pledged or charged or realisation in respect of any Hedging
Contracts or the Custodian Agreement made or purported to be made under
the provisions of this Clause, a certificate of any officer or employee
of MLI that a default has occurred and that the power to do so has
become exercisable shall be conclusive evidence of that fact in favour
of any purchaser or other person to whom any of such Pledged Securities
or other property hereby pledged or charged may be transferred under
such disposal or, as the case may be, any person liable under or in
respect of any such Hedging Contract or the Custodian Agreement and the
Borrower agrees to indemnify MLI (on a full indemnity basis) against any
claim which may be made against it by such purchaser or person by reason
of any defect in title to any such Pledged Securities or other property
hereby pledged or charged unless such claim has arisen as a result of
the negligence or wilful misconduct of MLI.
11.2 in addition to any general lien, right to combine or consolidate
accounts, set-off or other similar right to which it may be entitled at
law, by contract, or otherwise, MLI may at any time without notice to
the Borrower, debit any liabilities of the Borrower under or in
connection with this Agreement to any account of the Borrower with it
(including without limitation the Collateral Account) and combine or
consolidate all or any one or more of the Borrower's then existing
accounts (including without limitation the Collateral Account) with, and
liabilities of the Borrower to, it and/or set off, transfer or apply any
sum(s) standing to the credit of any one or more of the Borrower's
accounts with it (including without limitation the Collateral Account)
in or towards satisfaction of any of the liabilities of the Borrower to
MLI, whether present or future, actual or contingent.
11.3 do all such other acts and things as it may consider necessary or
desirable in connection with the realisation of the security created by
or pursuant to this Agreement.
MLI shall have authority to purchase one currency with another for
purposes of this Clause 11.
12 Indemnity
The Borrower shall on demand indemnify MLI (in this Clause 12, the
"Indemnified Party") against:
12.1 any funding and any other costs, expenses or liabilities (including loss
of profit and including taxes (other than taxes on the overall net
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<PAGE>
income of the Indemnified Party), any stamp duty or similar tax, legal
fees and value added tax) sustained or incurred by the Indemnified Party
(1) to render this Agreement (including the security created by or
pursuant to this Agreement) enforceable and admissible in evidence in
the courts referred to in Clause 20; (2) in the administration of this
Agreement (including the making of Securities Loans and the return of
Equivalent Securities); (3) as a result of the assignment, exercise or
performance of any Hedging Contract(s); (4) in protecting or enforcing
the Indemnified Party's rights under this Agreement and/or any
amendment; (5) as a result of the occurrence or continuance of any Event
of Default or default by the Borrower under this Agreement (whether in
connection with any act or thing done as set out in Clause 11 or
otherwise); or (6) as a result of the receipt or recovery by the
Indemnified Party (whether or not as a result of any application in
accordance with Clause 2.2) of all or any part of an Advance which has a
fixed interest period otherwise than on the last day of that fixed
interest period and
12.2 all costs, expenses and losses sustained or incurred by the Indemnified
Party as a result of or in connection with the payment of any amount due
under this Agreement, whether as a result of any judgement or order, the
winding up or bankruptcy of the Borrower, or otherwise, in a currency
other than that due under this Agreement, including any variation
between the rate of exchange at which such amount is converted into such
currency for the purpose of such judgement or order or otherwise, and
the rate prevailing on the date on which the Indemnified Party first
receives actual payment of such amount in such currency other than that
due under this Agreement.
13 Intentionally Omitted.
14 Successors and Assigns
14.1 The Borrower may not assign or transfer all or any part of its rights or
obligations under this Agreement. However, this Agreement shall be
binding on the Borrower and its successors as from time to time
constituted.
14.2 Where the Borrower is a partnership, this Agreement is being executed on
behalf of the Borrower by one of its general partners and, by such
execution, such general partner agrees and warrants that the partnership
of which he or it is a general partner is and will be fully bound by
this Agreement as the Borrower.
14.3 MLI may at any time assign or transfer all or part of its rights and/or
obligations under this Agreement to any other member of the Merrill
Lynch Group or, with the prior written consent of the Borrower (such
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<PAGE>
consent not to be unreasonably withheld), to any other person. MLI shall
after any such assignment or transfer and to the extent (if at all)
appropriate or required hold the security created by or pursuant to this
Agreement for itself and each assignee or transferee. Any reference in
this Agreement to MLI shall be construed accordingly and shall also
include its successors. Any such assignee or transferee shall be
entitled to the full benefit of this Agreement to the same extent as if
it were an original party in respect of the rights or obligations
assigned or transferred to it.
14.4 MLI may disclose to any other member of the Merrill Lynch Group or,
subject to prior notice to the Borrower, any other potential assignee or
transferee or person who has entered or proposes to enter into
contractual arrangements with it in relation to or concerning this
Agreement such information about the Borrower and this Agreement as it
may think fit.
15 Information
During the continuance of the Facilities and until the Secured
Liabilities (other than the Contingent Liabilities) have been duly and
properly paid in full, the Borrower shall furnish to MLI within 90 days
after the end of each of its financial years its annual audited accounts
and promptly such other financial and other information as MLI may
reasonably request from time to time.
16 Remedies and Waivers
No failure by MLI to exercise, and no delay by MLI in exercising, any
right or remedy will operate as a waiver thereof, nor will any single or
partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.
The authority to debit, charge and pledge and the right of set-off and
other rights and remedies provided in this Agreement are separate,
independent and cumulative and not exclusive of any rights or remedies
(including any other security, right of set-off, lien, right to combine
or consolidate accounts or similar right) to which MLI is at any time
entitled anywhere, whether by operation of law or otherwise.
17 Partial Invalidity
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement, nor the legality, validity or
enforceability of such provisions under the law of any other
jurisdiction shall in any way be affected or impaired thereby. If and to
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<PAGE>
the extent that the security expressed to be created by or pursuant to
this Agreement is at any time and for any reason not effective as a
fixed charge, it shall instead take effect as a floating charge.
18 Miscellaneous
18.1 All interest shall accrue from day to day and shall be calculated on the
basis of a 360-day year (365 days where that is market practice, as
determined by MLI) and the number of days elapsed.
18.2 The certificate of an officer or employee of MLI as to the calculation
of any sum payable to MLI under the terms of this Agreement shall be
final, conclusive and binding on the Borrower save in the case of
manifest error.
18.3 Except to the extent otherwise specifically provided in any other
agreement between MLI and the Borrower, if there is any conflict or
inconsistency between this Agreement and any other such agreement, the
terms of this Agreement shall prevail.
19 Notices
19.1 The Borrower and MLI may from time to time issue instructions, notices,
demands or requests either orally or in writing (but in writing only
where so provided under this Agreement) and MLI shall be entitled to
rely on and shall not be liable for any action taken or omitted to be
taken in good faith pursuant to instructions, notices, demands or
requests (believed by it to be genuine and to be given or made by the
appropriate person(s)). The Borrower shall indemnify MLI against all
costs, expenses and liabilities arising from MLI's relying on any such
instructions, notices, demands or requests.
19.2 Each oral communication under this Agreement shall be directed, if to
MLI, to such of its officer(s) as may be notified by MLI to the Borrower
from time to time, and if to the Borrower, to such of its
representative(s) as may be notified to MLI from time to time. Each
written communication under this Agreement shall be addressed as
follows:
MLI: 20 Farringdon Road
P.O. Box 293
London EC1M 3NH
Attention: International Prime Brokerage
Fax No: 4471 892 4985
The Borrower: As set out in the Letter
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<PAGE>
or to such other address, telex or facsimile number or marked for the
attention of such other person as may be notified by the relevant
addressee from time to time to the other party. Notices shall be deemed
to have been received two days after being deposited for overnight
delivery with any reputable overnight courier service and immediately in
the case of a telex, fax or oral communication.
