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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1999
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number: 1-12588
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CENTER TRUST, INC.
(Exact name of registrant as specified in charter)
Maryland 95-4444963
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3500 Sepulveda Boulevard, Manhattan Beach, California 90266
(Address of principal executive offices) (Zip Code)
(310) 546-4520
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class Name of Each Exchange on Which Registered
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COMMON STOCK, PAR VALUE $.01 PER SHARE NEW YORK STOCK EXCHANGE
<CAPTION>
7 1/2% CONVERTIBLE SUBORDINATED NEW YORK STOCK EXCHANGE
DEBENTURES DUE 2001, SERIES A
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Securities registered pursuant to Section 12(g) of the Act:
NONE REGISTERED
(Title of Class)
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for at least the past 90 days. YES [X] NO [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: [_]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $73,443,000 (computed on the basis of $6.688 per
share), which was the last sale price on the New York Stock Exchange on March
17, 2000.
As of March 17, 2000, 26,647,968 shares of Common Stock, Par Value $.01 Per
Share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates by reference information from the
Registrant's definitive Proxy Statement to be filed with the Securities and
Exchange Commission within 120 days of the close of Registrant's fiscal year
ended December 31, 1999.
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TABLE OF CONTENTS
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Item Page
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PART I
1. BUSINESS........................................................... 3
2. PROPERTIES......................................................... 12
3. LEGAL PROCEEDINGS.................................................. 25
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................ 25
PART II
5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS........................................................... 26
6. SELECTED FINANCIAL DATA............................................ 27
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................. 28
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......... 34
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................ 36
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.............................................. 56
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................. 57
11. EXECUTIVE COMPENSATION............................................. 57
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..... 57
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... 57
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K... 58
SIGNATURES............................................................... S-1
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PART I
ITEM 1. BUSINESS
Center Trust, Inc. (the "Company"), a Maryland corporation, is a self-
administered and self-managed real estate investment trust. The Company
engages in the ownership, management, leasing, acquisition, development and
redevelopment of retail shopping centers in the western United States.
As of December 31, 1999, the Company owned a portfolio comprised of
interests in 56 retail shopping centers (the "Properties"). The Company's
ownership interest in the Properties is held through various partnership
interests. The Company is the sole general partner of CT Operating
Partnership, L.P., a California limited partnership (the "Operating
Partnership" or "OP"), and owns a 94.2% interest therein. Of the
56 Properties, 49 are owned directly by the Operating Partnership. Two of the
Properties are owned by partnerships in which the OP has a general partner
interest, including a 75% interest in Willowbrook Center Partnership and a 34%
effective interest in Vermont Slauson Shopping Center, LTD. The final five
Properties are owned by CT Finance Partnership, L.P., a California limited
partnership ("CTFP"). The Operating Partnership is the 99% Limited Partner of
CTFP. CT Finance, Inc., a Delaware corporation wholly owned by the Company, is
the 1% general partner of CTFP, which results in the Company owning 100% of
properties owned by CTFP. For purposes of securing various mortgages, the OP
has created a series of single purpose entities. Of the 49 Properties owned by
the OP, ownership of 14 of these properties is held in 9 separate wholly owned
single purpose entities.
The Company conducts substantially all of its operations through the
Operating Partnership and generally has full, exclusive and complete
responsibility and discretion in the management and control of the Operating
Partnership.
On June 1, 1997 the Company entered into a Stock Purchase Agreement (the
"Agreement") with LF Strategic Realty Investors, L.P. and Prometheus Western
Retail, LLC, affiliates of Lazard Freres Real Estate Investors, LLC, (together
"LFREI"). Pursuant to the Agreement, LFREI purchased 15,666,666 shares of
common stock of the Company at a price of $15.00 per share for a total
investment of $235 million. The stockholders of the Company approved the
Agreement on August 14, 1997. As of December 31, 1999 LFREI owned 58.8% of the
outstanding Common Stock of the Company (42.2% on a diluted basis, assuming
the exchange of partnership units in the Operating Partnership ("OP Units")
for shares of Common Stock and conversion of the Company's 7 1/2% Convertible
Subordinated Debentures and 7 1/4% Exchangeable Subordinated Debentures
(collectively the "Debentures") into shares of Common Stock (herein referred
to as "Diluted Basis")).
Subject to certain restrictions, in the event that the Company issues or
sells shares of capital stock for cash, LFREI will be entitled to purchase or
subscribe for, either as part of such issuance or in a concurrent issuance,
that portion of the total number of shares to be issued equal to LFREI's
proportionate holdings of Common Stock prior to such issuance (but not to
exceed 37.5% of the offering).
For a period of five years from August 14, 1997 (the "Standstill Period")
and for any additional standstill extension term, LFREI and its affiliates may
not (i) acquire beneficial ownership of more than 49.9% of the outstanding
shares of Common Stock, on an Adjusted Fully Diluted Basis (as defined below),
or (ii) sell, transfer or otherwise dispose of any shares of Common Stock
except in accordance with certain specified limitations (including a
requirement that the Company, in its sole and absolute discretion, approve any
transfer in a negotiated transaction that would result in the transferee
beneficially owning more than 9.8% of the Company's capital stock). As used
herein, the term "Adjusted Fully Diluted Basis" shall mean on a Diluted Basis,
except that shares of Common Stock issuable upon conversion of the Company's
outstanding Debentures or upon exercise of options granted under management
benefit plans shall not be included. As of December 31, 1999, LFREI owned
55.4% of the Common Stock on an Adjusted Fully Diluted Basis therefore LFREI's
right to vote its common stock was limited to 90.1% of its total holdings. In
the event that the number of outstanding shares
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were to increase for any reason (including as a result of issuance of Common
Stock upon conversion or exercise of the outstanding Debentures or management
stock options), then LFREI would be allowed to acquire additional shares of
Common Stock, up to 49.9% on an Adjusted Fully Diluted Basis. In addition to
the above, LFREI has the right to nominate four members to the Company's Board
of Directors. Although LFREI will not be able to take action on behalf of the
Company without the concurrence of the other members of the Company's Board of
Directors, they may be able to exert substantial influence over the Company's
affairs. Further, LFREI is entitled to receive access to certain operating
statements and other financial reports used in operating the Company on a
monthly basis.
In November 1997, the Company entered into an agreement (the "Separation
Agreement") with Alexander Haagen, Sr., Charlotte Haagen and Alexander Haagen,
III (collectively the "Haagen Family") in connection with their retirement
from the Company. Under the terms of the Separation Agreement, the Haagen
Family received $2.7 million in cash, vesting of all granted stock options and
restricted stock awards, and the granting and vesting of previously committed
restricted stock awards. In addition, for certain defined periods the Company
agreed to continue to provide the Haagen Family certain medical benefits and
administrative assistance. During 1997, the Company recorded a non-recurring
charge of $9.4 million in connection with the Separation Agreement. Further,
under the Separation Agreement, the Company purchased substantially all of the
Haagen Family's ownership interests in the Company on May 25, 1999 for a total
of $58.8 million.
The Company, through the Operating Partnership, employs a staff of 117 full-
time real estate professionals with extensive experience, knowledge of local
markets and an established track record with national, regional and local
retailers. The Company believes that the expertise and relationships developed
by these professionals enhance the Company's ability to attract and retain
high quality tenants.
Risk Factors
More than half of our properties depend upon the Southern California economy.
More than half of our properties are located in Southern California. As of
December 31, 1999, these properties represented approximately 45.4% of the
aggregate square footage of all our properties. Concentrating approximately
half of our properties in a single geographic region may expose us to greater
economic risks then if our portfolio of properties were more geographically
diversified. Any adverse economic or real estate developments in the Southern
California region could adversely impact our financial condition, results from
operations, cash flow, the quoted per share trading price of our common stock
and our ability to pay distributions to you.
Our debt level reduces cash available for distribution and may expose us to
the risk of default under our debt obligations.
Like many owners of real estate, we rely on borrowings to assist us in
acquiring, developing and holding properties. We have a $250 million secured
line of credit (the "Credit Facility") and in addition, several of our
properties are encumbered by deeds of trust or mortgages to various lenders.
As of December 31, 1999, we had outstanding approximately $128.6 million of 7
1/2% Convertible Subordinated Debentures due 2001, Series A and B,
$30.0 million of 7 1/4% Exchangeable Subordinated Debentures due 2003, $158.1
million under our secured line of credit and $366.4 million under various
secured mortgages.
In February 2000, the terms of our Credit Facility were amended to allow for
a gradual step down in the amount available to us. The borrowing capacity of
the Credit Facility will be reduced to $135 million by March 31, 2000 and then
to $85 million by June 30, 2000. On March 31, 2000, we will be required to pay
down approximately $37 million under the Credit Facility in order to comply
with the step down of the borrowing capacity to $135 million. On March 24,
2000, the Company closed on a $17.4 million mortgage secured by the AMC
Theater at Covina Town Square. The mortgage bears interest at 8.44% and has a
10-year maturity. The Company is under contract to sell the AMC Theater, at
which time the buyer will assume the mortgage. This
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sale will generate additional net cash proceeds of approximately $5.5 million.
In addition, on March 29, 2000 the Company closed on the sale of its single
tenant facility in Glendora, California, which generated net cash proceeds of
approximately $7.8 million. In addition, we are in the process of negotiating
a new line of credit, which we expect to close on or prior to March 31, 2000
or shortly thereafter, with another lender to replace the entire Credit
Facility and thus eliminate the step down requirements. In the event that the
proceeds from the asset sales or the new line of credit are not available by
the March 31, 2000 step down date, the Company intends to seek a waiver from
the lenders under the Credit Facility to extend the March 31, 2000 step down
date for a short period.
Neither our charter nor our bylaws limits the amount of indebtedness we may
incur. Although financial covenants contained in our Credit Facility and in
our stockholders agreement with LFREI limit the amount of additional
indebtedness we may incur, those covenants currently would permit us to incur
substantial additional indebtedness. We have utilized the Credit Facility to
finance certain recent acquisitions and may use it to fund the acquisition of
additional properties, the redevelopment of assets and for other general
corporate purposes. The Credit Facility is secured by certain of our
properties and it requires that we comply with a number of financial
covenants. We are also obligated by other indebtedness secured by individual
properties.
Our level of debt and the limitations imposed on us by our debt agreements may
have important consequences, including the following:
. our cash flow may be insufficient to meet our required principal and
interest payments;
. we may be unable to refinance our indebtedness at maturity or the
refinancing terms may be less favorable than the terms of our original
indebtedness;
. we may be forced to dispose of one or more of our properties, possibly
on disadvantageous terms;
. we may default on our obligations and the lenders or mortgagees may
foreclose on our properties that secure their loans and receive an
assignment of rents and leases; and
. our default under one mortgage loan with cross default provisions could
result in a default on other indebtedness.
If any one of these events were to occur, our financial position, results of
operations, cash flow, quoted per share trading price of our common stock and
our ability to pay distributions to you could be adversely affected. In
addition, foreclosures could create taxable income without accompanying cash
proceeds, a circumstance that could hinder our ability to meet the REIT
distribution requirements imposed by the Internal Revenue Code of 1986, as
amended.
Our failure to qualify as a real estate investment trust would have serious
adverse consequences to stockholders.
We intend to operate so as to qualify as a real estate investment trust
under the Internal Revenue Code. We believe that we have been organized and
have operated in a manner which would allow us to qualify as a real estate
investment trust under the Internal Revenue Code beginning with our taxable
year ended December 31, 1993. However, it is possible that we have been
organized or have operated in a manner which would not allow us to qualify as
a real estate investment trust, or that our future operations could cause us
to fail to qualify. Qualification as a real estate investment trust requires
us to satisfy numerous requirements established under highly technical and
complex Internal Revenue Code provisions for which there are only limited
judicial and administrative interpretations, and involves the determination of
various factual matters and circumstances not entirely within our control. For
example, in order to qualify as a real estate investment trust, at least 95%
of our gross income in any year must be derived from qualifying sources, we
must pay dividends to stockholders aggregating annually at least 95% of our
real estate investment trust taxable income (determined without regard to the
dividends paid deduction and by excluding capital gains) and we must satisfy
specified asset tests on a quarterly basis. These provisions and the
applicable Treasury Regulations are more complicated in our case
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because we hold our assets through a partnership. Legislation, new
regulations, administrative interpretations or court decisions could
significantly change the tax laws with respect to qualification as a real
estate investment trust or the federal income tax consequences of such
qualification. However, we are not aware of any pending tax legislation that
would adversely affect our ability to operate as a real estate investment
trust.
If we fail to qualify as a real estate investment trust in any taxable year,
we will be required to pay federal income tax (including any applicable
alternative minimum tax) on our taxable income at regular corporate rates.
Unless we are entitled to relief under certain statutory provisions, we would
be disqualified from treatment as a real estate investment trust for the four
taxable years following the year during which we lost qualification. If we
lose our real estate investment trust status, our net earnings available for
investment or distribution to stockholders would be significantly reduced for
each of the years involved. In addition, we would no longer be required to
make distributions to stockholders. Even if we qualify as a real estate
investment trust, we will be required to pay certain federal, state and local
taxes on our income and property.
Our operations could be affected if we lost key management personnel.
Our executive officers have substantial experience in owning, operating,
managing, acquiring and developing shopping centers. We believe that our
success will depend in large part upon the efforts of these executives. We
have entered into employment agreements with certain of our executive officers
which provide for their continued employment with us and which contain certain
non-compete provisions. However, there can be no guarantee that these
executives will remain employed by us, notwithstanding their potential
liability for damages to us if they terminate their employment. The loss of
key management personnel could have a negative impact on our operations.
Our ability to generate revenues and pay distributions to our stockholders is
affected by the risks inherent in owning real property investments.
Real property investments are subject to a variety of risks. The yields
available from equity investments in real estate depend on the amount of
income generated and expenses incurred. If our properties do not generate
sufficient income to meet operating expenses, including debt service and
capital expenditures, results of operations and our ability to make
distributions to you may be adversely affected. The performance of the economy
in each of the areas in which our properties are located affects occupancy,
market rental and vacancy rates and expenses, and, consequently, has an impact
on the revenues from our properties and their underlying values.
Revenues from our properties may be further adversely affected by, among
other things:
. the general economic climate;
. local economic conditions in which the properties are located, such as
oversupply of space or a reduction in demand for rental space;
. the attractiveness of the properties to tenants;
. competition from other available space;
. our ability to provide for adequate maintenance and insurance and
increased operating expenses (including real estate taxes and utilities)
which may not be passed through to tenants; and
. the expense of periodically renovating, repairing and re-leasing space.
There is also the risk that as leases on the properties expire, tenants will
enter into new leases on terms that are less favorable to us. Revenues and
real estate values may also be adversely affected by such factors as
applicable laws such as the Americans with Disabilities Act of 1990 and tax
laws, interest rate levels and the availability and terms of financing.
Most of the leases of our retail properties, as is common with many multi-
tenant shopping centers, provide for tenants to reimburse us for a portion
(frequently based upon the portion of total retail space in the property that
is occupied by the tenant) of the common area maintenance, real estate taxes,
insurance and other operating
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expenses of the property. To the extent that a property has vacant leaseable
space, not only will we be deprived of the base rent that we would receive if
the vacant space were occupied, but we will have to bear the unreimbursed
expense applicable to such vacant space. If a property is mortgaged to secure
the payment of indebtedness and if we are unable to meet its mortgage
payments, a loss could be sustained as a result of foreclosure on the property
or the exercise of other remedies by the mortgagee. Likewise, if a property
suffers sustained reductions in revenues, we may sustain a writedown of the
asset value and a related charge to earnings.
We could incur significant costs related to environmental problems.
Environmental laws and regulations hold us liable for the costs of removal
or remediation of hazardous or toxic substances released on our properties.
These laws could impose liability without regard to whether we are responsible
for, or even knew of, the presence of the hazardous materials. Government
investigations and remediation actions may have substantial costs and the
presence of hazardous wastes on a property could result in personal injury or
similar claims by private plaintiffs. For instance, third parties may seek
recovery from us for personal injuries associated with asbestos-containing
materials and other hazardous or toxic substances if found on our properties.
Moreover, the presence of these substances on our properties may hinder our
ability to rent or sell our properties, or to borrow using our properties as
collateral. Various laws also impose liability on persons who arrange for the
disposal or treatment of hazardous or toxic substances for the cost of removal
or remediation of hazardous substances at the disposal or treatment facility.
These laws often impose liability whether or not the person arranging for the
disposal ever owned or operated the disposal facility. As an owner and
operator of our properties, we may be considered to have arranged for the
disposal or treatment of hazardous or toxic substances.
We may incur significant costs complying with the Americans with Disabilities
Act and similar laws.
Under the Americans with Disability Act of 1990, all public accommodations
must meet federal requirements related to access and use by disabled persons.
Although we believe that our properties substantially comply with the present
requirements under the Americans with Disabilities Act, we may incur
additional costs of complying with the Americans with Disabilities Act in the
future. Additional federal, state and local laws also may require
modifications to our properties, or restrict our ability to renovate our
properties. We cannot predict the ultimate amount of the cost of compliance
with the act or other legislation.
If we incur substantial costs to comply with the act and any other
legislation, our financial condition, results of operations, cash flow, quoted
per share trading price of our common stock and our ability to pay
distributions to you could be adversely affected.
Limits on the ownership of our capital stock could cause some stock transfers
to be void.
In order for us to maintain our qualification as a REIT, not more than 50%
in value of our outstanding stock may be owned, actually or constructively, by
five or fewer individuals, as defined in the Internal Revenue Code. In
addition, rent from certain related party tenants is not qualifying income for
purposes of the gross income tests under the Internal Revenue Code.
Two sets of constructive ownership rules apply in determining whether these
requirements are met. These constructive ownership rules determine whether we
are closely held and whether the rent we receive is from a related party
tenant. Accordingly, for the purpose of preserving our REIT qualification, our
charter prohibits actual or constructive ownership of more than 9.8% (in value
or number of shares, whichever is more restrictive) of outstanding common
stock by any person. The constructive ownership rules are complex and may
cause common stock owned actually or constructively by a group of related
individuals and/or entities to be deemed to be constructively owned by one
individual or entity. As a result, the acquisition of less than 9.8% of
outstanding common stock, or the acquisition of an interest in an entity which
owns common stock, by an individual or entity could cause that individual or
entity, or another individual or entity, to own constructively in excess of
9.8% of the outstanding common stock, and thus subject that common stock to
the ownership limit. In addition, for these purposes, common stock that may be
acquired upon conversion or exchange of debentures actually or
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constructively held by an investor, but not common stock issuable with respect
to debentures held by others, are deemed to be outstanding prior to their
conversion or exchange for purposes of determining the percentage of ownership
of common stock held by that investor. Actual or constructive ownership of
common stock in excess of the ownership limit would cause the violative
transfer or ownership to be void as to the transferee and would cause those
shares, and perhaps other common stock, to be converted into excess stock,
which have limited economic rights.
Our charter and the Maryland General Corporation Law contain provisions that
may prevent a change of control transaction.
Certain provisions of the Maryland General Corporation Law and our charter
and bylaws could have the effect of delaying, deferring or preventing a change
in control of us or the removal of existing management and, as a result, could
prevent you from being paid a premium for your common stock over then-
prevailing market prices.
Ownership Limit. The ownership limit set forth in our charter may have the
effect of precluding acquisition of control of us by a third party without
consent of our board of directors even when a change in control is in your
interest.
Staggered Board. Our board of directors is divided into three classes
serving staggered terms of three years each. Directors for each class are
chosen for a three-year term upon the expiration of the current class' term.
The staggered terms for directors may affect the stockholders' ability to
change control of the Company even where a change in control is in your
interest.
Preferred Stock. Our charter authorizes the board of directors to issue up
to 10,000,000 shares of preferred stock and to establish the preferences and
rights, including the right to vote and the right to convert into common
stock, of any shares issued. The power to issue preferred stock could have the
effect of delaying or preventing a change in control of the Company even where
a change of control is in your interest.
Control Shares. The Maryland General Corporation Law provides certain
restrictions upon the voting rights of "control shares" in a Maryland
corporation. Control shares are voting shares of stock which, if aggregated
with all other such shares of stock previously acquired by the holder thereof,
would entitle the acquiror to exercise voting power in electing directors
within one of the following ranges of power:
. one-fifth or more but less than one-third,
. one-third or more but less than a majority, or
. a majority of all voting power.
The Maryland General Corporation Law provides that control shares have no
voting rights except to the extent approved by an affirmative vote of two-
thirds of the outstanding shares entitled to vote on the matter, excluding
shares held by the acquiror or by officers and directors who are also
employees. A control share acquisition means the acquisition of control
shares, subject to certain exceptions. Pursuant to the statute, our bylaws
exempt control share acquisitions involving our executives and certain of
their associates and affiliates and, consequently, the prohibition on voting
control shares will not apply to those persons.
Business Combinations. Under the Maryland General Corporation Law, certain
business combinations between a Maryland corporation and any person or
affiliate thereof who is the beneficial owner of 10% or more of the voting
power of the corporation's shares are prohibited for five years after the most
recent date on which the 10% owner became a 10% owner. Thereafter, any such
business combination must be approved by the affirmative vote of at least:
. 80% of the votes entitled to be cast by holders of our outstanding
voting shares; and
. two-thirds of the votes entitled to be cast by holders of outstanding
voting shares held by persons other than the 10% owner with whom the
business combination is to be effected, subject to certain exceptions.
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Pursuant to the statute, we have exempted any business combinations
involving our executive officers and certain of their associates and
affiliates, and, consequently, the five-year prohibition and the super-
majority vote requirement will not apply to business combinations between us
and those persons.
We may change our investment and financing policies without stockholder
approval.
Our board of directors determines both ours and the operating partnership's
investment and financing policies and policies with respect to certain other
activities, including growth, capitalization, distributions and operating
policies. Although the board of directors has no present intention to amend or
revise these policies, the board of directors may do so at any time without a
vote of our stockholders.
Tax consequences may impact our ability to sell or refinance properties.
We are not required to distribute our net capital gains to stockholders in
order to retain our qualification as a REIT. However, we would be required to
pay federal income tax and, in certain cases, federal excise tax on our
undistributed net capital gains. Accordingly, as the managing general partner
of the operating partnership, we will be required to take reasonable efforts,
as determined by us in our sole discretion, to cause the operating partnership
to distribute sufficient amounts to enable the payment of sufficient
distributions by us to avoid any federal income or excise tax at the Company
level as a consequence of such sale. This requirement may impact our ability
to dispose of properties in our portfolio.
In addition, our share of any gain realized by the operating partnership on
the sale of any property held by the operating partnership as inventory or
other property held primarily for sale to customers in the ordinary course of
the operating partnership's trade or business will be treated as income from a
prohibited transaction. We would be required to pay a 100% penalty tax on
income from a prohibited transaction.
Our ability to make decisions concerning the operation or disposition of our
partially-owned properties may be restricted.
We are only partial owners of two of our properties held through the
operating partnership. The operating partnership owns a 75% managing general
partnership interest in the partnership that owns Kenneth Hahn Plaza and an
85% managing general partnership interest in Haagen-Central Partnership, the
general partnership which is the managing general partner of, and holds a 40%
interest in, the partnership that owns Vermont-Slauson Shopping Center.
Therefore, the operating partnership holds the equivalent of a 34% interest in
Vermont-Slauson Shopping Center.
The operating partnership is the managing general partner of each of these
partnerships, with control over their day-to-day operations. We may have
certain fiduciary responsibilities to our outside partners which we will need
to consider when making decisions relating to these partially-owned
properties. The consent of our outside partners may be required for any sale,
transfer or encumbrance of the partially-owned properties. In addition, the
sale, transfer, assignment or pledge of partnership interests in the
partnerships which own the partially-owned properties require the prior
written consent of the other partners or are subject to certain rights of
first refusal. These limitations may result in decisions by third parties with
respect to these properties that do not fully reflect our interests.
We may issue additional shares of capital stock without stockholder approval
which may dilute your investment.
We may issue shares of our common stock, preferred stock or other equity or
debt securities without stockholder approval. The future issuance of capital
stock may dilute an existing stockholder's investment.
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Sales of a substantial number of shares of common stock, or the perception
that such sales could occur, could result in decreasing the market prices for
our common stock.
We cannot predict whether future issuances of shares of our common stock or
the availability of shares for future sale will result in decreasing the
market price of the common stock. As of December 31, 1999, 26,647,968 shares
of our common stock were issued and outstanding and we had reserved for future
issuance the following shares of common stock:
. 1,654,725 shares issuable upon the exchange of common units issued in
connection with our formation and in connection with the acquisition of
properties;
. 1,327,709 shares issuable upon exercise of options we have granted under
our Second Amended and Restated 1993 Stock Option and Incentive Plan;
. 882,611 additional shares issuable under our Second Amended and Restated
1993 Stock Option and Incentive Plan; and
. 8,808,222 shares issuable upon the conversion or exchange of all our
outstanding debentures.
We may be unable to successfully develop properties.
We may selectively pursue development projects, including the expansion of
certain properties. Such projects generally require various governmental and
other approvals, the receipt of which cannot be assured. We may incur certain
risks in connection with development activities, including:
. the expenditure of funds on and devotion of management's time to
projects which may not come to fruition;
. the risk that construction costs of a project may exceed original
estimates, possibly making the project uneconomic; and
. the risk that occupancy rates and rents at a completed project will not
be sufficient to make the project profitable.
Decreases in cash available from our properties and other factors could limit
our ability to make distributions to stockholders.
Distributions to you will be based principally on cash available for
distribution from the properties in our portfolio. Increases in base rent and
percentage rent under the leases of our properties or the payment of rent in
connection with future acquisitions will increase our cash available for
distribution. However, in the event of a default or a lease termination by a
lessee, there could be a decrease or cessation of rental payments. In
addition, the amount available to make distributions may decrease if
properties acquired in the future yield lower than expected cash available for
distribution. If we incur additional indebtedness in the future, we will
require additional funds to service such indebtedness. As a result, amounts
available to make distributions may decrease. Distributions will also be
dependent upon a number of other factors, including:
. our financial condition;
. any decision to reinvest, rather than to distribute, funds;
. capital expenditures;
. the annual distribution requirements under the REIT provisions of the
Internal Revenue Code described below; and
. such other factors as we deem relevant.
The possibility exists that our future operating results may differ from the
assumptions used by our board of directors in determining the current
distribution rate. In that event, the trading price of our common stock may be
adversely affected.
10
<PAGE>
To obtain the favorable tax treatment associated with REITs, we generally
will be required to distribute to our stockholders at least 95% of our net
taxable income each year. In addition, we will be required to pay a 4%
nondeductible excise tax on the amount, if any, by which certain distributions
paid by us with respect to any calendar year are less than the sum of 85% of
our ordinary income, 95% of our capital gain net income and undistributed
income from prior years.
We intend to make distributions to our stockholders to comply with the 95%
distribution requirements of the Internal Revenue Code and to avoid the
nondeductible excise tax. Differences in timing between the receipt of income
and the payment of expenses in arriving at taxable income and the effect of
required debt amortization payments could require us to borrow funds on a
short-term basis to meet the distribution requirements that are necessary to
achieve the tax benefits associated with qualifying as a REIT, even if the
prevailing market conditions are not favorable for these borrowings.
An increase in market interest rates or a negative perception of retail
shopping center REITs could cause a decrease in the market price of our common
stock.
A variety of factors may influence the price of our common stock in public
trading markets. We believe that investors generally perceive REITs as yield-
driven investments and compare the annual yield from distributions by REITs
with yields on various other types of financial instruments. Thus, an increase
in market interest rates generally could adversely affect the market price of
our common stock. Similarly, to the extent that the investing public has a
negative perception of companies in the retail business or REITs that own and
operate retail shopping centers and other properties catering to retail
tenants, the value of our common stock may be negatively impacted in
comparison to shares of other REITs owning other types of properties and
catering to different types of tenants.
Bankruptcy of our tenants or downturns in our tenants' businesses may reduce
our cash flow.
At any time, a tenant of our properties may seek the protection of the
bankruptcy laws, which could result in the rejection and termination of that
tenant's lease. Although we have not experienced material losses from tenant
bankruptcies, no assurance can be given that tenants will not file for
bankruptcy protection in the future, or if any tenants file, that they will
affirm their leases and continue to make rental payments in a timely manner.
In addition, a tenant from time to time may experience a downturn in its
business which may weaken its financial condition and result in the failure to
make rental payments when due. If tenant leases are not affirmed following
bankruptcy or if a tenant's financial condition weakens, our results of
operations and ability to make distributions to our stockholders may be
adversely affected.
Real estate assets are illiquid and we may not be able to sell our properties
when we desire.
Equity real estate investments are generally illiquid which limits our
ability to sell our properties quickly in response to changes in economic or
other conditions or meet certain of our strategic objectives of disposing of
certain non-strategic assets. In addition, the Internal Revenue Code places
certain limits or prohibitive taxes on REITs which may limit our ability to
sell certain properties. These restrictions on our ability to sell our
properties could have an adverse effect on our financial position and our
ability to make distributions to you.
We face significant competition which may decrease the occupancy and rental
rates of our properties.
Numerous retail properties compete with our properties in attracting tenants
to lease space. Some of these competing properties are newer and better
located or designed and may offer lower expenses or be better capitalized than
our properties. The number of competitive commercial properties in a
particular area could have a material adverse effect on our ability to lease
space in our properties and on the rents charged. In addition, retailers at
our properties face increasing competition from outlet malls, discount
shopping clubs, mail order and e-commerce.
11
<PAGE>
Additionally, we may be competing for investment opportunities with entities
which have substantially greater financial resources than us. These entities
may generally be able to accept more risk than we can prudently manage.
ITEM 2. PROPERTIES
General
As of December 31, 1999, the Properties consisted of 47 community shopping
centers, 2 regional malls and 7 single tenant facilities, containing in the
aggregate approximately 11.1 million square feet of GLA. Approximately 9.4
million square feet of GLA is owned by the Company, with the balance owned by
certain anchor retailers. The Company has focused its efforts on four key
markets, which include the Pacific Northwest, Northern and Southern
California, and the Southwest. Of the 47 community centers, which comprise the
core asset group of the Company, 11 are located in the Pacific Northwest, 7 in
Northern California, 23 in Southern California and 6 in the Southwest. The two
regional malls are located in Southern California. Four of the single tenant
assets are in Southern California, 2 are in Northern California and one is
located in the Southwest.
The Company's community shopping centers range in size from approximately
14,000 square feet of total GLA to approximately 446,000 square feet of total
GLA. The Company's regional malls range in size from approximately 820,000
square feet of GLA to approximately 1,248,000 square feet of GLA. The
Company's single tenant facilities range in size from approximately 86,000
square feet of total GLA to approximately 115,000 square feet of total GLA.
The Properties are designed to attract local and regional area customers and
are typically anchored by one or more nationally or regionally known
retailers. Depending on the market focus of a specific Property, major
retailers at a Property may include value-oriented discount stores,
supermarkets, membership warehouses, traditional department stores, fashion-
oriented department stores, shops or well-known specialty retailers. Several
of the Properties contain an entertainment component such as a theater
multiplex. Anchor leases are typically for initial terms of 10 to 35 years,
with one or more renewal options available to the lessee upon expiration of
the initial term. By contrast, smaller shop leases are typically for 5 to 10
year terms. The longer term of the anchor leases helps to protect the Company
against significant vacancies and to insure the presence of anchor retailers
who draw consumers to the Company's retail centers. The shorter term of the
smaller shop leases allows the Company to adjust rental rates for non-anchor
store space on a regular basis and upgrade the overall tenant mix. Anchor
leases are generally for lower base rents than leases for smaller shop
tenants. The lower base rents paid by anchor retailers may be offset, in part,
through periodic escalations and/or the payment of percentage rents. Certain
anchor retailers at some of the Properties occupy space not owned by the
Company and therefore do not pay base rent to the Company.
During 1999, the Company completed one acquisition, acquiring Randolph
Plaza, a 180,000 square foot community shopping center located in Tucson,
Arizona for approximately $9.5 million. In addition, the Company sold 8 assets
during the year, generating net cash proceeds of $76.1 million which resulted
in a combined book gain of approximately $24 million. The asset dispositions
during 1999 consisted of the following:
<TABLE>
<CAPTION>
Date of Company
Dispostion Property Name Location Owned GLA
---------- ------------- -------- ---------
<S> <C> <C> <C>
1/26/1999 Sam's Club Fountain Valley, CA 119,126
2/15/1999 The City Center San Francisco, CA 194,193
8/2/1999 Empire Center Fontana, CA 261,996
9/15/1999 Sixth Avenue Plaza Tacoma, WA 139,107
9/16/1999 Oracle Road Tucson, AZ 102,400
11/10/1999 Vons Simi Valley, CA 102,400
12/28/1999 K-Mart Los Banos, CA 86,479
12/29/1999 Vons Escondido, CA 36,800
</TABLE>
12
<PAGE>
During 1998, the Company continued the acquisition program it had commenced
in 1997. The Company acquired 19 community shopping centers during 1998,
aggregating approximately 2.9 million square feet of Company owned GLA, with
an aggregate purchase price of $309.9 million. The 1998 acquisitions consisted
of the following:
<TABLE>
<CAPTION>
Company
Owned
Date Acquired Property Name Location GLA
------------- ------------- -------- -------
<S> <C> <C> <C>
January 20, 1998 Covington Square Kent, WA 151,427
March 11, 1998 Pavilions Centre Federal Way, WA 200,209
March 27, 1998 Bakersfield Shopping Center Bakersfield, CA 14,115
March 27, 1998 Center of El Centro El Centro, CA 178,889
March 27, 1998 Loma Square San Diego, CA 210,704
March 27, 1998 Vineyards Market Place Rancho Cucamonga, CA 56,035
March 27, 1998 North County Plaza Carlsbad, CA 153,325
March 31, 1998 Southpointe Plaza Sacramento, CA 83,543
April 30, 1998 Sixth Avenue Plaza Tacoma, WA 139,107
April 30, 1998 Southern Palms Center Tempe, AZ 254,863
May 1, 1998 Mineral King Plaza Visalia, CA 39,060
May 12, 1998 Madera Marketplace Madera, CA 168,596
May 18, 1998 Fairwood Center Renton, WA 208,082
June 24, 1998 Charleston Plaza Las Vegas, NV 222,594
June 25, 1998 Kyrene Village Chandler, AZ 161,174
June 29, 1998 Sunrise Place Center Tucson, AZ 40,974
August 20, 1998 North Mountain Village Phoenix, AZ 94,379
August 26, 1998 Torrance Promenade Torrance, CA 263,228
September 24, 1998 Mountain Square Shopping Center Upland, CA 273,280
</TABLE>
The acquisitions were principally funded through proceeds from the sale of
common stock to LFREI, the issuance of OP Units and borrowings on the
Company's Credit Facility.
During 1998, the Company sold its single tenant Sears Hollywood facility to
a related party for gross proceeds of $5.4 million, resulting in a net gain of
$1.1 million. In addition, the Company also purchased from a related party,
the Manhattan Beach, California building in which its corporate headquarters
are located for $3.2 million.
Forty-eight of the Properties are owned by the Company in fee, 7 are held by
the Company under long-term ground leases and one is owned in fee with a
portion of the shopping center under a long-term ground lease. Included in the
long-term ground leases are two partially-owned properties in which the
Company, through the Operating Partnership, owns, directly or indirectly,
partnership interests (the "Partially-Owned Properties"), as described below.
The Operating Partnership owns a 75% managing general partnership interest
in the partnership that owns Kenneth Hahn Plaza and a 85% managing general
partnership interest in Haagen-Central Partnership, the general partnership
which is the managing general partner of, and holds a 40% interest in, the
partnership that owns Vermont-Slauson Shopping Center. Therefore, the
Operating Partnership holds the equivalent of a 34% interest in Vermont-
Slauson Shopping Center.
The Operating Partnership is the managing general partner of each such
partnership, with control over day-to-day operations of the Partially-Owned
Properties. The Company may have certain fiduciary responsibilities to its
outside partners which it will need to consider when making decisions relating
to the Partially-Owned Properties. The consent of the Company's outside
partners may be required for any sale, transfer or encumbrance of the
Partially-Owned Properties. In addition, the sale, transfer, assignment or
pledge of partnership interests in the partnerships which own the Partially-
Owned Properties require the prior written consent of the other partners or
are subject to certain rights of first refusal.
The tables on the following pages provide information regarding the physical
descriptions of the Properties, the tenants and the debt secured by the
Properties.
13
<PAGE>
Description of Properties
The following table sets forth the physical description and anchor tenant
information with respect to the Properties as of December 31, 1999.
<TABLE>
<CAPTION>
Year of Total
Construction Shopping
(or Most Ownership Land Center Company
Recent Interest Area GLA (Sq. Owned GLA Anchor or
Renovation) (Expiration)(1) (Acres) Ft.) (Sq. Ft.) Principal Tenants
------------ --------------- ------- --------- --------- -----------------
<C> <C> <C> <C> <C> <C> <S>
COMMUNITY SHOPPING CENTERS
Pacific Northwest
Covington Square................. 1986 Fee 14.5 154,106 150,163 Safeway, Rite-Aid
Covington, WA
Fairwood Shopping Center......... (1995) Fee 20.0 208,181 208,181 Safeway, Pic 'N Save,
Renton, WA ACE Hardware, Quality
Food Centers
Frontier Village Shopping Center. 1993 Fee 15.7 153,320 153,320 Safeway, Bartell Drugs
Lake Stevens, WA
Gresham Town Fair................ 1988 Fee 25.6 262,725 262,725 GI Joe's, Craft
Gresham, OR Warehouse, Ross Stores,
Emporium
The Medford Center............... (1998) Fee 30.1 410,668 325,922 Cinemark Theatres,
Sears,
Medford, OR Emporium, Payless(2),
Safeway(2), Circuit
City, 24 Hour Fitness(3)
Pacific Linen Plaza.............. 1988 Fee 4.6 69,432 69,432
Lynnwood, WA
Pavilions' Centre................ 1995 Fee 17.0 200,209 200,209 Quality Food Centers,
Federal Way, WA Barnes & Noble,
Blockbuster Music,
Petco, JoAnn ETC.
Ross Center...................... 1987 Fee 10.0 132,465 132,465 Ross Stores, Michaels,
Portland, OR Pier 1 Imports
Ross Plaza....................... 1990 Fee 6.0 67,287 67,287 Ross Stores
Silverdale, WA
Vancouver Park Place............. 1987 Fee 6.4 77,944 77,944 T.J. Maxx, Pier 1
Imports
Vancouver, WA
Westgate North Shopping Center... 1980 Fee 13.3 111,112 108,771 Quality Food Centers
Tacoma, WA
----- --------- ---------
Subtotal Pacific Northwest..... 163.2 1,847,449 1,756,419
----- --------- ---------
Northern & Central California
Bakersfield Shopping Center...... 1978 Fee 9.3 14,115 14,115
Bakersfield, CA
Madera Marketplace............... 1992 Fee 14.5 294,059 168,596 Wal-Mart(2),
Madera, CA Pak-N-Sav
Marshall's Plaza................. 1989 Fee 5.0 86,200 79,000 Marshall's
Modesto, CA
Mineral King Plaza............... 1983 Fee 10.9 115,336 39,060 Vons(2),
Visalia, CA Longs Drugs(2)
Rheem Valley..................... 1990 Fee 18.4 153,260 153,260 T.J. Maxx, Longs Drugs
Moraga, CA
Rosedale Village Shopping Center. 1991 Fee 10.6 217,006 127,527 Savemart, Payless Drugs,
Bakersfield, CA Kmart(2)
Southpointe Plaza................ 1982 Fee 18.0 193,063 189,063 Big 5 Sporting Goods
Sacramento, CA
----- --------- ---------
Subtotal Northern &
Central California........... 86.7 1,073,039 770,621
----- --------- ---------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Year of Total
Construction Shopping
(or Most Ownership Land Center Company
Recent Interest Area GLA (Sq. Owned GLA Anchor or
Renovation) (Expiration)(1) (Acres) Ft.) (Sq. Ft.) Principal Tenants
------------ ---------------- ------- --------- --------- -----------------
<C> <C> <C> <C> <C> <C> <S>
Southern California
Center of El Centro............ 1980 Fee 17.0 178,889 178,889 Sears, Mervyn's
El Centro, CA
Country Fair Shopping Center... 1992 Fee 17.3 206,902 163,462 Albertson's(2),
Chino, CA PETsMART, Rite-Aid,
Staples, T.J. Maxx
Covina Town Square............. (1997) Fee 35.5 359,611 359,611 Home Depot, Staples,
Covina, CA PETsMART, Michael's, AMC
Theatres
Date Palm Center............... 1987 Fee 11.8 117,362 117,362 Sam's Club (Wal-Mart)
Cathedral City, CA
El Camino North................ 1982 Fee 54.0 445,807 319,307 Mervyn's(2),
Oceanside, CA Toys 'R' Us(2), Ross
Stores, Steinmart, Petco
Fire Mountain Center........... 1987 Fee/Ground Lease 9.4 92,378 92,378 Strouds, Lamps Plus,
Oceanside, CA (2048) Trader Joe's, Bookstar
Fullerton Town Center.......... 1987 Fee 21.7 368,387 255,687 Price Club(2), AMC
Fullerton, CA Theatres, Toys R' Us,
Office Depot
Gardena Gateway Center......... 1990 Fee 9.7 65,987 65,987 Marukai (Rite-Aid)
Gardena, CA 99 Ranch Market
Huntington Center.............. (1989) Ground Lease 3.9 110,244 110,244 Toys 'R' Us, Albertson's
Huntington Beach, CA (2032)
Kenneth Hahn Plaza............. 1987 Ground Lease 14.5 165,047 165,047 Food 4 Less, Pic 'N
Save,
Los Angeles, CA (2052) Rite-Aid, Super Trak
Auto
La Verne Towne Center.......... 1986 Fee 19.1 231,143 231,143 Target,
La Verne, CA Top Valu (Albertson's)
Lakewood Plaza................. (1989) Ground Lease 11.1 113,511 113,511 Stater Bros.