20 Governing law
This Agreement (except as set forth below) shall be governed by and
construed in accordance with English law and, in relation to any legal
action or proceedings arising out of or in connection with this
Agreement ("Proceedings"), the Borrower hereby and for the benefit of
MLI irrevocably submits to the jurisdiction of the courts of England and
any New York State or United States Federal court sitting in New York
City, and waives any objection to Proceedings in such courts on the
grounds of venue or on the grounds that the Proceedings have been
brought in an inconvenient forum. Section 6 of this Agreement and the
provisions regarding the creation, perfection, priority and enforcement
of the lien of this Agreement, and the determination of deficiency
judgments, shall be governed by the laws of New York State. Those
submissions shall not affect MLI's right to take Proceedings in any
other court of competent jurisdiction, nor shall the taking of
Proceedings in any court of competent jurisdiction preclude MLI from
taking Proceedings in any other court of competent jurisdiction (whether
concurrently or not).
-22-
FIRST AMENDMENT TO FACILITY LETTER AS OF NOVEMBER 17, 1999 BETWEEN MERRILL
LYNCH INTERNATIONAL ("LENDER") AND COMMONWEALTH ATLANTIC PROPERTIES INVESTORS
TRUST, PROMETHEUS INVESTMENT HOLDING CORP. AND PROMETHEUS WESTERN RETAIL,
LLC, ACTING JOINTLY AND SEVERALLY
Borrowers Commonwealth Atlantic Properties Investors Trust,
Prometheus Investment Holding Corp. and Prometheus
Western Retail, LLC, jointly and severally as co-
borrowers.
Guarantors LF Strategic Realty Investors L.P. ("LFSRI") and
Prometheus AAPT Holdings, L.L.C., jointly and
severally, for payment of all amounts due to Lender
in connection with the Loan, including interest,
principal, late payment fees and collection
expenses.
Closing Date November 17, 1999
Maturity Date May 15, 2001
Total Amount Available $44.0 million, being the total amount which Merrill
Lynch may, in its discretion, make available to the
Borrowers for drawdown, in minimum $5.0 million
increments or additional $1.0 million increments
thereof.
Initial Margin Not less than 75% as of the Closing Date.
Maintenance Margin Initially 75%, increasing to 80% on May 15, 2000 and
85% on November 15, 2000; however in no event shall
the principal amount of the loan outstanding exceed
the Total Amount Available.
Interest Rate Base Rate plus 2.625%, payable monthly in arrears
Loan Fee 2.0% of the Total Amount Available shall be due at
closing.
Amortization of Total The Total Amount Available shall be reduced by $8.0
Amount Available million (the "Scheduled Payment") on the fifteenth
day of each February, May, August and November,
commencing on February 15, 2000 (each, a "Payment
Date").
Dividends On the date that dividend payments are received by
Lender from CTA, UDR or BDN (each a "Dividend
Payment Date"), Lender shall apply such dividend
payments in reduction of the Total Amount Available
<PAGE>
(and such amounts shall be credited to the Scheduled
Payment coming due on the next Payment Date), and
once the Scheduled Payment that is coming due on the
next Payment Date has been fully paid, any such
dividends received on or prior to such next Payment
Date shall be applied to accrued and unpaid interest
then due and owing to Lender; provided, however,
that if the aggregate dividends received by Lender
on the Dividend Payment Dates immediately preceding
the next Payment Date are in an amount which is less
than the Scheduled Payment due on such Payment Date,
such shortfall between the aggregate amount of
dividend payments received by Lender on such
Dividend Payment Dates and the Scheduled Payment due
on such next Payment Date shall be paid by Borrowers
on such Payment Date. In the event that immediately
following a Payment Date there are funds remaining
on deposit with Lender after application of the
dividend payments received by Lender on or prior to
such Payment Date to the Scheduled Amount due on
such Payment Date and to all accrued and unpaid
interest due and payable on or before such Payment
Date, Lender shall pay the remaining balance to the
Borrowers pursuant to wiring instructions delivered
to Lender by the Borrowers.
Collateral Securities (i) 13,166,667 common shares of Center Trust Inc.
("CTA") carrying an annual dividend of $1.44 per
share (the "CTA Collateral Securities").
(ii) $136.5 million of perpetual Series D
Convertible Preferred Stock of United Dominion
Realty Trust, Inc. ("UDR"), carrying an annual
coupon of 7.50% (the "UDR Collateral Securities").
The UDR Collateral Securities are convertible into
8.4 million common shares at $16.25 per share.
(iii) $37.5 million of perpetual Convertible
Preferred Stock in Brandywine Realty Trust ("BDN"),
carrying an annual coupon of 7.25% (the "BDN
Collateral Securities"). The BDN Collateral
Securities are convertible into 1.3 million common
shares at $28.00 per share.
Prepayment Penalty None, except for any LIBOR breakage costs incurred
in connection with a prepayment.
2
<PAGE>
Release of BDN Provided there has been no Event of Default, the BDN
Collateral Securities Collateral Securities may be released upon a
reduction of the Total Amount Available by $25.0
million. Upon release of the BDN Collateral
Securities, the Maintenance Margin shall be reset to
85%.
Release or Sale of CTA The CTA Collateral Securities and the UDR Collateral
or UDR Collateral Securities may not be released, and the Loan will
Securities become due upon the sale of either the CTA
Collateral Securities or the UDR Collateral
Securities.
Conversion of UDR or Upon the conversion of either the UDR Collateral
BDN Collateral Securities or the BDN Collateral Securities either
Securities to Common by the Borrower or mandatorily by the issuer(s), the
Stock Maintenance Margin will increase to 85%.
Events of Default In addition to all Events of Default in the Facility
Letter, the following shall also be Events of
Default:
(i) Failure to pay interest when due;
(ii) Failure to pay scheduled principal
amortization when due;
(iii) Failure of CTA to pay a quarterly dividend
on common stock of not less than $0.36 per
share, and the sooner to occur of (i) the
closing share price of CTA declines by 50%
or more from the closing share price as of
the day prior to the Closing Date, or (ii)
the closing share price of CTA fails to
exceed $5.00 per share (in each case for 3
consecutive trading days);
(iv) Failure of UDR to pay stated dividend on
Series D Convertible Preferred Stock;
(v) Failure of BDN to pay stated dividend on
Convertible Preferred Stock;
(vi) Bankruptcy of, or any event as described in
clause 10.10 of the Facility Letter with
respect to CTA, UDR, or BDN;
(vii) The net assets represented by partner's
capital of the Guarantor is less than the
sum of (i) $400 million, plus (ii) the
market value of the collateral;
(viii) Failure to meet margin calls promptly;
3
<PAGE>
(ix) Cross-default to any event of Default
(howsoever described) related to the
recourse indebtedness of CTA, UDR or BDN in
excess of $25 million;
(x) A decline in the market value of the
Collateral in excess of 35% from the market
value as of the Closing Date.
Expenses Borrower shall pay all expenses in connection with the
Facilities, including, but not limited to, all fees and
disbursements of Lender's counsel whether with respect to
retained firms, the reimbursement for the expenses of in-
house staff or otherwise, and brokerage fees and
commissions. To the extent incurred, the foregoing
expenses shall be paid by Borrower whether or not the
Facilities shall close or be funded.
4
<PAGE>
MERRILL LYNCH INTERNATIONAL
By: /s/ John Piccitto
Name: John Piccitto
Title: Director of Equity Markets
Global Equity Finance
20 Farringdon Road
P.O. Box 293
London
EC1M 3NH
Commonwealth Atlantic Properties Investors Trust,
a Maryland real estate investment trust
c/o Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: /s/ John A. Moore
----------------------------------
Name: John A. Moore
Title: Chief Financial Officer
Prometheus Investment Holding Corp.,
a Delaware corporation
c/o Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: /s/ John A. Moore
----------------------------------
Name: John A. Moore
Title: Chief Financial Officer
5
<PAGE>
Prometheus Western Retail, LLC,
a Delaware limited liability company
c/o Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: Prometheus Western Retail Trust, a
Maryland real estate investment
trust, its managing member
By: /s/ John A. Moore
----------------------------------
Name: John A. Moore
Title: Chief Financial Officer
6
COLLATERALISED GUARANTEE
TO: Merrill Lynch International ("MLI")
For the Attention of: John Piccitto
20 Farringdon Road
P.O. Box 293
London, EC1M 3NH
1 Guarantee
In consideration of MLI entering into a facilities agreement
(as amended and supplemented from time to time, the
"Facilities Agreement", which shall include each transaction
entered into and each document issued or given pursuant to the
Facilities Agreement) constituted by a Terms Sheet and a
letter dated 17 November 1999 from MLI to Commonwealth
Atlantic Properties Investors Trust, Prometheus Investment
Holding Corp. and Prometheus Western Retail, LLC (collectively
the "Customer") c/o Lazard Freres Real Estate Investors
L.L.C., 30 Rockefeller Plaza, 50th Floor, New York, NY, 10020,
USA, as amended by First Amendment to Facility Letter dated
17 November 1999, and of MLI entering into a custodian
agreement with Prometheus Investment Holding Corp., LF
Strategic Realty Investors L.P. and Prometheus AAPT Holdings,
L.L.C. (as amended and supplemented from time to time, the
"Custodian Agreement" and, together with the Facilities
Agreement, the "Agreements") dated 17 November 1999, and of
MLI making available to the Customer the facilities and
services provided for in the Agreements, we, LF Strategic
Realty Investors L.P., a Delaware limited partnership and
Prometheus AAPT Holdings, L.L.C., a Delaware limited liability
company (collectively, the "Guarantor"), having our principal
place of business c/o Lazard Freres Real Estate Investors
L.L.C., 30 Rockefeller Plaza, 50th Floor, New York, NY 10020,
USA
hereby unconditionally and irrevocably:
1.1 guarantee that, if for any reason the Customer does not
pay any sum payable by it under the Agreements by the
time, on the date and otherwise in the manner required by
the Agreements, whether on the normal due date, on
acceleration or otherwise (together the "Guaranteed
Liabilities"), the Guarantor will pay that Guaranteed
Liability on demand by MLI and
1.2 as separate, independent and alternative stipulations,
agree:
1.2.1 that any Guaranteed Liability which, although
expressed to be payable by the Customer under
the Agreements, is for any reason (whether or
not now existing and whether or not now known
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or becoming known to MLI) not recoverable from
the Guarantor on the basis of a guarantee shall
nevertheless be recoverable from it as if it
were the sole principal debtor and shall be
paid by it to MLI on demand and
1.2.2 as a primary obligation to indemnify MLI
against any loss suffered by it as a result of
any Guaranteed Liability expressed to be
payable by the Customer under the Agreements
not being paid by the time, on the date and
otherwise in the manner required by the
Agreements or any Guaranteed Liability being or
becoming void, voidable or unenforceable for
any reason (whether or not now existing and
whether or not now known or becoming known to
MLI), the amount of that loss being the amount
expressed to be payable by the Customer in
respect of the relevant Guaranteed Liability.
2 Security Provisions
2.1 The Guarantor, as continuing security for the due payment
of the Guaranteed Liabilities and with full title
guarantee, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby
acknowledged, hereby irrevocably pledges, grants and
creates a first priority lien on, and security interest
in favour of MLI all the Guarantor's right, title and
interest in and to all Securities, and all related
documents, from time to time held by or for the account
or to the order of MLI (whether in its capacity as
Custodian or otherwise) or in or credited to the
Guarantor Collateral Account and the claims represented
thereby (together, the "Guarantor Pledged Securities").
The security created by or pursuant to this Guarantee
shall affect and include all dividends, distributions and
interest on and other proceeds of the Guarantor Pledged
Securities or other property hereby pledged or charged,
whether capital or income, and all property distributed,
paid, accruing or offered at any time on, to, in respect
of or in substitution for, any of the Guarantor Pledged
Securities or other property hereby pledged or charged,
in each case only to the extent that any of the foregoing
are paid or delivered to MLI for credit to the Guarantor
Collateral Account.
2.2 The Guarantor, as continuing security for the due payment
of the Guaranteed Liabilities and with full title
guarantee, and for other good and valuable
consideration, the receipt and sufficiency of which is
hereby acknowledged, hereby irrevocably pledges, grants
and creates a first priority lien on, and security
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interest in favour of MLI all monies and investment
property (and all the Guarantor's right, title and
interest in and to such monies and the debt represented
thereby and investment property) from time to time
standing to the credit of the Guarantor Collateral
Account, in whatever currency, and including any interest
accrued or accruing thereon.
2.3 None of the monies from time to time standing to the
credit of the Guarantor Collateral Account (nor the
Guarantor's right, title and interest in and to such
monies) shall, during the continuance of the Facilities
and until the Secured Liabilities (other than the
Contingent Liabilities) have been duly and properly paid
in full, be capable of being withdrawn, assigned or
otherwise disposed of or encumbered except with MLI's
prior written consent or as otherwise specifically
provided in this Guarantee. Any such consent of MLI (and
any payment whether with or without such consent) shall
operate as a release of the relevant monies and the
provisions of this Guarantee shall continue to apply to
the Guarantor Collateral Account and the monies from time
to time standing to the credit thereof.
2.4 The Guarantor hereby undertakes to MLI for itself that,
at all times during the continuance of the Facilities and
until the Secured Liabilities (other than the Contingent
Liabilities) have been properly and duly paid in full:
2.4.1 it will on demand duly pay any calls,
subscription monies and/or other monies payable
on or in respect of any of the Guarantor
Pledged Securities. If it does not do so, MLI
may (but shall not be obliged to) do so and, if
MLI does so, the Guarantor shall on demand
indemnify MLI against such payment and
2.4.2 it will not (nor will it agree, conditionally
or unconditionally, to) create or have
outstanding any call option, pledge,
assignment, transfer, hypothecation, mortgage,
charge, claim or similar encumbrance, security
interest or lien on or affecting any of the
Guarantor Pledged Securities (except as
contemplated by this Guarantee or with MLI's
prior written consent).
MLI acknowledges that the Guarantor may request consent
to options, assignments and transfers (including
agreements therefor) on or of Guarantor Pledged
Securities in the normal course of its trading operations
and MLI will consider any such request in good faith.
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2.5 Without prejudice to Clause 2.3 or 4.2, MLI is authorised
to debit the Guaranteed Liabilities to any account of the
Guarantor with MLI and MLI is authorised to combine or
consolidate such account with the Guarantor Collateral
Account and/or set off, transfer or apply any monies
standing to the credit of the Guarantor Collateral
Account in or towards satisfaction of any of the
Guaranteed Liabilities.
2.6 The security created by or pursuant to this Guarantee
shall be a continuing security notwithstanding any
intermediate payment or settlement of account and,
without prejudice to the generality of the foregoing,
shall continue in full force and effect until MLI
reassigns or executes a formal release with respect to
such security, which it may do in whole or from time to
time in part, and any withdrawal or other disposal of any
of the property subject to the security created by or
pursuant to this Guarantee shall operate as a release of
such property, and the provisions of this Guarantee shall
continue to apply to the remainder thereof. The security
created by or pursuant to this Guarantee shall be in
addition to and shall not prejudice any other security,
guarantee, indemnity, right or remedy of whatever nature
which MLI may now or at any time have in respect of any
of the Guaranteed Liabilities. Upon receipt from the
Guarantor of a request made after termination of the
Facilities and payment in full of all the Secured
Liabilities (other than the Contingent Liabilities), MLI
shall at the expense of the Guarantor reassign to the
Guarantor so much (if any) of the Guarantor Pledged
Securities as then remains and/or execute a formal
release with respect thereto.
2.7 In this Guarantee:
"Custodian" means MLI in its capacity as such under the
Custodian Agreement.
"Guarantor Collateral" means all Securities, including
any certificates and documents of or evidencing title to
the same (and the claim represented thereby), and cash
balances (and the debt represented thereby) in or
credited to the Guarantor Collateral Account all right,
title and interest in and to which are, to the
satisfaction of MLI, subject to the security created by
or pursuant to this Guarantee.
"Guarantor Collateral Account" means the one or more
accounts, having such designations as MLI may determine,
opened or to be opened by MLI pursuant to, or used for
the purposes of, this Guarantee for the Guarantor with
the Custodian or any other person (including MLIB or any
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other member of the Merrill Lynch Group) chosen by MLI in
respect of Guarantor Collateral, all such Guarantor
Collateral Accounts to be maintained under the complete
discretion of MLI or such other person in each case
pursuant to the Custodian Agreement.