(Albertson's),
Bellflower, CA (2032) Staples
Loma Square.................... 1980 Fee 15.8 210,704 210,704 T.J. Maxx, Circuit City,
San Diego, CA Sav-on Drugs, Staples,
Super Crown Books
Montebello Town Square ........ 1992 Fee 24.5 250,438 250,438 Sears, Toys 'R' Us,
Montebello, CA AMC Theatres, Petco
Mountain Square Shopping
Center........................ 1988 Fee 15.8 273,189 273,189 Home Depot, Staples,
Upland, CA Pavilions, Factory 2U
North County Plaza............. 1987 Fee 16.9 153,325 153,325 Marshall's, Michael's,
Carlsbad, CA Kids 'R' Us
Albertson's, Office
Parkway Place.................. (1989) Ground Lease 9.7 120,425 120,425 Depot
Escondido, CA (2037)
Pomona Gateway Center.......... (1993) Fee 9.8 103,905 103,905 Vons, Pic 'N Save
Pomona, CA
San Fernando Mission Plaza..... 1991 Fee 4.9 67,192 67,192 Value Plus (Vons)
San Fernando, CA
Torrance Promenade............. (1991) Fee 19.0 266,907 266,907 Ross, Marshall's,
Torrance, CA Office Depot, Linens 'n
Things, Bookstar, Sears
Homelife, Loehmann's,
Kids 'R' Us
Vermont-Slauson Shopping
Center........................ 1981 Ground Lease 10.3 169,744 169,744 Ralphs, Kmart,
Los Angeles, CA (2070) Sav-on Drugs
Vineyards Marketplace.......... 1991 Fee 6.7 106,765 56,035 Albertson's(2),
Rancho Cucamonga, CA Sav-on Drugs
Vista Balboa Shopping Center... (1988) Fee 10.3 117,410 117,410 Albertson's, SportMart
San Diego, CA
----- --------- ---------
Subtotal Southern California. 367.9 4,295,272 3,961,902
----- --------- ---------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Year of
Construction Total
(or Most Ownership Land Shopping Company
Recent Interest Area Center GLA Owned GLA Anchor or
Renovation) (Expiration)(1) (Acres) (Sq. Ft.) (Sq. Ft.) Principal Tenants
------------ --------------- ------- ---------- ---------- -----------------
<C> <C> <C> <C> <C> <C> <S>
Southwest
Charleston Plaza...... 1989 Fee 23.5 283,646 234,496 Home Base, Lucky(2),
Las Vegas, NV Sav-on Drugs
Kyrene Village
Shopping Center...... 1987 Fee 14.4 161,174 161,174 Basha's, Kyrene Lanes
Chandler, AZ
North Mountain
Village.............. 1985 Fee 15.0 147,510 94,379 Fry's Food & Drug(2),
Phoenix, AZ T. J. Maxx, Greenbacks
Randolph Plaza........ 1999 Fee 17.3 192,685 180,382 Fry's, Walgreen's,
Tucson, AZ MacFrugal's
Southern Palms Center. 1980 Fee 26.1 251,663 251,663 Food 4 Less, Heilig
Tempe, AZ Meyer Furniture,
Staples, Coomers Craft
Mall
Sunrise Place Center.. (1992) Fee 8.5 136,919 136,919 Smith's Food & Drug
Tucson, AZ
----- ---------- ----------
Subtotal Southwest.. 104.8 1,173,597 1,059,013
----- ---------- ----------
TOTAL COMMUNITY
SHOPPING CENTERS 722.6 8,389,357 7,547,955
----- ---------- ----------
REGIONAL MALLS
Baldwin Hills Crenshaw
Plaza................ 1988 Fee 42.0 819,704 359,704 Sears(2),
Los Angeles, CA Robinsons-May(2), Wal-
Mart(3), Albertson's,
T.J. Maxx, Sony/Magic
Johnson Theaters
Media City Center..... 1992 Ground Lease 37.1 1,248,015 818,405 Macy's, IKEA(2),
Burbank, CA (2078) Sears(2), Mervyn's(2),
AMC Theatres, Sports
Chalet, CompUSA, Barnes
& Noble, Virgin
Megastore
----- ---------- ----------
TOTAL REGIONAL MALLS.. 79.1 2,067,719 1,178,109
----- ---------- ----------
SINGLE TENANT
FACILITIES
Home Base............. (1988) Fee 8.7 107,165 107,165 Home Base
Glendora, CA
Kmart................. 1990 Fee 8.7 104,204 104,204 Kmart
Phoenix, AZ
Kmart................. 1990 Fee 8.8 86,479 86,479 Kmart
Banning, CA
Kmart................. 1990 Fee 9.1 86,479 86,479 Kmart
El Centro, CA
Kmart................. 1990 Fee 6.2 86,479 86,479 Kmart
Madera, CA
Kmart................. 1990 Fee 8.3 86,479 86,479 Kmart
Rocklin, CA
Sam's Club............ (1988) Ground Lease 9.8 114,722 114,722 Sam's Club
Downey, CA (2009) (Wal-Mart)
----- ---------- ----------
TOTAL SINGLE TENANT
FACILITIES........... 59.6 672,007 672,007
----- ---------- ----------
TOTAL ALL PROPERTIES.. 861.3 11,129,083 9,398,071
===== ========== ==========
</TABLE>
- --------
(1) The date indicated is the expiration date of any ground lease after giving
effect to all renewal periods.
(2) Indicates anchor not owned.
(3) Anchor tenant under construction.
16
<PAGE>
Property Performance Summary
The following table sets forth, on a property-by-property basis, the GLA
leased to anchor tenants, pad tenants and shop tenants, as of December 31,
1999:
<TABLE>
<CAPTION>
Average
Total Leased GLA Available GLA to Annualized Base Annual
------------------------- GLA be Built Total GLA Percentage Base Rent Percentage
Property Name Anchor(1) Pad(2) Shop(3) (sq.ft.) (sq.ft.) (sq. ft.) leased(4) Rent(5) psf(6) Rent(7)
------------- --------- ------- ------- --------- -------- --------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMUNITY SHOPPING
CENTERS
Pacific Northwest
Covington Square...... 70,837 -- 73,812 5,514 1,260 151,423 96.3 $1,599,919 $11.06 $ --
Fairwood Shopping
Center................ 109,249 10,777 81,846 6,309 6,334 214,515 97.0 1,967,302 9.75 182,000
Frontier Village
Shopping Center....... 68,473 22,023 58,637 4,187 -- 153,320 97.3 1,521,762 10.20 140,000
Gresham Town Fair..... 159,282 26,587 68,171 8,685 -- 262,725 96.7 2,252,072 8.87 13,000
The Medford Center.... 196,032 17,432 53,642 58,816 18,000 343,922 82.0 2,041,261 7.64 184,000
Pacific Linen Plaza... 25,000 -- 44,432 -- -- 69,432 100.0 998,902 14.39 --
Pavilions' Centre..... 123,562 -- 76,647 -- -- 200,209 100.0 3,060,357 15.29 --
Ross Center........... 53,331 7,000 70,944 1,190 -- 132,465 99.1 1,562,780 11.90 --
Ross Plaza............ 29,020 -- 36,642 1,625 -- 67,287 97.6 804,498 12.25 --
Vancouver Park Place.. 33,938 14,900 29,106 -- -- 77,944 100.0 962,070 12.34 73,000
Westgate North
Shopping Center....... 37,902 11,836 44,813 14,220 1,500 110,271 86.9 1,135,840 12.01 61,000
------- ------- ------- ------- ------ --------- ----- ---------- ------ -------
Subtotal Pacific
Northwest............ 906,626 110,555 638,692 100,546 27,094 1,783,513 94.3 17,906,763 10.81 653,000
------- ------- ------- ------- ------ --------- ----- ---------- ------ -------
Northern & Central
California
Bakersfield Shopping
Center................ -- -- 12,740 1,375 -- 14,115 90.3 90,556 7.11 --
Madera Marketplace.... 92,278 -- 70,856 5,462 -- 168,596 96.8 1,689,491 10.36 --
Marshall's Plaza...... 27,000 -- 33,715 18,285 -- 79,000 76.9 705,524 11.62 --
Mineral King Plaza.... -- -- 32,860 6,200 -- 39,060 84.1 511,976 15.58 --
Rheem Valley.......... 51,009 5,150 90,271 6,830 -- 153,260 95.5 1,670,852 11.41 2,000
Rosedale Village
Shopping Center....... 72,324 6,658 42,169 6,376 -- 127,527 95.0 1,319,065 10.89 --
Southpointe Plaza..... 105,650 -- 67,277 16,136 -- 189,063 91.5 1,424,396 8.24 35,000
------- ------- ------- ------- ------ --------- ----- ---------- ------ -------
Subtotal Northern &
Central California... 348,261 11,808 349,888 60,664 -- 770,621 92.1 7,411,860 10.44 37,000
------- ------- ------- ------- ------ --------- ----- ---------- ------ -------
Southern California
Center of El Centro... 149,300 5,623 18,616 5,350 -- 178,889 97.0 683,836 3.94 154,000
Country Fair Shopping
Center................ 96,225 27,341 31,899 7,997 4,905 168,367 95.1 2,258,613 14.53 47,000
Covina Town Square.... 266,383 15,918 63,618 13,692 -- 359,611 96.2 5,110,252 14.77 153,000
Date Palm Center...... 99,919 -- 12,937 4,506 4,000 121,362 96.2 1,692,236 14.99 --
El Camino North....... 101,582 133,024 65,141 19,560 2,946 322,253 93.9 3,599,341 12.01 5,000
Fire Mountain Center.. 44,481 23,432 23,339 1,126 -- 92,378 98.8 1,792,123 19.64 109,000
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Average
Total Leased GLA Available GLA to Annualized Base Annual
--------------------------- GLA be Built Total GLA Percentage Base Rent Percentage
Property Name Anchor(1) Pad(2) Shop(3) (sq.ft.) (sq.ft.) (sq. ft.) leased(4) Rent(5) psf(6) Rent(7)
------------- --------- ------- --------- --------- -------- --------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fullerton Town
Center............. 177,653 19,722 38,179 20,133 -- 255,687 92.1 3,702,275 15.72 --
Gardena Gateway
Center............. 41,300 5,062 17,125 2,500 -- 65,987 96.2 972,115 15.31 30,000
Huntington Center... 105,879 4,365 -- -- -- 110,244 100.0 1,285,121 11.66 --
Kenneth Hahn Plaza.. 97,186 14,598 51,263 2,000 -- 165,047 98.8 1,549,537 9.50 --
La Verne Towne
Center............. 158,860 1,940 58,019 12,324 -- 231,143 94.7 1,357,898 6.21 --
Lakewood Plaza...... 93,342 4,365 15,804 -- -- 113,511 100.0 1,308,068 11.52 --
Loma Square......... 96,514 -- 107,470 6,720 -- 210,704 96.8 2,698,609 13.23 81,000
Montebello Town
Square............. 210,533 7,879 25,167 6,859 -- 250,438 97.3 2,712,175 11.13 --
Mountain Square
Shopping Center.... 185,945 -- 70,099 17,145 -- 273,189 93.7 3,098,335 12.10 81,000
North County Plaza.. 43,610 28,720 73,045 7,950 8,500 161,825 94.8 2,125,361 14.62 --
Parkway Place....... 91,127 12,917 15,347 1,034 -- 120,425 99.1 1,225,856 10.27 --
Pomona Gateway
Center............. 96,418 6,487 1,000 -- 4,982 108,887 100.0 923,447 8.89 --
San Fernando Mission
Plaza.............. 50,508 2,293 14,391 -- -- 67,192 100.0 906,054 13.48 --
Torrance Promenade.. 215,562 20,496 30,183 666 -- 266,907 99.8 4,156,986 15.61 --
Vermont-Slauson
Shopping Center.... 142,411 3,720 23,613 -- -- 169,744 100.0 993,598 5.85 9,000
Vineyards
Marketplace........ 21,415 -- 32,245 2,375 -- 56,035 95.8 788,452 14.69 --
Vista Balboa
Shopping Center.... 105,210 12,200 -- -- -- 117,410 100.0 1,386,271 11.81 2,000
--------- ------- --------- ------- ------ --------- ----- ---------- ----- ---------
Subtotal Southern
California........ 2,691,363 350,102 788,500 131,937 25,333 3,987,235 96.7 46,326,559 12.10 671,000
--------- ------- --------- ------- ------ --------- ----- ---------- ----- ---------
Southwest
Charleston Plaza.... 153,131 19,171 51,672 10,522 -- 234,496 95.5 2,353,990 10.51 --
Kyrene Village
Shopping Center.... 95,957 5,120 57,490 2,607 -- 161,174 98.4 1,226,701 7.74 1,000
North Mountain
Village............ 41,215 -- 51,191 1,973 -- 94,379 97.9 877,174 9.49 --
Randolph Plaza...... 136,110 6,150 28,511 9,611 -- 180,382 94.7 995,057 5.83 80,000
Southern Palms
Center............. 56,345 20,025 123,641 51,652 3,200 254,863 79.5 1,885,994 9.43 23,000
Sunrise Place
Center............. 103,025 5,100 22,214 6,580 7,080 143,999 95.2 730,719 5.61 --
--------- ------- --------- ------- ------ --------- ----- ---------- ----- ---------
Subtotal Southwest. 585,783 55,566 334,719 82,945 10,280 1,069,293 92.2 8,069,635 8.27 104,000
--------- ------- --------- ------- ------ --------- ----- ---------- ----- ---------
TOTAL COMMUNITY
SHOPPING CENTERS.. 4,532,033 528,031 2,111,799 376,092 62,707 7,610,662 95.0 79,714,817 11.11 1,465,000
--------- ------- --------- ------- ------ --------- ----- ---------- ----- ---------
REGIONAL MALLS
Baldwin Hills
Crenshaw Plaza..... 141,554 29,610 157,167 31,373 -- 359,704 91.3 5,810,348 17.70 218,000
Media City Center... 467,961 48,984 226,087 75,373 -- 818,405 90.8 12,085,713 16.27 283,000
--------- ------- --------- ------- ------ --------- ----- ---------- ----- ---------
TOTAL REGIONAL
MALLS............. 609,515 78,594 383,254 106,746 -- 1,178,109 90.9 17,896,061 16.70 501,000
--------- ------- --------- ------- ------ --------- ----- ---------- ----- ---------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Average
Total Leased GLA Available GLA to Base Annual
----------------------------- GLA be Built Total GLA Percentage Annualized Rent Percentage
Property Name Anchor(1) Pad(2) Shop(3) (sq.ft.) (sq.ft.) (sq. ft.) leased(4) Base Rent(5) psf(6) Rent(7)
------------- --------- ------- --------- --------- -------- --------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SINGLE TENANT
FACILITIES
Home Base--
Glendora........... 107,165 -- -- -- -- 107,165 100.0 935,444 8.12 --
Kmart--Phoenix AZ.. 104,204 -- -- -- -- 104,204 100.0 551,576 5.29 --
Kmart--Banning CA.. 86,479 -- -- -- -- 86,479 100.0 457,744 5.29 --
Kmart--El Centro
CA................. 86,479 -- -- -- -- 86,479 100.0 507,915 5.87 --
Kmart--Madera CA... 86,479 -- -- -- -- 86,479 100.0 415,951 4.81 --
Kmart--Rocklin CA.. 86,479 -- -- -- -- 86,479 100.0 411,132 4.75 --
Sam's Club--Downey
CA................. 110,822 3,900 -- -- -- 114,722 100.0 732,765 6.39 62,000
--------- ------- --------- ------- ------ --------- ------------ ------ ----------
TOTAL SINGLE
TENANT FACILITIES. 668,107 3,900 -- -- -- 672,007 100.0 4,012,527 5.97 62,000
--------- ------- --------- ------- ------ --------- ------------ ------ ----------
TOTAL ALL
PROPERTIES........ 5,809,655 610,525 2,495,053 482,838 62,707 9,460,778 94.9 $101,623,405 $11.40 $2,028,000
========= ======= ========= ======= ====== ========= ============ ====== ==========
PERCENT OF TOTAL
GLA................ 61.41% 6.45% 26.38% 5.10% 0.66% 100.00%
========= ======= ========= ======= ====== =========
</TABLE>
- ----
(1) Anchor tenants are defined as those retail tenants occupying more than
25,000 square feet of GLA, 10% of a Property's aggregate GLA, or which
represent a significant drawing power for the Property.
(2) Pad tenants means freestanding single tenants.
(3) Includes certain office space.
(4) Based upon Total GLA, excluding GLA to be built.
(5) Total annualized base rents of the Company for leases signed as of
December 31, 1999, excluding (i) percentage rents, (ii) additional amounts
payable by tenants such as common area maintenance, real estate taxes and
other expense reimbursements and (iii) future contractual rent escalations
or cost of living increases.
(6) Calculated as total annualized base rent divided by GLA actually leased as
of December 31, 1999.
(7) Annual percentage rent reported during 1999.
19
<PAGE>
Tenant Concentration
The following table sets forth, as of December 31, 1999, information as to
anchor and/or national retail tenants which individually accounted for at
least 1.0% of total annualized base rent of the Properties:
<TABLE>
<CAPTION>
Percentage
Number of Total Total Percentage
of Annualized Annualized Tenant of Total
Retail Tenant(1) Stores Base Rent Base Rent GLA GLA
- ---------------- ------ ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
AMC Theatres................ 6 $ 5,907,780 5.81% 259,842 2.76%
Safeway/Vons................ 7 3,321,091 3.27% 393,819 4.19%
American Stores (Sav-On,
Albertson's)............... 10 3,677,277 3.62% 450,624 4.79%
K-Mart...................... 6 2,562,498 2.52% 532,624 5.67%
Sam's Club (Wal-Mart)....... 2 2,138,834 2.10% 210,741 2.24%
Fred Meyer (Ralph's/FFL/QFC,
Smith's)................... 6 1,995,879 1.96% 299,699 3.19%
T.J. Maxx................... 9 1,982,526 1.95% 247,614 2.63%
Home Depot.................. 2 1,875,930 1.85% 200,549 2.13%
Toys R' Us.................. 5 1,802,233 1.77% 180,780 1.92%
Home Base................... 2 1,710,826 1.68% 212,572 2.26%
Sears Roebuck & Co.......... 5 1,657,583 1.63% 299,642 3.19%
Staples..................... 6 1,513,504 1.49% 136,513 1.45%
Barnes & Noble.............. 4 1,434,609 1.41% 70,276 0.75%
Magic Johnson Theatres...... 1 1,288,210 1.27% 67,579 0.72%
Ross Stores, Inc. .......... 5 1,166,621 1.15% 142,852 1.52%
Payless Shoe Source......... 16 1,058,759 1.04% 54,409 0.58%
Office Depot................ 4 1,111,023 1.09% 101,594 1.08%
Circuit City................ 3 1,035,900 1.02% 84,680 0.90%
--- ----------- ----- --------- -----
TOTAL..................... 99 $37,241,083 36.65% 3,946,409 41.99%
=== =========== ===== ========= =====
</TABLE>
- --------
(1) Excludes non-owned anchors.
The following table sets forth, as of December 31, 1999, square footage of
GLA leased to national, regional and local retail tenants and the annualized
base rent generated from such:
<TABLE>
<CAPTION>
Average
% of Total Annual Base Percent of
Annualized Annualized Rent Per Total
Type of Tenant Base Rent Base Rent Square Foot Leased GLA
- -------------- ------------ ---------- ----------- ---------- ---
<S> <C> <C> <C> <C> <C>
National(1).................. $ 68,970,732 67.9% $10.32 75.0%
Regional(2).................. 9,697,860 9.5% 13.06 8.3%
Local(3)..................... 22,954,813 22.6% 15.41 16.7%
------------ ------ ------
$101,623,405 100.00% 11.40 100.00%
============ ====== ======
</TABLE>
- --------
(1) National tenant refers to a business operating in three or more
metropolitan areas located in at least three separate states.
(2) Regional tenant refers to a business operating in more than one
metropolitan area in one or two states. Includes financial institutions.
(3) Local tenant refers to a business operating in only one metropolitan area.
20
<PAGE>
The following table sets forth, as of December 31, 1999, the annualized base
rent of all of the Properties, the percentage of annualized base rent, the
average rent per square foot and the percentage leased, broken down by type of
tenant:
<TABLE>
<CAPTION>
Average
% of Total Annual Base
Annualized Annualized Rent Per Percent
Type of Space Base Rent Base Rent Square Foot Leased
- ------------- ------------ ---------- ----------- -------
<S> <C> <C> <C> <C>
Anchor.............................. $ 50,560,613 49.7% $ 8.70 98.1%
Pad................................. 9,443,777 9.3% 15.47 96.9%
Shop................................ 41,619,015 41.0% 16.68 87.7%
------------ ------
TOTAL............................. $101,623,405 100.00% 11.40 94.9%
============ ======
</TABLE>
Segment Concentration
The following table sets forth, as of December 31, 1999, information related
to the business segments in which our tenants operate which account for at
least 2% of our annualized gross rent:
<TABLE>
<CAPTION>
Total Percentage
Number Segment of Total Total Percentage
of Annualized Annualized Segment of Total
Retail Tenant Stores Base Rent Base Rent GLA GLA
- ------------- ------ ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Grocery Stores............... 24 $ 9,860,562 9.70% 1,227,610 13.06%
Theatres..................... 9 8,219,557 8.09% 409,694 4.36%
Fast Food Restaurants........ 193 6,965,916 6.85% 329,439 3.51%
Restaurants.................. 73 5,843,627 5.75% 379,680 4.04%
Discount Department Stores... 10 5,410,887 5.32% 963,747 10.25%
Discount Apparel Stores...... 36 4,487,548 4.42% 495,491 5.27%
Women's Wear................. 62 4,189,983 4.12% 282,518 3.01%
Home Improvement............. 12 4,043,165 3.98% 468,838 4.99%
Audio/Video Stores........... 34 3,483,441 3.43% 186,879 1.99%
Home Furnishings............. 24 3,359,618 3.31% 250,663 2.67%
Department Stores............ 9 2,802,871 2.76% 704,610 7.50%
Bank/Financial Services...... 59 2,513,855 2.47% 160,535 1.71%
Variety Stores............... 33 2,481,509 2.44% 280,063 2.98%
Beauty Supply/Salons......... 103 2,462,167 2.42% 134,860 1.43%
Office Supply Stores......... 10 2,453,781 2.41% 224,937 2.39%
Major Shoe Stores............ 36 2,304,066 2.27% 116,942 1.24%
Electronics.................. 22 2,130,597 2.10% 144,478 1.54%
--- ----------- ----- --------- -----
TOTAL...................... 749 $73,013,150 71.85% 6,760,984 71.94%
=== =========== ===== ========= =====
</TABLE>
21
<PAGE>
Tenant Lease Expirations and Renewals
The following table sets forth, as of December 31, 1999, tenant lease
expirations at the Properties, assuming that no tenants exercise renewal
options:
<TABLE>
<CAPTION>
Overall Portfolio Anchors Pads Shops
------------------------- ------------------- ---------------- ------------------
Number Base Base Rent Base Base
Of Square Rent Per Square Per Sq. Square Rent Per Square Rent Per
Year of Expiration Leases Feet Sq. Ft. Feet Ft. Feet Sq. Ft. Feet Sq. Ft.
- ------------------ ------ --------- -------- --------- --------- ------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Month-to-Month.......... 129 241,921 $13.00 74,096 $ 3.76 1,000 $13.00 166,825 $17.10
2000.................... 193 524,339 14.69 132,079 9.85 39,059 14.84 353,201 16.48
2001.................... 223 693,525 14.01 250,927 8.14 33,147 16.96 409,451 17.36
2002.................... 213 829,751 12.31 394,318 6.76 52,448 18.27 382,985 17.20
2003.................... 134 540,759 11.97 207,978 5.05 46,772 15.90 286,009 16.36
2004.................... 149 878,605 11.06 516,480 7.26 36,488 17.01 325,637 16.42
2005.................... 67 426,659 14.52 211,340 13.29 41,369 15.27 173,950 15.84
2006.................... 50 410,251 12.85 245,048 10.55 37,105 13.07 128,098 17.18
2007.................... 38 353,456 11.63 194,957 8.31 45,363 11.84 113,136 17.27
2008.................... 32 496,109 11.13 423,602 9.88 39,167 20.12 33,340 16.38
2009.................... 28 595,795 7.77 524,666 6.30 52,366 17.16 18,763 22.52
Thereafter.............. 97 2,924,063 9.90 2.634.164 9.48 186,241 14.10 103,658 12.94
----- --------- ------ --------- ------ ------- ------ --------- ------
TOTAL.................. 1,353 8,915,233 $11.40 5,809,655 $ 8.70 610,525 $15.47 2,495,053 $16.68
===== ========= ====== ========= ====== ======= ====== ========= ======
</TABLE>
The following table sets forth, as of December 31, 1999, tenant lease
expirations at the 47 community centers within the portfolio of Properties
which represent our strategic focus, assuming that no tenants exercise renewal
options:
<TABLE>
<CAPTION>
Overall Portfolio Anchors Pads Shops
-------------------------- ------------------- ----------------- -------------------
Number Base Rent Base Rent Base Rent Base Rent
Of Square Per Sq. Square Per Sq. Square Per Sq. Square Per Sq.
Year of Expiration Leases Feet Ft. Feet Ft. Feet Ft. Feet Ft.
- ------------------ ------ --------- --------- --------- --------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Month-to-Month.......... 77 178,635 $ 9.64 74,096 $ 3.76 1,000 $13.00 103,539 $13.81
2000.................... 161 466,616 14.21 132,079 9.85 35,159 15.55 299,378 15.98
2001.................... 182 644,269 12.74 250,927 8.14 33,147 16.96 360,195 15.56
2002.................... 180 776,825 11.25 394,318 6.76 51,408 17.75 331,099 15.60
2003.................... 113 504,165 11.07 207,978 5.05 46,772 15.90 249,415 15.19
2004.................... 122 802,603 10.09 485,908 6.98 28,188 18.12 288,507 14.54
2005.................... 54 308,080 12.21 113,761 7.43 39,649 14.57 154,670 15.12
2006.................... 42 365,595 12.17 219,744 9.57 30,695 14.14 115,156 16.60
2007.................... 30 300,459 10.55 194,957 8.31 45,363 11.84 60,139 16.84
2008.................... 26 337,778 10.54 271,480 9.12 34,167 17.80 32,131 14.83
2009.................... 23 470,932 7.81 413,844 6.30 38,884 17.35 18,204 21.90
Thereafter.............. 75 2,015,906 10.97 1,772,941 10.74 143,599 12.73 99,366 12.48
----- --------- ------ --------- ------ ------- ------ --------- ------
TOTAL.................. 1,085 7,171,863 $11.11 4,532,033 $ 8.70 528,031 $15.05 2,111,799 $15.32
===== ========= ====== ========= ====== ======= ====== ========= ======
</TABLE>
22
<PAGE>
Debt Secured by Properties
The following table summarizes the outstanding indebtedness secured by the
Company's Properties as of December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
Interest Maturity
Lender Property Rate Date Balance
------ -------- ---------- -------- --------
<S> <C> <C> <C> <C>
Mortgage Loans:
Principal Mutual Life
Insurance Company...... North Mountain Village 8.250% 05/01/01 $ 8,182
First Union National Covina, Randolph Plaza 8.980%(1) 06/01/02 58,017
Bank................... Fairwood & Mountain Square
Metropolitan Life
Insurance Company...... Date Palm 10.450% 07/31/02 9,254
First Union National
Bank................... Fire Mountain 8.980%(1) 08/01/02 11,448
The Travelers Insurance
Company................ North County 10.375% 01/31/03 15,573
Normura Asset Capital
Corporation............ Tranche A(2) 8.938% 04/01/05 22,198
DLJ Mortgage Acceptance
Corp................... Charleston 8.050% 01/01/06 15,201
Teachers................ Pavilions 7.440% 08/01/06 24,064
Column Financial, Inc... Mineral King 9.680% 08/01/06 3,673
Eastrich #79 Corporation
(AEW).................. Loan #1(3) 11.450% 10/15/06 19,908
Eastrich #79 Corporation
(AEW).................. Loan #2(4) 10.900% 10/15/06 9,153
First Union National Gardena, Gresham, Loma 7.750% 07/01/09 51,784
Bank................... Square & Southpointe
Chase Commercial
Mortgage Banking
Corp. ................. Torrance Promenade 8.300% 11/10/09 29,981
Chase Commercial
Mortgage Banking
Corp. ................. Kyrene Village 8.300% 11/10/09 5,191
Chase Commercial
Mortgage Banking
Corp. ................. Vineyards Marketplace 8.300% 11/10/09 7,945
Nomura Asset Capital
Corporation............ Tranche B(2) 9.000% 04/01/10 32,975
Aid Association for
Lutherans.............. Westgate North 8.300% 04/01/14 5,846
---------- --------
Total Mortgage Loans
Payable................ 8.829%(7) 330,393
---------- --------
CRA--Certificates of
Participation, Series
1985................... Baldwin Hills Crenshaw Plaza 5.300% 12/01/14 30,000
CDC--Certificates of
Participation, Series
1985................... Kenneth Hahn Plaza 5.200% 12/01/15 6,000
Secured Line of Credit--
Chase Manhattan Bank... (5) 7.801%(6) 12/31/00 158,075
---------- --------
Total secured debt...... 8.276%(7) $524,468
========== ========
</TABLE>
- --------
(1) Interest based on LIBOR plus 250 basis points.
(2) Secured by San Fernando Mission, Rosedale, Country Fair, Fullerton, La
Verne, and $10.6 million of U.S. Treasury Securities.
(3) Secured by KMart--Rocklin, KMart--El Centro, KMart--Banning, KMart--
Madera, KMart--Phoenix, Vista Balboa and Huntington Beach. Cross
collateralized with (4) below.
(4) Secured by Lakewood, Sam's Club--Downey, and Parkway Place. Cross
collateralized with (3) above.
(5) Secured by Media City, Montebello, Medford Shopping Center, Ross Center,
Pacific Linen, Vancouver Park Place, Sunrise Place, Marshall's Plaza, Ross
Plaza, Covington, Madera Marketplace, Frontier Village and Rheem Valley.
(6) Interest based on LIBOR plus 137.5 basis points (adjusted to 250 basis
points as of February 28, 2000).
(7) Weighted average interest rate on debt.
23
<PAGE>
Aggregate future principal payments by year on the balance of mortgage
indebtedness as of December 31, 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
Scheduled
Amortization Scheduled
Year Payments Maturities Total
---- ------------ ---------- --------
<S> <C> <C> <C>
2000...................................... $ 5,175 $158,075(1) $163,250
2001...................................... 5,573 8,105 13,678
2002...................................... 5,223 75,983 81,206
2003...................................... 4,610 14,434 19,044
2004...................................... 4,930 -- 4,930
2005...................................... 4,934 20,953 25,887
2006...................................... 3,976 53,846 57,822
2007...................................... 2,176 -- 2,176
2008...................................... 2,333 -- 2,333
2009...................................... 1,906 85,212 87,118
Thereafter................................ 2,639 64,385 67,024
------- -------- --------
Total................................... $43,475 $480,993 $524,468
======= ======== ========
</TABLE>
- --------
(1) Amount represents balance outstanding on the secured line of credit which
expires on December 31, 2000.
Other Assets of the Company
The Company's interest in Media City Center (Burbank, California) includes
an interest in two promissory notes issued by the Redevelopment Burbank Agency
of the City of Burbank (the "Burbank Agency") which mature on February 1,
2016. The first note, which is nonrecourse to the Burbank Agency, is unsecured
and was issued by the Burbank Agency on November 15, 1989 with an $18.5
million principal amount and bears interest at 9.25% per annum. On each semi-
annual payment date the Burbank Agency is required to make payments on the
note to the extent of 70% of the real property tax increment generated by
Media City Center, with certain exceptions. The second note is secured by
certain tax revenues and was issued by the Burbank Agency on December 6, 1990
with a $33 million initial principal amount and bears interest at 9.25% per
annum. The note is nonrecourse to the Burbank Agency but is secured by certain
real property tax increments generated by the property as well as certain
sales and use taxes generated by the property. On each semi-annual payment
date the Burbank Agency is required to make payments on the note only to the
extent of such tax items, less rent paid by Macy's (formerly Bullock's). Any
amount which accrues under the notes that is not required to be paid is added
to the principal amount of such notes. Any principal or interest due on either
of the notes which has not been paid (due to the permitted reductions and
limitation on payments described above) as of their respective maturity dates
will be forgiven, and it is not likely that the full face amount of the notes
and the interest thereon will be paid by such maturity dates. During the years
ended December 31, 1999, 1998 and 1997, the Company recognized income of
approximately $2,721,000, $2,633,000, and $2,656,000, respectively, pursuant
to the terms of such agency note agreements.
Under similar commitments from the Community Redevelopment Agencies of the
Cities of Fullerton and Chino, other income was recognized for the years ended
December 31, 1999, 1998 and 1997 from Fullerton Town Center of $42,000,
$52,000 and $48,000, respectively, and Country Fair Shopping Center of
$151,000, $146,000 and $147,000, respectively. Such commitments expire in 2013
and 2001 for Fullerton and Chino, respectively, and any balance owing to the
Company at expiration will be forgiven and discharged.
Such commitments have not been recorded as assets in the Company's financial
statements as they are contingent in nature.
24
<PAGE>
Environmental And Other Regulatory Requirements
Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real property may become liable for the costs of removal
or remediation of certain hazardous or toxic substances on or in its
properties. Such laws may impose such liability without regard to whether the
Company knew of, or was responsible for, the presence of such hazardous or
toxic substances. The costs of investigation, removal, or remediation of such
substances may be substantial and the presence of such substances, or the
failure to properly remediate such substances, may adversely affect the
owner's ability to sell such real estate or to borrow using such real estate
as collateral. In connection with its ownership and operation of properties,
the Company may be potentially liable under such laws and may incur costs in
responding to such liabilities. No assurance can be given that any existing
environmental studies with respect to any of the Properties will reveal all
environmental liabilities, that any prior owner or tenant of a Property did
not create any material environmental condition not known to the Company, that
future laws, ordinances or regulations will not impose any material
environmental liability, or that a material environmental condition does not
otherwise exist as to any one or more Properties.
Pursuant to an Environmental Indemnity Agreement, as modified by the
Separation Agreement, the transferors of eight of the 36 properties acquired
at the time of the Company's formation in December 1993 (the "Original
Properties") have agreed to provide certain indemnities to the Company for
environmental liabilities that may arise with respect to any contamination on
or affecting the condition of the Original Properties which was known as of
December 27, 1993 or which becomes known after December 27, 1993 as a result
of additional environmental testing commenced prior to December 27, 1993.
Pursuant to the transfer documents with respect to Rosedale Village, Gresham
Town Fair, Medford Center and LaVerne Towne Center (the "1994 Acquisition
Properties"), the transferors of such properties provided certain indemnities
with respect to environmental liabilities to the Company. Because
responsibility for such matters is being retained by the transferors no
liabilities have been recorded in the financial statements of the Company with
respect to such matters. For the Properties acquired during 1999, 1998 and
1997 where the Company's due diligence identified existing or potential
environmental contamination, the Company either obtained indemnifications from
the sellers or had remediation work paid for by the seller. For all other
Properties acquired, based on the Company's due diligence, the Company does
not believe that it has exposure to material environmental clean up cost.
The Properties are subject to the Americans with Disabilities Act of 1990
(the "ADA"). The ADA has separate compliance requirements for "public
accommodations" and "commercial facilities" but generally requires that all
public facilities be made accessible to people with disabilities. These
requirements became effective in 1992. Although the Company believes that the
Properties are substantially in compliance with the present requirements of
the ADA, the Company may incur additional costs of complying with the ADA in
the future. However, the Company does not believe that such costs of
compliance will have a material effect on the Company.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various legal proceedings and claims that arise in
the ordinary course of business. These matters are generally covered by
insurance. While the resolution of these matters cannot be predicted with
certainty, management believes, based on currently available information, that
the final outcome of such matters will not have a material adverse effect on
the financial position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1999, no matters were submitted for a vote of
stockholders of the Company.
25
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on the New York Stock Exchange under
the symbol "CTA." At March 1, 1999, the Company had approximately 178
stockholders of record and approximately 5,000 beneficial owners. The
following table sets forth quarterly high and low sales prices of the Common
Stock and the dividends paid by the Company with respect to each period.
<TABLE>
<CAPTION>
Dividends
Declared
Three months ended: High Low Per Share
------------------- ------- ------- ---------
<S> <C> <C> <C>
December 31, 1999................................. $11.125 $ 9.063 0.36
September 30, 1999................................ 12.375 9.625 0.36
June 30, 1999..................................... 12.438 10.313 0.36
March 31, 1999.................................... 13.000 9.156 0.36
December 31, 1998................................. 12.938 9.500 0.36
September 30, 1998................................ 15.750 10.813 0.36
June 30, 1998..................................... 17.000 13.750 0.36
March 31, 1998.................................... 18.000 16.250 0.36
</TABLE>
Distributions included a return of capital component of approximately 56.9%,
82.5% and 72%, for the years ended December 31, 1999, 1998 and 1997,
respectively. In addition, distributions for the years ended December 31, 1999
and 1998 represented a 16.5% and 5.3% capital gain, respectively. All
distributions will be made by the Company at the discretion of the Board of
Directors on a quarterly basis and will depend on the earnings of the Company,
its financial condition and such other factors as the Board of Directors deems
relevant. The Company has historically paid a quarterly dividend of $0.36 per
share. In March 2000, the Board of Directors elected to reduce the dividend
for the quarter ended March 31, 2000 to $0.21 per share. In making this
election, the Board of Directors concluded that the new dividend amount is
more reflective of the Company's anticipated stabilized funds from operations
and that it is reflective of a pay-out ratio more in line with the Company's
peer group. The historical return of capital component of the Company's
distributions is not indicative of the return of capital component of future
distributions, which may be lower than previous years. In order to qualify for
the beneficial tax treatment accorded to real estate investment trusts under
the Internal Revenue Code, the Company is required to make distributions to
holders of its shares which will be at least 95% of the Company's "real estate
investment trust taxable income," as defined in Section 857 of the Code.