Headings shall be ignored in construing this Guarantee.
2.8 MLI shall have all rights and remedies as a secured party
at law or in equity including, without limitation, the
rights of a secured party under the Uniform Commercial
Code.
3 Guarantor Collateral
3.1 The Guarantor, at its own expense, will execute or cause
to be executed all such documents, and will do or cause
to be done all such things, which are reasonably
requested by MLI (1) to enable MLI to enjoy, exercise or
enforce its rights as a secured party under this
Guarantee and (2) to evidence, and to establish and
maintain the perfection and first priority of, MLI's
security interest in the Guarantor Pledged Securities and
the Guarantor Collateral Account (and the monies for the
time being standing to the credit thereof and the debt
represented thereby) and the perfection of MLI's security
interest in the other property hereby pledged or charged.
Without limiting the generality of the foregoing, the
Guarantor, at its own expense, will execute and give or
file, or both, all notices and documents (including, but
not limited to, notice of the security created by or
pursuant to this Guarantee) in such manner, to such
persons and at such places as may be reasonably requested
by MLI to establish and maintain the perfection and, as
appropriate, first priority of MLI's said security
interest. The Guarantor irrevocably and by way of
security authorises MLI, if the Guarantor does not do so,
to take any step contemplated by this Clause 3.1 (but MLI
shall have no obligation to do so).
3.2 Except as otherwise agreed by the Guarantor and MLI, MLI
shall at all times while any Guarantor Collateral remains
credited to the Guarantor Collateral Account use
reasonable care in connection therewith but shall not
thereby be responsible for the value of the Guarantor
Collateral or the other property hereby pledged or
charged or, except to the extent otherwise specifically
agreed, for the collection or payment of any dividends,
distributions, interest or other receipts in respect of
Guarantor Pledged Securities or other property hereby
pledged or charged nor to ensure the taking up of any
securities, rights, monies or other property distributed,
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paid, accruing or offered at any time on, to, in respect
of or in substitution for any of the Guarantor Collateral
or other property hereby pledged or charged.
3.3 [Intentionally omitted.]
3.4 Until such time as an Event of Default as set out in
Clause 10 of the Facility Agreement (each an "Event of
Default") occurs, and without prejudice to any other
requirements of MLI, the Guarantor may at any time
request MLI to release and reconvey to the Guarantor (or
as it may direct) the BDN Collateral Securities (as
defined in the Letter) upon a reduction of the Total
Amount Available (as defined in the Letter) by
$25,000,000, and MLI will give effect to such request.
Upon release of the BDN Collateral Securities, the
Maintenance Margin (as defined in the Letter) shall be
reset to 85%.
4 Enforcement
If the Guarantor fails or is unable to MLI's satisfaction duly
to comply with any demand under Clause 1:
4.1 MLI may at any time thereafter, without notice to the
Guarantor and without prejudice to any other right or
remedy, dispose or procure the disposal, by sale or
otherwise, of all or from time to time part of the
Guarantor Pledged Securities or other property hereby
pledged or charged or otherwise realise or procure the
realisation of the same, in such manner and at such price
or prices (whether payable or deliverable immediately, on
a deferred basis or by instalments) without being
responsible for any loss or diminution in price, as it
may think fit, close out or liquidate any option, future,
long position or short position which the Guarantor may
have (by sale, purchase or otherwise howsoever), take
possession of all or from time to time of part of the
Guarantor Pledged Securities or other property hereby
pledged or charged and proceed forthwith to sell, assign,
give options to purchase, contract to sell or otherwise
dispose of and deliver the Guarantor Pledged Securities
or other property hereby pledged or charged or any part
thereof in one or more parts at public or private sale at
any exchange, broker's board or at any of MLI's offices
or elsewhere at such prices and on such terms as MLI
deems appropriate, all without demand for performance,
advertisement or other notice of any kind, and apply the
proceeds thereof and all cash balances in the Guarantor
Collateral Account or otherwise hereby pledged or charged
(together, the "Guarantor Proceeds") as follows:
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4.1.1 first, in or towards payment of all amounts
(including costs, expenses, commissions and
taxes) arising as a result thereof
4.1.2 secondly, in or towards payment and
satisfaction of the Guaranteed Liabilities in
such order and manner as MLI may determine
4.1.3 thirdly, in payment of any surplus to the
Guarantor or other person entitled thereto.
Provided always that MLI shall not be obliged to apply
any part of such proceeds in accordance with sub-clause
4.1.3 until all the Secured Liabilities (other than the
Contingent Liabilities) have been discharged to the
satisfaction of MLI and until after each of them has
exercised all set-offs and other rights which it is
expressed to be entitled to make or exercise under this
Guarantee and/or the Facilities Agreement. Until such
time the proceeds shall be held in or credited to the
Guarantor Collateral Account or such other account with
MLI as MLI may (in its absolute discretion) decide.
Upon disposal of any Guarantor Pledged Securities or
other property hereby pledged or charged made or
purported to be made under the provisions of this Clause,
a certificate of any officer or employee of MLI that a
default has occurred and that the power of disposal has
become exercisable shall be conclusive evidence of that
fact in favour of any purchaser or other person to whom
any of the Guarantor Pledged Securities or other property
hereby pledged or charged may be transferred under such
disposal and the Guarantor agrees to indemnify MLI (on a
full indemnity basis) against any claim which may be made
against it by such purchaser or person by reason of any
defect in title to such Guarantor Pledged Securities or
other property hereby pledged or charged unless such
claim has arisen as a result of the negligence or wilful
misconduct of MLI.
4.2 In addition to any general lien, right to combine or
consolidate accounts, set-off or similar right to which
it may be entitled at law, by contract, or otherwise, MLI
may at any time, without notice to the Guarantor, debit
any of the Guaranteed Liabilities to any account of the
Guarantor with it (including without limitation the
Guarantor Collateral Account) and combine or consolidate
all or any one or more of the Guarantor's then existing
accounts (including without limitation the Guarantor
Collateral Account) with, and liabilities of the
Guarantor to, it and/or set off, transfer or apply any
sum(s) standing to the credit of any one or more of the
Guarantor's accounts with it (including without
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limitation the Guarantor Collateral Account) in or
towards satisfaction of any of the liabilities of the
Guarantor to MLI, whether present or future, actual or
contingent.
4.3 MLI may do all such other acts and things as it may
consider necessary or desirable in connection with the
realisation of the security created by or pursuant to
this Guarantee.
MLI shall have authority to purchase one currency with
another for purposes of this Clause 4.
5 Guarantor as Principal Debtor
As between the Guarantor and MLI but without affecting the
Customer's obligations, the Guarantor shall be liable under
this Guarantee as if it were the sole principal debtor and not
merely a surety. Accordingly, it shall not be discharged, nor
shall its liability be affected, by anything which would not
discharge it or affect its liability if it were the sole
principal debtor (including (1) any time, indulgence,
concession, waiver or consent at any time given to the
Customer or any other person, (2) any amendment or supplement
to the Agreements or to any other security or guarantee, (3)
the making or absence of any demand on the Customer or any
other person for payment, (4) the enforcement or absence of
enforcement of the Agreements or of any other security or
guarantee, (5) the taking, existence or release of any other
security or guarantee, (6) the winding-up or dissolution of
the Customer or any other person or (7) the illegality,
invalidity or unenforceability of or any defect in any
provision of the Agreements or any of the Customer's
obligations under them).
6 Guarantee Continuing
The Guarantor's obligations under this Guarantee are and will
remain in full force and effect by way of continuing security
until the Facilities have terminated and MLI has irrevocably
received or recovered all sums payable under the Agreements.
Furthermore, those obligations of the Guarantor are additional
to, and not instead of, any other security or guarantee at any
time existing in favour of MLI, whether from the Guarantor or
otherwise, and may be enforced without first having recourse
to the Customer, any other person or any other security or
guarantee. The Guarantor irrevocably waives all notices and
(except as required by Clause 1) demands of any kind.
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7 Accounts
If this Guarantee ceases for any reason to be binding on the
Guarantor as a continuing security in relation to the
Customer, or if MLI becomes aware of any other mortgage,
charge, pledge, lien or other encumbrance or security of any
kind on or over the Guarantor Collateral or any part thereof,
then MLI may break any account or accounts of the Customer
with it and open a new account for the Customer. If that is
done, no monies then or subsequently credited to such new
account shall have the effect of reducing the amount due to
MLI on the original account. If that is not done, MLI shall
still be treated as if it had done so at the time of such
cessation or, as the case may be, of the creation of the other
mortgage, charge, pledge, lien or other encumbrance or
security, and as if all payments then or subsequently made by
or on behalf of the Customer to it had been credited to such
new account with the same result.
8 Exercise of Guarantor's Rights
Until such time as the Facilities are terminated and all the
Secured Liabilities (other than the Contingent Liabilities)
have been paid in full:
8.1 any right of the Guarantor, by reason of the performance
of any of its obligations under this Guarantee, to be
indemnified by the Customer or to take the benefit of or
enforce any other security or guarantee shall be
exercised and enforced only in such manner and on such
terms as MLI may reasonably require to ensure
satisfaction of the Customer's obligation to MLI; and
8.2 any amount received or recovered by the Guarantor (a) as
a result of any exercise of any such right or (b) in the
winding-up or dissolution of the Customer shall be held
in trust for MLI and immediately paid to MLI.
9 Avoidance of Payments
The Guarantor shall on demand by MLI indemnify MLI against any
funding or other cost, loss, expense or liability sustained or
incurred by it as a result of its being required for any
reason (including any bankruptcy, insolvency, winding-up,
dissolution or similar law of any jurisdiction) to refund all
or part of any amount received or recovered by it in respect
of any Guaranteed Liability and shall in any event pay to it
on demand by MLI the amount so refunded by it.
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10 Suspense Accounts
For the purpose of enabling MLI to maximise its recoveries in
any actual or potential winding-up or dissolution, any amount
received or recovered by MLI (otherwise than as a result of a
payment to it by the Customer) in respect of any Guaranteed
Liability may be placed by the recipient in a suspense
account. That amount may be kept there unless and until MLI is
satisfied that it is not obliged to pay any further sums under
the Agreements and that it has irrevocably received or
recovered all sums payable to it under the Agreements.
11 Certificates Conclusive
The certificate of an officer or employee of MLI as to the
calculation any amount payable to MLI under the terms of this
Guarantee shall, save for manifest error, be final, conclusive
and binding on the Guarantor.
12 Payments, Taxes
All payments by the Guarantor shall be made free and clear of
any restrictions or conditions, without set-off or
counterclaim, and free and clear of, and (subject as
hereinafter provided) without deduction for, any taxes,
deductions or withholdings of any nature. If any deduction or
withholding on account of any such tax or other amount is
required by law to be made from any payment, the Guarantor
shall pay in the same manner and at the same time such
additional amounts as will result in receipt by MLI, free from
any liability in respect of any such deduction or withholding,
of such amount as would have been received by it had no such
deduction or withholding been required to be made.
Notwithstanding the foregoing, Guarantor shall not be
obligated to pay income or "doing business" taxes imposed upon
MLI.
13 Currency
The Guarantor shall pay all amounts hereby guaranteed to such
account as MLI may notify to the Guarantor and in the same
currency and funds as such amounts are payable by the Customer
under the Agreements (the "Currency of Account"). Any amount
received or recovered by MLI in a currency other than the
appropriate Currency of Account (whether as a result of, or of
the enforcement of, a judgment or order of any court of any
jurisdiction, in the winding-up or dissolution of the
Customer, the Guarantor, or otherwise) in respect of any sum
due to it from the Guarantor under this Guarantee shall only
constitute a discharge to the Guarantor to the extent of the
amount in that Currency of Account which MLI is able, in
accordance with its usual practice, to purchase with the
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amount so received or recovered in that other currency on the
date of that receipt or recovery (or, if it is not practicable
to make that purchase on that date, on the first date on which
it is practicable to do so). If that amount in that Currency
of Account is less than the amount expressed to be due to MLI
under this Guarantee, the Guarantor shall indemnify it against
any loss sustained by it as a result. In any event, the
Guarantor shall indemnify it against the cost of making any
such purchase.
14 Representations and Warranties
The Guarantor represents and warrants to and for the benefit
of MLI that:
14.1 it is a limited liability company or limited partnership
duly organised or incorporated and validly existing under
the laws of the jurisdiction of its establishment and has
the power and authority to own its assets and to conduct
the business which it conducts
14.2 its entry into and/or performance of or compliance with
its obligations under this Guarantee do not and will not
violate or exceed any guaranteeing, charging or other
powers or restrictions granted or imposed under any law
to which it is subject, its constitutional documents or
any agreement to which it is a party or which is binding
on it or its assets
14.3 all acts, conditions and things required to be done,
fulfilled and performed in order to enable it lawfully to
execute and perform its obligations under this Guarantee
and to ensure that its obligations are legal, valid and
binding have been done, fulfilled and performed
14.4 it has the power to enter into and perform and comply
with its obligations under this Guarantee and has taken
all necessary action to authorise such execution and
performance
14.5 it will obtain and maintain in effect and comply with the
terms of all necessary consents, registrations and the
like of or with any governmental or other regulatory body
or authority applicable to this Guarantee (other than any
"doing business" consents, registrations and the like
which MLI is required by applicable law to obtain or
maintain)
14.6 its obligations under this Guarantee are binding and
enforceable at law
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14.7 it is not in default under any agreement to which it is a
party or by which it or its assets is or are bound and no
litigation, arbitration or administrative proceedings are
current or pending, which default, litigation,
arbitration or administrative proceedings are material in
the context of this Guarantee
14.8 it is not necessary or advisable in order to ensure the
validity, effectiveness, performance or enforceability of
this Guarantee or the perfection of the security created
by or pursuant to this Guarantee that any document be
filed, registered or recorded in any public office or
elsewhere that has not already been filed, registered or
recorded
14.9 except by this Guarantee, it has not assigned,
transferred or otherwise disposed of the Guarantor
Collateral it owns (or its rights, title and interest to
and in the Guarantor Collateral), either in whole or in
part, nor agreed to do so, and will not at any time do so
or agree to do so, and it will at all times be the sole
beneficial owner of and fully guarantee title to all
Guarantor Collateral which is now owned by it or may at
any time hereafter become subject to the security created
by or pursuant to this Guarantee
14.10 except for the security created by or pursuant to
this Guarantee, no mortgage, charge, pledge, lien,
claim or other similar encumbrance or security of
any kind exists on or over the Guarantor Collateral
(or its right, title and interest in and to the
Guarantor Collateral), either in whole or in part,
nor has it agreed to create any such other security
nor will it at any time do so or agree to do so and
14.11 each of the above representations and warranties
will be correct and complied with in all respects
during the continuance of the Facilities and so long
as any sum remains payable under the Agreements, as
if repeated then by reference to the then existing
circumstances.
15 Information
Until such time as the Facilities have been terminated and all
the Secured Liabilities (other than the Contingent
Liabilities) have been paid in full, the Guarantor shall
furnish to MLI such financial and other information as to its
affairs and, as the case may be, its subsidiaries as MLI may
reasonably request from time to time.
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16 Intentionally Omitted.
17 Assignments
MLI may at any time assign all or part of its rights under
this Guarantee to any other member of the Merrill Lynch Group
or, with the prior written consent of Guarantor (such consent
not to be unreasonably withheld), to any other person which is
the holder of the Facilities. MLI shall after any such
assignment and to the extent (if at all) appropriate or
required hold the security created by or pursuant to this
Guarantee for itself and each assignee. Any reference in this
Guarantee to MLI shall be construed accordingly and shall also
include its successors. Any such assignee shall be entitled to
the full benefit of this Guarantee to the same extent as if it
were an original party in respect of the rights assigned to
it. MLI may disclose to any other member of the Merrill Lynch
Group or, subject to prior notice to Guarantor, any potential
assignee or any other person who has entered or proposes to
enter into contractual arrangements with it in relation to or
concerning the Agreements or this Guarantee such information
about the Customer, the Guarantor, the Agreements and this
Guarantee as it may think fit.
18 Intentionally Omitted.
19 The Agreements
19.1 Terms defined in the Agreements (and not defined in this
Guarantee) shall have the same meanings in this
Guarantee.