26
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the Company. The
following data should be read in conjunction with management's discussion and
analysis of financial condition and results of operations and all of the
financial statements and notes thereto included elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- --------- -------- --------
(In thousands, except per share & property data)
<S> <C> <C> <C> <C> <C>
Statements of Operations
Data:
Total revenues.......... $ 144,886 $ 130,495 $ 88,961 $ 87,719 $ 81,323
---------- ---------- --------- -------- --------
Expenses:
Interest.............. 54,649 48,385 36,083 35,516 32,304
Property operating
costs................ 43,008 40,500 27,720 27,780 28,379
Depreciation and
amortization......... 24,854 24,313 18,333 17,118 20,018
Writedown of asset
held for sale........ -- 21,685 -- -- --
Non-recurring items... -- -- 9,355 9,044 --
General and
administrative....... 8,440 5,835 2,941 2,917 3,014
---------- ---------- --------- -------- --------
Total expenses.......... 130,951 140,718 94,432 92,375 83,715
---------- ---------- --------- -------- --------
Income (loss) before
other items............ 13,935 (10,223) (5,471) (4,656) (2,392)
Equity in income of
management company..... -- -- 19 -- 4
Gain on sale of rental
properties............. 23,991 1,055 -- 2,406 --
Minority interests...... (4,786) 1,055 1,229 245 (20)
Extraordinary items..... (6,483) -- (422) -- --
---------- ---------- --------- -------- --------
Net income (loss) ...... $ 26,657 $ (8,113) $ (4,645) $ (2,005) $ (2,408)
========== ========== ========= ======== ========
Net income (loss) per
share, basic........... $ 1.04 $ (0.38) $ (0.35) $ (0.17) $ (0.20)
========== ========== ========= ======== ========
Dividends per share..... $ 1.44 $ 1.44 $ 1.44 $ 1.44 $ 1.44
========== ========== ========= ======== ========
Weighted average shares
of common stock
outstanding............ 25,697 21,519 13,312 12,024 11,964
========== ========== ========= ======== ========
Number of operating
Properties (at end of
period)................ 56 63 46 38 40
Gross leasable area
owned (sq. ft.) (at end
of period)............. 9,398 10,185 7,217 6,570 6,740
<CAPTION>
As of December 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Rental Properties before
accumulated
depreciation........... $1,030,689 $1,074,629 $ 783,279 $659,565 $653,058
Total assets............ 955,579 987,021 710,713 594,876 605,777
Total debt and other
liabilities............ 712,881 697,419 519,441 434,603 421,561
Minority interests...... 15,410 49,231 41,433 43,647 16,765
Redeemable Common Stock. -- 9,903 8,385 -- --
Stockholders' equity.... 227,288 230,468 141,454 116,626 167,451
<CAPTION>
Year ended December 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Other Data:
Funds from
Operations(1):
Basic................. $ 42,477 $ 36,301 $ 21,924 $ 20,893 $ 17,075
Diluted............... 55,943 50,169 35,793 34,765 30,943
Cash Flows From:
Operating activities.. $ 33,711 $ 32,528 $ 19,559 $ 22,414 $ 19,910
Investing activities.. 39,793 (219,430) (110,192) (20,522) (32,075)
Financing activities.. (74,936) 189,925 88,305 362 11,326
</TABLE>
- -------
(1) The Company computes funds from operations ("FFO") on both a basic and a
diluted basis and considers Operating Partnership Units as the equivalent
of shares for the purpose of these computations. The diluted basis assumes
the conversion of the convertible and exchangeable debentures into shares
of common stock as well as other common stock equivalents. For further
discussion of FFO, see Item 7--Management's Discussion and Analysis of
Results of Operations.
27
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the "Selected
Financial Data" and the Company's Consolidated Financial Statements and Notes
thereto appearing elsewhere in this Form 10-K.
Forward-Looking Statements
This Annual Report on Form 10-K, including the documents that we incorporate
by reference, contains forward-looking statements. Also, documents we
subsequently file with the SEC and incorporate by reference will contain
forward-looking statements. In particular, statements pertaining to our
capital resources, portfolio performance and results of operations contain
forward-looking statements. Likewise, all our statements regarding anticipated
growth in our funds from operations and anticipated market conditions,
demographics and results of operations are forward-looking statements.
Forward-looking statements involve numerous risks and uncertainties and you
should not rely on them as predictions of future events. Forward-looking
statements depend on assumptions, data or methods which may be incorrect or
imprecise and we may not be able to realize them. We do not guarantee that the
transactions and events described will happen as described, or that they will
happen at all. You can identify forward-looking statements by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "would," "seeks," "approximately," "intends," "plans," "pro forma,"
"estimates" or "anticipates" or the negative of these words and phrases or
similar words or phrases. You can also identify forward-looking statements by
discussions of strategy, plans or intentions. The following factors, among
others, could cause actual results and future events to differ materially from
those set forth or contemplated in the forward-looking statements:
. defaults on or non-renewal of leases by tenants;
. increased interest rates and operating costs;
. our failure to obtain necessary outside financing;
. difficulties in identifying properties to acquire and completing
acquisitions;
. difficulties in disposing of properties;
. our failure to successfully operate acquired properties and operations;
. our failure to successfully develop property;
. our failure to maintain our status as a REIT;
. environmental uncertainties and risks related to natural disasters;
. financial market fluctuations; and
. changes in real estate and zoning laws and increases in real property
tax rates.
Our success also depends upon economic trends generally, as well as income
tax laws, governmental regulation, legislation, population changes and other
matters discussed above in the section entitled "Risk Factors." We caution
you, however, that any list of risk factors may not be exhaustive.
Results of Operations
Comparison of the year ended December 31, 1999 to the year ended December 31,
1998.
Total revenues increased by $14.4 million to $144.9 million for the year
ended December 31, 1999 from $130.5 million for the year ended December 31,
1998. The increase was primarily a result of the acquisition of 19 properties
during 1998. During their first full year of ownership, the 19 assets acquired
during 1998 contributed an additional $18.3 million to total revenues in 1999.
Comparable properties, the 28 properties owned as of January 1, 1998,
contributed an additional $2.2 million increase in revenues. Occupancy at
these centers increased from 94.1% at the beginning of the year to 95.2% at
the end of the year, which was the primary contributor to the increase.
Interest
28
<PAGE>
income increased $0.4 million over the prior year as a result of the $10.0
million of government securities that were purchased to defease a mortgage
secured by an asset sold during the year. Offsetting these increases was the
reduction in revenues of $6.5 million from the sale of 8 assets during 1999.
Interest expense increased by $6.3 million to $54.7 million for the year
ended December 31, 1999 from $48.4 million for the year ended December 31,
1998. The increase is a result of several factors including an increase in the
average debt outstanding in 1999 over 1998 of approximately $45 million. In
addition, interest rates on mortgages that were refinanced during 1999 were
higher than the variable rates that were being incurred on the Company's
Credit Facility. Offsetting these increases was a reduction in interest
expense of $0.4 million related to the repurchase of $10.0 million of the
Company's debentures.
Property operating costs increased $2.5 million from $40.5 million for the
year ended December 31, 1998 to $43.0 million for the year ended December 31,
1999. As with the increase in revenues, the 19 assets acquired during 1998
were the primary cause of the increase. These assets incurred an additional
$4.0 million in operating costs during 1999. The comparable properties
increased $0.6 million over the previous year. Offsetting these increases was
the reduction in operating costs of $1.5 million from the sale of 8 assets
during 1999 as well as a reduction in operating costs at the Company's two
regional malls of $0.6 million.
Depreciation and amortization expense increased by $0.6 million to $24.9
million for the year ended December 31, 1999 from $24.3 million for the year
ended December 31, 1998. This increase was a result of acquisition of 19
properties in 1998 offset by the sale of 8 assets during 1999.
General and administrative costs increased $2.6 million from $5.8 million
for the year ended December 31, 1998 to $8.4 million for the year ended
December 31, 1999. During the third quarter of 1999, the Company recorded a
$1.2 million charge related to the restructuring of its corporate operations.
In addition, during 1999 the Company recorded compensation expense of
$3.4 million related to the award of restricted stock, the vesting of which is
subject to the successful achievement of certain performance goals, to certain
key executives compared to $1.0 million during 1998.
Income before other items for the year ended December 31, 1999 was $13.9
million compared to a loss before other items of $10.2 million at December 31,
1998. The primary cause of the change was the writedown of an asset held for
sale of $21.7 million recorded in 1998 related to Empire Center, which was
sold during 1999.
During 1999, the Company sold 8 assets for an aggregate gain on sale of
$24.0 million.
During 1999, the Company incurred an extraordinary loss on the early
extinguishment of debt of $6.5 million related to the payment of certain
prepayment penalties and the write-off of unamortized deferred financing
costs.
Comparison of the year ended December 31, 1998 to the year ended December 31,
1997.
Total revenues increased by $41.5 million to $130.5 million for the year
ended December 31, 1998 from $89.0 million for the year ended December 31,
1997. The increase was primarily a result of the acquisition of 19 properties
during 1998 and 8 properties in the latter part of 1997. The acquired
properties account for $36.9 million of the increase. Covina Town Square and
Medford Center, properties where the Company opened new theaters in early 1998
and late 1997, respectively, accounted for $3.8 million of the remaining
difference. The balance of the increase came from growth from the existing
portfolio.
Interest expense increased by $12.3 million to $48.4 million for the year
ended December 31, 1998 from $36.1 million for the year ended December 31,
1997. The increase is principally a function of borrowings on the Company's
line of credit which increased $92.2 million and the assumption of $96.0
million in mortgage debt. The principal purpose of such debt was to finance
acquisitions.
29
<PAGE>
Property operating costs increased $12.8 million from $27.7 million for the
year ended December 31, 1997 to $40.5 million for the year ended December 31,
1998. The acquired properties referred to above accounted for $8.7 million of
the increase over the prior year. $2.5 million of the increase relates to
increases at Medford Center and Covina Town Center as well as increased
operating costs at the Company's two regional malls.
Depreciation and amortization expense increased by $6.0 million to $24.3
million for the year ended December 31, 1998 from $18.3 million for the year
ended December 31, 1997. This increase was a result of an overall increase in
rental properties.
General and administrative costs increased $2.9 million from $2.9 million
for the year ended December 31, 1997 to $5.8 million for the year ended
December 31, 1998. During 1998, the Emerging Issues Task Force issued EITF 97-
11, "Accounting for Internal Costs Related to Real Estate Property
Acquisitions," which prohibits the capitalization of internal costs associated
with the acquisition of properties. This ruling, along with costs related to
abandoned acquisitions, accounted for $1.5 million of the increase. The
balance of the increase was principally a result of the additional staffing
required to accommodate the growth within the Company.
As of December 31, 1998, the Company recorded a writedown of an asset held
for sale of $21.7 million. The write down resulted from the Company's decision
to sell Empire Center, located in Fontana, California. In anticipation of the
sale, which occurred in August 1999, the property was written down to its fair
market value, less estimated closing costs.
During the fourth quarter of 1997, the Company recorded a $9.4 million non-
recurring charge related to the Separation Agreement. This consists of $2.7
million in cash payment made in January 1998, vesting of outstanding stock
options and restricted stock grants, granting and vesting of previously
committed restricted stock awards and the value attributed to the Company's
agreement to repurchase, or cause to have repurchased, substantially all of
the Haagen Family's ownership in the Company at a minimum price of $17 per
share.
During 1998, the Company sold a single tenant facility for a net gain on
sale of $1.1 million.
During 1997, the Company incurred an extraordinary loss on the early
extinguishment of debt of $422,000 related to the write-off of unamortized
deferred financing costs.
Loss before other items increase by $4.7 million from $5.5 million at
December 31, 1997 to $10.2 million at December 31, 1998.
Selected Property Financial Information
Net Operating Income (defined as operating revenues less property operating
costs) for the Company's properties was as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Rental Properties:
Regional Malls.................................... $ 18,018 $17,156 $17,074
Community Centers................................. 77,920 65,379 36,200
Single Tenants.................................... 4,895 7,000 7,624
Other Income........................................ 1,045 460 343
-------- ------- -------
Net Operating Income................................ $101,878 $89,995 $61,241
======== ======= =======
</TABLE>
30
<PAGE>
The following summarizes the percentage of leased GLA (excluding non-owned
GLA) as of:
<TABLE>
<CAPTION>
December 31,
-------------------
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Rental Properties:
Regional Malls........................................ 90.9% 90.9% 91.3%
Community Centers..................................... 95.0% 91.9 93.8
Single Tenants........................................ 100.0% 100.0 100.0
Aggregate Portfolio..................................... 94.9% 92.7 94.6
</TABLE>
During 1999 the Company signed leases for approximately 356,000 square feet
and renewed approximately 460,000 square feet of community centers leases at
rates approximately 4.0% higher than previous rates. Such signed leases
resulted in an increase in the overall rent per square foot of the Company's
portfolio to $11.40 per square foot at December 31, 1998 from $11.23 per
square foot at December 31, 1998.
Liquidity Sources and Requirements
The Company's 7 1/2% Convertible Subordinated Debentures (the "7 1/2%
Debentures"), which mature on January 15, 2001 ($128.6 million at December 31,
1999) and its $250 million secured line of credit ($158.1 million outstanding
as of December 31, 1999) (the "Credit Facility") which expires on December 31,
2000 will require the Company to generate substantial cash proceeds during
2000. The Company intends to meet these cash requirements through the
disposition of certain assets, refinancing or restructuring of certain
existing debt agreements and cash generated from operations. The Company
anticipates that cash flows generated from the operations of the Company's
real estate will be sufficient to cover operating expenses, recurring debt
service and distributions. The Company has historically paid a quarterly
dividend of $0.36 per share. In March 2000, the Board of Directors elected to
reduce the dividend for the quarter ended March 31, 2000 to $0.21 per share.
In making this election, the Board of Directors concluded that the new
dividend amount is more reflective of the Company's anticipated stabilized
funds from operations and that it is reflective of a pay-out ratio more in
line with the Company's peer group.
In February 2000, the terms of the Credit Facility were amended to allow for
a gradual step down in the amount available to the Company. The borrowing
capacity of the Credit Facility was reduced to $175 million effective
January 1, 2000 and will be further reduced to $135 million by March 31, 2000
and then to $85 million by June 30, 2000. In addition, the interest rate on
the Credit Facility was increased from London Inter-Bank Offering Rate
("LIBOR") plus 137.5 basis points (7.8% at December 31, 1999) to LIBOR plus
250 basis points effective January 1, 2000.
As of March 20, 2000, the outstanding balance on the Credit Facility was
$167.6 million with an additional $4.4 million utilized to provide letters of
credit. On March 31, 2000, the Company will be required to pay down
approximately $37 million under the Credit Facility in order to comply with
the step down of the borrowing capacity to $135 million. On March 24, 2000,
the Company closed a $17.4 million mortgage secured by the AMC Theater at
Covina Town Square. The mortgage bears interest at 8.44% and has a 10-year
maturity. The Company is under contract to sell the AMC Theater, at which time
the buyer will assume the mortgage. This sale will generate additional net
cash proceeds of approximately $5.5 million. In addition, on March 29, 2000
the Company closed on the sale of its single tenant facility in Glendora,
California, which generated net cash proceeds of approximately $7.8 million.
The Company is also in the process of negotiating a new line of credit, which
it expects to close on or prior to March 31, 2000 or shortly thereafter, with
another lender to replace the entire Credit Facility and thus eliminate the
step down requirements. In the event that the proceeds from the asset sales or
the new line of credit are not available by the March 31, 2000 step down date,
the Company intends to seek a waiver from the lenders under the Credit
Facility to extend the March 31, 2000 step down date for a short period.
During 1999, the Company completed $165.1 million of mortgage transactions.
Two variable rate mortgages, secured by five properties, bear interest at
LIBOR plus 250 basis points. The first loan of
31
<PAGE>
$58.5 million matures on June 1, 2002 and the second loan of $11.5 million
matures August 1, 2002. A fixed rate mortgage, bearing interest at 7.75%, in
the amount of $52.0 million is secured by four properties and matures on July
1, 2009. Three mortgages, each secured by a single property, bear interest at
8.3% have a combined balance of $43.1 million and mature on November 10, 2009.
Proceeds from these mortgage transactions were used to repay mortgage debt
of $66.7 million, plus certain prepayment penalties, and to reduce the
outstanding balance on the Company's Credit Facility. In connection with the
repayment of this debt, as well as the repayment of debt secured by assets
sold during 1999, the Company incurred extraordinary losses from the early
extinguishment of debt of $6.9 million.
During 1999, the Company repurchased $10.0 million of its 7 1/2% Debentures
on the open market. In connection with the repurchase of the 7 1/2% Debentures
the Company recorded an extraordinary gain on early extinguishment of debt of
$461,000.
The Company has commenced marketing certain of its stable community shopping
centers in order to meet its debt maturities in 2000 and early 2001, including
the $128.6 million of 7 1/2% Debentures which mature in January 2001. The
Company is actively pursuing the disposition of $175 million of community
shopping centers. The assets being marketed comprise stable community centers
where management believes value has been fully captured. Management believes
that it will be able to execute the transactions necessary for it to meet
these obligations.
Funds from Operations
The Company considers Funds From Operations ("FFO") to be an alternative
measure of the performance of an equity REIT since such measure does not
recognize depreciation and amortization expenses as operating expenses. FFO is
defined, as outlined in the March 1995 white paper, by the National
Association of Real Estate Investment Trusts ("NAREIT") as net income plus
depreciation and amortization, excluding non-real estate assets, less gains on
sales of properties. Additionally, the definition also permits FFO to be
adjusted for significant non-recurring items. Funds from operations do not
represent cash flows from operations as defined by generally accepted
accounting principles and should not be considered as an alternative to net
income or cash flows from operations and should not be considered as an
alternative to those indicators in evaluating the Company's operating
performance or liquidity. Further, the methodology for computing FFO utilized
by the Company may differ from that utilized by other equity REITs and,
accordingly may not be comparable to such other REITs.
32
<PAGE>
The Company computes FFO on both a basic and a diluted basis. The diluted
basis assumes the conversion of the convertible and exchangeable debentures
into shares of common stock. The following table summarizes the Company's
computation of FFO and provides certain additional disclosures (dollars in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Net Income (Loss)................................. $ 26,657 $(8,113) $(4,645)
Adjustments to reconcile net loss to funds from
operations:
Depreciation and Amortization:
Buildings and improvements...................... 16,793 15,980 12,161
Tenant improvements and allowances.............. 5,470 5,768 4,635
Leasing costs................................... 2,392 2,407 1,451
Gain on Sale of Assets............................ (23,991) (1,055) --
Write down of Asset Held for Sale................. -- 21,685 --
Non-recurring charges, net........................ 1,148 -- 9,355
Minority Interests................................ 4,163 (1,634) (1,810)
Extraordinary Loss on Early Extinguishment of
Debt............................................. 6,483 -- 422
Other............................................. 3,362 1,263 355
-------- ------- -------
Funds from Operations, basic...................... 42,477 36,301 21,924
Debenture interest expense........................ 12,176 12,568 12,569
Amortization of debenture financing costs......... 1,290 1,300 1,300
-------- ------- -------
Funds from Operations, diluted.................... $ 55,943 $50,169 $35,793
======== ======= =======
</TABLE>
Funds from operations, on a basic basis, increased to $42.5 million for the
year ended December 31, 1999, as compared to $36.3 million for the same period
in 1998. On a diluted basis, assuming conversion of the debentures and other
common stock equivalents, funds from operations increased to $55.9 million
from $50.2 million. The increase in funds from operations is principally a
function of acquisitions made during 1998 and the latter part of 1997. During
1998 and 1997, the Company recorded a writedown on assets held for sale of
$21.7 million and non-recurring charges of $9.4 million, respectively. The
1997 charge related to the retirement of the Haagen Family while the 1998
charge relates to the estimated loss on the pending sale of Empire Center.
Such items were not included in the computation of FFO as the Company
considers them to be significant non-recurring events that if deducted would
materially distort the comparative measurement of Company performance.
Cash Flows
Net cash provided by operations for the year ended December 31, 1999 was
$33.7 million compared to $32.5 million for the prior year. The principal
reasons for the increase in net cash from operations are discussed in Results
of Operations above.
Net cash provided by investing activities was $39.8 million compared to cash
used by investing activities of $219.4 million for the prior year. This change
was a result of the acquisition of 19 properties in 1998 compared to the
acquisition of 1 property and the sale of 8 properties in 1999. Net cash used
by financing activities was $74.9 million for the year ended December 31,
1999, compared to cash provided of $189.9 million from the prior year. The
change from cash provided to cash used is a result of the purchase of OP units
and an increase in restricted cash during 1999. In addition, during 1999 the
Company received $33.9 million from the sale of common stock to LFREI compared
to $141.0 million in the prior year.
Net cash provided by operations for the year ended December 31, 1998 was
$32.5 million compared to $19.6 million for the prior year, an increase of
$12.9 million. The principal reason for the increase in net cash from
operations is the properties acquired during 1998, as discussed in Results of
Operations above.
33
<PAGE>
Net cash used by investing activities increased by $109.2 million to $219.4
million from $110.2 million for the prior year. The increase is a direct
result of the acquisitions made during 1998 of $309.9 million. In addition to
cash, the Company also assumed mortgage debt and issued OP units in connection
with certain of its acquisitions. Net cash provided by financing activities
was $189.9 million for the year ended December 31, 1998, an increase of $101.6
million from the prior year. This increase includes $141 million in proceeds
from the sale of common stock to LFREI. In addition, the Company increased by
$92.2 million, the amount outstanding on its secured line of Credit.
Inflation
The Company's long-term leases contain provisions designed to mitigate the
adverse impact of inflation on its results from operations. Such provisions
include clauses enabling the Company to receive percentage rents based upon
tenants' gross sales, which generally increase as prices rise, and/or, in
certain cases, escalation clauses, which generally increase rental rates
during the terms of the leases. Such escalation clauses are often related to
increases in the CPI or similar inflation indices. In addition, many of the
Company's leases are for terms of less than ten years, which permits the
Company to seek to increase rents upon re-rental at market rates if rents are
below then existing market rates. Many of the Company's leases require the
tenants to pay a pro rata share of operating expenses, including common area
maintenance, real estate taxes, insurance and utilities, thereby reducing the
Company's exposure to increases in costs and operating expenses resulting from
inflation.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk primarily due to fluctuations in
interest rates. Specifically, the risk resulting from increasing LIBOR based
interest rates as interest on the Company's Credit Facility of $158.1 million
as well as mortgage notes of $69.5 million are tied to various LIBOR interest
rates. The Credit Facility matures December 31, 2000. The Company is also
subject to market risk resulting from fluctuations in the general level of
U.S. interest rates as $260.9 million of the Company's debt is based on a
weighted average fixed rate of 8.79%. As a result, the Company will be
obligated to pay contractually agreed upon rates of interest on its fixed rate
debt, unless management refinances its existing fixed rate debt and
potentially incur substantial prepayment penalties. The $36 million of tax-
exempt certificates of participation are tied to a general index of AAA rated
tax free municipal bonds.
34
<PAGE>
The following tables provides information about the Company's interest rate
sensitive financial instruments, including, amounts due at maturity, principal
amortization, weighted average interest rates and fair market values (in
thousands):
<TABLE>
<CAPTION>
As of December 31, 1999
- --------------------------------------------------------------------------------------------------------
Fair Market
2000 2001 2002 2003 2004 Thereafter Total Value
-------- -------- ------- ------- ------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Sensitive
Liabilities:
Credit Facility........ $158,075 $158,075 $144,636
Interest Rate........ LIBOR+ LIBOR+
1.38% 1.38%
Variable Rate Debt..... $69,465 $ 69,465 $ 69,465
Interest Rate........ LIBOR+ LIBOR+
2.50% 2.50%
Fixed Rate Debt........ $ 8,182 $ 9,254 $15,573 $227,919 $260,928 $265,251
Weighted Average
Interest Rate....... 8.25% 10.45% 10.38% 8.63% 8.79%
Tax Exempt
Certificates.......... $ 36,000 $ 36,000 $ 36,000
Weighted Average
Interest Rate....... 5.28% 5.28%
<CAPTION>
As of December 31, 1998
- --------------------------------------------------------------------------------------------------------
Fair Market
1999 2000 2001 2002 2003 Thereafter Total Value
-------- -------- ------- ------- ------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Sensitive
Liabilities:
Credit Facility........ $200,895 $200,895 $200,895
Average Interest
Rate................ LIBOR+ LIBOR+
1.38% 1.38%
Fixed Rate Debt........ $48,441 $ 4,372 $12,883 $13,919 $19,213 $161,663 $260,491 $280,378
Weighted Average
Interest Rate......... 9.107% 9.321% 8.250% 10.284% 10.375% 9.287% 9.321%
Tax Exempt
Certificates.......... $ 36,000 $ 36,000 $ 36,000
Average Interest
Rate................ 5.110% 5.110%
</TABLE>
35
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Center Trust, Inc.:
We have audited the accompanying consolidated balance sheets of Center
Trust, Inc. and subsidiaries (the "Company") as of December 31, 1999 and 1998,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1999. Our audits also included the financial statement schedules listed in the
Index at Item 14.A.2. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December
31, 1999 and 1998, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1999 in conformity
with accounting principles generally accepted in the United States of America.
Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
Deloitte & Touche
Los Angeles, California
March 22, 2000
36
<PAGE>
CENTER TRUST, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
(in thousands, except share data)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
------
Rental properties (Notes 2, 3 and 4).................... $1,030,689 $1,074,629
Accumulated depreciation and amortization............. (143,610) (141,785)
---------- ----------
Rental properties, net.................................. 887,079 932,844
Cash and cash equivalents (Note 2)...................... 5,204 6,636
Tenant receivables, net (Note 2)........................ 12,267 13,543
Other receivables (Note 2).............................. 6,181 7,984
Restricted cash (Note 4)................................ 20,577 5,437
Deferred charges, net (Note 2).......................... 20,966 18,682
Other assets............................................ 3,305 1,895
---------- ----------
TOTAL............................................... $ 955,579 $ 987,021
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Secured Debt (Notes 4 and 10)......................... $ 524,468 $ 497,386
7 1/2% Convertible subordinated debentures (Notes 5
and 10).............................................. 128,548 138,599
7 1/4% Exchangeable subordinated debentures (Notes 5
and 10).............................................. 30,000 30,000
Accrued dividends and distributions (Note 7).......... 9,963 10,931
Accrued interest...................................... 5,441 5,873
Accounts payable and other accrued expenses (Note 11). 6,760 6,718
Accrued construction costs............................ 1,753 1,955
Tenant security and other deposits.................... 5,948 5,957
---------- ----------
Total liabilities................................... 712,881 697,419
---------- ----------
MINORITY INTERESTS (Notes 1, 2 and 12):
Operating Partnership (1,654,725 and 4,978,240 units
issued as of December 31, 1999 and 1998,
respectively)........................................ 14,091 47,215
Other Minority Interests.............................. 1,319 2,016
---------- ----------
Total minority interests............................ 15,410 49,231
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 12)
REDEEMABLE COMMON STOCK (Note 6):
(590,034 shares outstanding as of December 31, 1998,
redeemed on May 25, 1999)............................ -- 9,903
---------- ----------
STOCKHOLDERS' EQUITY (Notes 5, 7, and 8):
Common stock ($.01 par value, 100,000,000 shares
authorized; 26,647,968 and 24,756,693 shares issued
and outstanding at December 31, 1999 and 1998,
respectively)........................................ 266 248
Additional paid-in capital............................ 361,412 354,281
Accumulated distributions and deficit................. (134,390) (124,061)
---------- ----------
Total stockholders' equity.......................... 227,288 230,468
---------- ----------
TOTAL............................................... $ 955,579 $ 987,021
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
37
<PAGE>
CENTER TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Years Ended December 31, 1999
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
REVENUES (Notes 2 and 9):
Rental revenues................................. $105,410 $ 94,756 $64,682
Expense Reimbursements.......................... 32,387 28,909 19,204
Percentage rents................................ 2,103 1,728 982
Other income (Note 2)........................... 4,986 5,102 4,093
-------- -------- -------
Total revenues.............................. 144,886 130,495 88,961
-------- -------- -------
EXPENSES:
Interest (Notes 2, 4 and 5)..................... 54,649 48,385 36,083
Property operating costs:
Common area................................... 21,217 20,393 13,925
Property taxes................................ 14,505 12,477 7,663
Leasehold rentals (Note 12)................... 1,681 1,652 1,634
Marketing..................................... 1,188 685 529
Other operating............................... 4,417 5,293 3,969
Depreciation and amortization (Note 2).......... 24,854 24,313 18,333
Write down of asset held for sale (Note 3)...... -- 21,685 --
Non-recurring charges (Note 11)................. -- -- 9,355
General and administrative ..................... 8,440 5,835 2,941
-------- -------- -------
Total expenses.............................. 130,951 140,718 94,432
-------- -------- -------
INCOME (LOSS) BEFORE OTHER ITEMS.................. 13,935 (10,223) (5,471)
NET GAIN ON SALE OF RENTAL PROPERTIES............. 23,991 1,055 --
EQUITY IN INCOME OF MANAGEMENT COMPANY (Note 11).. -- -- 19
MINORITY INTERESTS (Note 2):
Operating Partnership........................... (4,497) 1,323 1,508
Other Minority Interests........................ (289) (268) (279)
-------- -------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM........... 33,140 (8,113) (4,223)
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT
(Notes 4 and 5).................................. (6,483) -- (422)
-------- -------- -------
NET INCOME (LOSS)................................. $ 26,657 $ (8,113) $(4,645)
======== ======== =======
BASIC AND DILUTED INCOME (LOSS) PER SHARE (Note
2):
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM......... $ 1.29 $ (0.38) $ (0.32)
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF
DEBT........................................... (0.25) -- (0.03)
-------- -------- -------
NET INCOME (LOSS)............................... $ 1.04 $ (0.38) $ (0.35)
======== ======== =======
</TABLE>
See Notes to Consolidated Financial Statements.
38
<PAGE>
CENTER TRUST, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three Years Ended December 31, 1999
(in thousands, except share data)
<TABLE>
<CAPTION>
Common Stock
------------------ Additional Accumulated Total
Number of Paid-In Distributions Stockholders'
Shares Amount Capital and Deficit Equity
---------- ------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
JANUARY 1, 1997.......... 12,024,378 $120 $174,792 $ (58,286) $116,626
Issuance of common stock
(Note 1)................ 4,006,434 40 58,242 -- 58,282
Exercise of stock options
(Note 8)................ 36,369 1 441 -- 442
Reclassification to
redeemable common stock
(Note 6)................ (510,034) (5) (8,380) -- (8,385)
Restricted stock grants
(Note 8)................ 101,000 1 65 -- 66
Adjustment in connection
with Haagen Separation
(Note 11)............... -- -- 4,549 -- 4,549
Conversion of OP units
into common stock and
adjustment to minority
interest in OP (Note 2). 6,667 -- (5,737) -- (5,737)
Net Loss................. -- -- -- (4,645) (4,645)
Dividends declared (Note
7)...................... -- -- -- (19,744) (19,744)
---------- ---- -------- --------- --------
DECEMBER 31, 1997........ 15,664,814 157 223,972 (82,675) 141,454
Issuance of common stock
(Note 1)................ 9,400,000 94 140,906 -- 141,000
Exercise of stock options
(Note 8)................ 2,120 -- 25 -- 25
Reclassification to
redeemable common stock
(Note 6)................ (80,000) (1) (1,517) -- (1,518)
Restricted stock grants
(Note 8)................ 207,459 2 1, 489 -- 1, 491
Common stock repurchased
(Note 7)................ (436,700) (4) (5,177) -- (5,181)
Adjustment to minority
interest in OP (Note 2). (1,000) -- (5,417) -- (5,417)
Net Loss................. -- -- -- (8,113) (8,113)
Dividends declared (Note
7)...................... -- -- -- (33,273) (33,273)
---------- ---- -------- --------- --------
DECEMBER 31, 1998........ 24,756,693 248 354,281 (124,061) 230,468
Issuance of common stock
(Note 1)................ 2,260,232 22 33,881 -- 33,903
Conversion of OP units
into common stock
and Adjustment to
minority interest in OP
(Note 2).................. 62,597 1 (19,717) -- (19,716)
Restricted stock grants
(Note 8)................ 547,446 5 3,042 -- 3,047
Common stock repurchased
(Note 7)................ (979,000) (10) (10,075) -- (10,085)
Net Income............... -- -- -- 26,657 26,657
Dividends declared (Note
7)...................... -- -- -- (36,986) (36,986)
---------- ---- -------- --------- --------
DECEMBER 31, 1999........ 26,647,968 $266 $361,412 $(134,390) $227,288
========== ==== ======== ========= ========
</TABLE>
See Notes to Consolidated Financial Statements.
39
<PAGE>
CENTER TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................... $ 26,657 $ (8,113) $ (4,645)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization of rental
properties............................... 24,854 24,313 18,333
Amortization of deferred financing costs.. 3,158 2,898 2,074
Amortization of deferred compensation..... 3,362 958 299
Net gain on sale of rental properties..... (23,991) (1,055) --
Write down of asset held for sale......... -- 21,685 --
Extraordinary loss on early extinguishment
of debt.................................. 6,483 -- 422
Non-recurring charge--Haagen Separation... -- -- 9,355
Non-recurring charge for building
demolition............................... -- -- 57
Equity in income of management company.... -- -- (19)
Minority interests in operations.......... 4,786 (1,055) (1,229)
Net changes in operating assets and
liabilities................................ (11,598) (7,103) (5,088)
--------- --------- ---------
Net cash provided by operating
activities............................. 33,711 32,528 19,559
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of rental properties............ (18,975) (203,748) (85,420)
Construction and development costs.......... (17,333) (21,039) (24,772)
Proceeds from sale of rental properties..... 76,101 5,357 --
--------- --------- ---------
Net cash provided by (used in) investing
activities............................. 39,793 (219,430) (110,192)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal amortization on mortgage
financing.................................. (4,304) (3,813) (2,464)
Principal payments on mortgage financing.... (90,451) -- --
Proceeds from mortgage financing............ 165,144 -- --
Borrowings on secured line of credit........ 147,336 213,568 195,522
Repayments of secured line of credit........ (190,156) (121,400) (127,995)
Repurchase of common stock.................. (20,115) (5,181) --
Proceeds from sale of common stock.......... 33,903 141,025 58,664
Repurchase of OP units...................... (48,142) -- --
Repurchase of convertible debentures........ (9,561) -- --
Costs of obtaining financing................ (1,302) (939) (3,118)
(Increase) decrease in restricted cash...... (15,140) 3,998 (6,183)
Dividends to shareholders................... (36,778) (29,962) (18,243)
Distributions to minority interests......... (5,370) (7,371) (7,878)
--------- --------- ---------
Net cash (used in) provided by financing
activities............................. (74,936) 189,925 88,305
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS.................................. (1,432) 3,023 (2,328)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF
YEAR......................................... 6,636 3,613 5,941
--------- --------- ---------
CASH AND CASH EQUIVALENTS, AT END OF YEAR..... $ 5,204 $ 6,636 $ 3,613
========= ========= =========
NON-CASH TRANSACTIONS:
Fair value of debt assumed to acquire
properties................................. $ -- $ 95,955 $ 6,255
========= ========= =========
Use of operating partnership units to (sell)
acquire properties......................... $ (1,999) $ 11,190 --
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
40
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended December 31, 1999
1. ORGANIZATION AND BUSINESS
Center Trust, Inc. (the "Company"), a Maryland corporation, is a self-
administered and self-managed real estate investment trust. The Company
engages in the ownership, management, leasing, acquisition, development and
redevelopment of retail shopping centers in the western United States.
As of December 31, 1999, the Company owned a portfolio comprised of
interests in 56 retail shopping centers (the "Properties"). The Company's
ownership interest in the Properties is held through various partnership
interests. The Company is the sole general partner of CT Operating
Partnership, L.P., a California limited partnership (the "Operating
Partnership" or "OP"), and owns a 94.2% interest therein. Of the
56 Properties, 49 are owned directly by the Operating Partnership. Two of the
Properties are owned by partnerships in which the OP has a general partner
interest, including a 75% interest in Willowbrook Center Partnership and a 34%
effective interest in Vermont Slauson Shopping Center, LTD. The final five
Properties are owned by CT Finance Partnership, L.P., a California limited
partnership ("CTFP"). The Operating Partnership is the 99% Limited Partner of
CTFP. CT Finance, Inc., a Delaware corporation wholly owned by the Company, is
the 1% general partner of CTFP, which results in the Company owning 100% of
properties owned by CTFP. For purposes of securing various mortgages, the OP
has created a series of single purpose entities. Of the 49 Properties owned by
the OP, ownership of 14 of these properties is held in 9 separate wholly owned
single purpose entities.
The Company conducts substantially all of its operations through the
Operating Partnership and generally has full, exclusive and complete
responsibility and discretion in the management and control of the Operating
Partnership.
On June 1, 1997 the Company entered into a Stock Purchase Agreement (the
"Agreement") with LF Strategic Realty Investors, L.P. and Prometheus Western
Retail, LLC, affiliates of Lazard Freres Real Estate Investors, LLC, (together
"LFREI"). Pursuant to the Agreement, LFREI purchased 15,666,666 shares of
common stock of the Company at a price of $15.00 per share for a total
investment of $235 million. The stockholders of the Company approved the
Agreement on August 14, 1997. As of December 31, 1999 LFREI owned 58.8% of the
outstanding Common Stock of the Company (42.2% on a diluted basis, assuming
the exchange of partnership units in the Operating Partnership ("OP Units")
for shares of Common Stock and conversion of the Company's 7 1/2% Convertible
Subordinated Debentures and 7 1/4% Exchangeable Subordinated Debentures
(collectively the "Debentures") into shares of Common Stock (herein referred
to as "Diluted Basis")).
Subject to certain restrictions, in the event that the Company issues or
sells shares of capital stock for cash, LFREI will be entitled to purchase or
subscribe for, either as part of such issuance or in a concurrent issuance,
that portion of the total number of shares to be issued equal to LFREI's
proportionate holdings of Common Stock prior to such issuance (but not to
exceed 37.5% of the offering).
For a period of five years from August 14, 1997 (the "Standstill Period")
and for any additional standstill extension term, LFREI and its affiliates may
not (i) acquire beneficial ownership of more than 49.9% of the outstanding
shares of Common Stock, on an Adjusted Fully Diluted Basis (as defined below),
or (ii) sell, transfer or otherwise dispose of any shares of Common Stock
except in accordance with certain specified limitations (including a
requirement that the Company, in its sole and absolute discretion, approve any
transfer in a negotiated transaction that would result in the transferee
beneficially owning more than 9.8% of the Company's capital stock). As used
herein, the term "Adjusted Fully Diluted Basis" shall mean on a Diluted Basis,
except that shares of Common Stock issuable upon conversion of the Company's
outstanding Debentures or upon exercise of options granted under management
benefit plans shall not be included. As of December 31, 1999,
41
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
LFREI owned 55.4% of the Common Stock on an Adjusted Fully Diluted Basis
therefore LFREI's right to vote its common stock was limited to 90.1% of its
total holdings. In the event that the number of outstanding shares
were to increase for any reason (including as a result of issuance of Common
Stock upon conversion or exercise of the outstanding Debentures or management
stock options), then LFREI would be allowed to acquire additional shares of
Common Stock, up to 49.9% on an Adjusted Fully Diluted Basis. In addition to
the above, LFREI has the right to nominate four members to the Company's Board
of Directors. Although LFREI will not be able to take action on behalf of the
Company without the concurrence of the other members of the Company's Board of
Directors, they may be able to exert substantial influence over the Company's
affairs. Further, LFREI is entitled to receive access to certain operating
statements and other financial reports used in operating the Company on a
monthly basis.
2. SIGNIFICANT ACCOUNTING POLICIES
The Company's significant accounting policies are as follows:
Basis of Presentation--The accompanying financial statements include the
accounts of the Company, the OP and CTFP on a consolidated basis. All
significant intercompany transactions and balances have been eliminated in the
consolidated presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Minority Interests--Included in minority interest for the years ended
December 31, 1999, 1998 and 1997 is the 5.8%,16.4% and 20.9% interests,
respectively, in the results of the OP which are owned by various third
parties. At December 31, 1999, 1998 and 1997, 1,654,725, 4,978,240 and
4,280,789 OP Units were held by the limited partners, respectively. The OP
Units are exchangeable, subject to maintaining the Company's status as a REIT,
on a one-for-one basis for shares of the Company's common stock or for cash.