19.2 This Guarantee is a Performance Assurance Agreement for
the purposes of the Facilities Agreement.
20 Parties
This Guarantee shall not be discharged nor shall the liability
of the Guarantor be affected by any amalgamation or merger of
MLI or the Guarantor with any other company, or any
reconstruction or change in the constitution of MLI or the
Guarantor, or any change in the name, style or constitution of
MLI or the Guarantor or, as the case may be, in the persons
who from time to time constitute the general and/or limited
partners in the Guarantor, and this Guarantee shall be binding
on the Guarantor and on all such persons.
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21 Communications
Any demand or other notice under this Guarantee shall be made
in writing by MLI acting by one of its officers or employees
and may be sent by post or hand delivered to the address of
the Guarantor specified below, or sent by facsimile to the
facsimile number specified below, or in each case to such
other address and/or facsimile number as the Guarantor has
from time to time notified to MLI in writing. Notices shall be
deemed to have been received two days after being deposited
for overnight delivery with any reputable overnight courier
service and immediately in the case of hand delivered or
facsimile communication.
22 Remedies and Waivers
No failure by MLI to exercise, and no delay by MLI in
exercising, any right or remedy will operate as a waiver
thereof, nor will any single or partial exercise of any such
right or remedy preclude any other or further exercise thereof
or the exercise of any other right or remedy. The authority to
debit, charge and pledge and the right of set-off and other
rights and remedies provided in this Guarantee are separate,
independent and cumulative and not exclusive of any rights or
remedies (including any other security, right of set-off,
lien, right to combine or consolidate accounts or similar
right) to which MLI is at any time entitled anywhere, whether
by operation of law or otherwise.
23 Partial Invalidity
If at any time any provision of this Guarantee is or becomes
illegal, invalid or unenforceable in any respect under the law
of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Guarantee,
nor the legality, validity or enforceability of such
provisions under the law of any other jurisdiction shall in
any way be affected or impaired thereby. If and to the extent
that the security expressed to be created by or pursuant to
this Guarantee is at any time and for any reason not effective
as a fixed charge, it shall instead take effect as a floating
charge.
24 Counterpart Execution
This Guarantee may be executed in any number of counterparts,
all of which taken together shall constitute one and the same
instrument.
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25 Governing Law
This Guarantee (except as hereinafter set forth) shall be
governed by and construed in accordance with English Law.
Section 2 of this Guaranty and the provisions regarding the
creation, perfection, priority and enforcement of the lien of
this Agreement, and the determination of deficiency judgments,
shall be governed by the laws of New York State.
26 Proceedings
In relation to any legal action or proceedings arising out of
or in connection with this Guarantee ("Proceedings") the
Guarantor, for the benefit of MLI, irrevocably submits to the
jurisdiction of the courts of England and any New York State
or United States Federal court sitting in New York City, and
waives any objection to Proceedings in such courts on the
grounds of venue or on the grounds that the Proceedings have
been brought in an inconvenient forum. Those submissions shall
not affect MLI's right to take Proceedings in any other court
of competent jurisdiction, nor shall the taking of Proceedings
in any court of competent jurisdiction preclude MLI from
taking Proceedings in any other court of competent
jurisdiction (whether concurrently or not).
MERRILL LYNCH INTERNATIONAL
By: /s/ John Piccitto
Name: John Piccitto
Title: Director of Equity Markets
Global Equity Finance
20 Farringdon Road
P.O. Box 293
London
EC1M 3NH
Attention: International Prime Brokerage
Fax No: 44 17l 892 4860
Telephone: 44 171 892 4920
15
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LF Strategic Realty Investors L.P.,
a Delaware limited liability company
c/o Lazard Freres Real Estate Investors, L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: Lazard Freres Real Estate Investors L.L.C., a
New York limited liability company, its general partner
By: /s/ John A. Moore
-----------------------------------
Name: John A. Moore
Title: Principal & Chief Financial Officer
16
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Prometheus AAPT Holdings, L.L.C.
a Delaware limited liability company
c/o Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: LF Strategic Realty Investors L.P.
a Delaware limited partnership, its managing member
By: Lazard Freres Real Estate Investors L.L.C.,
a New York limited liability company,
its general partner
By: /s/ John A. Moore
-----------------------------
Name: John A. Moore
Title: Principal & Chief Executive Officer
17
CUSTODIAN AGREEMENT
This Agreement is made on 17 November 1999 between
(1) MERRILL LYNCH INTERNATIONAL (the "Custodian") and
(2) LF Strategic Realty Investors L.P., Prometheus AAPT Holdings, L.L.C. and
Prometheus Western Retail, LLC, acting jointly and severally
(collectively, the "Customer").
It is agreed as follows:
1 Definitions
In this Agreement:
1.1 Collateralised Guarantee means the Collateralised Guarantee dated 17
November 1999 from LF Strategic Realty Investors L.P. and Prometheus
AAPT Holdings, L.L.C., as amended and supplemented from time to time
1.2 "Customer Account" means the Collateral Account under Facility Agreement
and the Guarantor Collateral Account under the Collateralised Guaranty
1.3 "Facility Agreement" means the facility letter dated 17 November 1999
between Merrill Lynch International ("MLI"), Prometheus Western Retail,
LLC, Commonwealth Atlantic Properties Investors Trust and Prometheus
Investment Holding Corp., as amended by First Amendment to Facility
Letter dated 17 November 1999, as further amended and supplemented from
time to time
1.4 "Instructions" means any instructions given by the Customer in relation
to any specified transaction in writing or by facsimile or telex, signed
or given by any one of the persons specified in or notified pursuant to
Clause 11
1.5 "Rules" means the Rules of The Securities and Futures Authority Limited
as from time to time in effect and
1.6 "Securities" means the Collateral Securities (as defined in the Facility
Agreement) and the Guarantor Collateral Securities (as defined in the
Collateralised Guaranty) and shall include all other investments, as
defined in the Financial Services Act 1986 (as amended or re-enacted
from time to time) and physical commodities (or any certificates or
documents of or evidencing title to any of the same), which the Customer
may at any time deposit with the Custodian to be held on the terms of
this Agreement.
<PAGE>
2 Appointment of Custodian
The Customer hereby appoints the Custodian to act as custodian of the
Securities in accordance with the terms and conditions of this Agreement
and to provide the services described in this Agreement.
3 Warranties and Statements under the Rules
3.1 The Customer warrants to and for the benefit of the Custodian that it is
duly organised and validly existing under the laws of its jurisdiction
of establishment, has full capacity and authority to enter into this
Agreement and to carry out all the transactions contemplated in this
Agreement and has taken all necessary action (including the obtaining of
all necessary consents, registrations and the like of or with any
government or other regulatory body or authority) to authorise the
execution, delivery and performance of this Agreement.
3.2 The Customer understands that the Custodian is regulated by of The
Securities and Futures Authority Limited, that its name is as set out at
the beginning of this Agreement and that at the date of this Agreement
its registered office is at the address set out for the Custodian
pursuant to Clause 12.
3.3 The Customer further understands that the Custodian is proposing to and
will treat the Customer as a non-private customer within the meaning of
the Rules for all the purposes of this Agreement and acknowledges that
in accordance with the Rules it has agreed that its monies shall not be
treated by the Custodian as or deemed to be Client Money for the purpose
of the Financial Services (Client Money) Regulations 1991 (as amended).
3.4 As respects cash items, the first sum paid in shall be the first paid
out, and a payment in shall discharge the first undischarged debit item,
and no cash item shall be held for a period of a year or more.
3.5 Notwithstanding any of its rights and duties under this Agreement,
nothing in this Agreement shall make the Custodian a manager or adviser
in respect of any Securities and the Custodian is not required to have
regard to any particular investment objectives. The Custodian will not
be subject to any fiduciary duties towards the Customer and will not
incur any duty of disclosure towards the Customer or be subject to any
restriction in dealing for the Custodian's own or its customers' account
by reason of any custodial services provided to the Customer.