Adjustments have been made to the minority interest balance in the OP to
properly reflect their ownership interests in the Company. During 1999, 1998
and 1997, adjustments of $19,716,000, $5,417,000 and $5,737,000 were recorded,
respectively. The adjustments are a result of either the purchase or issuance
of additional shares of common stock and OP Units, and the conversion of OP
Units into common stock.
Minority interest also includes the limited partners' share of equity in two
properties. The two properties in which the OP has a general partner interest
are Kenneth Hahn Plaza (75% interest) and Vermont-Slauson Shopping Center (34%
interest). Consolidation accounting is applied to both of the above
partnerships as the OP is deemed to have control over the operations of the
properties.
Rental Properties--Rental properties are stated at cost less accumulated
depreciation. Costs incurred for the acquisition, renovation and betterment of
the properties are capitalized. Recurring maintenance and repairs are charged
to expense as incurred. Costs incurred during the initial leasing period of a
property (primarily representing interest, property taxes, and unrecoverable
operating costs) are also capitalized as buildings and improvements. The
initial leasing period is generally defined as that period beginning when
basic construction of the building is complete and ending when substantially
all tenant improvements and additional construction costs have been incurred;
however, such initial leasing period cannot exceed one year.
The Company regularly reviews long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
asset may not be recoverable. If the sum of expected future
42
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
cash flows is less than the carrying amount of the asset, the Company
recognizes an impairment loss equal to the difference between the estimated
fair value and the carrying amount of the asset.
Interest costs incurred with respect to qualified expenditures relating to
the construction of assets are capitalized during the construction period.
Interest capitalized during the years ended December 31, 1999, 1998 and 1997
amounted to $735,000, $734,000 and $843,000, respectively. Cash paid for
interest, net of capitalized interest costs, was $52,479,000, $45,218,000 and
$33,895,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.
Depreciation and Amortization--The cost of buildings and improvements is
depreciated on the straight-line method over estimated useful lives, as
follows:
Buildings--40 years
Leasehold interests--shorter of lease term or useful life of the
related property
Improvements--shorter of lease term or useful life ranging from 10 to
20 years
Cash and Cash Equivalents--Cash and cash equivalents include highly liquid
investments with original maturities of three months or less.
Deferred Charges--Deferred charges include deferred leasing costs and loan
fees. Leasing costs include an allocation of internal costs associated with
the execution of leases and third-party leasing commissions. Such costs are
amortized on the straight-line basis over the initial lives of the leases,
which range from 5 to 20 years. Deferred financing fees are amortized over the
terms of the respective loans.
<TABLE>
<CAPTION>
December 31,
------------------
1999 1998
-------- --------
(in thousands)
<S> <C> <C>
Deferred financing costs............................... $ 19,405 $ 18,312
Deferred leasing costs................................. 19,379 16,529
-------- --------
Total deferred charges................................. 38,784 34,841
Accumulated amortization............................... (17,818) (16,159)
-------- --------
Deferred charges, net.................................. $ 20,966 $ 18,682
======== ========
</TABLE>
Revenue Recognition and Tenant Receivables--Leases with tenants are
accounted for as operating leases. Minimum annual rentals are recognized on a
straight-line basis over the lease term. Unbilled deferred rent represents the
amount by which expected straight-line rental income exceeds rents currently
due under the lease agreement. The Company continually evaluates its reserve
for unbilled deferred rent and may adjust its reserve in the future for
changes in the retail environment. Total rents receivable consist of the
following:
<TABLE>
<CAPTION>
December 31,
----------------
1999 1998
------- -------
(in thousands)
<S> <C> <C>
Billed tenant receivables................................ $10,034 $11,443
Allowance for uncollectible rent......................... (1,531) (2,171)
------- -------
Net billed tenant receivables............................ 8,503 9,272
------- -------
Unbilled deferred rent .................................. 9,248 11,111
Allowance for unbilled deferred rent .................... (5,484) (6,840)
------- -------
Net unbilled deferred rent............................... 3,764 4,271
------- -------
Total tenant receivables, net ........................... $12,267 $13,543
======= =======
</TABLE>
43
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Included in billed tenant receivables are (1) additional rentals based on
common area maintenance expenses and certain other expenses which are accrued
in the period in which the related expense is incurred and (2) percentage
rents which are accrued on the basis of reported tenant sales.
Other Income--In connection with the development of the Media City Center,
commitments in the form of notes receivable (terminating in 2016) were
received from the Community Redevelopment Agency of the City of Burbank (the
"Burbank Agency") aggregating $51,500,000 (plus interest, subject to certain
reductions, as defined). Such commitments are repayable by the Burbank Agency
out of incremental sales and property taxes associated with certain defined
parcels within the property. Management considers amounts receivable under
these notes to be contingent in nature and accordingly has not recorded the
notes receivable. Other income has been recorded with respect to these
commitments generally in proportion to the recording of property tax expense.
Included in other income in connection with such commitments for the years
ended December 31, 1999, 1998 and 1997 is $2,721,000, $2,633,000 and
$2,656,000, respectively. At December 31, 1999 and 1998, other receivables
with respect to such commitments from the Burbank Agency were $2,324,000 and
$3,560,000, respectively.
Under similar commitments from the Community Redevelopment Agencies of the
Cities of Fullerton and Chino, other income was recognized for the years ended
December 31, 1999, 1998 and 1997 from Fullerton Town Center of $42,000,
$52,000 and $48,000, respectively, and Country Fair Shopping Center of
$151,000, $146,000 and $147,000, respectively.
Income Taxes--The Company has elected to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"), commencing with the
taxable year ended December 31, 1993. As a result, the Company generally will
not be subject to federal and state income taxation at the corporate level to
the extent it distributes annually at least 95% of its REIT taxable income, as
defined in the Code, to its stockholders and satisfies certain other
requirements. Accordingly, no provision has been made for federal and state
income taxes in the accompanying consolidated financial statements.
As of December 31, 1999 and 1998, the net tax basis of the Properties was
approximately $91,594,000 and $108,900,000 respectively, less than the net
book basis of such assets.
Earnings Per Share--Basic earnings per share is based on the weighted
average number of shares of common stock outstanding during the period and
diluted earnings per share is based on the weighted average number of shares
of common stock outstanding combined with the incremental weighted average
shares that would have been outstanding if all dilutive potential common
shares had been issued. The basic and diluted weighted average number of
shares of common stock used in the computation for the years ended December
31, 1999, 1998 and 1997 were 25,696,646, 21,519,034 and 13,312,311,
respectively. Units held by limited partners in the Operating Partnership may
be exchanged for shares of common stock of the Company on a one-for-one basis
and therefore are not dilutive. Accordingly, the weighted average shares
outstanding under the diluted method over the basic method in every period
presented would be entirely a result of outstanding options issued under the
Company's Amended and Restated 1993 Stock Option and Incentive Plan and the
Conversion of the Debentures. If the shares were dilutive, the weighted
average shares outstanding for the years ended December 31, 1999, 1998, and
1997 would increase by 9,120,523, 9,366,611 and 9,366,611 shares,
respectively. Basic and diluted earnings per share were the same for all
periods presented.
Segment Information--The Company operates in one segment, retail operating
properties.
Reclassifications--Certain amounts have been reclassified in the 1998 and
1997 financial statements to conform to the 1999 financial statement
presentation.
44
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. RENTAL PROPERTIES
As of December 31, 1999, the Properties consisted of 47 community shopping
centers, 2 regional malls and 7 single tenant facilities, containing in the
aggregate 9.4 million square feet of Company owned gross leasable area. During
1999 and 1998, the Company acquired 1 and 19 community shopping centers,
respectively. The Company sold 8 assets during 1999, five single tenant
facilities and 3 community shopping centers. The Company sold one single
tenant facility during 1998.
The historical carrying value and accumulated depreciation and amortization
is as follows:
<TABLE>
<CAPTION>
December 31,
--------------------
1999 1998
--------- ---------
(in thousands)
<S> <C> <C>
Land................................................. $ 276,812 $ 284,344
Leasehold interests.................................. 18,772 23,097
Site improvements.................................... 47,473 50,357
Buildings and improvements........................... 684,953 715,045
Construction in process.............................. 2,679 1,786
--------- ---------
Rental Properties, at cost........................... 1,030,689 1,074,629
Less: Accumulated depreciation and amortization...... (143,610) (141,785)
--------- ---------
Rental Properties, Net............................... 887,079 932,844
========= =========
</TABLE>
The Company sold Empire Center, a 262,000 square foot community center, in
August 1999. The decision to market and sell the property was made in 1998. As
such, the property was written down to its estimated fair value at that time
which resulted in a change of $21,685,000 as of December 31, 1998.
4. SECURED DEBT
<TABLE>
<CAPTION>
December 31,
-----------------
1999 1998
-------- --------
(in thousands)
<S> <C> <C>
Secured Line of Credit...................................... $158,075 $200,895
Notes payable to life insurance companies--interest only and
interest plus principal; rates ranging from 7.44% to
10.45%; maturing May 2001 through April 2014; non-recourse. 62,919 140,478
Notes payable to financial institutions--principal and
interest paid monthly, at interest rates ranging from 7.75%
to 9.68%; maturing June 2002 through April 2010; non-
recourse................................................... 238,413 74,789
Notes payable to pension funds--principal and interest paid
monthly at rates of 10.90% and 11.45%; maturing October
2006; non-recourse......................................... 29,061 39,146
Floating rate tax-exempt certificates of participation--
interest only at effective rates of 5.2% to 5.3%; maturing
December 2014 through December 2015; non-recourse.......... 36,000 36,000
Community Facilities District Special Tax Bonds--interest
rates ranging from 6.0% to 8.5%; maturing in gradually
increasing installments through April 2021; non-recourse... -- 6,078
-------- --------
$524,468 $497,386
======== ========
</TABLE>
45
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The OP has a $250 million secured revolving line of credit with a financial
institution that expires on December 31, 2000 and bears interest at a floating
rate equal to London Inter-Bank Offering Rate ("LIBOR") plus 137.5 basis
points (6.48% at December 31, 1999) (the "Credit Facility"). Subsequent to
December 31, 1999, the terms of the Credit Facility were amended. As a result,
the interest rate was adjusted to 250 basis points over LIBOR, effective
January 1, 2000. In addition, the maximum availability on the Credit Facility
was reduced to $175 million with further reductions to provide for a gradual
step down in size to $85 million by June 30, 2000.
Borrowings under the Credit Facility are secured by first mortgage liens on
Montebello Town Square, Media City Center, Madera Marketplace, Medford Center,
Pacific Linen Plaza, Ross Center, Vancouver Park Place, Sunrise Place,
Frontier Village, Marshalls Plaza, Rheem Valley, Ross Plaza and Covington
Square. The Company has utilized $4.4 million of the Credit Facility to
provide various letters of credit. The Credit Facility is subject to certain
conditions, the violation of which may affect its terms.
During 1999, the Company completed $165.1 million of mortgage transactions.
Two variable rate mortgages, secured by five properties, bear interest at
LIBOR plus 250 basis points. The first loan of $58.5 million matures on June
1, 2002 and the second loan of $11.5 million matures on August 1, 2002. A
fixed rate mortgage, bearing interest at 7.75%, in the amount of $52.0 million
is secured by four properties and matures on July 1, 2009. Three mortgages,
each secured by a single property, bear interest at 8.3% have a combined
balance of $43.1 million and mature on November 10, 2009.
Proceeds from these mortgage transactions were used to repay mortgage debt
of $66.7 million, plus certain prepayment penalties, and to reduce the
outstanding balance on the Company's Credit Facility. In connection with the
repayment of this debt, as well as the repayment of debt secured by assets
sold during 1999, the Company incurred extraordinary losses from the early
extinguishment of debt of $6.9 million.
The remaining notes payable are secured by deeds of trust and the assignment
of rents and leases associated with 28 properties. Certain of the notes
payable are subject to coverage ratios and other covenants, the violation of
which may result in additional recourse being available to the lenders.
Certain of the loans are subject to substantial prepayment penalties, as
defined in the respective loan agreements (See Note 10).
The $6,078,000 Community Facilities District Special Tax Bonds were issued
by the City of Fontana, California, to finance the construction of the
infrastructure for Empire Center. The Company sold Empire Center in July 1999
and the bonds were assumed by the purchaser of the property.
Aggregate future principal payments as of December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Years Ending
December 31,
------------ (in thousands)
<S> <C>
2000...................................................... $ 5,175
2001...................................................... 13,678
2002...................................................... 81,206
2003...................................................... 19,044
2004 ..................................................... 4,930
Thereafter................................................ 242,360
--------
Total................................................... $366,393
========
</TABLE>
Total amount excludes $158,075,000 outstanding on the Credit Facility which
is due on December 31, 2000.
46
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Restricted cash at December 31, 1999 and 1998 includes reserve funds
established in connection with the tax exempt financing, funds restricted for
the completion of certain construction projects as well as certain balances
reserved for debt service and property taxes. Interest income on such funds
accrues to the benefit of the Company. Restricted cash disbursements require
the approval of the trustees of the respective obligations. The floating rate
tax-exempt certificates of participation require the Company to maintain
letters of credit equal to the balance outstanding. The cost of such is
factored into the effective rate on such notes.
On January 26, 1999, the Company sold a single tenant property in Fountain
Valley which was leased to Sam's Club. This property was one of a group of
assets that have been pledged as collateral for a securitized mortgage. As a
result, the Company was required to defease the portion of the debt attributed
to the asset sold. Included in restricted cash as of December 31, 1999 are
$10.4 million of government securities, which provide for the monthly debt
service as well as the balance due at maturity for the loan secured by the
asset sold. The Company has no ability to sell or replace these securities
during the term of the original mortgage. The Company records interest income
on a straight-line basis, however, the income on the securities is restricted
and is used to service the original note.
5. SUBORDINATED DEBENTURES
In conjunction with the Company's formation, it issued 7 1/2% Convertible
Subordinated Debentures, Series A and Series B which mature on January 15,
2001 (collectively, the "Debentures"). The Debentures are convertible at any
time after issuance and prior to maturity, into shares of Common Stock of the
Company at a conversion price of $18.00 per share, subject to adjustment under
certain conditions. The Convertible Debentures are not redeemable by the
Company prior to maturity, except for certain reasons primarily intended to
protect the Company's status as a REIT. Interest on the Convertible Debentures
is payable semi-annually in arrears on January 15 and July 15.
The Convertible Debentures are unsecured general obligations of the Company,
subordinate to all existing and future senior indebtedness of the Company, as
defined. The Debentures are effectively subordinated to all indebtedness of
the OP.
Concurrently, the OP issued 7 1/4% Exchangeable Subordinated Debentures
which mature on December 27, 2003 and are secured by one of the Company's
properties. The Exchangeable Subordinated Debentures are exchangeable at any
time for Common Stock of the Company at an exchange price of $18.00 per share,
except for certain reasons, primarily intended to protect the Company's status
as a REIT. Interest on the Exchangeable Subordinated Debentures is payable
semi-annually in arrears on June 27 and December 27.
The Exchangeable Subordinated Debentures are redeemable by the OP at any
time subsequent to December 27, 1998, at the option of the Company, at 100% of
the principal amount thereof, together with accrued interest.
Exchangeable Subordinated Debentures may be put to the OP for cash in the
principal amount thereof together with accrued interest at the election of the
holders at any time on or after December 27, 2000.
During 1999, the Company repurchased $10.0 million of its Debentures on the
open market. In connection with the repurchase of the Debentures, the Company
recorded an extraordinary gain on early extinguishment of debt of $461,000.
6. REDEEMABLE COMMON STOCK
Per the terms of the Separation Agreement, as described in Note 11 below,
the Company purchased from the Haagen Family, on May 25, 1999, an aggregate of
3,656,818 shares of common stock and Operating
47
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Partnership Units (the "Shares") at $17 per share. A portion of the Shares
repurchased required that certain stock options be exercised by the Haagen
Family resulting in a net payment of $58.8 million. The Company had
590,034 shares of Redeemable Common stock as of December 31, 1998.
7. STOCKHOLDERS' EQUITY
In addition to Common Stock, the Company's Charter authorizes the issuance
of 10,000,000 shares of Preferred Stock, par value $.01 per share. No such
shares were issued or outstanding as of December 31, 1999 and 1998. During
1998, the shareholders of the Company approved an increase in the authorized
shares of Common Stock from 50 million to 100 million.
During each of the years ended December 31, 1999, 1998 and 1997, the Company
declared four quarterly distributions of $0.36 per share/unit.
In October 1998, the Board of Directors authorized the Company to repurchase
up to $25 million of its common stock through the open market or in privately
negotiated transactions over a period of twelve months. During 1999 and 1998,
the Company repurchased 979,000 and 436,700 shares, respectively for an
aggregate cost of $15,266,000, including commissions and other costs.
8. STOCK OPTION AND INCENTIVE PLAN
The Second Amended and Restated 1993 Stock Option and Incentive Plan for
Officers, Directors and Key Employees of the Company (the "Option Plan")
enables executive officers, key employees and directors of the Company to
participate in the ownership of the Company. The Option Plan provides for the
award of a broad variety of stock-based compensation alternatives such as non-
qualified stock options, incentive stock options, and restricted stock, and
provides for the grant to Independent Directors of non-qualified stock
options. Options are granted at prices which are not less than market at date
of grant, expire ten years from the date of grant, and are generally
exercisable 25% per year over four years. The Option Plan is administered by
the Compensation Committee of the Board of Directors, which is authorized to
determine the number of shares to be subject thereto and the terms and
conditions thereof. Pursuant to the Option Plan, 2,750,000 shares of Common
Stock were reserved for issuance to eligible participants.
Following is a summary of the stock option activity for the three years
ended December 31, 1999:
<TABLE>
<CAPTION>
Shares Weighted Average
Under Options Exercise Price
------------- ----------------
<S> <C> <C>
January 1, 1997............................... 604,268 $15.280
Granted..................................... 546,500 $15.470
Exercised................................... (36,369) $12.153
Cancelled................................... (88,016) $16.120
----------
December 31, 1997............................. 1,026,383 $15.120
Granted..................................... 948,189 $15.600
Exercised................................... (2,120) $11.661
Cancelled................................... (160,685) $14.535
----------
December 31, 1998............................. 1,811,767 $15.284
Granted..................................... 530,000 $10.011
Cancelled................................... (1,014,058) $15.608
----------
December 31, 1999............................. 1,327,709 $13.149
==========
</TABLE>
48
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
As of December 31, 1999, 1998 and 1997 options exercisable totaled 547,168,
606,758 and 361,827, respectively.
The following table summarizes information about stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
Number Weighted Average Number
Range of Outstanding Weighted Average Remaining Exercisable Weighted Average
Exercise Prices At 12/31/99 Exercise Price Contractual Life As of 12/31/99 Exercise Price
--------------- ----------- ---------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
$10.000............... 525,000 $10.000 9.88 -- --
$11.125-$15.000......... 542,609 $14.004 7.48 303,068 $13.413
$15.500-$18.000......... 260,100 $17.724 4.66 244,100 $17.852
--------- -------
1,327,709 $13.149 7.88 547,168 $15.394
========= =======
</TABLE>
The weighted average fair value of the stock options granted during 1999,
1998 and 1997 were, $0.62, $2.80 and $12.98, respectively. The Company applies
Accounting Principles Board Opinion No. 25 and related Interpretations in
accounting for its stock option and incentive plan. Accordingly, no
compensation cost has been recognized as a result of its initial granting of
Stock Options. As a result of the retirement of the Haagen Family (see Note 11
below), the Company accelerated the vesting period of certain stock options
and restricted stock and recorded a charge of approximately $2.7 million in
1997 in connection with such acceleration. Had compensation cost for the
Company's Option Plan been determined based on the fair value at the grant
dates for awards during the three years ended December 31, 1999, consistent
with the method of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ("SFAS No. 123"), the Company's net
income (loss) and income (loss) per share for each of the periods would have
been equal to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1999 1998 1997
------- ------- -------
(in thousands, except
per share amounts)
<S> <C> <C> <C>
Net Income (loss):
As reported.................................... $26,657 $(8,113) $(4,645)
Pro forma...................................... $26,369 $(8,554) $(4,824)
Net Income (loss) per share, basic (loss):
As reported.................................... $ 1.04 $ (0.38) $ (0.35)
Pro forma...................................... $ 1.03 $ (0.40) $ (0.36)
</TABLE>
The effects of applying SFAS No. 123 may not be representative of the
effects on disclosed pro forma net income (loss) for future years because
options vest over multiple years and additional awards can be made each year.
The fair value of options granted under the Company's Option Plan was
estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions used for 1999, 1998, and 1997,
respectively: expected option life of five years; risk free interest rate of
6.34%, 4.63% and 5.49%; expected dividend yield of 13.3%, 10.11% and 8.3%; and
expected volatility of 26.5%, 37.3% and 22.2%.
During 1999, the Company granted 500,000 shares of restricted shares of
Common Stock to certain Key Employees. As holders of restricted stock have all
the rights of other stockholders, subject to certain restrictions and
forfeiture provisions, such restricted stock is considered to be issued and
outstanding. Restrictions on 200,000 shares will expire after seven years. The
expiration of the restrictions can be accelerated under certain circumstances
at the direction of the Compensation Committee of the Board of Directors.
Unamortized
49
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
compensation expense related to Unearned restricted stock of $1.5 million was
recorded as of December 31, 1999 based on the market value of the shares on
the date of issuance and is reflected in Stockholders' Equity. Restrictions of
the remaining 300,000 shares of restricted stock can be lifted by the
Compensation Committee based on the achievement of certain performance goals.
Compensation expense will be recognized at the point in time that the
restrictions are lifted based on the stock price on such date. During 1999,
the Company recorded compensation expense of $3,362,000 related to the
amortization of deferred compensation.
During 1998 and 1997, 162,425 and 101,000 shares, respectively, of
restricted stock were granted which vest over three years. During 1998 and
1997, the Company recorded compensation expense of $958,000 and $299,000,
respectively related to the amortization of deferred compensation.
9. FUTURE MINIMUM RENT
The Company has operating leases with tenants that expire at various dates
through 2037 and are either subject to scheduled fixed increases or
adjustments based on the Consumer Price Index. Generally, the leases grant
tenants renewal options and provide certain potential allowances during the
initial lease-up period. Leases also provide for additional or contingent
rents based on certain operating expenses as well as tenants sales volume.
Future minimum rent under operating leases on a cash basis, excluding tenant
reimbursements of certain costs, as of December 31, 1999 is summarized as
follows:
<TABLE>
<CAPTION>
Years Ending
December 31,
------------ (in thousands)
<S> <C>
2000....................................................... $ 96,074
2001....................................................... 88,950
2002....................................................... 79,419
2003....................................................... 71,535
2004....................................................... 62,304
Thereafter................................................. 368,106
--------
Total.................................................... $766,388
========
</TABLE>
The Properties are located throughout the western United States. The ability
of the tenants to honor the terms of their respective leases is dependent upon
the economic, regulatory and social factors affecting the communities and
industries in which the tenants operate.
10. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
The following disclosure of estimated fair value was determined by the
Company using available market information and appropriate valuation
methodologies. However, considerable judgment is necessary to interpret market
data and develop the related estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of the amounts that
could be realized upon disposition of the financial instruments. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
Billed tenant and other receivables, accounts payable and other liabilities
are carried at amounts which reasonably approximate their fair value.
The fixed rate mortgage notes payable totaling $260,928,000 and $260,491,000
as of December 31, 1999 and 1998, respectively, have fair values of
$265,251,000 and $280,378,000, respectively (excluding prepayment penalties)
as estimated based upon current interest rates available for the issuance of
debt with similar terms and
50
<PAGE>
CENTER TRUST, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
remaining maturities. These notes were subject to estimated prepayment
penalties of $26,140,000 and $51,189,000 at December 31, 1999 and 1998,
respectively, which would be required to retire these notes prior to maturity.
As a result of the subsequent amendment, the fair value of the $158,075,000
outstanding balance on the Credit Facility as of December 31, 1999 was
$144,636,000. The fair value of the outstanding balance on the Credit Facility
at December 31, 1998 was equal to the balance outstanding as of that date.
Based on their tax-exempt status the carrying value of floating rate
certificates of participation approximate their fair value. The fair market
values of the Convertible Debentures at December 31, 1999 and 1998 were
$120,835,000 and $129,590,000, respectively, based on the trading price of the
Series A Convertible Debentures as of December 31, 1999 and 1998. Assuming a
trading value comparable to the Convertible Debentures, the fair value of the
Exchangeable Debentures would be $28,200,000 and $28,050,000 at December 31,
1999 and 1998, respectively.
The fair value estimates presented herein are based on information available
to management as of December 31, 1999 and 1998. Although management is not
aware of any factors that would significantly affect the estimated fair value
amounts, such amounts have not been comprehensively revalued for purposes of
these financial statements since those dates, and current estimates of fair
value may differ significantly from the amounts presented herein.
11. RELATED PARTY TRANSACTIONS
During 1998, the Company sold its Sears Hollywood facility, a single tenant
facility for proceeds of $5.4 million which resulted in a net gain of $1.1
million. In addition, the Company purchased the Manhattan Beach, California
building in which its corporate headquarters are located for $3.2 million.
Both of the above transactions were with affiliates of Alexander Haagen, Sr.,
the Company's former chairman and were negotiated at arms-length.
On November 24, 1997, the Company entered into an agreement (the "Separation
Agreement") with Alexander Haagen, Sr., Charlotte Haagen and Alexander Haagen,
III (collectively the "Haagen Family") in connection with their retirement
from the Company. Under the terms of the Separation Agreement, the Haagen
Family received $2.7 million in cash, vesting of all granted stock options and
restricted stock awards, and the granting and vesting of previously committed
restricted stock awards. In addition, for certain defined periods the Company
agreed to continue to provide the Haagen Family certain medical benefits and
administrative assistance. Further, the Company agreed to purchase, or cause
to have purchased, substantially all of the Haagen Family's ownership
interests in the Company on May 25, 1999 (see Note 6).
During 1997, the Company recorded a non-recurring charge of $9.4 million
which reflects the consideration given to the Haagen Family in connection with
the Separation Agreement. Included in accrued expenses as of December 31, 1998
and 1997 is approximately $1.5 million and $4.9 million, respectively, related
to the Separation Agreement of which $2.7 million in cash was paid on January
2, 1998. The remaining $4.5 million relates to noncash charges for the
acceleration of the vesting of stock options and restricted stock, granting
and acceleration of vesting of previously committed restricted stock awards,
and the value attributed to the Company's obligation to repurchase the Haagen
Family's ownership interests in the Company and has been charged directly to
Additional Paid-in Capital.
Through December 31, 1997, Haagen Property Management, Inc. ("HPMI")
conducted all of the executive, construction, leasing, legal, and property
management functions pursuant to management agreements between the OP and
HPMI. Prior to December 31, 1997, the OP owned a 95% interest in but did not
control HPMI. The investment has been accounted for on the equity basis. No
dividends were paid by HPMI during the year ended December 31, 1997. HPMI
provides leasing and property management services to other properties owned by
certain third parties. In connection with the Separation Agreement (see
above), the OP purchased the remaining 5% interest, including the voting
interest.
51
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
12. COMMITMENTS AND CONTINGENCIES
Operating Leases--The Company leases certain of its Properties under long-
term ground leases which are accounted for as operating leases and which
generally provide for contingent rents based on the Company's tenants' sales
volume and renewal options. Six leases expire between 2001 and 2018 and
provide for options to renew for additional periods of 20 to 30 years. Four
additional leases expire in 2020 and 2050. Future minimum rental payments
required during noncancelable lease terms as of December 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
Years Ending
December 31,
------------ (in thousands)
<S> <C>
2000....................................................... $ 1,358
2001....................................................... 1,358
2002....................................................... 1,363
2003....................................................... 1,364
2004....................................................... 1,371
Thereafter................................................. 15,139
-------
Total.................................................... $21,953
=======
</TABLE>
Assuming exercise of all renewal options, aggregate future rental payments
as of December 31, 1999 are $49.1 million. Certain of the Company's ground
leases contain participation features. Participation rents paid in accordance
with such terms were $68,000, $54,000 and $51,000 for the years ended December
31, 1999, 1998, and 1997, respectively.
Litigation--The Company is subject to various legal proceedings and claims
that arise in the ordinary course of business. These matters are generally
covered by insurance. While the resolution of these matters cannot be
predicted with certainty, management believes, based on currently available
information, that the final outcome of such matters will not have a material
adverse effect on the financial statements of the Company.
52
<PAGE>
CENTER TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table sets forth the selected quarterly financial data for the
Company for the years ended December 31, 1999 and 1998 (in thousands, except
per share data):
<TABLE>
<CAPTION>
1999 Quarter Ended
-----------------------------------------
December 31 September 30 June 30 March 31
----------- ------------ ------- --------
<S> <C> <C> <C> <C>
Total operating revenues.......... $ 35,826 $36,701 $36,193 $36,166
Income before extraordinary item.. $ 5,250 $ 2,610 $ 4,388 $20,892
Net income........................ $ 3,672 $ 1,753 $ 340 $20,892
Basic income before extraordinary
item per share................... $ 0.20 $ 0.10 $ 0.17 $ 0.83
Diluted income before
extraordinary item per share .... $ 0.20 $ 0.10 $ 0.17 $ 0.70
Basic income per share............ $ 0.14 $ 0.07 $ 0.01 $ 0.83
Diluted income per share.......... $ 0.14 $ 0.07 $ 0.01 $ 0.70
<CAPTION>
1998 Quarter Ended
-----------------------------------------
December 31 September 30 June 30 March 31
----------- ------------ ------- --------
<S> <C> <C> <C> <C>
Total operating revenues.......... $ 37,774 $34,188 $31,364 $27,169
Net (loss) income................. $(14,855) $ 3,392 $ 1,570 $ 1,780
Basic and Diluted (loss) income
per share........................ $ (0.58) $ 0.15 $ 0.08 $ 0.10
</TABLE>
Included in the fourth quarter of 1998 is the $21.7 million charge related
to the asset held for sale, as described in Note 3.
53
<PAGE>
CENTER TRUST, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
Each of Three Years Ended December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Charged to
Balance at Costs and Balance
Beginning Expenses or at End
of Year Rental Revenue Deductions of Year
---------- -------------- ---------- -------
<S> <C> <C> <C> <C>
Year Ended December 31, 1999
Allowance for uncollectible
rent........................... $2,171 $ 572 $(1,212) $1,531
Allowance for unbilled deferred
rent........................... 6,840 -- (1,356) 5,484
------ ------ ------- ------
$9,011 $ 572 $(2,568) $7,015
====== ====== ======= ======
Year Ended December 31, 1998
Allowance for uncollectible
rent........................... $2,145 $ 421 $ (395) $2,171
Allowance for unbilled deferred
rent........................... 7,182 -- (342) 6,840
------ ------ ------- ------
$9,327 $ 421 $ (737) $9,011
====== ====== ======= ======
Year Ended December 31, 1997
Allowance for uncollectible
rent........................... $1,617 $1,283 $ (755) $2,145
Allowance for unbilled deferred
rent........................... 6,007 1,175 -- 7,182
------ ------ ------- ------
$7,624 $2,458 $ (755) $9,327
====== ====== ======= ======
</TABLE>
54
<PAGE>
CENTER TRUST, INC.
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Initial Cost Costs December 31, 1999
-------------------------------------- Capitalized ------------------------------------------------------
Buildings Subsequent Buildings
and to Acquisition/ and Accumulated
Description Encumbrances (1) Land Improvements Construction Land Improvements Total Depreciation Net
----------- ---------------- -------- ------------ --------------- -------- ------------ ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMUNITY
SHOPPING CENTERS
Southern
California...... $(211,520) $124,572 $204,822 $ 45,548 $124,572 $250,370 $ 374,942 $ (56,422) $318,520
Washington...... (44,290) 50,314 69,905 2,686 50,314 72,591 122,905 (3,487) 119,418
Oregon.......... (16,730) 14,769 25,627 18,091 14,769 43,718 58,487 (3,953) 54,534
Northern/Central
California...... (13,382) 24,719 49,352 1,448 24,719 50,800 75,519 (3,089) 72,430
Southwest....... (34,524) 29,966 49,657 3,738 29,966 53,395 83,361 (3,157) 80,204
--------- -------- -------- -------- -------- -------- ---------- --------- --------
(320,446) 244,340 399,363 71,511 244,340 470,874 715,214 (70,108) 645,106
--------- -------- -------- -------- -------- -------- ---------- --------- --------
SINGLE TENANT
FACILITIES
Southern
California...... (8,295) 4,890 13,348 575 4,890 13,923 18,813 (4,495) 14,318
Northern/Central
California...... (4,591) 1,734 6,936 -- 1,734 6,936 8,670 (1,778) 6,892
Arizona......... (3,061) 1,156 4,620 -- 1,156 4,620 5,776 (1,184) 4,592
--------- -------- -------- -------- -------- -------- ---------- --------- --------
(15,947) 7,780 24,904 575 7,780 25,479 33,259 (7,457) 25,802
--------- -------- -------- -------- -------- -------- ---------- --------- --------
REGIONAL MALLS
Southern
California...... (30,000) 24,692 203,623 53,901 24,692 257,524 282,216 (66,045) 216,171
--------- -------- -------- -------- -------- -------- ---------- --------- --------
$(366,393) $276,812 $627,890 $125,987 $276,812 $753,877 $1,030,689 $(143,610) $887,079
========= ======== ======== ======== ======== ======== ========== ========= ========
</TABLE>
- -----
(1) Excludes the secured line of credit of $158,075,000 at December 31, 1999,
which is secured by various properties.
55
<PAGE>
The aggregate gross cost of rental property included above for federal income
tax purposes approximated $1,009,799,000 as of December 31, 1999.
The following table reconciles the Historical Cost of Properties from January
1, 1997 to December 31, 1999:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
Balance at beginning of the year........... $1,074,629 $ 783,279 $659,565
Additions during the year--
Acquisition of properties.............. 18,975 310,893 91,382
Construction and Development Costs..... 13,385 5,852 32,406
Deductions during the year--
Cost of real estate sold............... (76,300) (3,710) --
Cost of building demolished............ -- -- (74)
Write down of asset held for sale...... -- (21,685) --
---------- ---------- --------
Balance at close of the year............... $1,030,689 $1,074,629 $783,279
========== ========== ========
The following table reconciles the Accumulated Depreciation from January 1,
1997 to December 31, 1999:
<CAPTION>
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
Balance at beginning of the year........... $ 141,785 $ 121,202 $104,330
Additions during the year--
Depreciation for the year.............. 22,566 21,465 16,889
Deductions during the year--
Property sold.......................... (20,741) (882) --
Property demolished.................... -- -- (17)
---------- ---------- --------
Balance at close of the year............... $ 143,610 $ 141,785 $121,202
========== ========== ========
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
56
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by Item 10 is incorporated herein by reference to
the information included under the captions "Election of Directors" and
"Executive Officers" in the Company's definitive Proxy Statement for the 2000
Annual Meeting of Stockholders (the "Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information called for by Item 11 is incorporated herein by reference to
the information included under the captions "Executive Compensation" in the
Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information called for by this Item 12 is incorporated herein by
reference to the information included under the caption "Security Ownership of
Certain Beneficial Owners and Management" in the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this Item 13 is incorporated herein by
reference to the information included under the caption "Certain Relationships
and Related Transactions" in the Company's Proxy Statement.
57
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
A. The following documents are filed as part of this report:
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
1. Independent Auditors' Report...................................... 36
Consolidated Balance Sheets as of December 31, 1999 and 1998........ 37
Consolidated Statements of Operations for Each of the Three Years
Ended December 31, 1999............................................ 38
Consolidated Statements of Stockholders' Equity for Each of the
Three Years Ended December 31, 1999................................ 39
Consolidated Statements of Cash Flows for Each of the Three Years
Ended December 31, 1999............................................ 40
Notes to Consolidated Financial Statements.......................... 41
2. Financial Statement Schedules
II. Valuation and Qualifying Accounts............................... 54
III. Real Estate and Accumulated Depreciation....................... 55
</TABLE>
Schedules other than those listed above are omitted because they are not
applicable, not required, or the information required to be set forth therein
is included in the financial statements or the notes thereto.
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
3. Exhibits........................................................... 58
</TABLE>
The following exhibits are included as part of this Annual Report on Form
10-K as required by Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
Exhibit
Exhibit Description
------- -----------
<C> <S>
3.1a Articles of Amendment and Restatement of the Company, incorporated
herein by reference to Exhibit 3.1 to the Company's Form 10-K for the
year ended December 31, 1993 (the "1993 Form 10-K").
3.1b Articles of Amendment of the Company, incorporated herein by reference
to Exhibit 3.3 to the Company's Form 10-Q for the quarter ended June
30, 1998.
3.1c+ Articles of Amendment of the Company.
3.2+ Second Amended and Restated Bylaws of the Company.
4.1 Indenture, dated as of December 27, 1993, between the Company and The
First National Bank of Boston as Trustee with respect to the 7 1/2%
Convertible Subordinated Debentures due 2001, Series A, incorporated
herein by reference to Exhibit 4.1 to the 1993 Form 10-K.
4.2 Specimen 7 1/2% Convertible Subordinated Debenture due 2001, Series A,
incorporated herein by reference to Exhibit 4.2 to the 1993 Form 10-
K.
4.3 Fiscal Agency Agreement, dated as of December 27, 1993, between the
Company and The First National Bank of Boston as Fiscal Agent with
respect to the 7 1/2% Convertible Subordinated Debentures due 2001,
Series B, incorporated herein by reference to Exhibit 4.3 to the 1993
Form 10-K.
</TABLE>
58
<PAGE>
<TABLE>
<C> <S>
4.4 Form of 7 1/2% Convertible Subordinated Debentures due 2001, Series B,
incorporated herein by reference to Exhibit 4.4 to the 1993 Form 10-K.
4.5+ Form of Common Stock Certificate.
4.6 Form of 7 1/4% Exchangeable Subordinated Debentures due 2003 of CT
Operating Partnership, L.P., incorporated herein by reference to
Exhibit 4.6 to the 1993 Form 10-K.
4.7 Registration Rights Agreement, dated as of December 27, 1993, among the
Company and the persons named therein, incorporated herein by
reference to Exhibit 10.2 to the Company's Registration Statement on
Form S-11 (No. 33-70156).
4.8 Registration Rights Agreement, dated as of December 27, 1993, among the
Company, Merrill Lynch Global Allocation Fund, Inc., Merrill Lynch
Special Value Fund, Inc., and Merrill Lynch Multinational Investment
Portfolios Equity/Convertible Series (Global Allocation Portfolio),
incorporated herein by reference to Exhibit 10.26 to the 1993 Form
10-K.
4.9 Registration Rights Agreement by and among the Company and Prometheus
Western Retail, LLC, dated as of June 1, 1997, incorporated herein by
reference to the Company's 1997 Proxy Statement.
4.10+ Registration Rights Agreement dated as of March 24, 1998 by and among
the Company and Bartfam, a California Limited Partnership.
4.11+ Registration Rights Agreement dated as of March 24, 1998 by and among
the Company and Cecile C. Bartman, Trustee Under the Will of Bernard
Citron, Deceased.
4.12+ Registration Rights Agreement dated as of March 24, 1998 by and among
the Company and CJJ Limited Partnership.
4.13+ Registration Rights Agreement dated as of March 24, 1998 by and among
the Company and the Harry J.L. Frank, Jr. and Margaret S. Frank Family
Trust U/A 5/9/91.
4.14+ Registration Rights Agreement dated as of March 24, 1998 by and among
the Company and HI-NC, a California general partnership.
4.15+ Registration Rights Agreement dated as of March 24, 1998 by and among
the Company and Bartfam, a California Limited Partnership.
4.16+ Registration Rights Agreement dated as of March 24, 1998 by and among
the Company and Cecile C. Bartman.
4.17+ Registration Rights Agreement dated as of March 24, 1998 by and among
the Company and CJJ Limited Partnership.
4.18+ Registration Rights Agreement dated as of March 26, 1998 by and among
the Company and Hughes Investments.
4.19+ Registration Rights Agreement dated as of March 26, 1998 by and among
the Company and Hughes Milliken Associates.
4.20+ Registration Rights Agreement dated as of March 25, 1998 by and among
the Company and Speer Family Partnership.
4.21+ Registration Rights Agreement dated as of March 26, 1998 by and among
the Company and HI-LOMA, a California general partnership.
4.22+ Registration Rights Agreement dated as of May 1, 1998 by and among the
Company and Myrtle Gronske.
4.23+ Registration Rights Agreement dated as of May 1, 1998 by and among the
Company and Visalia MKP, Inc.
4.24+ Registration Rights Agreement dated as of April 30, 1998 by and among
the Company, the Operating Partnership, Southern Palms Associates,
John L. Holmes and Holmes Development Group, Inc.
4.25+ Registration Rights Agreement dated as of March 20, 1998 by and among
the Company and North Mountain Village Shopping Center Limited
Partnership.
</TABLE>
59
<PAGE>
<TABLE>
<C> <S>
10.1+ Amended and Restated Agreement of Limited Partnership of CT Operating
Partnership, L.P.
10.2*+ Second Amended and Restated 1993 Stock Option and Incentive Plan for
Officers, Directors and Key Employees of Center Trust, Inc. and CT
Operating Partnership, L.P.
10.3 401(k) Plan and Trust Agreement of the Company and its affiliated and
related companies, incorporated herein by reference to Exhibit 10.4 to
the 1993 Form 10-K.
10.4 Form of Indemnification Agreement between the Company and its directors
and officers, incorporated herein by reference to Exhibit 10.4 to the
Company's Registration Statement on Form S-11 (No. 33-70156).
10.5 Purchase Agreement, dated as of December 27, 1993, among the Operating
Partnership, Merrill Lynch Global Allocation Fund, Inc., Merrill Lynch
Special Value Fund, Inc., Merrill Lynch Multinational Investment
Portfolios Equity/Convertible Series (Global Allocation Portfolio),
with respect to the 7 1/4% Exchangeable Subordinated Debentures due
2003, incorporated herein by reference to Exhibit 10.12 to the 1993
Form 10-K.
10.6 Agreement for Transfer of Realty and Assets, dated as of December 27,
1993, by and among the Operating Partnership and Montebello Commercial
Properties, Haagen GDH Partnership, Center Partners, H&H Oceanside
Co., El Camino North, Baldwin Hills Associates, Haagen-Burbank
Partnership, Date Palm Partnership, Alexander Haagen III, Betty
Haagen, Seymour Kreshek, Haagen-Fontana Partnership, Lake Forest
Shopping Center, Haagen-San Francisco Partnership, Haagen GDH-2
Partnership, Haagen-Vista Way Associates, and Haagen Alhambra
Associates, incorporated herein by reference to Exhibit 10.14 to the
1993 Form 10-K.
10.7 Amendment No. 1 to Agreement for Transfer of Realty and Assets, dated
as of December 27, 1993, by and among the Operating Partnership and
Montebello Commercial Properties, Haagen GDH Partnership, Center
Partners, H&H Oceanside Co., El Camino North, Baldwin Hills
Associates, Haagen-Burbank Partnership, Date Palm Partnership,
Alexander Haagen III, Betty Haagen, Seymour Kreshek, Haagen-Fontana
Partnership, Lake Forest Shopping Center, Haagen-San Francisco
Partnership, Haagen GDH-2 Partnership, Haagen-Vista Way Associates,
and Haagen Alhambra Associates, incorporated herein by reference to
Exhibit 10.15 to the 1993 Form 10-K.
10.8 Agreement for Transfer of Realty and Assets, dated as of December 27,
1993, by and among the Company, Alexander Haagen, Sr. and Charlotte
Haagen, Co-Trustees of the Haagen Living Trust dated August 17, 1988,
Saul S. Kreshek, Saul S. Kreshek and Seymour Kreshek, Co-Trustees of
the Helen Roseman Trust, Saul S. Kreshek and Seymour Kreshek, Co-
Trustees of the Alex Kreshek Revocable Trust, Jeffrey Harris Kreshek
1992 Irrevocable Trust, Bradley Howard Kreshek 1992 Irrevocable Trust,
Howard Andrew Kreshek 1992 Irrevocable Trust, Haagen-Gardena Gateway
Partnership, Haagen-Hollywood Partnership, San Fernando Mission
Partnership, and Haagen GDH Partnership, incorporated herein by
reference to Exhibit 10.16 to the 1993 Form 10-K.
10.9 Amendment No. 1 to Agreement for Transfer of Realty and Assets, dated
as of December 27, 1993, by and among the Company, Alexander Haagen,
Sr. and Charlotte Haagen, Co-Trustees of the Haagen Living Trust dated
August 17, 1988, Saul S. Kreshek, Saul S. Kreshek and Seymour Kreshek,
Co-Trustees of the Helen Roseman Trust, Saul S. Kreshek and Seymour
Kreshek, Co-Trustees of the Alex Kreshek Revocable Trust, Jeffrey
Harris Kreshek 1992 Irrevocable Trust, Bradley Howard Kreshek 1992
Irrevocable Trust, Howard Andrew Kreshek 1992 Irrevocable Trust,
Haagen-Gardena Gateway Partnership, Haagen-Hollywood Partnership, San
Fernando Mission Partnership, and Haagen GDH Partnership, incorporated
herein by reference to Exhibit 10.17 to the 1993 Form 10-K.
</TABLE>
60
<PAGE>
<TABLE>
<C> <S>
10.10 Partnership Interests Exchange Agreement, dated as of December 27,
1993, by and among the Company, Alexander Haagen, Sr. and Charlotte
Haagen, Co-Trustees of the Haagen Living Trust, Seymour Kreshek and
Arline Kreshek, Co-Trustees of the Seymour and Arline Kreshek Living
Trust, and Alexander Haagen III, incorporated herein by reference to
Exhibit 10.18 to the 1993 Form 10-K.
10.11 Partnership Interests Exchange Agreement between Willowbrook General
Partnership and the Operating Partnership, dated as of December 27,
1993, incorporated herein by reference to Exhibit 10.19 to the 1993
Form 10-K.
10.12 Contribution Agreement, dated as of December 27, 1993, between the
Operating Partnership and the Company, incorporated herein by
reference to Exhibit 10.20 to the 1993 Form 10-K.
10.13 Development Properties Agreement, dated as of December 27, 1993, among
Haagen-Burbank Partnership, Haagen-Fontana Partnership, Baldwin Hills
Associates, Montebello Commercial Properties, Haagen-San Francisco
Partnership and the Operating Partnership, incorporated herein by
reference to Exhibit 10.23 to the 1993 Form 10-K.
10.14 Form of Waiver and Recontribution Agreement among Executive Officers
and the Operating Partnership, incorporated herein by reference to
Exhibit 10.16 to the Company's Registration Statement on Form S-11
(No. 33-70156).
10.15 Form of Indemnity Agreement among Executive Officers and the Operating
Partnership, incorporated herein by reference to Exhibit 10.17 to the
Company's Registration Statement on Form S-11 (No. 33-70156).
10.16 Indemnity Agreement, dated as of December 27, 1993, by the Operating
Partnership to National Westminster Bank PLC, Capital Markets Branch,
as agent, for the benefit of Merrill Lynch Global Allocation Fund,
Inc., Merrill Lynch Special Value Fund, Inc., and Merrill Lynch
Multinational Investment Portfolios Equity/Convertible Series (Global
Allocation Portfolio), incorporated herein by reference to Exhibit
10.27 to the 1993 Form 10-K.
10.17 Loan Agreement, dated as of March 15, 1995, by and between CT
Properties Finance Partnership, L.P. and Nomura Asset Capital
Corporation, incorporated herein by reference to Exhibit 10.31 to the
1994 Form 10-K.
10.18 Stock Purchase Agreement by and among Prometheus Western Retail, LLC
and LF Strategic Realty Investors, L.P. and the Company, dated as of
June 1, 1997, incorporated herein by reference to the Company's 1997
Proxy Statement.
10.19 Stockholders Agreement by and among Lazard Freres Real Estate
Investors, LLC, LF Strategic Realty Investors, L.P., Prometheus
Western Realty Investors, LLC and the Company, dated as of June 1,
1997, incorporated herein by reference to the Company's 1997 Proxy
Statement.
10.20 Separation Agreement and Release by and between Alexander Haagen, Sr.,
Alexander Haagen, III, Charlotte Haagen, Autumn Haagen, Alexander
Haagen III & Betty Haagen Trust fbo Alexander Haagen IV UA 10/24/88,
Alexander Haagen III & Betty Haagen Trust fbo Autumn Haagen
UA 10/24/88, Alexander Haagen III & Betty Haagen Trust fbo Andrew
Haagen UA 10/28/88, Haagen Living Trust dated August 17, 1988, as
amended and restated as of April 18, 1996, Haagen Limited Partnership
and Lazard Freres Real Estate Investors, LLC, Lf Strategic Realty
Investors, L.P., Prometheus Western Retail LLC and the Company, the
Operating Partnership and Haagen Property Management, Inc., dated as
of November 24, 1997, incorporated herein by reference to Exhibit No.
1 to Amendment #4 to the 13D filed by Prometheus Western Retail, LLC
and LF Strategic Investors, L.P. dated as of December 5, 1997,
incorporated herein by reference to Exhibit 10.34 to the Company's
Form 10-K for the year ended December 31, 1997 (the "1997 Form 10-K").
10.21 Credit Agreement among the Operating Partnership, The Chase Manhattan
Bank, Chase Securities, Inc., Credit Lyonnais, New York Branch and
CIBC, Inc., dated as of December 31, 1997, incorporated herein by
reference to Exhibit 10.36 to the 1997 Form 10-K.
</TABLE>
61
<PAGE>
<TABLE>
<C> <S> <C>
10.22+ Amended and Restated Credit Agreement among the Operating
Partnership, The Chase Manhattan Bank, Chase Securities, Inc.,
Credit Lyonnais, New York Branch and CIBC, Inc., dated
February 28, 2000.
10.23*+ Employment Agreement dated as of January 1, 1999 between the
Company, the Operating Partnership and Edward D. Fox.
10.24*+ Employment Agreement dated as of January 1, 1999 between the
Company, the Operating Partnership and Stuart J.S. Gulland.
10.25*+ Employment Agreement dated as of January 1, 1999 between the
Company, the Operating Partnership and William P. Hewitt.
10.26*+ Employment Agreement dated as of January 1, 1999 between the
Company, the Operating Partnership and Steven M. Jaffe.
10.27*+ Employment Agreement dated as of January 1, 1999 between the
Company, the Operating Partnership and Joseph F. Paggi.
21.1+ Subsidiaries of the Company.
23.1+ Consent of Deloitte & Touche LLP.
24 Power of Attorney (included on page S-1).
27+ Financial Data Table.
</TABLE>
- --------
* Management contracts and compensation plans or arrangements.
+ Filed herewith.
B. Reports on Form 8-K
On November 4, 1999, the Company filed a report on Form 8-K to make
available additional financial and operational information concerning
the Company and properties owned as of September 30, 1999.
62
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Manhattan Beach,
State of California, on the 30th day of March, 2000.
CENTER/TRUST, INC.
/s/ Edward D. Fox
By: _________________________________
Edward D. Fox
Chairman of the Board, Chief
Executive Officer and President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Edward D. Fox and Stuart J. S. Gulland, such
person's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign this Form 10-K, and any and all amendments
thereto, and to file the same, with exhibits and schedules thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing necessary or
desirable to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ Edward D. Fox Chairman of the Board, March 30, 2000
____________________________________ Chief Executive Officer
Edward D. Fox and President
(Principal Executive
Officer)
/s/ Mark Ticotin Director March 30, 2000
____________________________________
Mark Ticotin
/s/ R. Bruce Andrews Director March 30, 2000
____________________________________
R. Bruce Andrews
/s/ Robert Barnum Director March 30, 2000
____________________________________
Robert Barnum
/s/ Stuart J.S. Gulland Director, Senior Vice March 30, 2000
____________________________________ President--Chief
Stuart J.S. Gulland Financial Officer
(Principal Financial
Officer)
/s/ Christine Garvey Director March 30, 2000
____________________________________
Christine Garvey
/s/ Anthony Meyer Director March 30, 2000
____________________________________
Anthony Meyer
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ Fred L Reidman Director March 30, 2000
____________________________________
Fred L. Riedman
/s/ Edward A. Stokx Vice President and March 30, 2000
____________________________________ Controller (Principal
Edward A. Stokx Accounting Officer)
</TABLE>
S-2
<PAGE>
EXHIBIT 3.1c
CENTERTRUST RETAIL PROPERTIES, INC.
ARTICLES OF AMENDMENT
---------------------
CenterTrust Retail Properties, Inc., a Maryland corporation, having its
principal office at c/o Prentice-Hall Corporation System Maryland, 1123 Eutaw
Street, Baltimore, Maryland 21201 (the "Corporation") hereby certifies to the
State Department of Assessments and Taxation of Maryland (the "Department")
that:
FIRST: The charter of the Corporation as currently in effect,
-----
consisting of Articles of Amendment and Restatement filed with the Department on
December 9, 1993 and Articles of Amendment filed with the Department on August
6, 1998 (the "Charter"), is hereby further amended by deleting therefrom in its
entirety Article I and by substituting in lieu thereof the following new Article
I:
ARTICLE I
NAME
The name of the Corporation is: Center Trust, Inc.
SECOND: The Charter of the Corporation is hereby further amended by
------
deleting therefrom Section 2 of Article VII and by substituting in lieu thereof
the following new Section 2 of Article VII:
Section 2. Restriction on Ownership and Transfer. Provided that nothing
contained in these Articles shall preclude the settlement of transactions
entered into through the facilities of the NYSE, the following restrictions on
ownership and transfer of Common Stock shall apply:
A. Except as provided in Section 7 of this Article VII, from and after the
date of the Initial Public Offering,
<PAGE>
no Person shall Beneficially Own or Constructively Own shares of Common Stock in
excess of the Ownership Limit.
B. Except as provided in Section 7 of this Article VII, from and after the
date of the Initial Public Offering, to the extent any Transfer or other event
(if effective) would result in any Person Beneficially Owning or Constructively
Owning Common Stock in excess of the Ownership Limit, then (i) the Common Stock
being Transferred (or in the case of an event other than a Transfer, the Common
Stock Constructively Owned or Beneficially Owned) which would otherwise cause
such Person to Beneficially Own or Constructively Own Common Stock in excess of
the Ownership Limit shall be automatically converted into and exchanged for an
equal number of shares of Excess Stock (such conversion shall be effective as of
the close of business on the business day prior to the date of such Transfer or
other event) and such person shall acquire no rights in such shares of Common
Stock; and (ii) shall, if necessary to prevent any Person from Beneficially
Owning or Constructively Owning Common Stock in excess of the Ownership Limit
(notwithstanding the conversion to and exchange for Excess Stock described in
clause (i) of this Section 2.B.), be void ab initio as to the Transfer of such
---------
shares of Common Stock or other event whereby the intended transferee shall
acquire no rights in such shares of Common Stock.
C. Except as provided in Section 7 of this Article VII, from and after the
date of the Initial Public Offering, any Transfer that, if effective, would
result in the Common Stock being beneficially owned by less than 100 Persons
(determined without reference to any rules of attribution) shall be void ab
--
initio as to the Transfer of such shares of Common Stock which would be
- ------
otherwise beneficially owned by the transferee and the intended transferee shall
acquire no rights in such shares of Common Stock.
D. From and after the date of the Initial Public Offering, to the extent any
Transfer or other event (if effective) (i) would result in the Corporation being
closely held within the meaning of Section 856(h) of the Code, or (ii) would
otherwise result in the Corporation failing to qualify as a REIT (including, but
not limited to, a Transfer or other event that would result in the Corporation
owning (directly or Constructively) an interest in a tenant that is described in
Section 856 (d) (2) (B) of the Code if the income derived by the Corporation to
fail to satisfy any of the gross income requirements of Section 856(c) of the
Code), then (iii) the Common
-2-
<PAGE>
the Common Stock being Transferred (or in the case of an event other than a
Transfer, the Common Stock Constructively Owned or Beneficially Owned)
which would otherwise cause a violation of clause (i) or (ii) of this
Section 2.D. shall be automatically converted into and exchanged for an
equal number of shares of Excess Stock (such conversion and exchange shall
be effective as of the close of business on the business day prior to the
date of such Transfer or other event) and the intended transferee shall
acquire no rights in such shares of Common Stock; and (iv) shall, if
necessary to prevent a violation of clause (i) or (ii) of this Section 2.D.
(notwithstanding the conversion into and exchange for Excess Stock
described in clause (iii) of this Section 2.D.), be void ab initio as to
---------
the Transfer of such shares of Common Stock or other event which would
otherwise cause a violation of clause (i) or (ii) of this Section 2.D.
whereby the intended transferee shall acquire no rights in such shares of
Common Stock.
THIRD: The Charter of the Corporation is hereby further amended by
-----
deleting therefrom Section 6 of Article VII and by substituting in lieu thereof
the following new Section 6 of Article VII:
Section 6. Other Action by Board. Nothing contained in this Article VII
shall limit the authority of the Board of Directors to take such other
action as it deems necessary or advisable to protect the Corporation and
the interests of its stockholders by preservation of the Corporation's
status as a REIT, provided, however, that nothing in these Articles shall
preclude the settlement of transactions entered into through the facilities
of the NYSE.
FOURTH: The foregoing amendments to the Charter of the Corporation
------
were duly advised by the Board of Directors of the Corporation and were approved
by the stockholders of the Corporation, all in accordance with applicable
sections of the Maryland General Corporation Law and the Charter and Bylaws of
the Corporation.
-3-
<PAGE>
FIFTH: The foregoing amendments do not alter or change the authorized
-----
capital stock of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be signed in its name and on its behalf by its President and its
corporate seal to be hereunder affixed and attested by its Secretary as of the
19th day of July, 1999, and its President acknowledges that these Articles of
Amendment are the act and deed of the Corporation and, under the penalties of
perjury, that the matters and facts set forth herein with respect to
authorization and approval are true in all material respects to the best of his
knowledge, information and belief.
ATTEST: CenterTrust Retail Properties, Inc.
/s/ Steven M. Jaffe By: /s/ Edward D. Fox (SEAL)
- -------------------------- -------------------------------
Steven M. Jaffe Edward D. Fox
Secretary President
-4-
<PAGE>
Exhibit 3.2
SECOND AMENDED AND RESTATED BYLAWS
OF
CENTER TRUST, INC.
These Second Amended and Restated Bylaws of Center Trust, Inc., a
Maryland corporation (the "Corporation"), restate, integrate and further amend
the Amended and Restated Bylaws of the Corporation adopted by the Board of
Directors of the Corporation on December 10, 1993, as amended by the First
Amendment to the Amended and Restated Bylaws of the Corporation dated as of
August 12, 1996, the Second Amendment to the Amended and Restated Bylaws of the
Corporation dated as of July 7, 1997 and the Third Amendment to the Amended and
Restated Bylaws of the Corporation dated as of August 14, 1997. The text of the
Amended and Restated Bylaws of the Corporation as heretofore amended is hereby
restated and amended to read in its entirety as follows:
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE AND REGISTERED AGENT. The principal
-------------------------------------
office of the Corporation shall be located at such place in the State of
Maryland as the Board of Directors may designate and the registered agent of the
Corporation in the State of Maryland shall be such person as the Board of
Directors may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional
------------------
offices at such places as the Board of Directors may from time to time determine
or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at such
-----
place, either within the State of Maryland or at such other place within the
United States as shall be designated by the Board of Directors. In the absence
of any such designation, stockholders' meetings shall be held at the principal
office of the Corporation.
Section 2. ANNUAL MEETING. An annual meeting of the stockholders for
--------------
the election of directors and the transaction of any business within the powers
of the Corporation shall be held each year on a date and at a time designated by
the Board of Directors.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders for
----------------
the transaction of any business within the powers of the Corporation may be
called by the President, Chief Executive Officer or Board of Directors. Except
as may be otherwise provided by the Maryland General Corporation Law, as it may
be amended from time to time (the "MGCL"), special meetings of stockholders
shall also be called by the Secretary upon the written request of the holders of
shares entitled to cast not less than twenty-five (25%) percent of all the votes
entitled to be cast at such meeting. Such request shall state the purpose of
such meeting and the matters
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proposed to be acted on at such meeting. The Secretary shall inform such
stockholders of the reasonably estimated cost of preparing and mailing notice of
the meeting and, upon payment to the Corporation of such costs, the Secretary
shall give notice to each stockholder entitled to notice of the meeting. Unless
requested by the stockholders entitled to cast a majority of all the votes
entitled to be cast at such meeting, a special meeting need not be called to
consider any matter which is substantially the same as a matter voted on at any
special meeting of the stockholders held during the preceding twelve months.
Section 4. NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE.
-------------------------------------------------
Written notice of all meetings shall be given by the Secretary and shall state
the time and place of the meeting. The notice of an annual meeting shall state
that the meeting is called for the election of directors and for the transaction
of other business which may properly come before the meeting, and shall (if any
other action which could be taken at a special meeting is to be taken at such
annual meeting) contain any additional statements required in a notice of a
special meeting, and shall include a copy of any requisite statements or
provisions prescribed by the provisions of the MGCL; provided, however, that any
business of the Corporation may be transacted at any annual meeting without
being specially noticed unless the provisions of the MGCL provide otherwise.
The notice of a special meeting shall in all instances state the purpose or
purposes for which the meeting is called and shall include a copy of any
requisite statements or provisions prescribed by the provisions of the MGCL.
Written notice of any meeting shall be given to each stockholder either by mail
or personally delivered to him or by leaving it at his residence or usual place
of business not less than ten days and not more than ninety days before the date
of the meeting, unless any provisions of the MGCL shall prescribe a different
elapsed period of time, to each stockholder at his address appearing on the
books of the Corporation or the address supplied by him for the purpose of
notice. If mailed, notice shall be deemed to be given when deposited in the
United States mail addressed to the stockholder at his address as it appears on
the records of the Corporation with postage thereon prepaid. Whenever any
notice of the time, place or purpose of any meeting of stockholders is required
to be given under the provisions of the Corporation's Charter, these Bylaws or
of the provisions of the MGCL, a waiver thereof in writing, signed by the
stockholder and filed with the records of the meeting, whether before or after
the holding thereof, or his presence in person or by proxy at the meeting shall
be deemed equivalent to the giving of such notice to such stockholder. The
foregoing requirements of notice shall also apply, whenever the Corporation
shall have any class of stock which is not entitled to vote, to holders of stock
who are not entitled to vote at the meeting, but who are entitled to notice
thereof and to dissent from any action taken thereat.
Section 5. SCOPE OF NOTICE. Any business of the Corporation may be
---------------
transacted at an annual meeting of stockholders without being specifically
designated in the notice, except such business as is required by statute to be
stated in such notice. No business shall be transacted at a special meeting of
stockholders except as specifically designated in the notice.
Section 6. QUORUM. At any meeting of stockholders, the presence in
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person or by proxy of stockholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this section
shall not affect any requirement under the provisions of the MGCL or the
Corporation's Charter for the vote necessary for the adoption of any measure.
If, however, such quorum shall not be present at any meeting of the
stockholders, the stockholders entitled to vote at such meeting, present in
person or by proxy, shall have power to
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adjourn the meeting from time to time to a date not more than 120 days after the
original record date without notice other than announcement at the meeting. At
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 7. VOTING. A majority of all the votes cast at a meeting of
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stockholders duly called and at which a quorum is present shall be sufficient to
elect a director. A majority of the votes cast at a meeting of stockholders
duly called and at which a quorum is present shall be sufficient to approve any
other matter which may properly come before the meeting, unless more than a
majority of the votes cast is required by the provisions of the MGCL or by the
Charter of the Corporation. Unless otherwise provided in the Charter, each
outstanding share, regardless of class, shall be entitled to one vote on each
matter submitted to a vote at a meeting of stockholders.
Section 8. PROXIES. Every stockholder may authorize another person
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or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether for the purposes of determining his presence at
a meeting, or whether by waiving notice of any meeting, voting or participating
at a meeting, or expressing consent or dissent without a meeting, or otherwise.
Every proxy shall be executed in writing by the stockholder or by his duly
authorized attorney in fact, and filed with the Secretary of the Corporation.
No proxy shall be valid more than eleven months from the date of its execution,
unless the proxy provides otherwise.
Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock registered in
----------------------------------
the name of a corporation, partnership, trust or other entity, if entitled to be
voted, may be voted by the president or a vice president, a general partner or
trustee thereof, as the case may be, or a proxy appointed by any of the
foregoing individuals, unless some other person who has been appointed to vote
such stock pursuant to a bylaw or a resolution of the board of directors of such
corporation or other entity presents a certified copy of such bylaw or
resolution, in which case such person may vote such stock. Any director or
other fiduciary may vote stock registered in his name as such fiduciary, either
in person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it
shall not be voted at any meeting and shall not be counted in determining the
total number of outstanding shares entitled to be voted at any given time,
unless they are held by it in a fiduciary capacity, in which case they may be
voted and shall be counted in determining the total number of outstanding shares
at any given time.
The Board of Directors may adopt by resolution a procedure by which a
stockholder may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date of closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.
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Notwithstanding any other provision of the Charter of the Corporation
or these Bylaws, Subtitle 7 of Title 3 of the MGCL (as the same may hereafter be
amended from time to time) shall not apply to the voting rights of any shares of
stock of the Corporation now or hereafter held by Alexander Haagen, Sr.,
Charlotte Haagen, Alexander Haagen III, Seymour Kreshek, Fred W. Bruning, or
Edward Krasnove and any Affiliate (as defined in Section 3-601 of the MGCL) or
Associates (as defined in Section 3-701 of the MGCL) of any of the foregoing
persons.
Notwithstanding any other provision of the Charter of the Corporation
or these Bylaws, Subtitle 7 of Title 3 of the MGCL, shall not apply to any
acquisitions of shares of capital stock of any class of the Corporation made at
any time by Prometheus Western Retail, LLC or any of its existing or future
"affiliates" (as defined in Section 3-601(b) of the MGCL, as it may be amended
from time to time). Any amendment, modification, alteration or repeal of any
provision of this paragraph shall not eliminate, restrict or otherwise limit
such exemption with respect to any such acquisitions that have been consummated,
or are the subject of an existing agreement entered into prior to the amendment,
modification, alteration or repeal.
Section 10. INSPECTORS. At any meeting of stockholders, the chairman
----------
of the meeting may, or upon the request of any stockholder shall, appoint one or
more persons as inspectors for such meeting. Such inspectors shall ascertain
and report the number of shares represented at the meeting based upon their
determination of the validity and effect of proxies, count all votes, report the
results and perform such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the stockholders.
Each report of an inspector shall be in writing and signed by him or
by a majority of them if there is more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
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Section 11. NOMINATIONS AND STOCKHOLDER BUSINESS
------------------------------------
(a) Annual Meetings of Stockholders.
-------------------------------
(1) Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by the stockholders may be made at
an annual meeting of stockholders (i) pursuant to the Corporation's notice of
meeting, (ii) by or at the direction of the Board of Directors or (iii) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in this Section 11(a), who is entitled to vote at
the meeting and who complied with the notice procedures set forth in this
Section 11(a).
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (iii) of paragraph
(a)(1) of this Section 11, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the
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annual meeting is advanced by more than 30 days or delayed by more than 60 days
from such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the 90th day prior to such annual meeting and not
later then the close of business on the later of the 60th day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made. Such stockholder's notice shall set
forth (i) as to each person whom the stockholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (ii) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and of the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the stockholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (x) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (y) the class and number
of shares of stock of the Corporation which are owned beneficially and of record
by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(a)(2) of this Section 11 to the contrary, in the event that the number of
directors to be elected to the Board of Directors is increased and there is no
public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Corporation at least 70
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Section 11(a) shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
offices of the Corporation not later than the close of business on the tenth day
following the day on which such public announcement is first made by the
Corporation.
(b) Special Meetings of Stockholders. Only such business shall be
--------------------------------
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) provided that the Board of Directors has determined that
directors shall be elected at such special meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this Section 11(b), who is entitled to vote at the meeting and
who complied with the notice procedures set forth in this Section 11(b). In the
event the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be) for election to such
position as specified in the Corporation's notice of meeting, if the
stockholder's notice required by paragraph (a)(2) of this Section 11(b) shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the 90th day prior to such special meeting and not later than
the close of business on the later of the 60th day prior to such special meeting
or the tenth day following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
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(c) General.
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(1) Only such persons who are nominated in accordance with the
procedures set forth in this Section 11 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 11. The presiding officer of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Section 11 and, if any proposed nomination or business is not in
compliance with this Section 11, to declare that such defective nomination or
proposal be disregarded.
(2) For purposes of this Section 11, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones New Service,
Associated Press or comparable news service or in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to Sections
13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 11,
a stockholder shall also comply with all applicable requirements of state law
and of the Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this Section 11. Nothing in this Section 11 shall be
deemed to affect any rights of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 12. CONDUCT OF MEETINGS. Meetings of the stockholders shall
-------------------
be presided over by one of the following officers in the order of seniority and
if present and acting - the Chairman of the Board, the Vice Chairman of the
Board, if any, the President, or a Vice-President. The Secretary of the
Corporation, or in his absence, an assistant secretary, shall act as secretary
of every meeting, but if neither the Secretary nor an assistant secretary is
present the Chairman of the meeting shall appoint a secretary of the meeting.
Section 13. INFORMAL ACTION BY STOCKHOLDERS. Any action required or
-------------------------------
permitted to be taken at a meeting of stockholders may be taken without a
meeting if the following are filed with the records of the meeting: a unanimous
written consent, which sets forth such action and is signed by each stockholder
entitled to vote on the matter and, as applicable, a written waiver of any right
to dissent signed by each stockholder entitled to notice of the meeting but not
entitled to vote at it.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the
--------------
Corporation shall be managed under the direction of its Board of Directors.
Section 2. NUMBER AND QUALIFICATION. The number of directors of the
------------------------
Corporation shall be eleven, which number may be increased or decreased, but not
to less than seven, nor more than thirteen. The number of directors may be
increased or decreased by an
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amendment to these Bylaws, provided, however, that the tenure of office of a
director shall not be affected by any decrease in the number of directors. Each
director shall be a natural person of full age. A director need not be a
stockholder, a citizen of the United States or a resident of the State of
Maryland.
Section 3. ELECTION AND TERM. The directors shall be divided into
-----------------
three classes designated Class I, Class II and Class III, as nearly equal in
number as possible, with a term of three years each, and the term of office of
one class shall expire each year. Class I directors shall hold office initially
for a term expiring at the annual meeting of stockholders in 1994, Class II
directors shall hold office initially for a term expiring at the annual meeting
of stockholders in 1995 and Class III directors shall hold office initially for
a term expiring at the annual meeting of stockholders in 1996. Beginning with
the annual meeting of stockholders in 1994 and at each succeeding annual meeting
of stockholders, the directors of the class of directors whose term expires at
such meeting will be elected to hold office for a term expiring at the third
succeeding annual meeting. Each director will hold office for the term for
which he or she is elected and until his or her successor is duly elected and
qualified or until his death, retirement, resignation or removal. In the
interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors, newly created directorships
and any vacancies in the Board of Directors, including vacancies resulting from
the removal of directors by the stockholders which have not been filled by said
stockholders, may be filled by the Board of Directors. Newly created
directorships filled by the Board of Directors shall be by action of a majority
of the entire Board of Directors. All other vacancies to be filled by the Board
of Directors may be filled by a majority of the remaining members of the Board
of Directors, whether or not sufficient to constitute a quorum.
Section 4. ANNUAL AND REGULAR MEETINGS. An annual meeting of the
---------------------------
Board of Directors shall be held immediately after and at the same place as the
annual meeting of stockholders, no notice other than this Bylaw being necessary.
The Board of Directors may provide, by resolution, the time and place, either
within or without the State of Maryland, for the holding of regular meetings of
the Board of Directors without other notice than such resolution.
Section 5. SPECIAL MEETINGS. Special meetings of the Board of
----------------
Directors may be called by or at the request of the Chairman of the Board, the
President or by a majority of the directors then in office. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Maryland, as the place for
holding any special meeting of the Board of Directors called by them.
Section 6. NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Notice of any
---------------------------------------
special meeting shall be given by written notice delivered personally,
transmitted by facsimile, telegraphed or mailed to each director at his business
or residence address. Personally delivered, facsimile transmitted or
telegraphed notices shall be given at least two days prior to the meeting.
Notice by mail shall be given at least five days prior to the meeting. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail properly addressed, with postage thereon prepaid. If given by
telegram, such notice shall be deemed to be given when the telegram is delivered
to the telegraph company. Neither the business to be transacted at, nor the
purpose of, any annual, regular or special meeting of the Board of Directors
need be stated in this notice, unless specifically required by statute or these
Bylaws. Whenever any notice of the time, place, or
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purpose of any meeting of directors or any committee thereof is required to be
given under the provisions of the MGCL of these Bylaws, a waiver thereof in
writing, signed by the director or committee member entitled to such notice and
filed with the records of the meeting, whether before or after the meeting, or
presence at the meeting, shall be deemed equivalent to the giving of such notice
to such director or such committee member.
Section 7. QUORUM. At all meetings of the Board of Directors, a
------
majority of the authorized number of directors shall be necessary and sufficient
to constitute a quorum for the transaction of business, and the vote of a
majority of the directors present at any meeting at which there is a quorum,
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, by the Charter of the Corporation or by these
Bylaws. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present. Notwithstanding the foregoing, one more than a majority of
the authorized number of directors shall be necessary to constitute a quorum to
approve the actions set forth below in clauses (i) through (iv), and such
actions shall not be effective unless approved by one more than a majority of
the authorized number of directors and by the stockholders of the Corporation,
if required by the MGCL, the Charter or these Bylaws. Such action includes:
(i) a Change in Control (as hereinafter defined) of the
corporation or CT Operating Partnership, L.P. (the "Operating
Partnership");
(ii) any amendment to the Charter or these Bylaws (except for
such amendments as may be required in the reasonable discretion of a
majority of the Board of Directors to maintain the Corporation's status as
a real estate investment trust under the Internal Revenue Code of 1986, as
amended);
(iii) any waiver or modification of the Ownership Limit (as
defined in the Charter); and
(iv) the issuance of any equity securities (other than shares of
Common Stock issued (a) for at least the fair market value thereof at the
time of issuance as determined in good faith by a majority of the Board of
Directors, (b) pursuant to the Corporation's stock incentive plan, (c) upon
exchange of OP Units under the partnership agreement of the Operating
Partnership or (d) in a bona fide underwritten public offering managed by
one or more nationally recognized investment banking firms) or rights to
acquire any such securities.
For purposes of this Section 7:
(a) the term "Change in Control" of (A) the Corporation shall
mean (i) any transaction or series of transactions (whether by purchase of
existing shares of Common Stock, issuance of shares of Common Stock,
merger, consolidation or otherwise) the result of which is that either (x)
any Person or Group other than The Alexander Haagen Company, Inc. or its
affiliates becomes the Beneficial Owner, directly or indirectly, of 20% or
more of the total voting power in the aggregate of all classes of capital
stock of the Corporation then outstanding normally entitled to vote in the
election of directors of the Corporation (or any
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surviving entity) or (y) the Beneficial Owners of the capital stock of the
Corporation normally entitled to vote in the election of directors
immediately prior to the transaction beneficially own less than 80% of the
total voting power in the aggregate of all classes of capital stock of the
Corporation then outstanding normally entitled to vote in the election of
directors of the Corporation (or any surviving entity) immediately after
such transaction or (ii) any transaction or series of transactions (whether
by purchase of existing shares of Common Stock or OP Units, issuance of
shares of Common Stock or OP Units, merger, consolidation or otherwise) the
result of which is that either (x) any Person or Group other than The
Alexander Haagen Company, Inc. or its affiliates becomes the Beneficial
Owner, directly or indirectly, of 20% or more of the total voting power in
the aggregate of all classes of capital stock of the Corporation then
outstanding (including shares of Common Stock issuable upon exchange of OP
Units, whether or not such OP Units are immediately exchangeable and
without regard to the Ownership Limit) normally entitled to vote in the
election of directors of the Corporation (or any surviving entity) or (y)
the Beneficial Owners of the capital stock of the Corporation normally
entitled to vote in the election of directors immediately prior to the
transaction beneficially own less than 80% of the total voting power in the
aggregate of all classes of capital stock of the Corporation then
outstanding (including shares of Common Stock issuable upon exchange of OP
Units, whether or not such OP Units are immediately exchangeable and
without regard to the Ownership Limit) normally entitled to vote in the
election of directors of the Corporation (or any surviving entity)
immediately after such transaction; or (B) the Operating Partnership shall
mean (i) any sale, transfer or other conveyance (whether by merger or
consolidation of the Corporation or otherwise) by the Corporation of the
general partnership interest in the Operating Partnership, except such
transfers permitted under Section 11.2 of the Agreement of Limited
Partnership of the Operating Partnership, (ii) any transaction or series of
transactions (whether by purchase of existing OP Units, issuance of OP
Units, merger, consolidation or otherwise) the result of which is that
either (x) any Person or Group other than The Alexander Haagen Company,
Inc. or its affiliates becomes the Beneficial Owner, directly or
indirectly, of OP Units which represent 20% or more of the total percentage
of limited partnership interests (including interests of assignees) therein
or (y) the Beneficial Owners of limited partnership interests (including
interests of assignees) therein immediately prior to the transaction
beneficially own less than 80% of the total percentage of limited
partnership interests (including interests of assignees) therein then
outstanding immediately after such transaction.
(b) The term "Person" as used herein shall have the same meaning
as such term has for purposes of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended.
(c) The term "Group" as used herein shall have the same meaning
as such term has for purposes of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended.
(d) The term "Beneficial Owner" as used herein shall have the
same meaning as such term has for purposes of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended, except that a Person shall
be deemed to have beneficial ownership of all shares that a Person has the
right to acquire, whether or not such right is immediately
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exercisable.
(e) The term "Ownership Limit" as used herein shall have the
same meaning as such term has in the Charter of the Corporation.
Section 8. TELEPHONE MEETINGS. Directors may participate in a
------------------
meeting by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear each other at the same
time. Participation in a meeting by these means shall constitute presence in
person at the meeting.
Section 9. INFORMAL ACTION BY DIRECTORS. Any action required or
----------------------------
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting, if a consent in writing to such action is signed by each
director and such written consent is filed with the minutes of proceedings of
the Board of Directors.
Section 10. VACANCIES. If for any reason any or all the directors
---------
cease to be directors, such event shall not terminate the Corporation or affect
these Bylaws or the powers of the remaining directors hereunder (even if fewer
than three directors remain). Any vacancy on the Board of Directors for any
cause other than an increase in the number of directors shall be filled by a
majority of the remaining directors, although such majority is less than a
quorum. Any vacancy in the number of directors created by an increase in the
number of directors may be filled by a majority vote of the entire Board of
Directors. Any individual so elected as director shall hold office for the
unexpired term of the director he is replacing.
Section 11. COMPENSATION. Directors shall not receive any stated
------------
salary for their services as directors but, by resolution of the Board of
Directors, fixed sums per year and/or per meeting. Expenses of attendance, if
any, may be allowed to directors for attendance at each annual, regular or
special meeting of the Board of Directors or of any committee thereof; but
nothing herein contained shall be construed to preclude any directors from
serving the Corporation in any other capacity and receiving compensation
therefor.
Section 12. REMOVAL OF DIRECTORS. Any or all of the directors may be
--------------------
removed, with cause, by the affirmative vote of two-thirds of all the votes
entitled to be cast for the election of directors.
Section 13. SURETY BONDS. Unless required by law, no director shall
------------
be obligated to give any bond or surety or other security for the performance of
any of his duties.
Section 14. RELIANCE. Each director, officer, employee and agent of
--------
the Corporation shall, in the performance of his duties with respect to the
Corporation, be fully justified and protected with regard to any act or failure
to act in reliance in good faith upon the books of account or other records of
the Corporation, upon an opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the adviser, accountants,
appraisers or other experts or consultants selected by the Board of Directors or
officers of the Corporation, regardless of whether such counsel or expert may
also be a director.