4 Deposit of Securities
4.1 The Customer may tender Securities to the Custodian, which may decline
to accept Securities tendered to it if it determines that it would be
2
<PAGE>
illegal or contrary to any applicable rules of any exchange or market
for the Custodian to accept such Securities or if the Custodian
reasonably suspects that such Securities are tainted by fraud.
4.2 The Customer and the Custodian shall agree from time to time the normal
categories of Securities, and the markets in which such Securities are
to be dealt in, to be deposited under the terms of this Agreement and,
if the Customer intends to tender Securities to the Custodian under this
Clause falling outside such categories or to be dealt in on other
market(s), it shall give 30 days' (or such lesser period as the
Custodian may agree) notice to the Custodian of its intention to tender
Securities of such category or to be dealt in on such market(s). At any
time during such period the Custodian may notify the Customer that it
will decline to accept such Securities if it determines that
custodianship facilities suitable for holding Securities of that
particular category or to be dealt in on such market(s) are not
reasonably available to it.
4.3 The Custodian shall be entitled to treat Securities accepted by it as
fungible or at any time to allocate specific Securities to the Customer,
any such treatment or allocation to be binding on the Customer.
4.4 Intentionally Omitted.
4.5 The Securities held in the Customer Account shall, at all times, as
between the Custodian (in its capacity as such) and the Customer be the
property of the Customer, and the Custodian shall not have the power or
authority to transfer, assign, hypothecate, pledge or otherwise dispose
of any of the Securities to any person except as expressly permitted by
the provisions of this Agreement, the Facility Agreement or the
Collateralised Guarantee.
5 Transactions Requiring Instructions
The Custodian shall carry out the following transactions in relation to
the Securities upon receipt of specific Instructions:
5.1 Sales: The Custodian shall deliver Securities sold by the Customer and
receive payment for those Securities in such manner as may be specified
by the Customer in its Instructions (and, in the absence of specific
Instructions to the contrary, shall make such payment available to MLI
for application in accordance with the Facility Agreement).
5.2 Purchases: The Custodian shall make payment for and receive Securities
purchased by the Customer (insofar as monies are made available to the
Custodian by the Customer to make such payment), payment to be made by
3
<PAGE>
the Custodian in such manner as may be specified by the Customer in its
Instructions.
5.3 Exercise of rights, etc: The Custodian shall deal with rights (including
rights to subscribe for securities and conversion rights), warrants and
other similar securities received by it in connection with the
Securities only in the manner and to the extent specified in
Instructions.
5.4 Voting: The Custodian shall not exercise any voting rights attached to
any of the Securities except as directed by Instructions received by the
Custodian.
The Customer shall on demand pay to the Custodian such transaction fees
(together with value added tax, if any) as the Custodian may from time
to time specify in respect of each delivery of Securities to or out of
the Customer Account and such other fees (together with value added tax,
if any) as may be agreed by the Customer and the Custodian from time to
time.
6 Transactions not Requiring Instructions
The Custodian shall be entitled to carry out the following transactions
relating to the Securities without seeking Instructions from the
Customer:
6.1 Signature of Certificates: The Customer hereby authorises the Custodian
to sign any certificates of ownership or other certificates relating to
the Securities which may be required by any regulations made by the
Commissioners of Inland Revenue, the United States Internal Revenue
Service or any other regulatory authority, whether governmental or
otherwise, relating to income tax, any other tax levied or ownership.
6.2 Intentionally Omitted.
6.3 Intentionally Omitted.
6.4 Receipt of Securities: The Custodian shall receive and hold for the
account of the Customer all Securities received as a distribution on
Securities held by the Custodian as a result of a stock dividend, share
sub-division or reorganisation, capitalisation of reserves or otherwise.
6.5 Exchange of Interim Receipts: The Custodian shall exchange interim
receipts or temporary Securities for definitive certificates or
Securities.
6.6 Expenses and Disbursements: The Custodian may make cash disbursements
for expenses and stamp duties and transfer taxes in handling Securities
4
<PAGE>
and for similar items in connection with the Custodian's duties under
this Agreement. Any such disbursements, and all transaction and other
agreed fees and expenses charged by the Custodian under this Agreement
(together with value added tax, if any) shall be debited to the Customer
Account.
6.7 Delivery of Information and Documents: The Custodian shall deliver to
the Customer transaction advices and/or regular statements of account
showing the Securities held and any cash balances held under the terms
of this Agreement at such intervals as may be agreed with the Customer
and shall notify the Customer of all notices, reports and other
financial information relating to the Securities when received by it
which in its opinion require action and obtain the Customer's
Instructions as to the action to be taken in connection therewith. The
Custodian shall check for errors all transaction advices and/or
statements of account received by it from any agent appointed under
Clause 7.1. Each time the Customer and the Custodian agree normal
categories of Securities, and the markets in which they are to be dealt
in (including acceptance by the Custodian of Securities outside such
categories or to be dealt in on other market(s)) as contemplated by
Clause 4.2, the Custodian shall inform the Customer of the identity of
each agent (if any) appointed under Clause 7.1 which will or may have
any such Securities deposited with it. The Custodian shall also keep the
Customer informed about any changes (including additions and
terminations) in any such agents.
6.8 Records: Records of all transactions in the Securities and any cash
balances held by the Custodian under the terms of the Agreement shall be
maintained by the Custodian and shall be made available for inspection
and audit on the Custodian's premises at reasonable times by the
Customer, any representative of the Customer and the independent
accountants employed by the Customer. Wherever practicable, the
Custodian shall endeavour to ensure that the Customer's independent
accountants are afforded access to the records of transactions in the
Securities and cash balances maintained by any agent appointed by the
Custodian under Clause 7.1 and pertaining to the Customer.
6.9 Right to take Action: Notwithstanding the provisions of Clause 5 and 6.7
above, the Custodian shall be entitled in its absolute discretion to
take any action in relation to the Securities, including without
limitation the exercise of rights attached thereto and the satisfaction
of liabilities arising therefrom or any other action on behalf of the
Customer which the Custodian considers is necessary or desirable to
safeguard the Securities or further the Customer's interests in the
event that no Instructions to the contrary are received or that
circumstances make it impracticable for the Custodian to obtain any, or
any timely, Instructions.
5
<PAGE>
7 Appointment of Agents and Advisers
7.1 General Agents: The Custodian shall be entitled to appoint agents,
whether in its own name or that of the Customer, to perform any of the
duties undertaken by the Custodian in this Agreement. The Custodian may
delegate to any agent so appointed any of the functions to be performed
by the Custodian under this Agreement including without limitation the
collection of payments due on Securities. The Custodian shall forthwith
notify the Customer upon any such appointment.
Any such agent shall be a person whom the Custodian reasonably believes
to be a person whose business includes the provision of investment
custodial services, and all cash and Securities deposited with or held
by any such agent will be at the risk of the Customer as regards any
act, omission or insolvency of such agent and any laws, acts, decrees,
regulations, edicts, orders or other mandates, and any acts of warfare,
seizure, confiscation, destruction or impairment of property,
promulgated and/or done by any court or by any governmental, military or
civil authority, whether de jure or de facto in control of or operating
at the place where such agent is located. The Custodian's sole
obligation, in the event of any loss in connection with any cash and
Securities held by or deposited with any such agent will be to assign to
the Customer such rights (if any) as the Custodian may have against such
agent.
7.2 Legal and other Advisers: If the Custodian considers it necessary it may
request advice from legal or other professional advisers of its own
choosing in connection with any action to be taken by the Custodian in
relation to the Securities.
7.3 Remuneration for Agents and Advisers: If the Custodian appoints any
agent or adviser pursuant to 7.1 or 7.2 above, it shall be entitled to
pay normal remuneration to such agent or adviser and, in the case of any
such agent, and any such adviser which the Custodian may appoint having
determined that such appointment is necessary or advisable in
connection with the Custodian's protecting or enforcing its rights under
this Agreement and/or any amendment or in any other case where such
adviser is appointed with the prior written approval of the Customer,
such remuneration shall be for the account of the Customer.