Section 15. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES
------------------------------------------------
10
<PAGE>
AND AGENTS. The directors shall have no responsibility to devote their full time
- ----------
to the affairs of the Corporation. Any director or officer, employee or agent of
the Corporation, in his personal capacity or in a capacity as an affiliate,
employee, or agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in addition to those
of or relating to the Corporation.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors
---------------------------------
may appoint from among its members an Executive Committee, an Audit Committee, a
Compensation Committee and other committees, composed of two or more directors,
to serve at the pleasure of the Board of Directors.
Section 2. POWERS. The Board of Directors may delegate to committees
------
appointed under Section 1 of this Article any of the powers of the Board of
Directors, except as prohibited by law.
Section 3. MEETINGS. In the absence of any member of any such
--------
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another director to act in the place of such
absent member.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Board
------------------
of Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or
-----------------------------
permitted to be taken at any meeting of a committee of the Board of Directors
may be taken without a meeting, if a consent in writing to such action is signed
by each member of the committee and such written consent is filed with the
minutes of proceedings of such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation shall
------------------
include a President, a Secretary and a Treasurer and may include a Chief
Executive Officer, a Chairman of the Board, a Vice Chairman of the Board, one or
more Vice Presidents, a Chief Financial Officer, one or more assistant
secretaries and one or more assistant treasurers. In addition, the Board of
Directors may from time to time appoint such other officers with such powers and
duties as they shall deem necessary or desirable. Unless otherwise provided in
the resolution of election or appointment, and subject to any employment
agreements, the officers of the Corporation shall be elected annually by the
Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of stockholders, except that the Chief Executive Officer
11
<PAGE>
may appoint one or more Vice Presidents, assistant secretaries and assistant
treasurers. If the election of officers shall not be held at such meeting, such
election shall be held as soon thereafter as may be convenient. Each officer
shall hold office until his successor is elected and qualifies or until his
death, resignation or removal in the manner hereinafter provided. Any two or
more offices except President and Vice President may be held by the same person.
In its discretion, the Board of Directors may leave unfilled any office except
that of President, Treasurer and Secretary. Election of an officer or agent
shall not of itself create contract rights between the Corporation and such
officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the
-----------------------
Corporation may be removed by the Board of Directors if in its judgment the best
interests of the Corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. Any
officer of the Corporation may resign at any time by giving written notice of
his resignation to the Board of Directors, the Chairman of the Board, the
President or the Secretary. Any resignation shall take effect at any time
subsequent to the time specified therein or, if the time when it shall become
effective is not specified therein, immediately upon its receipt. The
acceptance of a resignation shall not be necessary to make it effective unless
otherwise stated in the resignation.
Section 3. VACANCIES. A vacancy in any office may be filled by the
---------
Board of Directors for the balance of the term.
Section 4. CHAIRMAN OF THE BOARD. The Board of Directors may
---------------------
designate a Chairman of the Board. The Chairman of the Board shall preside over
the meetings of the Board of Directors and of the stockholders at which he shall
be present. The Chairman of the Board shall perform such other duties as may be
assigned to him by the Board of Directors.
Section 5. CHIEF EXECUTIVE OFFICER. The Board of Directors shall
-----------------------
designate a Chief Executive Officer. In the absence of such designation, the
President shall be the chief executive officer of the Corporation. The Chief
Executive Officer shall have general responsibility for implementation of the
policies of the Corporation, as determined by the Board of Directors, and for
the management of the business and affairs of the Corporation.
Section 6. PRESIDENT. The Board of Directors shall designate a
---------
President. In the absence of such designation, the Chief Executive Officer
shall be the President of the Corporation. The President shall in general
supervise and control the business and affairs of the Corporation. The
President may execute any deed, mortgage, bond, contract or other instrument,
except in cases where the execution thereof shall be expressly delegated by the
Board of Directors or by these Bylaws to some other officer or agent of the
Corporation or shall be required by law to be otherwise executed; and in general
shall perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
Section 7. VICE PRESIDENT. In the absence of the President or in the
--------------
event of a vacancy in such office, the Vice President (or in the event there be
more than one Vice President, the Vice Presidents in the order designated at the
time of their election or, in the absence of any designation, then in the order
of their election) shall perform the duties of the President and when so acting
shall have all the powers of and be subject to all the restrictions upon the
President; and
12
<PAGE>
shall perform such other duties as from time to time may be assigned to him by
the President or by the Board of Directors. The Board of Directors may designate
one or more Vice Presidents as Senior Vice President or as Vice President for
particular areas of responsibility.
Section 8. CHIEF FINANCIAL OFFICER. The Board of Directors may
-----------------------
designate a Chief Financial Officer. The Chief Financial Officer shall have the
responsibilities and duties as set forth by the Board of Directors or the Chief
Executive Officer.
Section 9. TREASURER. The Treasurer shall have the custody of the
---------
funds and securities of the Corporation and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. In the absence of a designation of a Chief Financial Officer by
the Board of Directors, the Treasurer shall be the Chief Financial Officer of
the Corporation.
Section 10. SECRETARY. The Secretary shall (a) keep the minutes of
---------
the proceedings of the stockholders, the Board of Directors and committees of
the Board of Directors in one or more books provided for that purpose; (b) see
that all notices are duly given in accordance with the provisions of these
Bylaws or as required by law; (c) be custodian of the trust records and of the
seal of the Corporation; (d) keep a register of the post office address of each
stockholder which shall be furnished to the Secretary by such stockholder; (e)
have general charge of the stock transfer books of the Corporation; and (f) in
general perform such other duties as from time to time may be assigned by the
Chief Executive Officer, the President or by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and Board of Directors, at the
regular meetings of the Board of Directors or whenever it may so require, an
account of all his transactions as Treasurer and of the financial condition of
the Corporation.
If required by the Board of Directors, he shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, all books, papers, vouchers, moneys and other
property of whatever kind in his possession or under his control belonging to
the Corporation.
Section 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
----------------------------------------------
assistant secretaries and assistant treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or Treasurer, respectively,
or by the President or the Board of Directors. The assistant treasurers shall,
if required by the Board of Directors, give bonds for the faithful performance
of their duties in such sums and with such surety or sureties as shall be
satisfactory to the Board of Directors.
Section 12. SALARIES. The salaries of the officers shall be fixed
--------
from time to time by the Board of Directors and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director.
13
<PAGE>
ARTICLE VI
CONTRACTS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any
---------
officer or agent to enter into any contract or to execute and deliver any
instrument in the name of and on behalf of the Corporation and such authority
may be general or confined to specific instances. Any agreement, deed,
mortgage, lease or other document executed by one or more of the directors or by
an authorized person shall be valid and binding upon the Board of Directors and
upon the Corporation when authorized or ratified by action of the Board of
Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for
-----------------
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by the Board of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may designate.
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Certificates representing shares of stock
------------
shall set forth thereon the statements prescribed by Sections 2-207 and 2-211 of
the MGCL and by any other applicable provision of law and the statements
prescribed in Article VII of the Charter of the Corporation. Each certificate
shall be signed by the Chief Executive Officer, the President or a Vice
President and countersigned by the Secretary or an assistant secretary or the
Treasurer or an assistant treasurer and may be sealed with the seal, if any, of
the Corporation. The signatures of such officers may be either manual or
facsimile signatures. Certificates shall be consecutively numbered; and if the
Corporation shall, from time to time, issue several classes of stock, each class
may have its own number series. A certificate is valid and may be issued
whether or not an officer who signed it is still an officer when it is issued.
No certificate representing shares of stock shall be issued for any share of
stock until such share is fully paid, except as otherwise authorized by the
provisions of Section 2-210 of the MGCL.
Section 2. TRANSFERS. Upon compliance with the provisions
---------
restricting the transferability of shares of stock contained in the Charter,
these Bylaws and the MGCL, if any, transfers of shares of stock of the
Corporation shall be made only on the stock transfer books of the Corporation by
the record holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation or with a
transfer agent or a registrar, if any, and on surrender of the certificate or
certificates for such shares of stock properly endorsed and the payment of all
taxes due thereon, if any.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other
14
<PAGE>
claim to or interest in such share on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of the State of Maryland.
Section 3. LOST CERTIFICATE. The Board of Directors (or any officer
----------------
designated by it) may direct a new certificate to be issued in place of any
certificate previously issued by the Corporation alleged to have been lost,
stolen or destroyed upon the making of an affidavit of that fact by the person
claiming the certificate to be lost, stolen or destroyed. When authorizing the
issuance of a new certificate, the Board of Directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or his legal representative to advertise
the same in such manner as they shall require and/or to give bond, with
sufficient surety, to the Corporation to indemnify it against any loss or claim
which may arise as a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The
--------------------------------------------------
Board of Directors may set, in advance, a record date for the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders, or stockholders entitled to receive payment of any dividend or the
allotment of any other rights, or in order to make a determination of
stockholders for any other proper purpose. Such date, in any case, shall not be
prior to the close of business on the day the record date is fixed and shall be
not more than 90 days and, in the case of a meeting of stockholders, not less
than ten days, before the date on which the meeting or particular action
requiring such determination of stockholders is to be held or taken.
In lieu of fixing a record date, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not longer
than 20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days before the date
of such meeting.
If no record date is fixed and the stock transfer books are not closed
for the determination of stockholders, (a) the record date for the determination
of stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day on which the notice of meeting is
mailed or the 30th day before the meeting, whichever is the closer date to the
meeting; and (b) the record date for the determination of stockholders entitled
to receive payment of a dividend or an allotment of any other rights shall be
the close of business on the day on which the resolution of the directors,
declaring the dividend or allotment of rights, is adopted, but any such payment
of a dividend or allotment of rights shall not be made more than sixty days
after the date on which the resolution is adopted; and a meeting of stockholders
convened on the date for which it was called may be adjourned from time to time
without further notice to a date not more than one hundred and twenty days after
the original record date.
When a determination of stockholders entitled to vote at any meeting
of stockholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, except where the determination has been
made through the closing of the transfer books and the stated period of closing
has expired.
Section 5. STOCK LEDGER. The Corporation shall maintain at its
------------
principal office or at the office of its counsel, accountants or transfer agent,
an original or duplicate stock ledger
15
<PAGE>
containing the name and address of each stockholder and the number of shares of
each class held by each stockholder. Such stock ledger may be in written form or
any other form capable of being converted into written form within a reasonable
time for visual inspection.
Section 6. FRACTIONAL SHARE INTERESTS OR SCRIP. The Corporation may,
-----------------------------------
but shall not be obliged to, issue fractional shares of stock, eliminate a
fractional interest by rounding off to a full share of stock, arrange for the
disposition of a fractional interest by the person entitled to it, pay cash for
the fair value of a fractional share of stock determined as of the time when the
person entitled to receive it is determined, or issue scrip or other evidence of
ownership, and which shall entitle its holder to exchange such scrip or other
evidence of ownership aggregating a full share for a certificate which
represents the share, but such scrip or other evidence of ownership shall not,
unless otherwise provided, entitle the holder to exercise any voting right, or
to receive dividends thereon or to participate in any of the assets of the
Corporation in the event of liquidation. The Board of Directors may impose any
reasonable condition on the issuance of scrip or other evidence of ownership,
and may cause such scrip or evidence of ownership to be issued subject to the
condition that it shall become void if not exchanged for a certificate
representing a full share of stock before a specified date or subject to the
condition that the shares for which such scrip or evidence of ownership is
exchangeable may be sold by the Corporation and the proceeds thereof distributed
to the holders of such scrip or evidence of ownership, or subject to a provision
for forfeiture of such proceeds to the Corporation if not claimed within a
period of not less than three years from the date the scrip or other evidence of
ownership was originally issued.
ARTICLE VIII
FISCAL YEAR
The Board of Directors shall have the power, from time to time, to fix
the fiscal year of the Corporation by a duly adopted resolution.
ARTICLE IX
DIVIDENDS
Section 1. DECLARATION. Dividends upon the stock of the Corporation
-----------
may be declared by the Board of Directors, subject to the provisions of the MGCL
and the Charter of the Corporation. Dividends may be paid in cash, property or
stock of the Corporation, subject to the provisions of law and the Charter.
Section 2. CONTINGENCIES. Before payment of any dividends, there may
-------------
be set aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors may from time to time, in its absolute
discretion, think proper as a reserve fund for contingencies, for equalizing
dividends, for repairing or maintaining any property of the Corporation or for
such other purpose as the Board of Directors shall determine to be in the best
interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
16
<PAGE>
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Charter of the Corporation, the Board
of Directors may from time to time adopt, amend, revise or terminate any policy
or policies with respect to investments by the Corporation as it shall deem
appropriate in its sole discretion.
ARTICLE XI
CORPORATE SEAL
The Board of Directors may authorize the adoption of a seal by the
Corporation. The seal shall have inscribed thereon the name of the Corporation
and the year of its organization and shall contain such other words and/or
figures as the Board of Directors shall determine or the law require. The Board
of Directors may authorize one or more duplicate seals and provide for the
custody thereof.
ARTICLE XII
INDEMNIFICATION
To the maximum extent permitted by Maryland law in effect from time to
time, the Corporation, without requiring a preliminary determination of the
ultimate entitlement to indemnification, shall indemnify and shall pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(i) any individual who is a present or former director or officer of the
Corporation or (ii) any individual who, while a director of the Corporation and
at the request of the Corporation, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of such corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise from and against
any claims made against such individual by reason of service in the capacities
described in clauses (i) and (ii). The Corporation may, with the approval of
its Board of Directors, provide such indemnification and advancement of expenses
to a person who served as a predecessor of the Corporation in any of the
capacities described in (i) or (ii) above and to any employee or agent of the
Corporation or a predecessor of the Corporation.
Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or Charter of the Corporation
inconsistent with this Article, shall apply to or affect in any respect the
applicability of the preceding paragraph with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Charter of
the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated herein, shall be
17
<PAGE>
deemed equivalent to the giving of such notice. Neither the business to be
transacted at nor the purpose of any meeting need be set forth in the waiver of
notice, unless specifically required by statute. The attendance of any person at
any meeting shall constitute a waiver of notice of such meeting, except where
such person attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Board of Directors shall have the exclusive power to adopt, alter
or repeal any provision of these Bylaws and to make new Bylaws.
18
<PAGE>
EXHIBIT 4.5
<TABLE>
<CAPTION>
<S> <C>
COMMON STOCK COMMON STOCK
PAR VALUE $.01 PAR VALUE $.01
[Center Trust Logo]
THIS CERTIFICATE IS TRANSFERABLE IN CUSIP 151845 10 4
THE CITIES OF BOSTON OR NEW YORK SEE REVERSE FOR CERTAIN DEFINITION
CENTER TRUST, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
This certifies that
is the record holder of
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF
Center Trust, Inc. transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this
Certificate properly presented. This Certificate and the shares represented hereby and issued shall be held subject to all of the
provisions of the Charter of the Corporation and the Bylaws of the Corporation, and any amendments thereto. This Certificate is not
valid until countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seat of the Corporation and the facsimile signatures of the duly authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED:
BankBoston, N.A.
TRANSFER AGENT AND REGISTRAR
BY /s/ L.E. Seeley-Boger /s/ Steven Jaffe /s/ Edward D. Fox
AUTHORIZED SIGNATURE CORPORATE SECRETARY CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
<PAGE>
The Corporation is authorized to issue three classes of capital stock which
are designated as Common Stock, Preferred Stock and Excess Stock. The
Corporation will furnish to any stockholder on request and without charge a full
statement of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of the stock of each class which the
Corporation is authorized to issue, or the differences in the relative, rights
and preferences between the shares of each series of a class in series which the
Corporation is authorized to issue, to the extent they have been set, and of the
authority of the Board of Directors to set the relative rights and preferences
of subsequent series of classes. Such request may be made to the Secretary of
the Corporation or to its transfer agent.
The shares represented by this certificate are subject to restrictions on
ownership and transfer for the purpose of the Corporation's maintenance of its
status as a "real estate investment trust" under the Internal Revenue Code of
1986, as amended. Except as otherwise provided pursuant to the charter of the
Corporation, no Person may Beneficially Own or Constructively Own shares of
Common Stock in excess of 9.8% (measured in value or in number of shares,
whichever is more restrictive) of the outstanding Common Stock of the
Corporation, with certain further restrictions and exceptions set forth in the
Corporation's charter. Any Person who attempts or proposes to Beneficially Own
or Constructively Own shares of Common Stock in excess of the above limitation
must notify the Corporation in writing at least 15 days prior to such proposed
or attempted Transfer or ownership. Transfers of ownership of shares in
violation of the Corporation. Excess Stock has limited economic rights, no
voting rights and the Corporation has an option to acquire Excess Stock under
certain circumstances. The Corporation will furnish to the holder hereof upon
request and without charge a complete written statement of the terms and
conditions of the Excess Stock. In addition, the Corporation may redeem shares
upon the terms and conditions specified by the Board of Directors in its sole
discretion if the Board of Directors determines that ownership or a Transfer or
other event may violate the restrictions described above. In addition, upon the
occurrence of certain events, attempted Transfers in violation of the
restrictions described above may be void ab initio. All capitalized terms in
this legend have the meanings defined in the charger of the Corporation, a copy
of which, including the restrictions on transfer, will be sent without charge to
each stockholder who so requests.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -........Custodian................
TEN ENT -- as tenants by the entireties (Cust) (Minor)
TEN ENT -- as joint tenants with right of under Uniform Gift to Minors
survivorship and not as tenants Act..............................
in common (State)
UNIF TRF MIN ACT - .......Custodian (drill age.....)
(Cust)
...........under Uniform Transfer
(Minor)
to Minors Act....................
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ____________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OR ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
- -------------------------------------------------------------------------
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
--------------------------
X
------------------------------------
X
------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By
-----------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15
<PAGE>
Exhibit 4.10
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
BARTMAN, A CALIFORNIA LIMITED PARTNERSHIP
dated as of
March 24, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 24,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Bartfam, A California limited partnership (the "Issuee").
Capitalized terms not otherwise defined herein have the meaning ascribed to them
in the Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Bartfam, A California Limited Partnership
11777 San Vicente Boulevard, #600
Los Angeles, California 90049
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Steven Jaffe
-------------------------
Name: Steven Jaffe
Title: Senior Vice President
BARTFAM, A CALIFORNIA LIMITED PARTNERSHIP
By: /s/ John W. Bartman
-------------------------------
Name: John W. Bartman
Title: General Partner
By: /s/ Thomas F. Bartman
--------------------------------
Name: Thomas F. Bartman
Title: General Partner
-12-
<PAGE>
Exhibit 4.11
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
CECILE C. BARTMAN, TRUSTEE UNDER THE WILL OF BERNARD CITRON, DECEASED
dated as of
March 24, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 24,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Cecile C. Bartman, Trustee Under the Will of Bernard Citron,
Deceased (the "Issuee"). Capitalized terms not otherwise defined herein have
the meaning ascribed to them in the Contribution Agreement (as herein after
defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Cecile C. Bartman, Trustee under the Will of Bernard Citron, Deceased
11777 San Vicente Boulevard, #600
Los Angeles, California 90049
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Stuart Gulland
-------------------------
Name: Stuart Gulland
Title: SVP, CFO
/s/ Cecile C. Bartman, Trustee
---------------------------------
Cecile C. Bartman, Trustee
Under the Will of Bernard
Citron, Deceased
-12-
<PAGE>
Exhibit 4.12
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
CJJ LIMITED PARTNERSHIP
dated as of
March 24, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 24,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and CJJ Limited Partnership, a California limited partnership
(the "Issuee"). Capitalized terms not otherwise defined herein have the meaning
ascribed to them in the Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
CJJ Limited Partnership
11777 San Vicente Boulevard, #600
Los Angeles, California 90049
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Steven Jaffe
-------------------------
Name: Steven Jaffe
Title: Senior Vice President
CJJ LIMITED PARTNERSHIP
By: /s/ John W. Bartman
-------------------------------
Name: John W. Bartman
Title: General Partner
-12-
<PAGE>
Exhibit 4.13
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
THE HARRY J.L. FRANK, JR. AND
MARGARET S. FRANK FAMILY TRUST
U/A 5/9/91
dated as of
March 24, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 24,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and The Harry J.L. Frank, Jr. and Margaret S. Frank Family Trust
U/A 5/9/91 (the "Issuee"). Capitalized terms not otherwise defined herein have
the meaning ascribed to them in the Contribution Agreement (as herein after
defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
The Harry J.L. Frank, Jr. and Margaret S. Frank
Family Trust U/A 5/9/91
11777 San Vicente Boulevard, #600
Los Angeles, California 90049
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Stuart Gulland
-------------------------
Name: Stuart Gulland
Title: SVP, CFO
THE HARRY J.L. FRANK, JR. AND MARGARET S. FRANK
FAMILY TRUST U/A 5/9/91
By: /s/ James H. Frank
-------------------------------
Name: James H. Frank
Title: Trustee
-12-
<PAGE>
Exhibit 4.14
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
HI-NC
dated as of
March 24, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 24,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and HI-NC, a California partnership (the "Issuee"). Capitalized
terms not otherwise defined herein have the meaning ascribed to them in the
Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
HI-NC
13 Corporate Plaza, #150
Newport Beach, California 92660
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Stuart Gulland
-------------------------
Name: Stuart Gulland
Title: SVP, CFO
HI-NC, a CALIFORNIA GENERAL PARTNERSHIP
By: Hughes Investments,
a California general partnership,
general partner
By: WWH Investments, Inc., a
California corporation,
general partner
By: /s/ William W. Hughes, Jr.
-------------------------------
William W. Hughes, Jr.
Its: President
-12-
<PAGE>
Exhibit 4.15
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
BARTFAM, A CALIFORNIA LIMITED PARTNERSHIP
dated as of
March 24, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 24,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Bartfam, A California Limited Partnership (the "Issuee").
Capitalized terms not otherwise defined herein have the meaning ascribed to them
in the Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Bartfam, A California Limited Partnership
11777 San Vicente Boulevard, #600
Los Angeles, California 90049
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Stuart Gulland
-------------------------
Name: Stuart Gulland
Title: SVP, CFO
BARTFAM, A CALIFORNIA LIMITED PARTNERSHIP
By: /s/ John W. Bartman
-------------------------------
Name: John W. Bartman
Title: General Partner
By: /s/ Thomas F. Bartman
-------------------------------
Name: Thomas F. Bartman
Title: General Partner
-12-
<PAGE>
Exhibit 4.16
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
CECILE C. BARTMAN
dated as of
March 24, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 24,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Cecile C. Bartman, an individual (the "Issuee"). Capitalized
terms not otherwise defined herein have the meaning ascribed to them in the
Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Cecile C. Bartman
11777 San Vicente Boulevard, #600
Los Angeles, California 90049
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Steven Jaffe
-------------------------
Name: Steven Jaffe
Title: SVP
/s/ Cecile C. Bartman
- ----------------------------
Cecile C. Bartman
-12-
<PAGE>
Exhibit 4.17
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
CJJ LIMITED PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP
dated as of
March 24, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 24,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and CJJ Limited Partnership, a California limited partnership
(the "Issuee"). Capitalized terms not otherwise defined herein have the meaning
ascribed to them in the Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
CJJ Limited Partnership
11777 San Vicente Boulevard, #600
Los Angeles, California 90049
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Stuart Gulland
-------------------------
Name: Stuart Gulland
Title: SVP, CFO
CJJ LIMITED PARTNERSHIP, a California Limited Partnership
By: /s/ John W. Bartman
-------------------------------
Name: John W. Bartman
Title: General Partner
-12-
<PAGE>
Exhibit 4.18
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
HUGHES INVESTMENTS
dated as of
March 26, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 26,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Hughes Investments, a California general partnership (the
"Issuee"). Capitalized terms not otherwise defined herein have the meaning
ascribed to them in the Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Hughes Investments
13 Corporate Plaza, #150
Newport Beach, California 92660
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Steven Jaffe
-------------------------
Name: Steven Jaffe
Title: SVP
By: Hughes Investments, a California general
partnership,
By: WWH Investments, Inc., a California
corporation, general partner
By: /s/ William W. Hughes, Jr.
----------------------------------
William W. Hughes, Jr.
Its: President
-12-
<PAGE>
Exhibit 4.19
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
HUGHES MILLIKEN ASSOCIATES
dated as of
March 26, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 26,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Hughes Milliken Associates, a California general
partnership(the "Issuee"). Capitalized terms not otherwise defined herein have
the meaning ascribed to them in the Contribution Agreement (as herein after
defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Hughes Milliken Associates
13 Corporate Plaza, #150
Newport Beach, California 92660
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Steven Jaffe
-------------------------
Name: Steven Jaffe
Title: SVP
HUGHES MILLIKEN ASSOCIATES,
a California general partnership
By: HI-Victoria, a California general partnership,
general partner
By: Hughes Investments,
a California general partnership,
general partner
By: WWW Investments, Inc., a
California corporation,
general partner
By: /s/ William W. Hughes, Jr.
--------------------------
William W. Hughes, Jr.
Its: President
-12-
<PAGE>
Exhibit 4.20
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
SPEER FAMILY PARTNERSHIP
dated as of
March 25, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 25,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Speer Family Partnership, a California general partnership
(the "Issuee"). Capitalized terms not otherwise defined herein have the meaning
ascribed to them in the Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Speer Family Partnership
7777 Alvarado Road, Suite 621
La Mesa, California 91941
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.
By: /s/ Steven Jaffe
-------------------------
Name: Steven Jaffe
Title: SVP
SPEER FAMILY PARTNERSHIP
a California general partnership
By: /s/ Phillip H. Banks
--------------------
Phillip H. Banks, as Trustee of
Trusts A and D of the W. Arnet
Speer Testamentary Trust
By: /s/ Phillip H. Banks
------------------------------
Phillip H. Banks, as Trustee
of the William A. Speer,
Jr. Irrevocable Trust
U/A/D fbo Linda Speer
By: /s/ Phillip H. Banks
------------------------------------
Phillip H. Banks, as Trustee of the
William A. Speer, Jr.
Irrevocable Trust U/A/D
10/18/88 fbo Rebecca
Speer Troncale
By: /s/ Phillip H. Banks
--------------------
Phillip H. Banks, as
Successor Trustee of the
Doreann Speer Gibson Trust
U/A/D 10/13/89
By: /s/ Phillip H. Banks
--------------------
Phillip H. Banks, as Trustee of the
Rebecca Jean Speer [Troncale] Trust
U/A/D 11/9/94
-12-
<PAGE>
Exhibit 4.21
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
HI-LOMA
dated as of
March 26, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 26,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Hi-Loma, a California general partnership (the "Issuee").
Capitalized terms not otherwise defined herein have the meaning ascribed to them
in the Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Hi-Loma
13 Corporate Plaza, #150
Newport Beach, California 92660
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Steven Jaffe
-------------------------
Name: Steven Jaffe
Title: SVP
HI-LOMA, a California general partnership
By: WWH Investments, Inc., a California corporation, general partner
By: /s/ William W. Hughes, Jr.
------------------------------
William W. Hughes, Jr.
Its: President
-12-
<PAGE>
Exhibit 4.22
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
MYRTLE GRONSKE
dated as of
May 1, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of May 1,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Myrtle Gronske, an individual (the "Issuee"). Capitalized
terms not otherwise defined herein have the meaning ascribed to them in the
Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Myrtle Gronske
700 South Linwood Avenue
Visalia, California 93277
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Stuart J.S. Gulland
-------------------------
Name: Stuart J.S. Gulland
Title: Senior VP and CFO
/s/ Myrtle Gronske
- ----------------------------
Myrtle Gronske
-12-
<PAGE>
Exhibit 4.23
------------
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
VISALIA MKP, INC.
dated as of
May 1, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 1
(f) "Commission"............................................... 2
(g) "Contribution Agreement.................................... 2
(h) "Exchange Act"............................................. 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP Units"................................................. 2
(m) "Registration Expenses".................................... 2
(n) "Securities Act"........................................... 2
(o) "Shelf Registration"....................................... 2
Section 2. Shelf Registration..............................................2
------------------
(a) Obligation to File......................................... 2
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 3
(e) Expenses................................................... 3
Section 3. Registration Procedures.................................... 3
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 6
---------------
(a) Indemnification by the Company............................. 6
(b) Indemnification by the Issuee.............................. 7
(c) Notices of Claims, etc..................................... 7
(d) Other Indemnification...................................... 7
(e) Indemnification Payments................................... 7
(f) Contribution............................................... 8
Section 6. Covenants Relating to Rule 144............................. 8
------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7. Miscellaneous.............................................. 8
-------------
(a) Counterparts............................................... 8
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 9
(e) Successors and Assigns..................................... 10
(f) Headings................................................... 10
(g) Amendments and Waivers..................................... 10
(h) Interpretation; Absence of Presumption..................... 10
(i) Severability............................................... 10
</TABLE>
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of May 1,
1998, by and among Alexander Haagen Properties, Inc., a Maryland corporation
(the "Company") and Visalia MKP, Inc. a California corporation (the "Issuee").
Capitalized terms not otherwise defined herein have the meaning ascribed to them
in the Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
dated as of March 23, 1998 (the "Contribution Agreement"), that provides for the
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
of this agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
<PAGE>
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in Section
2(a).
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common
-2-
<PAGE>
Stock registered thereunder has been completed. During the period during
which the Shelf Registration is effective, the Company shall supplement or
make amendments to the Shelf Registration, if required by the Securities
Act and shall use its reasonable best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after
filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2, the Company shall use
its reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration
-3-
<PAGE>
and use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
-4-
<PAGE>
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and if any Issuee OP Units have not been
exchanged for Company Common Stock, promptly (but in any event, within five
business days) prepare and furnish to the Issuee a reasonable number of
copies of a supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other
document filed or prepared pursuant to this Agreement, the Issuee shall furnish
in writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company
-5-
<PAGE>
Common Stock to be sold, the intended method of distribution of such Company
Common Stock, and such other information reasonably requested by the Company.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
respresentatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with
-6-
<PAGE>
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of the Issuee and shall survive the transfer of such securities
by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
------------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
-7-
<PAGE>
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and
-8-
<PAGE>
shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
Visalia MKP, Inc.
13 Corporate Plaza, #150
Newport Beach, California 92660
Telecopy Number:
-9-
<PAGE>
with a copy to:
----------------
Bryan Cave LLP
18881 Von Karman, Suite 1500
Irvine, CA 92612-1582
Attention: Will Layman
Telecopy Number: (714)223-7100
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
-10-
<PAGE>
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[signatures appear on the following page]
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
By: /s/ Stuart J. S. Gulland
-------------------------
Name: Stuart J. S. Gulland
Title: Senior VP and CFO
VISALIA MKP, INC., a California corporation
By: /s/ William W. Hughes, Jr.
--------------------------
William W. Hughes, Jr.
Its: President
-12-
<PAGE>
Exhibit 4.24
------------
______________________________________
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
(as "Company")
and
ALEXANDER HAAGEN PROPERTIES OPERATING PARTNERSHIP
(as "OP")
and
SOUTHERN PALMS ASSOCIATES;
JOHN L. HOLMES;
HOLMES DEVELOPMENT GROUP, INC.,
an Arizona corporation
(collectively as "Issuee")
dated as of
April 30, 1998
______________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................ 1
-----------
(a) "Agreement"................................................ 1
(b) "Commencement Date"........................................ 1
(c) "Company".................................................. 1
(d) "Company Common Stock"..................................... 1
(e) "Company Registration Expenses"............................ 2
(f) "Commission"............................................... 2
(g) "Exchange Act"............................................. 2
(h) "Pavilions"................................................ 2
(i) "Issuee"................................................... 2
(j) "Issuee OP Units".......................................... 2
(k) "NASD"..................................................... 2
(l) "OP"....................................................... 2
(m) "OP Units"................................................. 2
(n) "Registration Expenses".................................... 2
(o) "Securities Act"........................................... 2
(p) "Shelf Registration"....................................... 2
(q) "Transfer Agreement"....................................... 3
Section 2. Shelf Registration......................................... 3
------------------
(a) Obligation to File......................................... 3
(b) Black-Out Periods of the Issuee............................ 3
(c) Number of Shelf Registrations.............................. 3
(d) Notice..................................................... 4
(e) Expenses................................................... 4
Section 3. Registration Procedures.................................... 4
-----------------------
Section 4. Preparation; Reasonable Investigation...................... 6
-------------------------------------
Section 5. Indemnification............................................ 7
---------------
(a) Indemnification by the Company............................. 7
(b) Indemnification by the Issuee.............................. 8
(c) Notices of Claims, etc..................................... 8
(d) Other Indemnification...................................... 8
(e) Indemnification Payments................................... 8
(f) Transfer................................................... 8
Section 6. Covenants Relating to Rule 144............................. 9
------------------------------
Section 7. Miscellaneous.............................................. 9
-------------
(a) Counterparts............................................... 9
(b) Governing Law.............................................. 9
(c) Entire Agreement........................................... 9
(d) Notices.................................................... 10
(e) Successors and Assigns..................................... 11
(f) Headings................................................... 11
(g) Amendments and Waivers..................................... 12
(h) Interpretation; Absence of Presumption..................... 12
(i) Multiple Parties........................................... 12
(j) Severability............................................... 12
</TABLE>
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of April
30, 1998, by and among (i) Alexander Haagen Properties, Inc., a Maryland
corporation (the "Company"), (ii) Alexander Haagen Properties Operating
Partnership, a California limited partnership (the "OP" and together with the
Company, "Haagen"), and (iii) Southern Palms Associates, an Arizona general
partnership, John L. Holmes, and Holmes Development Group, Inc. an Arizona
corporation (collectively the "Issuee"). Capitalized terms not otherwise
defined herein have the meaning ascribed to them in the Transfer Agreement (as
herein after defined).
WHEREAS, the OP, and Southern Palms Associates, a Arizona general
partnership ("SPA") have entered into an Agreement of Transfer of Realty and
Assets, dated as of January 15, 1998 (the "Transfer Agreement"), that provides
for the transfer by the SPA to the OP and acceptance by OP of certain Property;
WHEREAS, Company is the general partner of OP and deems it to be in
Company's best economic interest for the OP to enter into this Agreement and the
Transfer Agreement;
WHEREAS, each individual and entity comprising Issuee is a constituent
partner of SPA and/or of SPA constituent partners;
WHEREAS, pursuant to the Transfer Agreement, each Issuee will receive
from OP as part of the consideration for the Property certain OP Units;
WHEREAS, in order to induce the SPA to enter into the Transfer
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the following meanings:
(a) "Agreement" shall have the meaning set forth in the first
paragraph hereof.
(b) "Commencement Date" shall mean Closing Date as defined in the
Transfer Agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
(e) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection
<PAGE>
with the Company's performance of or compliance with this Agreement,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, and any
premiums and other costs of policies of insurance obtained by the Company
against liabilities arising out of the sale of any securities.
(f) "Commission" shall mean the Securities and Exchange Commission,
and any successor thereto.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(h) "SPA" shall have the meaning set forth in the second paragraph
hereof.
(i) "Issuee OP Units" shall mean the OP Units received by the Issuees
pursuant to the Transfer Agreement.
(j) "Issuee" shall have the meaning set forth in the first paragraph
hereof.
(k) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(l) "OP" shall have the meaning set forth in the first paragraph
hereof.
(m) "OP Units" shall mean the units of limited partnership interest
in Alexander Haagen Properties Operating Partnership, L.P., a California limited
partnership.
(n) "Registration Expenses" shall mean all registration, filing and
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(o) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor thereto, and the rules and regulations
thereunder.
(p) "Shelf Registration" shall have the meaning set forth in Section
2(a).
(q) "Transfer Agreement" shall have the meaning set forth in the
second paragraph hereof.
-2-
<PAGE>
Section 2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 30 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
Registration"). The Company shall use its reasonable best efforts to cause
the Shelf Registration to become effective within one year of the
Commencement Date, and, upon the request of the Issuee, keep the Shelf
Registration continuously effective until the exchange of all of the Issuee
OP Units for Company Common Stock registered thereunder has been completed.
During the period during which the Shelf Registration is effective, the
Company shall supplement or make amendments to the Shelf Registration, if
required by the Securities Act, and shall use its reasonable best efforts
to have such supplements and amendments declared effective, if required, as
soon as practicable after filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to a shelf registration statement which was in
existence prior to the Commencement Date, in either case, pertaining to an
underwritten public offering of equity securities of the Company for the
account of the Company, and ending on the date 75 days following the
effective date of such registration statement or the date of filing of the
final prospectus supplement, and (ii) the Company shall be entitled to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof (but not for a period exceeding an
aggregate of 75 days in any calendar year) if the Company determines, in
its good faith judgment, that such exchange or continued effectiveness
would interfere with any material financing, acquisition, disposition,
corporate reorganization or other material transaction involving the
Company or any of its subsidiaries or public disclosure thereof would be
required prior to the time such disclosure might otherwise be required, or
when the Company is in possession of material information that it deems
advisable not to disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
-3-
<PAGE>
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
Section 3. Registration Procedures. In connection with the filing
-----------------------
of any registration statement as provided in Section 2 and the exchange of
Issuee OP Units for Company Common Stock, the Company shall use its reasonable
best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration and
use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee copies of all such documents proposed to be
filed, which documents will be subject to the review of such counsel before
any such filing is made, and the Company will comply with any reasonable
request made by such counsel to make changes in any information contained
in such documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued or to be
issued in exchange for Issuee OP Units under such other securities or blue
sky laws of such jurisdictions as the Issuee shall reasonably request, to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable the Issuee to consummate
the acquisition in such jurisdictions of the Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
-4-
<PAGE>
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement to the effect that the applicable
requirements of the Agreement, the Transfer Agreement and applicable
securities laws have been complied with in connection with the
exchange of Issuee OP Units for Company Common Stock, reasonably
satisfactory in form and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and at the request of the Issuee promptly
prepare and furnish to the Issuee a reasonable number of copies of a
supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act, having been furnished with a copy thereof at least five Business Days
prior to the filing thereof;
(i) provide a transfer agent and registrar for all Company Common
Stock
-5-
<PAGE>
covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on any securities exchange on which any of the Company Common
Stock is then listed.
The Issuee shall furnish in writing to the Company, upon the Company's written
request, such information regarding the Issuee (and any of its affiliates), the
Company Common Stock to be sold, the intended method of distribution of such
Company Common Stock, and such other information reasonably requested by the
Company. Such writing shall expressly state that it is being furnished to the
Company for use in the preparation of a registration statement, preliminary
prospectus, supplementary prospectus, final prospectus or amendment or
supplement thereto, as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
Section 4. Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of the Shelf Registration under the Securities
Act, the Company will give the Issuee and its counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers, its counsel and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the Issuee's
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
Section 5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee against any losses, claims, damages or liabilities, joint or
several, to which the Issuee may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection
-6-
<PAGE>
with investigating or defending any such loss, claim, liability, action or
proceedings; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with written information furnished to
the Company by the Issuee specifically stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Issuee and
shall survive the transfer of such securities by the Issuee.
(b) Indemnification by the Issuee. The Issuee, and each of them,
-----------------------------
will, and hereby does, indemnify and hold harmless (in the same manner and
to the same extent as set forth in paragraph (a) of this Section 5) the
Company, each director of the Company, each officer of the Company and each
other person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any untrue statement or alleged untrue
statement of a material fact in or omission or alleged omission to state a
material fact from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment
or supplement thereto, if such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by the Issuee
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
the Company or any such director, officer, or controlling person and shall
survive the transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation.
-7-
<PAGE>
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Transfer. If, for any reason, the foregoing indemnity is
--------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 6. Covenants Relating to Rule 144. The Company will file
------------------------------
in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request of the Issuee, deliver
to the Issuee a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock and the number of shares of Company Preferred Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company will, at its expense, forthwith upon the written request of the Issuee,
make available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
-8-
<PAGE>
Section 7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to each Issuee
shall be addressed to:
-9-
<PAGE>
c/o John Holmes
Holmes Development Group, Inc.
4520 East Camelback Road
Suite K-116
Phoenix, Arizona 85018-8301
Telecopy Number: (602) 840-4343
With a Copies to:
----------------
K. Layne Morrill
Morrill & Aronson
1 East Camelback Road
Suite 1100
Phoenix, Arizona 85012
Telecopier Number: (602) 263-2900
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a bona fide financial institution as security for
any bona fide indebtedness of any the Issuee and such financial institution
agrees to be bound by this Agreement, the pledgee of such Issuee OP Units
shall be considered an intended beneficiary hereof and may exercise all
rights of the Issuee hereunder, and (ii) any person included within the
definition of the term the Issuee shall be permitted to assign its rights
hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on
the part of such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision hereof
shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
-10-
<PAGE>
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(i) Multiple Parties. If more than one person or entity has signed
----------------
this Agreement as Issue, then all references in this Agreement to Issuee
shall mean each and all of the persons so signing, as applicable. The
liability of all persons and entities signing shall be joint and several
with all others similarly liable.
(j) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
"COMPANY"
ALEXANDER HAAGEN PROPERTIES, INC.,
a Maryland corporation
By: /s/ Steven M. Jaffe
-------------------------
Name: Steven M. Jaffe
-----------------------
Title: Senior Vice President
----------------------
"OP"
ALEXANDER HAAGEN PROPERTIES
OPERATING PARTNERSHIP, L.P.,
a California limited partnership
By: ALEXANDER HAAGEN PROPERTIES, INC.,
a Maryland corporation, General Partner
By: /s/ Steven M. Jaffe
-------------------------
Name: Steven M. Jaffe
-----------------------
Title: Senior Vice President
----------------------
"ISSUEE"
-11-
<PAGE>
SOUTHERN PALMS ASSOCIATES,
an Arizona general partnership
By:/s/ John L. Holmes
-------------------------------
John L. Holmes, General Partner
By: Holmes Development Group, Inc.,
an Arizona corporation, General Partner
By:/s/ John L. Holmes
-------------------------
John L. Holmes, President
JOHN L. HOLMES
/s/ John L. Holmes
- ------------------
HOLMES DEVELOPMENT GROUP, INC.,
an Arizona corporation
By: /s/ John L. Holmes
-------------------------
John L. Holmes, President
-12-
<PAGE>
Exhibit 4.25
------------
_____________________________
REGISTRATION RIGHTS AGREEMENT
by and among
ALEXANDER HAAGEN PROPERTIES, INC.
and
NORTH MOUNTAIN VILLAGE SHOPPING CENTER LIMITED PARTNERSHIP
dated as of
August 20, 1998
_____________________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Definitions................................................................. 1
"Agreement"............................................................ 1
"Commencement Date".................................................... 1
"Company".............................................................. 1
"Company Common Stock"................................................. 1
"Company Registration Expenses"........................................ 2
"Commission"........................................................... 2
"Contribution Agreement"............................................... 2
"Exchange Act"......................................................... 2
"Issuee OP Units"...................................................... 2
"NASD"................................................................. 2
"Registration Expenses"................................................ 2
"Securities Act"....................................................... 2
"Shelf Registration"................................................... 2
Shelf Registration.......................................................... 3
Obligation to File..................................................... 3
Black-Out Periods of the Issuee........................................ 3
Number of Shelf Registrations.......................................... 3
Notice................................................................. 3
Expenses............................................................... 4
Registration Procedures..................................................... 4
Preparation; Reasonable Investigation....................................... 6
Indemnification............................................................. 6
Indemnification by the Company......................................... 6
Indemnification by the Issuee.......................................... 7
Notices of Claims, etc................................................. 7
Other Indemnification.................................................. 8
Indemnification Payments............................................... 8
Contribution........................................................... 8
Covenants Relating to Rule 144.............................................. 8
Miscellaneous............................................................... 9
Counterparts........................................................... 9
Governing Law.......................................................... 9
Entire Agreement....................................................... 9
Notices................................................................ 9
Successors and Assigns................................................. 10
Headings............................................................... 10
Amendments and Waivers................................................. 10
Interpretation; Absence of Presumption................................. 11
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Severability......................................................... 11
</TABLE>
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of
---------
August 20, 1998, by and among Alexander Haagen Properties, Inc., a Maryland
corporation (the "Company") and North Mountain Village Shopping Center Limited
-------
Partnership, a California limited partnership, (the "Issuee"). Capitalized
------
terms not otherwise defined herein have the meaning ascribed to them in the
Contribution Agreement (as herein after defined).
WHEREAS, the Company, Alexander Haagen Properties Operating
Partnership, L.P., a California limited partnership (the "OP" and together with
--
the Company, "Haagen"), and Issuee have entered into a Contribution Agreement,
------
dated as of August 4, 1998 (the "Contribution Agreement"), that provides for the
----------------------
transfer by Issuee to the OP and the acceptance by the OP of certain Property
(as defined in the Contribution Agreement);
WHEREAS, Issuee will receive from the OP as part of the consideration
for the Property certain OP Units; and
WHEREAS, in order to induce the Issuee to enter into the Contribution
Agreement, the Company has agreed to provide the registration rights set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
1. Definitions. As used herein, the following terms shall have the
-----------
following meanings:
(a) "Agreement" shall have the meaning set forth in the first
---------
paragraph hereof.
(b) "Commencement Date" shall mean the first anniversary of the date
-----------------
of this Agreement.
(c) "Company" shall have the meaning set forth in the first paragraph
-------
hereof.
(d) "Company Common Stock" shall mean the common stock of the Company.
--------------------
<PAGE>
(e) "Company Registration Expenses" shall mean the fees and
-----------------------------
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with
this Agreement, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of any
securities.
(f) "Commission" shall mean the Securities and Exchange Commission,
----------
and any successor thereto.
(g) "Contribution Agreement" shall have the meaning set forth in the
----------------------
second paragraph hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, and any successor thereto, and the rules and regulations
thereunder.
(i) "Issuee" shall have the meaning set forth in the first paragraph
------
hereof.
(j) "Issuee OP Units" shall mean the OP Units received by the Issuee
---------------
pursuant to the Contribution Agreement.
(k) "NASD" shall mean the National Association of Securities Dealers,
----
Inc.
(l) "OP Units" shall mean the units of limited partnership interest in
--------
Alexander Haagen Properties Operating Partnership, L.P., a California
limited partnership.
(m) "Registration Expenses" shall mean all registration, filing and
---------------------
stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by
the Issuee, and transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by the Issuee against liabilities arising
out of the public offering of securities, including Company Registration
Expenses, but specifically excludes any fees and disbursements of
underwriters customarily paid by sellers of securities who are not the
issuers of such securities and all underwriting discounts and commissions.
(n) "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended, and any successor thereto, and the rules and regulations
thereunder.
(o) "Shelf Registration" shall have the meaning set forth in
------------------
Section 2(a).
2
<PAGE>
2. Shelf Registration
------------------
(a) Obligation to File. As soon as possible after the Commencement
------------------
Date, but in no event later than 60 days after the Commencement Date, the
Company will cause to be filed with the Commission a registration statement
under Rule 415 of the Securities Act for the exchange of all of the Issuee
OP Units then owned by Issuee for Company Common Stock (the "Shelf
-----
Registration"). The Company shall use its reasonable best efforts to cause
------------
the Shelf Registration to become effective, and keep the Shelf Registration
continuously effective until the exchange of all of the Issuee OP Units for
Company Common Stock registered thereunder has been completed. During the
period during which the Shelf Registration is effective, the Company shall
supplement or make amendments to the Shelf Registration, if required by the
Securities Act and shall use its reasonable best efforts to have such
supplements and amendments declared effective, if required, as soon as
practicable after filing.
(b) Black-Out Periods of the Issuee. Notwithstanding anything herein
-------------------------------
to the contrary, (i) the Company shall have the right from time to time to
require the Issuee not to exchange under the Shelf Registration or to
suspend the effectiveness thereof during the period starting with the date
30 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Issuee, of the proposed date
of filing of a registration statement or a preliminary prospectus
supplement relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 75 days
following the effective date of such registration statement or the date of
filing of the final prospectus supplement, and (ii) the Company shall be
entitled to require the Issuee not to exchange under the Shelf Registration
or to suspend the effectiveness thereof (but not for a period exceeding 75
days in any calendar year) if the Company determines, in its good faith
judgment, that such exchange or continued effectiveness would interfere
with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any
of its subsidiaries or public disclosure thereof would be required prior to
the time such disclosure might otherwise be required, or when the Company
is in possession of material information that it deems advisable not to
disclose in a registration statement.
(c) Number of Shelf Registrations. The Company shall be obligated to
-----------------------------
effect, under this Section 2, only one Shelf Registration. A Shelf
Registration shall not be deemed to have been effected if such registration
cannot be used by the Issuee for more than 60 days as a result of any stop
order, injunction or other order of the Commission or other Government
Authority for any reason other than an act or omission of the Issuee, and
all the Issuee OP Units registered thereunder are not exchanged.
(d) Notice. The Company shall give the Issuee prompt notice in the
------
event that the Company has suspended exchanges of Issuee OP Units under
Section 2(b).
3
<PAGE>
(e) Expenses. All Registration Expenses incurred in connection with
--------
the Shelf Registration shall be borne by the Company.
3. Registration Procedures. In connection with the filing of any
-----------------------
registration statement as provided in Section 2, the Company shall use its
reasonable best efforts to, as expeditiously as reasonably practicable:
(a) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration and
use its reasonable best efforts to cause such registration statement to
become effective, provided that before filing such registration statement
or any amendments or supplements thereto, the Company will furnish to the
counsel selected by the Issuee, at least five business days prior to the
filing thereof, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to the Issuee;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the exchange of all Issuee OP Units covered by such
registration statement until all of such securities have been exchanged for
Company Common Stock;
(c) furnish to the Issuee such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statements (including each
complete prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as the Issuee may reasonably request;
(d) register or qualify all Company Common Stock issued in exchange
for Issuee OP Units under such other securities or blue sky laws of such
jurisdictions as the Issuee shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Issuee to consummate the
acquisition in such jurisdictions of registered Company Common Stock to be
received by the Issuee in exchange for the Issuee OP Units, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
4
<PAGE>
(e) cause all Company Common Stock covered by such registration
statement to be registered with or approved by such other Government
Authority as may be reasonably necessary to enable the Issuee to consummate
the acquisition of such Company Common Stock to be received by the Issuee
in exchange for the Issuee OP Units;
(f) furnish to the Issuee a signed counterpart, addressed to the
Issuee, of
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement, reasonably satisfactory in form
and substance to the Issuee, and
(ii) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement, signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(g) immediately notify the Issuee at any time when the Company becomes
aware that a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and if any Issuee OP Units have not been exchanged
for Company Common Stock, promptly (but in any event, within five business
days) prepare and furnish to the Issuee a reasonable number of copies of a
supplement to or an amendment of such prospectus;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of at least 12 months, but not more than 18 months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Issuee shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act;
5
<PAGE>
(i) provide a transfer agent and registrar for all Company Common
Stock covered by such registration statement not later than the effective
date of such registration statement; and
(j) list all Company Common Stock covered by such registration
statement on each securities exchange on which any of the Company Common
Stock is then listed.
In connection with any registration statement, prospectus or other document
filed or prepared pursuant to this Agreement, the Issuee shall furnish in
writing to the Company such information regarding the Issuee (and any of its
affiliates), the Company Common Stock to be sold, the intended method of
distribution of such Company Common Stock, and such other information reasonably
requested by the Company. Such writing shall expressly state that it is being
furnished to the Company for use in the preparation of a registration statement,
preliminary prospectus, supplementary prospectus, final prospectus or amendment
or supplement thereto, as the case may be.
The Issuee agrees by acquisition of the Issuee OP Units that upon receipt
of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 3, the Issuee will forthwith
discontinue its exchange of Issuee OP Units pursuant to the registration
statement relating to such Issuee OP Units until the Issuee's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (g)
of this Section 3.
4. Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of the Shelf Registration under the Securities Act, the
Company will give the Issuee and its counsel the opportunity to participate in
the preparation of such registration statement, each prospectus included therein
or filed with the Commission, and each amendment thereof or supplement thereto,
and will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers, its
counsel and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of the Issuee's counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
5. Indemnification
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Company Common Stock under the Securities Act pursuant to this
Agreement, the Company will, and hereby does, indemnify and hold harmless
the Issuee and its affiliates, officers, directors, agents, partners and
representatives against any losses, claims, damages or liabilities, joint
or several, to which the Issuee may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement under which such Company Common Stock was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any
6
<PAGE>
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and the
Company will reimburse the Issuee for any reasonable legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with written information furnished to
the Company by the Issuee specifically stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Issuee and
shall survive the transfer of such securities by the Issuee.
(b) Indemnification by the Issuee. The Issuee will, and hereby does,
-----------------------------
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact in
or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Issuee specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Issuee.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying
7
<PAGE>
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to the indemnified
party for any legal or other expenses subsequently incurred by the latter
in connection with the defense thereof other than reasonable costs of
investigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 5 (with appropriate
modifications) shall be given by the Company and the Issuee with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of Governmental Authority other than the
Securities Act.
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Contribution. If, for any reason, the foregoing indemnity is
------------
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission relates
to information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. No indemnified
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
6. Covenants Relating to Rule 144. The Company will file in a timely
------------------------------
manner (taking into account any extensions granted by the Commission),
information, documents and reports in compliance with the Exchange Act and will,
at its expense, forthwith upon the request of the Issuee, deliver to the Issuee
a certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of shares of Company Common Stock and the
number of shares of Company Preferred Stock outstanding as shown by the most
recent report or statement published by the Company, and (e) whether the Company
has filed the reports required to be filed under the Exchange Act for a period
of at least 90 days prior to the
8
<PAGE>
date of such certificate and in addition has filed the most recent annual report
required to be filed thereunder. If at any time the Company is not required to
file reports in compliance with either Section 13 or Section 15(d) of the
Exchange Act, the Company will, at its expense, forthwith upon the written
request of the Issuee, make available adequate current public information with
respect to the Company within the meaning of paragraph (c)(2) of Rule 144 of the
General Rules and Regulations promulgated under the Securities Act.
7. Miscellaneous
-------------
(a) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 7, provided receipt of copies of such counterparts
is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
----------------
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred
to herein. This Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
(d) Notices. All notices and other communications hereunder shall be
-------
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices
to the Company shall be addressed to:
Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, CA 90266
Attention: Chief Executive Officer
Telecopy Number: (310) 546-8455
9
<PAGE>
with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Attention: John M. Newell
Telecopy Number: (213) 891-8763
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Issuee. Notices to the Issuee
shall be addressed to:
North Mountain Village Shopping Center Limited Partnership
c/o Western Investment Management Company
18770 Cox Avenue
Saratoga, California 95070
Attention: Charles L. Marsh Jr.
Telecopy Number: (408) 871-0360
with a copy to:
Western Brokerage, Inc.
45 Golden Currant Circle
Reno, Nevada 89511
Attention: Henry G. Winans Jr.
Telecopy Number: (702) 849-7662
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors.
Neither party shall be permitted to assign any of its rights hereunder to
any third party, except that if (i) the Issuee transfers or pledges any or
all Issuee OP Units to a third party in accordance with the requirements of
the OP's Agreement of Limited Partnership and such third party agrees to be
bound by the Contribution Agreement, the transferee or pledgee of the
Issuee OP Units shall be considered an intended beneficiary hereof and may
exercise all rights of the Issuee hereunder, and (ii) any person included
within the definition of the term the Issuee shall be permitted to assign
its rights hereunder to any other person included within such definition.
(f) Headings. The Section and other headings contained in this
--------
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings
of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be modified or
----------------------
amended except by an instrument or instruments in writing signed by the
party against
10
<PAGE>
whom enforcement of any such modification or amendment is sought. Either
party hereto may, only by an instrument in writing, waive compliance by the
other party hereto with any term or provision hereof on the part of such
other party hereto to be performed or complied with. The waiver by any
party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the purposes hereof,
--------------------------------------
(i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv)
the word "or" shall not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(i) Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
11
<PAGE>
IN WITNESS WHEREOF, this Registration Rights Agreement has been signed
by or on behalf of each of the parties hereto as of the day first above written.
ALEXANDER HAAGEN PROPERTIES, INC.,
a Maryland corporation
By: /s/ STUART J.S. GULLARD
-----------------------------------
Name: Stuart J.S. Gullard
Title: Senior Vice President
Chief Financial Officer
NORTH MOUNTAIN VILLAGE SHOPPING CENTER LIMITED
PARTNERSHIP,
a California limited partnership
By: WESTERN INVESTMENT PROPERTIES, III,
a California general partnership
Its: General Partner
By:/s/ HENRY G. WINANS JR.
--------------------------------
Henry G. Winans Jr.
General Partner
By:/s/ CHARLES L. MARSH JR.
--------------------------------
Charles L. Marsh Jr.
General Partner
12
<PAGE>
EXHIBIT 10.1
---------------------------------
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CT OPERATING PARTNERSHIP, L.P.
(A California Limited Partnership)
---------------------------------
Dated as of March 23, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. DEFINED TERMS.......................................................... 1
ARTICLE 2. ORGANIZATIONAL MATTERS................................................. 13
Section 2.1 Organization...................................................... 13
Section 2.2 Name.............................................................. 13
Section 2.3 Registered Office and Agent; Principal Office..................... 13
Section 2.4 Power of Attorney................................................. 13
Section 2.5 Term.............................................................. 15
ARTICLE 3. PURPOSE................................................................ 15
Section 3.1 Purpose and Business.............................................. 15
Section 3.2 Powers............................................................ 15
Section 3.3 Partnership Only for Purposes Specified........................... 15
Section 3.4 Representations and Warranties by the Parties..................... 16
ARTICLE 4. CAPITAL CONTRIBUTIONS.................................................. 17
Section 4.1 Capital Contributions of the Partners............................. 17
Section 4.2 Loans by Third Parties............................................ 18
Section 4.3 Additional Funding and Capital Contributions...................... 18
Section 4.4 Stock Incentive Plan.............................................. 20
ARTICLE 5. DISTRIBUTIONS.......................................................... 20
Section 5.1 Requirement and Characterization of Distributions................. 20
Section 5.2 Distributions in Kind............................................. 20
Section 5.3 Amounts Withheld.................................................. 21
Section 5.4 Distributions Upon Liquidation.................................... 21
ARTICLE 6. ALLOCATIONS............................................................ 21
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss....... 21
Section 6.2 General Allocations............................................... 21
Section 6.3 Additional Allocation Provisions.................................. 21
Section 6.4 Tax Allocations................................................... 23
Section 6.5 Allocations Regarding Transfers, Contributions and Distributions.. 24
ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS.................................. 24
Section 7.1 Management........................................................ 24
Section 7.2 Certificate of Limited Partnership................................ 27
Section 7.3 Restrictions on General Partner's Authority....................... 27
Section 7.4 Reimbursement of the General Partner.............................. 30
Section 7.5 Outside Activities of the General Partner......................... 30
Section 7.6 Contracts with Affiliates......................................... 31
Section 7.7 Indemnification................................................... 31
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 7.8 Liability of the General Partner................................. 33
Section 7.9 Other Matters Concerning the General Partner..................... 34
Section 7.10 Title to Partnership Assets...................................... 34
Section 7.11 Reliance by Third Parties........................................ 34
ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................ 35
Section 8.1 Limitation of Liability.......................................... 35
Section 8.2 Management of Business........................................... 35
Section 8.3 Outside Activities of Limited Partners........................... 35
Section 8.4 Return of Capital................................................ 36
Section 8.5 Rights of Limited Partners Relating to the Partnership........... 36
Section 8.6 Exchange Rights.................................................. 37
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS................................ 39
Section 9.1 Records and Accounting........................................... 39
Section 9.2 Fiscal Year...................................................... 39
Section 9.3 Reports.......................................................... 39
ARTICLE 10. TAX MATTERS........................................................... 39
Section 10.1 Preparation of Tax Returns....................................... 39
Section 10.2 Tax Elections.................................................... 40
Section 10.3 Tax Matters Partner.............................................. 40
Section 10.4 Organizational Expenses.......................................... 41
Section 10.5 Withholding...................................................... 41
ARTICLE 11. TRANSFERS AND WITHDRAWALS............................................. 42
Section 11.1 Transfer......................................................... 42
Section 11.2 Transfer of General Partner's Partnership Interest............... 42
Section 11.3 Limited Partners' Rights to Transfer............................. 44
Section 11.4 Substituted Limited Partners..................................... 45
Section 11.5 Assignees........................................................ 45
Section 11.6 General Provisions............................................... 46
ARTICLE 12. ADMISSION OF PARTNERS................................................. 47
Section 12.1 Admission of Successor General Partner........................... 47
Section 12.2 Admission of Additional Limited Partners......................... 47
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership.... 47
Section 12.4 Limit on Number of Partners...................................... 48
ARTICLE 13. DISSOLUTION AND LIQUIDATION........................................... 48
Section 13.1 Dissolution...................................................... 48
Section 13.2 Winding Up....................................................... 48
Section 13.3 Compliance with Timing Requirements of Regulations............... 49
Section 13.4 Deemed Distribution and Recontribution........................... 50
Section 13.5 Rights of Limited Partners....................................... 50
Section 13.6 Notice of Dissolution............................................ 50
Section 13.7 Cancellation of Certificate of Limited Partnership............... 51
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 13.8 Reasonable Time for Winding-Up................................. 51
ARTICLE 14. PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS....................... 51
Section 14.1 Procedures For Actions And Consents of Partners................ 51
ARTICLE 15. GENERAL PROVISIONS.................................................... 52
Section 15.1 Addresses and Notice........................................... 52
Section 15.2 Titles and Captions............................................ 52
Section 15.3 Pronouns and Plurals........................................... 52
Section 15.4 Further Action................................................. 52
Section 15.5 Binding Effect................................................. 52
Section 15.6 Creditors...................................................... 53
Section 15.7 Waiver......................................................... 53
Section 15.8 Counterparts................................................... 53
Section 15.9 Applicable Law................................................. 53
Section 15.10 Invalidity of Provisions....................................... 53
Section 15.11 Maximum Amount Paid or Credited to General Partner............. 53
Section 15.12 Partition...................................................... 54
Section 15.13 No Third-Party Rights Created Hereby........................... 54
EXHIBIT A PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS...................... A-1
EXHIBIT B NOTICE OF EXCHANGE..................................................... B-1
EXHIBIT C PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS...................... C-1
EXHIBIT D DEFINITION OF "CONSTRUCTIVELY OWNS".................................... D-1
</TABLE>
iii
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CT OPERATING PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
of March 23, 2000, amends and restates in its entirety that certain Agreement
of Limited Partnership of CT Operating Partnership, L.P. (formerly Alexander
Haagen Properties Operating Partnership, L.P.), a California limited
partnership, dated as of December 27, 1993, as amended by the First Amendment to
Agreement of Limited Partnership, dated as of January 1, 1994, the Second
Amendment to Agreement of Limited Partnership, dated as of March, 1995, the
Third Amendment to Agreement of Limited Partnership, dated February 27, 1997,
the Fourth Amendment to Agreement of Limited Partnership, dated effective as of
November 19, 1996, the Fifth Amendment to Agreement of Limited Partnership,
dated as of May 1, 1998, and the Sixth Amendment to Agreement of Limited
Partnership, dated as of August 20, 1998, entered into by and among Center
Trust, Inc. (formerly Alexander Haagen Properties, Inc.), a Maryland corporation
(the "Company"), as the General Partner and the Persons whose names are set
forth on Exhibit A as attached hereto, as the Limited Partners, together with
any other Persons who become Partners in the Partnership as provided herein.
ARTICLE 1.
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the California Revised Uniform Limited Partnership Act, as
---
it may be amended from time to time, and any successor to such statute.
"Additional Funds" has the meaning set forth in Section 4.3.A.
----------------
"Additional Limited Partner" means a Person admitted to the
--------------------------
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
--------------------------------
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments:
(i) decrease such deficit by any amounts which such Partner is
obligated to restore pursuant to this Agreement or is deemed to be
obligated to restore pursuant to Treasury Regulation Section 1.704-
1(b)(2)(ii)(c) or the penultimate sentence of each of Treasury Regulation
Sections 1.704-2(i)(5) and 1.704-2(g); and
(ii) increase such deficit by the items described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1
<PAGE>
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"Adjustment Date" has the meaning set forth in Section 4.3.F.
---------------
"Affiliate" means, with respect to any Person, any Person directly or
---------
indirectly controlling, controlled by or under common control with such Person,
and when used in Sections 7.12 and 11.3, such Person's Immediate Family.
"Agreed Value" means (i) in the case of any Contributed Property set
------------
forth in Exhibit A and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit A; (ii) in the case of
any Contributed Property not set forth in Exhibit A and as of the time of its
contribution to the Partnership, the fair market value of such property as
determined by the General Partner, reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed; and (iii) in the case of any property distributed to a Partner by
the Partnership, the fair market value of such property as determined by the
General Partner at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of the distribution as determined under
Section 752 of the Code and the regulations thereunder.
"Agreement" means this Agreement of Limited Partnership, as it may be
---------
amended, supplemented or restated from time to time.
"Appraisal" means with respect to any assets, the opinion of an
---------
independent third party experienced in the valuation of similar assets, selected
by the General Partner in good faith. Such opinion may be in the form of an
opinion by such independent third party that the value for such property or
asset as set by the General Partner is fair, from a financial point of view, to
the Partnership.
"Assignee" means a Person to whom one or more Partnership Units have
--------
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
--------------
calculation is being made, (i) the sum, without duplication, of:
(a) the Partnership's Net Income or Net Loss (as the case
may be) for such period,
(b) Depreciation and all other noncash charges deducted
in determining Net Income or Net Loss for such period,
(c) the amount of any reduction in reserves of the
Partnership referred to in clause (ii)(f) below (including, without
limitation, reductions resulting because the General Partner determines
such amounts are no longer necessary),
(d) the excess of the net proceeds from the sale,
exchange, disposition or refinancing of Partnership property for such
period over the gain (or loss,
2
<PAGE>
as the case may be) recognized from such sale, exchange, disposition or
refinancing during such period (excluding Terminating Capital
Transactions), and
(e) all other cash received by the Partnership for such
period that was not included in determining Net Income or Net Loss for such
period;
(ii) less the sum, without duplication, of:
(a) all principal debt payments made during such period
by the Partnership,
(b) capital expenditures made by the Partnership during
such period,
(c) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise described in
the immediately preceding clauses (ii)(a) or (b),
(d) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period,
(e) any amount included in determining Net Income or Net
Loss for such period that was not received by the Partnership during such
period, and
(f) the amount of any increase in reserves established
during such period which the General Partner determines are necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or include any disbursements made or
reserves established, after commencement of the dissolution, liquidation and
winding up of the Partnership.
"Board of Directors" means the Board of Directors of the General
------------------
Partner.
"Burbank Notes" means those certain notes issued to the Haagen-Burbank
-------------
Partnership by the Redevelopment Agency of the City of Burbank in connection
with the development of Media City Center.
"Business Day" means any day except a Saturday, Sunday or other day on
------------
which commercial banks in Los Angeles, California or New York, New York are
authorized or required by law to be closed.
"Capital Account" means, with respect to any Partner, the Capital
---------------
Account maintained for such Partner in accordance with the following provisions:
(a) To each Partner's Capital Account, there shall be added such
Partner's Capital Contributions, such Partner's share of Net Income and any
items in the nature of income or gain which are specially allocated pursuant to
Section 6.3 hereof, and the amount of any Partnership liabilities assumed by
such Partner or which are secured by any property distributed to such Partner.
3
<PAGE>
(b) From each Partner's Capital Account, there shall be subtracted the
amount of cash and the Gross Asset Value of any property distributed to such
Partner pursuant to any provision of this Agreement, such Partner's distributive
share of Net Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 6.3 hereof, and the amount of any
liabilities of such Partner assumed by the Partnership or which are secured by
any property contributed by such Partner to the Partnership.
(c) In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
interest.
(d) In determining the amount of any liability for purposes of
subsections (a) and (b) hereof, there shall be taken into account Code section
752(c) and any other applicable provisions of the Code and Regulations.
(e) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such modification provided that
it is not likely to have a material effect on the amounts distributable to any
Person pursuant to Article 13 of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.
"Capital Contribution" means, with respect to any Partner, the amount
--------------------
of money and the initial Gross Asset Value of any property (other than money)
contributed to the Partnership by such Partner.
"Certificate" means the Certificate of Limited Partnership of the
-----------
Partnership filed in the office of the California Secretary of State, as amended
from time to time in accordance with the terms hereof and the Act.
"Charter" means the Charter of the General Partner filed with the
-------
Maryland State Department of Assessments and Taxation on September 20, 1993, as
amended or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time or any successor statute thereto, as interpreted by the applicable
regulations thereunder. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Company" has the meaning set forth in the first paragraph of this
-------
Agreement.
4
<PAGE>
"Consent" means the consent to, approval of, or vote on a proposed
-------
action by a Partner given in accordance with Article 14 hereof.
"Consent of the Limited Partners" means the Consent of a Majority In
-------------------------------
Interest of the Limited Partners, which Consent shall be obtained prior to the
taking of any action for which it is required by this Agreement and may be given
or withheld by a Majority in Interest of the Limited Partners, unless otherwise
expressly provided herein, in their sole and absolute discretion.
"Consent of the Partners" means the Consent of Partners holding
-----------------------
Percentage Interests that in the aggregate are equal to or greater than 60% of
the aggregate Percentage Interests of all Partners, which Consent shall be
obtained prior to the taking of any action for which it is required by this
Agreement and may be given or withheld by such Partners, in their sole and
absolute discretion.
"Constructively Own" means ownership under the constructive ownership
------------------
rules described in Exhibit D.
"Contributed Properties" means each property or other asset, in such
----------------------
form as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership (or deemed contributed to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code).
"Convertible Debentures" means the 7 1/2 Convertible Subordinated
----------------------
Debentures due 2001, Series A and B of the General Partner.
"Debt" means, as to any Person, as of any date of determination, (i)
----
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect to reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) any obligations of such Person
as lessee under any lease of property which, in accordance with generally
accepted accounting principles, is capitalized.
"Deemed Partnership Interest Value" means, as of any date, the Deemed
---------------------------------
Value of the Partnership multiplied by the applicable Partner's Percentage
Interest.
"Deemed Value of the Partnership" means, as of any date, (i) the total
-------------------------------
number of REIT Shares issued and outstanding as of the close of business on such
date (excluding any treasury shares but including any Excess Shares) multiplied
by the Value of a REIT Share on such date; (ii) divided by the Percentage
------- --
Interest of the General Partner on such date.
"Depreciation" means, for each fiscal year or other period, an amount
------------
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value
5
<PAGE>
as the federal income tax depreciation, amortization or other cost recovery
deduction for such year or other period bears to such beginning adjusted tax
basis; provided, however, that if the federal income tax depreciation,
-------- -------
amortization or other cost recovery deduction for such year is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the General Partner.
"Development Properties" means the retail shopping centers known as
----------------------
Media City Center (Burbank, CA), Empire Center (Fontana, CA), Baldwin Hills
Crenshaw Plaza (Los Angeles, CA), Montebello Town Square (Montebello, CA) and
The City Center (San Francisco, CA).
"Effective Date" means the date of closing of the sale of REIT Shares
--------------
pursuant to that certain Underwriting Agreement between the General Partner and
NatWest Securities Limited et al., upon which the Agreement shall be declared
------
effective under the Securities Act.
"Exchange" has the meaning set forth in Section 8.6.A.
--------
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
"Exchangeable Debentures" means the 7 1/4 Exchangeable Subordinated
-----------------------
Debentures due 2001 of the Partnership.
"Funding Debt" means the incurrence of any Debt by on or behalf of the
------------
General Partner for the purpose of providing funds to the Partnership.
"Funding Notice" has the meaning set forth in Section 4.3.B.
--------------
"General Partner" means the Company or its successors as general
---------------
partner of the Partnership.
"General Partner Interest" means a Partnership Interest held by the
------------------------
General Partner that is a general partnership interest. A General Partner
Interest may be expressed as a number of Partnership Units.
"General Partner Loan" has the meaning set forth in Section 4.3.C.
--------------------
"General Partner Payment" has the meaning set forth in Section 15.11.
-----------------------
"Gross Asset Value" means, with respect to any asset, the asset's
-----------------
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset,
as determined by the contributing Partner and the General Partner (as set forth
on Exhibit A attached hereto, as such Exhibit may be amended from time to time)
provided that, if the contributing Partner is the General Partner then, except
with respect to the General Partner's initial Capital Contribution or capital
contributions of cash or REIT Shares, the determination of the fair market value
of the contributed asset shall be determined by Appraisal.
6
<PAGE>
(b) The Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as determined by the General
Partner using such reasonable method of valuation as it may adopt; provided,
--------
however, that for this purpose, the net value of all of the Partnership assets,
- -------
in the aggregate, shall be equal to the Deemed Value of the Partnership,
regardless of the method of valuation adopted by the General Partner, as of the
following times:
(i) the acquisition of an additional interest in the
Partnership by a new or existing Partner in exchange for more than a de
minimis Capital Contribution, if the General Partner reasonably determines
that such adjustment is necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership;
(ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property as consideration for
an interest in the Partnership, if the General Partner reasonably
determines that such adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the Partnership;
(iii) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); and
(iv) at such other times as the General Partner shall
reasonably determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset distributed to a
Partner shall be the gross fair market value of such asset on the date of
distribution as determined by the distributee and the General Partner provided
that, if the distributee is the General Partner, or if the distributee and the
General Partner cannot agree on such a determination, by Appraisal.
(d) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that
-------- -------
Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to
the extent that the General Partner reasonably determines that an adjustment
pursuant to Paragraph subparagraph (b) is necessary or appropriate in connection
with a transaction that would otherwise result in an adjustment pursuant to this
subparagraph (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subparagraph (a), (b) or (d), such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income and Net Losses.
"IRS" means the Internal Revenue Service, which administers the
---
internal revenue laws of the United States.
"Immediate Family" means, with respect to any Person, such Person's
----------------
estate and heirs and current and former spouse(s), parents, parents-in-law,
children, children-in-law, siblings and grandchildren and any trust or estate,
all of the beneficiaries of which consist of such
7
<PAGE>
Person or such Person's current or former spouse, parents, parents-in-law,
children, children-in-law, siblings or grandchildren.
"Incapacity" or "Incapacitated" means, (i) as to any individual
---------- -------------
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter; (iii) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership; (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy or such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a)
the Partner commences a voluntary proceeding seeking liquidation, reorganization
or other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a
final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Partner, (c)
the Partner executes and delivers a general assignment for the benefit of the
Partner's creditors, (d) the Partner files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within 120 days after the
commencement thereof, (g) the appointment without the Partner's consent or
acquiescence of a trustee, receiver of liquidator has not been vacated or stayed
within 90 days of such appointment, or (h) an appointment referred to in clause
(g) is not vacated within 90 days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
----------
reason of his status as (A) the General Partner or (B) a director of the General
Partner or officer of the Partnership, or the General Partner, and (ii) such
other Persons (including Affiliates of the General Partner or the Partnership)
as the General Partner may designate from time to time, in its sole and absolute
discretion.
"Limited Partner" means any Person named as a Limited Partner in
---------------
Exhibit A attached hereto, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of a
----------------------------
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to comply with
the terms and provisions of this Agreement. A Limited Partnership Interest may
be expressed as a number of Partnership Units.
"Liquidating Events" has the meaning set forth in Section 13.1.
------------------
8
<PAGE>
"Liquidator" has the meaning set forth in Section 13.2.A.
----------
"Majority in Interest of the Limited Partners" means those Limited
--------------------------------------------
Partners (other than any Limited Partner 50% or more of whose equity is owned,
directly or indirectly, by the General Partner) holding in the aggregate
Percentage Interests that are greater than fifty percent (50%) of the aggregate
Percentage Interests of all Limited Partners (other than any Limited Partner 50%
or more of whose equity is owned, directly or indirectly, by the General
Partner).
"Net Income" or "Net Loss" means for each fiscal year of the
---------- --------
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Net Income or Net Loss
pursuant to this definition of Net Income or Net Loss shall be added to such
taxable income or loss;
(b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income or Net Loss pursuant to this definition of Net Income or
Net Loss shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Income or Net Loss;
(d) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such fiscal year;
(f) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this definition of Net
Income or Net Loss, any items which are specially allocated pursuant to Section
6.3 hereof shall not be taken into account in computing Net Income or Net Loss.
The amounts of the items of
9
<PAGE>
Partnership income, gain, loss or deduction available to be specially allocated
pursuant to Section 6.3 hereof shall be determined by applying rules analogous
to those set forth in this definition of Net Income or Net Loss.
"Nonrecourse Deductions" has the meaning set forth in Regulations
----------------------
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
---------------------
Section 1.752-1(a)(2).
"Notice of Exchange" means the Notice of Exchange substantially in the
------------------
form of Exhibit B to this Agreement.
"Original Limited Partner" means a Limited Partner who is a Partner on
------------------------
the date of this Agreement.
"Original Limited Partnership Unit" means a Partnership Unit held by
---------------------------------
an Original Limited Partner on the date of this Agreement.
"Partner" means a General Partner or a Limited Partner, and "Partners"
-------
means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
--------------------
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
------------------------
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
------------------------------
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section 1.704-
2(i)(2).
"Partnership" means the limited partnership formed under the Act and
-----------
pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
--------------------
of either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A Partnership Interest
may be expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
------------------------
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section 1.704-
2(d).
10
<PAGE>
"Partnership Record Date" means the record date established by the
-----------------------
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof which record date shall be the same as the record date established by the
General Partner for a distribution to its stockholders of some or all of its
portion of such distribution.
"Partnership Unit" means a fractional, undivided share of the
----------------
Partnership Interests of all Partners issued pursuant to Sections 4.1. As of
the Effective Date, there shall be considered to be 925,200 Partnership Units
outstanding, with each Partnership Unit representing a 0.00010808 Percentage
Interest in the Partnership. The ownership of Partnership Units is evidenced by
the form of certificate for units attached hereto as Exhibit C.
"Partnership Year" means the fiscal year of the Partnership, which
----------------
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
-------------------
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time.
"Person" means an individual or a corporation, partnership, trust,
------
unincorporated organization, association or other entity.
"Properties" means such interests in real property and personal
----------
property, including without limitation, fee interests, interests in ground
leases, interests in joint ventures or partnerships, interests in mortgages, and
Debt instruments as the Partnership may hold from time to time.
"Regulations" means the Income Tax Regulations promulgated under the
-----------
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section 6.3.A
----------------------
(viii).
"REIT" means a real estate investment trust under Section 856 of the
----
Code.
"REIT Requirements" has the meaning set forth in Section 5.1.
-----------------
"REIT Share" means a share of common stock of the General Partner, but
----------
shall not, for purposes of the definition of "Value" include any Excess Stock
(as defined in the Charter).
"REIT Shares Amount" means, as of any date, an aggregate number of
------------------
REIT Shares equal to the number of Tendered Units, as adjusted for stock
dividends and distributions, stock splits and subdivisions, reverse stock splits
and combinations, distributions of rights, warrants or options, and
distributions of evidences of indebtedness or assets relating to assets not
received by the General Partner pursuant to a pro rata distribution by the
--- ----
Partnership.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
11
<PAGE>
"Specified Exchange Date" means the day of receipt by the General
-----------------------
Partner of a Notice of Exchange.
"Stock Option Plan" means the 1993 Stock Option and Incentive Plan for
-----------------
Officers, Directors and Key Employees of Center Trust, Inc. and CT Operating
Partnership, L.P., such plan as amended or restated and any similar or successor
plans.
"Subsidiary" means, with respect to any Person, any corporation or
----------
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
---------------------------
Limited Partner to the Partnership pursuant to Section 11.4.
"Tax Items" has the meaning set forth in Section 6.4.A.
---------
"Tenant" means any tenant from which the Company derives rent either
------
directly or indirectly through partnerships including the Partnership.
"Tendered Units" has the meaning set forth in Section 8.6.A.
--------------
"Tendering Partner" has the meaning set forth in Section 8.6.A.