8 Scope of Responsibility and Indemnity
8.1 Liability of the Custodian: Subject to the provisions of this Agreement
the Custodian shall use all reasonable care in the performance of its
duties under this Agreement. The Custodian's liability at any time in
connection with any cash and Securities deposited under the terms of
this Agreement shall be subject to Clause 7.1 and shall not in any
6
<PAGE>
circumstances exceed the amount or (as appropriate) market value of such
cash and Securities at the time of failure to exercise reasonable care
as aforesaid whether or not then held by the Custodian.
The Custodian shall have no liability or responsibility to the Customer
with respect to any changes in the standard of currencies of property or
with respect to any fluctuations or changes in the conversion value of
property into other currencies and/or property.
8.2 Custodian's right to rely on Instructions: Subject to Clause 8.1, the
Custodian may rely in the performance of its duties under this Agreement
upon any Instructions believed by it to be genuine and given by any
person specified in or notified pursuant to Clause 11.
8.3 Responsibility for Insurance: Without prejudice to the liability of the
Custodian from time to time pursuant to any other provision of this
Agreement, the Custodian shall not be responsible for insuring any
Securities.
8.4 Customer's Responsibility to examine documents: Upon receipt of each and
every transaction advice and/or statement of account supplied to it by
the Custodian pursuant to Clause 6.7, the Customer shall examine the
same and notify the Custodian within 4 Business Days of the date of
receipt of any such advice or statement of any discrepancy between
Instructions given and the situation shown therein and/or of any other
errors therein. In the absence of such notification by the Customer the
Custodian shall not (in the absence of gross negligence or wilful
default on its own behalf) be liable for the consequences of any such
discrepancy or error which was made or existed during the period covered
by such statement or transaction indicated by such advice.
8.5 Indemnity: The Customer agrees to indemnify the Custodian, and to hold
the Custodian harmless, against all costs, liabilities and expenses
including (without limitation) legal fees and disbursements, arising
directly or indirectly:
8.5.1 from the fact that Securities are registered in the name of or
deposited with the Custodian or
8.5.2 (without limiting the generality of 8.5.1 above), from any act
or thing which the Custodian takes or does or omits to take or
do in relation to the Securities, provided that the Custodian
shall not be indemnified against any liability arising out of
the Custodian's own gross negligence or wilful default or
8.5.3 from the Custodian's relying on any Instructions as referred
to in Clause 8.2 provided that the Custodian shall not be
7
<PAGE>
indemnified against any liability arising out of the
Custodian's own gross negligence or wilful default.
8.6 Right to Deduct: The Custodian shall be entitled to deduct or withhold
from any amount which is received by it for the account of the Customer
or which is payable by it to the Customer or, at its option, to debit to
the Customer Account any amount payable to the Custodian under this
Agreement.
8.7 The Rules: Nothing in this Agreement shall exclude or restrict any
obligation which the Custodian has under the Rules in relation to the
Customer, whether as regards its activities as custodian of Safe Custody
Investments or otherwise, or any liability which the Custodian may incur
under the Financial Services Act 1986 or the Rules in respect of a
breach of any such obligation. It is further agreed that the Custodian
will hold all Securities (whether or not Safe Custody Investments as
defined in the Rules) as though Chapter 4 of the Rules regulated the
Custodian's custodianship thereof, except in so far as any of the Rules
regulate the Custodian's activities under this Agreement in priority to
the said Chapter 4. This Agreement shall be construed accordingly.
9 Lien
The Custodian shall have a general lien on all monies and Securities
from time to time held by it under this Agreement as security for all
obligations of the Customer under this Agreement for amounts becoming
due or owing for safekeeping and administration. In the event of failure
by the Customer to discharge any of such obligations when due, the
Custodian shall be entitled to apply in or towards discharge thereof
such monies as aforesaid held by it and shall be entitled without
notice to the Customer to sell or otherwise realise any of the
Securities so held by it and apply the proceeds of such realisation in
or towards discharge of the said obligations.
10 Termination
Either party hereto may terminate this Agreement on giving not less than
thirty days' written notice to the other party. This Agreement shall
automatically terminate as to the applicable Customer upon release by
MLI of all of the Securities deposited by such Customer hereunder with
the Custodian. Upon such termination the Custodian shall, subject to
Clause 9, account to any such successor custodian as the Customer shall,
within 14 days of such termination, designate in writing to the
Custodian (and, failing any such designation, to the Customer) for all
monies and Securities then held by it pursuant to this Agreement.
8
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11 Instructions
The Customer hereby authorises the Custodian to act in relation to the
Securities and cash on Instructions received from persons whose names
and signatures are set out in a list which shall be provided by the
Customer for such purpose, shall specify the number of such persons who
must give such Instructions for them to be effective and shall be signed
by any two of the persons whose names and signatures are set out below.
NAME SIGNATURES
John Moore
--------------------------
Henry Herms
--------------------------
Any such list shall be superseded by any later list, signed by any two
of the above persons, which the Customer may from time to time provide.
The Customer may also notify the Custodian by Instructions signed by any
two of the above persons of additional person(s) who may sign any such
list and upon whose signature of such list the Custodian is authorised
to rely, any such Instructions to contain specimen signature(s) of such
additional person(s).
12 Notices
12.1 The Customer and the Custodian may from time to time issue Instructions,
notices or other communications either orally or in writing (but in
writing only where so provided under this Agreement) and the Custodian
shall be entitled to rely on and shall not be liable for any action
taken or omitted to be taken in good faith pursuant to Instructions,
notices or other communications so given or made, subject to Clause 8.1.
12.2 Each oral communication under this Agreement shall be directed, if to
the Custodian, to such officer(s) of the Custodian as may be notified by
the Custodian to the Customer from time to time, and if to the Customer,
to such representative(s) of the Customer as may be notified to the
Custodian from time to time. Each written communication under this
Agreement shall be addressed as set out under the relevant party's name
at the end of this Agreement, or to such other address, telex or
facsimile number or marked for the attention of such other person as may
be notified by the relevant addressee from time to time to the other
party. Notices to the Customer shall be deemed to have been received two
days after being deposited for overnight delivery with any reputable
overnight delivery service and immediately in the case of a telex, fax
or oral communication.
9
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13 Governing Law
This Agreement and all contemporaneous and subsequent mandates,
Instructions and agreements between the parties pursuant to this
Agreement shall be governed by and construed in accordance with English
law and, in relation to any legal action or proceedings arising out of
or in connection with this Agreement ("Proceedings"), the Customer
hereby and for the benefit of the Custodian submits to the jurisdiction
of the courts of England and any New York State or United States Federal
court sitting in New York City, and waives any objection to Proceedings
in such courts on the grounds of venue or on the grounds that the
Proceedings have been brought in an inconvenient forum. Those
submissions shall not affect the Custodian's right to take Proceedings
in any other court of competent jurisdiction, nor shall the taking of
Proceedings in any court of competent jurisdiction preclude the
Custodian from taking Proceedings in any other court of competent
jurisdiction (whether concurrently or not).
This Agreement has been entered into in London on the date stated at the
beginning.
10
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MERRILL LYNCH INTERNATIONAL
By: /s/ John Piccitto
Name: John Piccitto
Title: Director of Equity Markets
Global Equity Finance
20 Farringdon Road
P.O. Box 293
London
EC1M 3NH
Attention: International Prime Brokerage
Fax No: 44 17l 892 4860
Telephone: 44 171 892 4920
LF Strategic Realty Investors L.P.,
a Delaware limited partnership
c/o Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: Lazard Freres Real Estate Investors L.L.C., a
New York limited liability company, its general partner
By: /s/ John A. Moore
---------------------------------
Name: John A. Moore
Title: Principal & Chief Financial Officer
11
<PAGE>
Prometheus AAPT Holdings, L.L.C.,
a Delaware limited liability company
c/o Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: LF Strategic Realty Investors L.P.,
a Delaware limited partnership, its managing member
By: Lazard Freres Real Estate Investors L.L.C.,
a New York limited liability company,
its general partner
By: /s/ John A. Moore
---------------------------------
Name: John A. Moore
Title: Chief Financial Officer
Prometheus Western Retail, LLC,
a Delaware limited liability company
c/o Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, NY 10020
By: Prometheus Western Retail Trust, a
Maryland real estate investment trust,
its managing member
By: /s/ John A. Moore
---------------------------------
Name: John A. Moore
Title: Vice President and Chief Financial Officer
12