-----------------
"Terminating Capital Transaction" means any sale or other disposition
-------------------------------
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Value" means, with respect to a REIT Share, the average of the daily
-----
market price for the ten (10) consecutive trading days immediately preceding the
date with respect to which "Value" must be determined hereunder, or, if such
date is not a Business Day, the immediately preceding Business Day. The market
price for each such trading day shall be: (i) if the REIT Shares are listed or
admitted to trading on any securities exchange or the NASDAQ-National Market
System, the closing price, regular way, on such day, or if no such sale takes
place on such day, the average of the closing bid and asked prices on such day,
(ii) if the REIT Shares are not listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System, the last reported sale price on
such day or, if no sale takes place on such day, the average of the closing bid
and asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or (iii) if the REIT Shares are not listed or
admitted to trading on any securities exchange or the NASDAQ-National Market
System and no such last reported sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked prices on such
day, as reported by a reliable quotation source designated by the General
Partner, or if there shall be no bid and asked prices on such day, the average
of the high bid and low asked prices, as so reported, on the most recent day
(not more than 10 days prior to the date in question) for which prices have been
so reported; provided that if there are no bid and asked prices reported during
--------
the 10 days prior to the date in question, the Value of the REIT Shares shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event the REIT Shares Amount includes rights that a holder
of REIT Shares would be entitled to receive, then the Value of such rights shall
be determined by the General Partner acting in good
12
<PAGE>
faith on the basis of such quotations and other information as it considers, in
its reasonable judgment, appropriate; and provided further that, in connection
-------- -------
with determining the Deemed Value of the Partnership for purposes of determining
the number of additional Partnership Units issuable upon a Capital Contribution
funded by an underwritten public offering of REIT Shares, then the Value of the
REIT Shares shall be the public offering price per share of the REIT Shares
sold.
ARTICLE 2.
ORGANIZATIONAL MATTERS
Section 2.1 Organization
------------
The Partnership is a limited partnership formed pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
Section 2.2 Name
----
The name of the Partnership is CT Operating Partnership, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
---------------------------------------------
The address of the registered office of the Partnership in the State
of California is located at 3500 Sepulveda Boulevard, Manhattan Beach,
California, and the registered agent for service of process on the Partnership
in the State of California at such registered office is Steven M. Jaffe. The
principal office of the Partnership is 3500 Sepulveda Boulevard, Manhattan
Beach, California, or such other place as the General Partner may from time to
time designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of California
as the General Partner deems advisable.
Section 2.4 Power of Attorney
-----------------
A. Each Limited Partner and each Assignee hereby irrevocably
constitutes and appoints the General Partner, any Liquidator, and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in each
case with full power of substitution, as its true and lawful agent and attorney-
in-fact, with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and
other instruments (including, without limitation, this Agreement
and the Certificate and all amendments or restatements thereof)
that the General Partner or the
13
<PAGE>
Liquidator deems appropriate or necessary to form, qualify or
continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited
partners have limited liability) in the State of California and
in all other jurisdictions in which the Partnership may conduct
business or own property; (b) all instruments that the General
Partner deems appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other
instruments or documents that the General Partner deems
appropriate or necessary to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a certificate of
cancellation; (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article 11, 12 or 13 hereof or the
Capital Contribution of any Partner; and (e) all certificates,
documents and other instruments relating to the determination of
the rights, preferences and privileges of Partnership Interests;
and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of
the General Partner, to make, evidence, give, confirm or ratify
any vote, consent, approval, agreement or other action which is
made or given by the Partners hereunder or is consistent with the
terms of this Agreement or appropriate or necessary, in the sole
discretion of the General Partner, to effectuate the terms or
intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
to amend this Agreement except in accordance with Article 14 hereof or as may be
otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall survive and not be affected by
the subsequent Incapacity of any Limited Partner or Assignee and the transfer of
all or any portion of such Limited Partner's or Assignee's Partnership Units and
shall extend to such Limited Partner's or Assignee's heirs, successors, assigns
and personal representatives. Each such Limited Partner or Assignee hereby
agrees to be bound by any representation made by the General Partner, acting in
good faith pursuant to such power of attorney; and each such Limited Partner or
Assignee hereby waives any and all defenses which may be available to contest,
engage or disaffirm the action of the General Partner, taken in good faith under
such power of attorney. Each Limited Partner or Assignee shall execute and
deliver to the General Partner or the Liquidator, within 15 days after receipt
of the General Partner's request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidator, as the
case may be, deems necessary to effectuate this Agreement and the purposes of
the Partnership.
14
<PAGE>
Section 2.5 Term
----
The term of the Partnership commenced on November 30, 1993, the date
the Certificate was filed in the office of the Secretary of State of California
in accordance with the Act and shall continue until December 31, 2092 unless the
Partnership is dissolved sooner pursuant to the provisions of Article 13 or as
otherwise provided by law.
ARTICLE 3.
PURPOSE
Section 3.1 Purpose and Business
--------------------
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
-------- -------
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT for federal income tax
purposes, unless the General Partner has determined to cease to qualify as a
REIT, (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or the ownership of interests in
any entity engaged in any of the foregoing and (iii) to do anything necessary or
incidental to the foregoing. The business of the Partnership shall at all times
be conducted in a manner substantially consistent with the policies set forth
under the caption "Policies and Objectives With Respect to Certain Activities"
in the final prospectus with respect to the initial public offering of REIT
Shares, unless otherwise consented to in writing by the General Partner and a
Majority in Interest of the Limited Partners.
Section 3.2 Powers
------
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, provided that the Partnership
shall not take, or refrain from taking, any action which, in the judgment of the
General Partner, in its sole and absolute discretion, (i) could adversely affect
the ability of the General Partner to continue to qualify as a REIT, (ii) could
subject the General Partner to any additional taxes under Section 857 or Section
4981 of the Code or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner or its
securities, unless such action (or inaction) under (i), (ii) or (iii) shall have
been specifically consented to by the General Partner in writing.
Section 3.3 Partnership Only for Purposes Specified
---------------------------------------
The Partnership shall be a partnership only for the purposes specified
in Section 3.1 hereof, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1 hereof. Except as otherwise provided in this Agreement, no Partner
shall have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall
be responsible or liable for any indebtedness or obligation of another Partner,
nor shall the Partnership be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities,
15
<PAGE>
indebtedness or obligations incurred pursuant to and as limited by the terms of
this Agreement and the Act.
Section 3.4 Representations and Warranties by the Parties
---------------------------------------------
A. Each Partner that is an individual represents and warrants to
each other Partner that (i) he has the legal capacity to enter into this
Agreement and perform his obligations hereunder, (ii) the consummation of the
transactions contemplated by this Agreement to be performed by such Partner will
not result in a breach or violation of, or a default under, any agreement by
which such Partner or any of such Partner's property is or are bound, or any
statute, regulation, order or other law to which such Partner is subject, (iii)
such Partner is not a "foreign person" within the meaning of Section 1445(f) of
the Code nor a "foreign person" under Section 1446(e) of the Code, and (iv) this
Agreement is binding upon, and enforceable against, such Partner in accordance
with its terms.
B. Each Partner that is not an individual represents and warrants to
each other Partner that (i) all transactions contemplated by this Agreement to
be performed by it have been duly authorized by all necessary action, including
without limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or shareholder(s), as the case may be, as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its partnership agreement, trust agreement,
charter or by-laws, as the case may be, any agreement by which such Partner or
any of such Partner's properties or any of its partners, beneficiaries, trustees
or shareholders, as the case may be, is or are bound, or any statute,
regulation, order or other law to which such Partner or any of its partners,
trustees, beneficiaries or shareholders, as the case may be, is or are subject,
(iii) such Partner is neither a "foreign person" within the meaning of Section
1445(f) of the Code nor a "foreign partner" within the meaning of Section
1446(e) of the Code, and (iv) this Agreement is binding upon, and enforceable
against, such Partner in accordance with its terms.
C. Each Partner represents, warrants and agrees that it has acquired
and continues to hold its interest in the Partnership for its own account for
investment only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, nor with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment.
D. Each Partner further represents, warrants and agrees as follows:
(i) Except as provided in Exhibit D, it does not and will not
directly own or Constructively Own (a) with respect to any Tenant that is a
corporation, stock of such Tenant, and (b) with respect to any Tenant that is
not a corporation, any interests in the assets or net profits of such Tenant.
(ii) It understands that if, for any reason, any of the
representations, warranties or agreements set forth in D.(i) above are violated,
then (a) some or all of the Partners' rights to exchange Partnership Units for
REIT Shares may become non-exercisable, and (b) some
16
<PAGE>
or all of the REIT Shares owned by the Partners may be automatically converted
into Excess Stock.
E. The representations and warranties contained in Sections 3.4.A,
3.4.B, 3.4.C and 3.4.D hereof shall survive the execution and delivery of this
Agreement by each Partner and the dissolution and wind up of the Partnership.
F. Each Partner hereby acknowledges that no representations as to
potential profit, cash flows, funds from operations or yield, if any, in respect
of the Partnership or the General Partner have been made by any Partner or any
employee or representative or Affiliate of any Partner, and that projections and
any other information, including, without limitation, financial and descriptive
information and documentation, which may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.
ARTICLE 4.
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
-------------------------------------
A. At the time of the execution of this Agreement, the Partners
shall make Capital Contributions as set forth in Exhibit A to this Agreement.
The Partners shall own Partnership Units in the amounts set forth in Exhibit A
and shall have a Percentage Interest in the Partnership as set forth in Exhibit
A, which Percentage Interest shall be adjusted in Exhibit A from time to time by
the General Partner to the extent necessary to reflect accurately exchanges,
redemptions, Capital Contributions, the issuance of additional Partnership Units
or similar events having an effect on a Partner's Percentage Interest. Except
as required by law or as otherwise provided in Sections 4.3 and 10.5, no Partner
shall be required or permitted to make any additional Capital Contributions or
loans to the Partnership.
B. It is difficult to ascertain the fair market value of the
Development Properties being contributed to the Partnership because such
properties are newly developed properties which have not been fully leased up.
Rather than attempt to reach a final conclusion as to the value of the
Development Properties today based on inadequate information, the Partners have
agreed that certain future events shall be taken into account in determining the
ultimate fair market value of the Development Properties. Accordingly,
notwithstanding the provisions of Section 4.1.A, pursuant to the terms of that
certain Development Properties Agreement dated December 27, 1993 by and among
Haagen-Burbank Partnership, Haagen-Fontana Partnership, Baldwin Hills
Associates, Haagen-San Francisco Partnership and Montebello Commercial
Properties and the Partnership, each Limited Partner who made a Capital
Contribution set forth on Schedule A consisting of a Development Property or an
interest therein may be issued additional Partnership Units, from time to time,
in respect of the additional value of the Development Properties through certain
periods specified in the Development Properties Agreement. In such event, each
Partner's Percentage Interest in the Partnership set forth on Schedule A shall
be correspondingly adjusted from time to time to reflect the issuance of such
additional Partnership Units. Such adjustment shall be viewed as an additional
Capital Contribution of property by such Partners to the Partnership.
17
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Section 4.2 Loans by Third Parties
----------------------
The Partnership may incur Debt, or enter into other similar credit,
guarantee, financing or refinancing arrangements for any purpose (including,
without limitation, in connection with any further acquisition of Properties)
with any Person that is not the General Partner upon such terms as the General
Partner determines appropriate; provided that, the Partnership shall not incur
-------- ----
any Debt under which a breach, violation or default would be deemed to occur by
virtue of the transfer of any Limited Partnership Interest or General Partner
Interest, and any Debt which refinances Debt outstanding upon the closing of the
initial public offering, shall be non-recourse to the General Partner, except to
the extent otherwise approved by the Consent of the Limited Partners.
Section 4.3 Additional Funding and Capital Contributions
--------------------------------------------
A. General. The General Partner may, at any time and from time to
-------
time determine that the Partnership requires additional funds ("Additional
Funds") for the acquisition of additional Properties or for such other
Partnership purposes as the General Partner may determine. Additional Funds may
be raised by the Partnership, at the election of the General Partner, in any
manner provided in, and in accordance with, the terms of this Section 4.3. No
Person shall have any preemptive, preferential or similar right or rights to
subscribe for or acquire any Partnership Interest, except as set forth in this
Section 4.3.
B. Additional General Partner Capital Contributions. Upon written
------------------------------------------------
notice (the "Funding Notice") to the Partners of the need for Additional Funds
and the anticipated source(s) thereof, the General Partner may, or, to the
extent the General Partner raises all or any portion of the Additional Funds
through the sale or other issuance of REIT Shares or other equity interests in
the General Partner, the General Partner shall, contribute the Additional Funds
to the capital of the Partnership in exchange for General Partner Interests.
C. General Partner Loans. Upon delivery of a Funding Notice to the
---------------------
Partners, the General Partner may, or, to the extent the General Partner enters
into a Funding Debt, the General Partner shall, lend the Additional Funds to the
Partnership (a "General Partner Loan"). If the General Partner enters into such
a Funding Debt, the General Partner Loan will consist of the net proceeds from
such Funding Debt and will be on the same terms and conditions, including
interest rate, repayment schedule and costs and expenses, as shall be applicable
with respect to or incurred in connection with such Funding Debt. Otherwise,
all General Partner Loans made pursuant to this Section 4.3 shall be on terms
and conditions no less favorable to the Partnership than would be available to
the Partnership from any third party. In the event that a Funding Debt or debt
issued by the Partnership is comprised, in whole or in part, of Debt convertible
into or exchangeable for REIT Shares or other equity interests in the General
Partner and any portion of such debt is converted into or exchanged for REIT
Shares, the General Partner shall have the right, but not the obligation, to
contribute the equivalent amount of the General Partner Loan or such other debt
to the Partnership in exchange for additional General Partner Interests.
D. Conversion or Exchange of Outstanding Debentures.
------------------------------------------------
Notwithstanding any other provision of this Agreement, in the event that any
portion of the Exchangeable Debentures or Convertible Debentures is converted
into or exchanged for REIT Shares, the General Partner shall have the right, but
not the obligation, to contribute an equivalent amount of
18
<PAGE>
the General Partner loan of the net proceeds of Convertible Debenture offering,
or in the case of the Exchangeable Debentures, contribute the equivalent amount
of Exchangeable Debentures, to the Partnership in exchange for 8,333,333
additional General Partner Interests, in the aggregate (subject to anti-dilution
adjustments) in the case of the Exchangeable Debentures, and 1,666,666
additional General Partner Interests, in the aggregate (subject to anti-dilution
adjustments) in the case of the Convertible Debentures.
E. Additional Capital Contributions. Upon delivery of a Funding
--------------------------------
Notice to the Partners, the General Partner on behalf of the Partnership may
raise all or any portion of the Additional Funds by accepting additional Capital
Contributions (i) in the case of cash, from the General Partner, or (ii) in the
case of property other than cash, from any Partner and/or third parties, and
either (A) in the case of Partners, increasing such Partner's Partnership
Interest, or (B) in the case of a third party, admitting such third party as an
Additional Limited Partner. Subject to the terms of this Section 4.3, the
General Partner shall determine the amount, terms and conditions of such
additional Capital Contributions (including, without limitation, the Percentage
Interest that the General Partner so determines to be attributable to such
additional Capital Contributions, subject to agreement with the Contributing
Partner); provided, that, upon the contribution of property other than cash, the
-------- ----
Percentage Interest related thereto shall be equal to a fraction, the numerator
of which is equal to the Agreed Value of the Property contributed as of the
Adjustment Date and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership (computed as of the Business Day immediately
preceding the Adjustment Date) and (ii) the Agreed Value of the property as of
the Adjustment Date, as reasonably determined by the General Partner. The
Percentage Interests of each Partner not making such contribution shall be
reduced, as of the Adjustment Date, such that the Percentage Interest of each
such Partner shall be equal to a fraction, the numerator of which is equal to
the sum of (i) the Deemed Partnership Interest Value of such Partner (computed
as of the Business Day immediately preceding the Adjustment Date) and (ii) the
Agreed Value of the Property contributed, if any, by such Partner, as of the
adjustment date, and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership (computed as of the Business Day immediately
preceding the Adjustment Date and (ii) the Agreed Value of the Property
contributed by all Partners and/or third parties as of the Adjustment Date.
F. Percentage Interest Adjustments. Upon the acceptance of
-------------------------------
additional cash Capital Contributions pursuant to this Section 4.3, the
Percentage Interest related thereto shall be equal to a fraction, the numerator
of which is equal to the cash contributed as of the Business Day immediately
preceding the date on which the additional Capital Contributions are made (an
"Adjustment Date") and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership (computed as of the Business Day immediately
preceding the Adjustment Date) and (ii) the aggregate amount of additional
Capital Contributions contributed to the Partnership on such Adjustment Date.
The Percentage Interest of each other Partner not making a full pro rata
--- ----
Contribution shall be adjusted to equal to a fraction, the numerator of which is
equal to the sum of (i) the Deemed Partnership Interest Value of such Limited
Partner (computed as of the Adjustment Date) and (ii) the amount of additional
capital contributions made by such Partners to the Partnership as such
Adjustment Date, and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership (computed as of the Business Day immediately
preceding the Adjustment Date), plus (ii) the aggregate amount of additional
----
Capital Contributions contributed by all Partners and/or third parties to the
Partnership on such Adjustment Date. Provided, however, solely for purposes of
calculating Partner's Percentage Interests pursuant to this Section 4.3.F, cash
Capital Contributions by the General Partner will be
19
<PAGE>
deemed to equal the cash contributed by the General Partner plus, in the case of
cash contributions funded by an offering of REIT Shares, the offering costs
attributable to the cash contributed to the Partnership. The General Partner
shall promptly give each Partner written notice of its Percentage Interest, as
adjusted.
Section 4.4 Stock Incentive Plan
--------------------
If at any time or from time to time the General Partner issues or
sells REIT Shares pursuant to the Stock Option Plan, it may contribute the
proceeds therefrom to the Partnership as an additional Capital Contribution as
provided in Section 4.3. In consideration for such contribution, the General
Partner's Capital Account shall be adjusted as provided in this Agreement and
the General Partner shall be issued a number of Partnership Units equal to the
number of REIT Shares so issued or sold.
ARTICLE 5.
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
-------------------------------------------------
A. General. Except as provided in Section 5.1.B, the General
-------
Partner shall cause the Partnership to distribute quarterly all, or such portion
as the General Partner may in its discretion determine, of Available Cash
generated by the Partnership during such quarter to the Partners who are
Partners on the Partnership Record Date with respect to such quarter in
accordance with their respective Percentage Interests on such Partnership Record
Date. The General Partner shall take such reasonable efforts, as determined by
it in its sole and absolute discretion and consistent with its qualification as
a REIT, to cause the Partnership to distribute sufficient amounts to enable the
General Partner to pay stockholder dividends that will (a) satisfy the
requirements for qualifying as a REIT under the Code and Regulations ("REIT
Requirements"), and (b) avoid any federal income or excise tax liability of the
General Partner.
B. Exceptions. Notwithstanding the first sentence of Section 5.1.A,
----------
(a) the General Partner may apportion distributions of Available Cash among
existing and newly issued Partnership Units in the year such units are issued in
any other manner it deems reasonable with respect to (i) Partnership Units
issued to parties other than the General Partner, and (ii) Partnership Units
issued to the General Partner to the extent the General Partner did not issue an
equivalent number of REIT Shares in connection with the issuance of such units;
and (b) the General Partner may apportion distributions of Available Cash among
Partnership Units in the year a portion of the Partnership Units have been
redeemed or otherwise acquired by the Partnership in any other manner it deems
reasonable with respect to (i) Partnership Units acquired from parties other
than the General Partner, and (ii) Partnership Unites acquired from the General
Partner to the extent the General Partner did not acquire an equivalent number
of REIT Shares in connection with the Partnership's acquisition of such units.
Section 5.2 Distributions in Kind
---------------------
A. General. No right is given to any Partner to demand and receive
-------
property other than cash. The General Partner may determine, in its sole and
absolute discretion, to make a distribution in kind to the Partners of
Partnership assets, and (except as provided in Section 5.2.B) such assets shall
be distributed in such a fashion as to ensure that the fair market value is
distributed and allocated in accordance with Articles 5, 6 and 10. To the
extent the General
20
<PAGE>
Partner makes a distribution pursuant to this Section 5.2.A which is not pro
rata to the Partners' Percentage Interests, the General Partner shall, in its
reasonable discretion, adjust the number of Partnership Units held by the
distributee Partners in a manner which is consistent with the provisions of
Section 4.3.E and 4.3.F.
B. Burbank Notes. The Haagen-Burbank Partnership contributed the
-------------
Burbank Notes to the Partnership in exchange for Partnership Units. In the
event the General Partner determines that the Partnership's ownership of the
Burbank Notes could jeopardize the General Partner's status as a REIT under the
Code, the General Partner may, to the extent necessary to protect its REIT
status, cause the Partnership to distribute some or all of the Burbank Notes to
the Haagen-Burbank Partnership in exchange for Partnership Units. The number of
Partnership Units exchanged will be equal to the number of Partnership Units
received by the Haagen-Burbank Partnership in exchange for the portion of the
Burbank Notes being distributed.
Section 5.3 Amounts Withheld
----------------
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners, or Assignees, as the case may be, pursuant to Section 5.1 for
all purposes under this Agreement.
Section 5.4 Distributions Upon Liquidation
------------------------------
Proceeds from a Terminating Capital Transaction shall be distributed
to the Partners in accordance with Section 13.2.
ARTICLE 6.
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and Net
------------------------------------------------------
Loss
- ----
Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each fiscal year of the Partnership as of the end of
each such year. Subject to the other provisions of this Article 6, an
allocation to a Partner of a share of Net Income or Net Loss shall be treated as
an allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.
Section 6.2 General Allocations
-------------------
Except as otherwise provided in this Article 6, Net Income and Net
Loss shall be allocated to each of the Partners in accordance with their
respective Percentage Interest.
Section 6.3 Additional Allocation Provisions
--------------------------------
Notwithstanding the foregoing provisions of this Article 6:
A. Regulatory Allocations.
----------------------
21
<PAGE>
(i) Minimum Gain Chargeback. Except as otherwise provided in
-----------------------
Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2 of
the Agreement, or any other provision of this Article 6, if there is a net
decrease in Partnership Minimum Gain during any fiscal year, each Partner shall
be specially allocated items of Partnership income and gain for such year (and,
if necessary, subsequent years) in an amount equal to such Partner's share of
the net decrease in Partnership Minimum Gain, as determined under Regulations
Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be allocated shall be determined in accordance
with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
6.3(A)(i) is intended to qualify as a "minimum gain chargeback" within the
meaning of Regulation Section 1.704-2(f) which shall be controlling in the event
of a conflict between such Regulation and this Section 6.3(A)(i).
(ii) Partner Minimum Gain Chargeback. Except as otherwise
-------------------------------
provided in Regulations Section 1.704-2(i)(4), and notwithstanding the
provisions of Section 6.2 of the Agreement or any other provision of this
Article 6 (except Section 6.3(A)(i)), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any fiscal year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-
2(j)(2). This Section 6.3(A)(ii) is intended to qualify as a "chargeback of
partner nonrecourse debt minimum gain" within the meaning of Regulation Section
1.704-2(i) which shall be controlling in the event of a conflict between such
Regulation and this Section 6.3(A)(ii).
(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions.
---------------------------------------------------------
Any Nonrecourse Deductions for any fiscal year shall be specially allocated to
the Partners in accordance with their Percentage Interests. Any Partner
Nonrecourse Deductions for any fiscal year shall be specially allocated to the
Partner(s) who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable,
in accordance with Regulations Section 1.704-2(i).
(iv) Qualified Income Offset. If any Partner unexpectedly
-----------------------
receives an adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
gain shall be allocated, in accordance with Regulations Section 1.704-
1(b)(2)(ii)(d), to the Partner in an amount and manner sufficient to eliminate,
to the extent required by such Regulations, the Adjusted Capital Account Deficit
of the Partner as quickly as possible provided that an allocation pursuant to
this Section 6.3(A)(iv) shall be made if and only to the extent that such
Partner would have an Adjusted Capital Account Deficit after all other
allocations provided in this Article 6 have been tentatively made as if this
Section 6.3(A)(iv) were not in the Agreement. It is intended that this Paragraph
6.3(A)(iv) qualify and be construed as a "qualified income offset" within the
meaning of Regulations 1.704-1(b)(2)(ii)(d), which shall be controlling in the
event of a conflict between such Regulations and this Paragraph 6.3(A)(iv).
22
<PAGE>
(v) Gross Income Allocation. In the event any Partner has a
-----------------------
deficit Capital Account at the end of any fiscal year which is in excess of the
sum of (1) the amount (if any) such Partner is obligated to restore to the
Partnership, and (2) the amount such Partner is deemed to be obligated to
restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such
Partner shall be specially allocated items of Partnership income and gain in the
amount of such excess as quickly as possible, provided that an allocation
pursuant to this Section 6.3(A)(v) shall be made if and only to the extent that
such Partner would have a deficit Capital Account in excess of such sum after
all other allocations provided in this Article 6 have been tentatively made as
if this Section 6.3(A)(v) and Section 6.3(A)(iv) were not in the Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent any
------------------------------------
allocation of Net Loss would cause or increase an Adjusted Capital Account
Deficit as to any Partner, such allocation of Net Loss shall be reallocated
among the other Partners in accordance with their respective Percentage
Interests, subject to the limitations of this Paragraph 6.3(A)(vi).
(vii) Section 754 Adjustment. To the extent an adjustment to the
----------------------
adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to Regulations Section 1.704-
1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as the result of a distribution to
a Partner in complete liquidation of his interest in the Partnership, the amount
of such adjustment to the Capital Accounts shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the
Partners in accordance with their interests in the Partnership in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom
such distribution was made in the event that Regulations Section 1.704-
1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocation. The allocations set forth in Sections
-------------------
6.3.(A)(i), (ii), (iii), (iv), (v), (vi) and (vii) (the "Regulatory
Allocations") are intended to comply with certain regulatory requirements,
including the requirements of Regulations Sections 1.704-1(b) and 1.704-2.
Notwithstanding the provisions of Section 6.2, the Regulatory Allocations shall
be taken into account in allocating other items of income, gain, loss and
deduction among the Partners so that, to the extent possible, the net amount of
such allocations of other items and the Regulatory Allocations to each Partner
shall be equal to the net amount that would have been allocated to each such
Partner if the Regulatory Allocations had not occurred.
B. For purposes of determining a Partner's proportional share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Partner's interest in Partnership
profits shall be such Partner's Percentage Interest.
Section 6.4 Tax Allocations
---------------
A. In General. Except as otherwise provided in this Section 6.4,
----------
for income tax purposes each item of income, gain, loss and deduction
(collectively, "Tax Items") shall be allocated among the Partners in the same
manner as its correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Section 6.2 and 6.3.
23
<PAGE>
B. Allocations Respecting Section 704(c) Revaluations.
--------------------------------------------------
Notwithstanding Section 6.4.A, Tax Items with respect to Partnership property
that is contributed to the Partnership by a Partner shall be shared among the
Partners for income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take into account the variation, if any,
between the basis of the property to the Partnership and its initial Gross Asset
Value. With respect to Partnership property that is initially contributed to
the Partnership upon its formation, such variation between basis and initial
Gross Asset Value shall be taken into account under the "traditional method" as
described in Proposed Treasury Regulation (S) 1.704-3(b) and Treasury Regulation
(S) 1.704-1(c)(2). With respect to properties subsequently contributed to the
Partnership, the Partnership shall account for such variation under any method
approved under Section 704(c) of the Code and the applicable regulations as
chosen by the General Partner. In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (b) of the definition of
Gross Asset Value (provided in Article 1 of the Agreement), subsequent
allocations of Tax Items with respect to such asset shall take account of the
variation, if any, between the adjusted basis of such asset and its Gross Asset
Value in the same manner as under Code Section 704(c) and the applicable
regulations consistent with the requirements of Treasury Regulations section
1.704-1(b)(2)(iv)(g) using any method approved under Section 704(c) of the Code
and the applicable regulations as chosen by the General Partner.
Section 6.5 Allocations Regarding Transfers, Contributions and
--------------------------------------------------
Distributions
- -------------
If any Partnership Interest is transferred during the Partnership's
fiscal year in compliance with the provisions of Article 11 or transferred
pursuant to Section 8.6, Net Income, Net Loss, each item thereof and all other
items attributable to such interest for such fiscal year shall be divided and
allocated between the transferor Partner and the transferee Partner (or
Assignee) in any manner reasonably determined by the General Partner to take
into account their varying interests during the fiscal year in accordance with
Section 706(d) of the Code. If new Partnership Units are issued during the
Partnership's fiscal year, Net Income, Net Loss, each item thereof and all other
times of the Partnership for the fiscal year shall be divided and allocated
between the existing and newly issued Partnership Units in any manner reasonably
determined by the General Partner to take into account the Partners' varying
interests during the fiscal year in accordance with Section 706(d) of the Code.
If a portion of the Partnership Units are redeemed or otherwise acquired by the
Partnership during the Partnership's fiscal year, Net Income, Net Loss, each
item thereof and all other items of the Partnership Units and remaining
Partnership Units in any manner reasonably determined by the General Partner to
take into account the Partners' varying interests during the fiscal year in
accordance with Section 706(d) of the Code.
ARTICLE 7.
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
----------
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
24
<PAGE>
hereafter granted a general partner of a limited partnership under the Act or
which are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to the other provisions hereof, shall
have full power and authority to do all things deemed necessary or desirable by
it to conduct the business of the Partnership, to exercise all powers set forth
in Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures, the lending of money, borrowing
of money (including, without limitation, making prepayments on
loans and borrowing money to permit the Partnership to make
distributions to its Partners in such amounts as will permit the
General Partner (so long as the General Partner has determined to
qualify as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section
4981 of the Code), to make distributions to its stockholders
sufficient to permit the General Partner to maintain REIT
status), the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by
mortgage, deed of trust or other lien or encumbrance on the
Partnership's assets) and the incurring of any obligations it
deems necessary for the conduct of the activities of the
Partnership; provided, that all such borrowing, incurrence of
--------
Debt and prepayments shall be subject to the limitations set
forth in Sections 4.2 and 4.3;
(2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership or the
merger or other combination of the Partnership with or into
another entity; provided that as long as the General Partner has
--------
determined to continue to qualify as a REIT, the General Partner
may not engage in any such acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or exchange that would cause
it to fail to qualify as a REIT
(4) the mortgage, pledge, encumbrance or hypothecation of any assets
of the Partnership, and the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it
sees fit, including, without limitation, the financing of the
conduct of the operations of the General Partner, the Partnership
the lending of funds to other Persons and the repayment of
obligations of the Partnership and any other Person in which it
has an equity investment;
(5) the negotiation, execution and performance of any contracts,
leases, deeds, conveyances or other instruments that the General
Partner considers useful or necessary to the conduct of the
Partnership's operations or the implementation of the General
Partner's powers under this Agreement;
25
<PAGE>
(6) the distribution of Partnership cash or other Partnership assets
in accordance with this Agreement;
(7) the selection and dismissal of any employees of the Partnership
(including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer"), and
agents, outside attorneys, accountants, consultants and
contractors of the Partnership and the determination of their
compensation and other terms of employment or hiring;
(8) the selection and employment of third parties to perform services
for and on behalf of the Partnership, including, but not limited
to management, leasing and development services, and the General
Partner may require that such third party service providers bill
the Partnership directly for payment or reimbursement for such
services;
(9) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
(10) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to, any Person in
which it has an equity investment from time to time); provided
--------
that as long as the General Partner has determined to continue to
qualify as a REIT, the General Partner may not engage in any such
formation, acquisition or contribution that would cause it to
fail to qualify as a REIT;
(11) the control of any matters affecting the rights and obligations
of the Partnership, including the conduct of litigation and the
incurring of legal expense and the settlement of claims and
litigation, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(12) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Person
(including, without limitation, the contribution or loan of funds
by the Partnership to such Persons);
(13) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt, provided that such methods are
otherwise consistent with industry standards and the requirements
of this Agreement; and
(14) the enforcement of any rights against any Partner pursuant to
representations, warranties, covenants and indemnities relating
to such Partner's contribution of property or assets to the
Partnership.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any
26
<PAGE>
other provisions of this Agreement (except as provided in Section 7.3), the Act
or any applicable law, rule or regulation. The execution, delivery or
performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the Partnership
or the Limited Partners or any other Persons under this Agreement or of any duty
stated or implied by law or equity.
C. At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain (i) casualty, liability and
other insurance on the properties of the Partnership and (ii) liability
insurance for the Indemnities hereunder.
D. At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain working capital reserves in
such amounts as the General Partner, in it sole and absolute discretion, deems
appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
by it. The General Partner and the Partnership shall not have liability to a
Partner under any circumstances as a result of an income tax liability incurred
by such Partner as a result of an action (or inaction) by the General Partner
pursuant to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
----------------------------------
To the extent that such action is determined by the General Partner to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of
California and each other state, the District of Columbia or any other
jurisdiction, in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(4) hereof, the General Partner shall not
be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto to any Limited Partner. The General
Partner shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be reasonable and necessary or appropriate for
the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners limited liability)
in the State of California any other state, or the District of Columbia, in
which the Partnership may elect to do business or own property.
Section 7.3 Restrictions on General Partner's Authority
-------------------------------------------
A. The General Partner may not take any action in contravention of
this Agreement, including, without limitation:
(1) take any action that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise
provided in this Agreement;
(2) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose except
as otherwise provided in this Agreement;
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(3) admit a Person as a Partner, except as otherwise provided in this
Agreement;
(4) perform any act that would subject a Limited Partner to liability
as a general partner in any jurisdiction or any other liability
except as provided herein or under the Act; or
(5) enter into any contract, mortgage, loan or other agreement that
prohibits or restricts, or has the effect of prohibiting, the
ability of a Limited Partner to exercise its rights set forth
herein to effect an Exchange in full, except with the written
consent of such Limited Partner.
B. The General Partner shall not, without the prior Consent of the
Limited Partners, undertake, on behalf of the Partnership, any of the following
actions or enter into any transaction which would have the effect of such
transactions:
(1) Except as provided in Section 7.3.C., amend, modify or terminate
this Agreement other than to reflect the admission, substitution,
termination or withdrawal of partners pursuant to Article 12
hereof;
(2) Make a general assignment for the benefit of creditors or appoint
or acquiesce in the appointment of a custodian, receiver or
trustee for all or any part of the assets of the Partnership;
(3) Institute any proceeding for bankruptcy on behalf of the
Partnership; or
(4) Approve or acquiesce to the transfer of the Partnership Interest
of the General Partner, or admit into the Partnership any
Additional or Substitute General Partners.
C. Notwithstanding Section 7.3.B, the General Partner shall have the
power, without the Consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or surrender any
right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(3) to reflect a change that is of an inconsequential nature and does
not adversely affect the Limited Partners in any material
respect, or to cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law or with
other provisions, or make other changes with respect to matters
arising under this Agreement that will not be inconsistent with
law or with the provisions of this Agreement;
28
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(4) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law;
(5) to reflect such changes as are reasonably necessary for the
General Partner to maintain status as a REIT; and
(6) to modify the manner in which Capital Accounts are computed but
only to the extent set forth in the definition of "Capital
Account."
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.C is taken.
D. Notwithstanding Section 7.3.B and 7.3.C hereof, this Agreement
shall not be amended, and no action may be taken by the General Partner, without
the Consent of each Partner adversely affected if such amendment or action would
(i) convert a Limited Partner's interest in the Partnership into a general
partner's interest (except as the result of the General Partner acquiring such
interest), (ii) modify the limited liability of a Limited Partner, (iii) alter
rights of the Partner to receive distributions pursuant to Article 5 or Section
7.1.A(3), or the allocations specified in Article 6 (except as permitted
pursuant to Section 4.3 and Section 7.3.C, (iv) alter or modify the Exchange
Right or REIT Shares Amount as set forth in Sections 8.6 and 11.2, and related
definitions thereof, (v) cause the termination of the Partnership prior to the
time set forth in Sections 2.5 or 13.1, or (vi) amend this Section 7.3.D.
Further, no amendment may alter the restrictions on the General Partner's
authority set forth elsewhere in this Section 7.3 without the Consent specified
in such section. Any such amendment or action consented to by any Limited
Partner shall be effective as to that Limited Partner, notwithstanding the
absence of such consent by any other Limited Partner.
E. At any time that the Partnership Interests of all of the Limited
Partners of the Partnership equal, in the aggregate, not less than ten percent
(10%), the General Partner shall not, without the prior Consent of the Limited
Partners, undertake, on behalf of the Partnership, any of the following actions:
(1) Dissolve the Partnership.
(2) Agree to or consummate any merger, consolidation, reorganization
or other business combination to which the Partnership is a
party, in each case resulting in the disposition by the then
Limited Partners and Assignees of all outstanding Limited
Partnership Interests and interests of Assignees therein in
consideration for (a) cash, (b) debt instruments or other
evidences of indebtedness, (c) other securities issued by a
corporation, partnership or other entity, other than (i) the
General Partner, (ii) the Partnership or (iii) any entity at
least 80% of the total assets of which (on the basis of market
value) are comprised of assets which, immediately prior to such
transaction, were assets of the Partnership, or (d) any
combination of the consideration described in (a), (b) and/or (c)
above.
(3) Sell or otherwise transfer all or substantially all of the assets
of the Partnership.
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(4) Prior to February 27, 2002, sell or otherwise dispose of any of
the properties knows as Covina Town Square, El Camino/Fire
Mountain, Fountain Valley, Date Palm and City Center - San
Francisco.
Section 7.4 Reimbursement of the General Partner
------------------------------------
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments and allocations to which it may be entitled), the General Partner shall
not be compensated for its services as general partner of the Partnership.
B. Subject to Section 15.11, the General Partner shall be reimbursed
on a monthly basis, or such other basis as the General Partner may determine in
its sole and absolute discretion, for all expenses it incurs relating to the
ownership of interests in and operation of, or for the benefit of, the
Partnership. The Limited Partners acknowledge that the General Partner's sole
business is the ownership of interests in and operation of the Partnership and
that all of the General Partner's expenses are incurred for the benefit of the
Partnership; provided that, the General Partner shall not be reimbursed for
-------- ----
expenses it incurs relating to the organization of the Partnership and the
General Partner, the initial public offering of REIT Shares or subsequent public
offerings of REIT Shares by the General Partner. Such reimbursements shall be
in addition to any reimbursement of the General Partner as a result of
indemnification pursuant to Section 7.7 hereof.
C. It is the intent of the Partners that any amounts paid by the
Partnership to the General Partner pursuant to this Section 7.4 shall be treated
as a "guaranteed payment" within the meaning of Section 707(c) of the Code.
Section 7.5 Outside Activities of the General Partner
-----------------------------------------
A. The General Partner shall not, directly or indirectly, enter into
or conduct any business, other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner and
the management of the business of the Partnership, its operation as a public
reporting company with a class (or classes) of securities registered under the
Exchange Act, its operation as a REIT and such activities as are incidental to
the same. Without the Consent of the Limited Partners, the General Partner
shall not, directly or indirectly, participate in or otherwise acquire any
interest in any real or personal property, except its General Partner Interest,
and other than such bank accounts, similar instruments or other short-term
investments as it deems necessary to carry out its responsibilities contemplated
under this Agreement and the Charter; provided, however, that the General
-------- -------
Partner may organize and own the stock of CT Finance, Inc. (formerly, Alexander
Haagen Properties Finance, Inc.), a Delaware corporation (and any successor
entity thereto), and do any and all such things as may be necessary and
appropriate in connection with the formation of CT Finance Partnership, L.P.
(formerly Alexander Haagen Properties Finance Partnership, L.P.) including the
contribution of an approximately 7.275% undivided interest in the La Verne Towne
Center and a demand note for the amount of $10,185,000 to the capital of CT
Finance, Inc.. Any Limited Partner Interests acquired by the General Partner,
whether pursuant to exercise by a Limited Partner of its rights to Exchange or
otherwise, shall be automatically converted into a General Partner Interest
comprised of an identical number of Partnership Units.
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B. In the event the General Partner exercises its rights under the
Charter to purchase REIT Shares, then the General Partner shall cause the
Partnership to purchase from it a number of Partnership Units as determined
based on the REIT Shares Amount equal to the number of REIT Shares so purchased
on the same terms that the General Partner purchased such REIT Shares.
Section 7.6 Contracts with Affiliates
-------------------------
A. The Partnership may lend or contribute to Persons in which it has
an equity investment, and such Persons may borrow funds from the Partnership, on
terms and conditions established in the sole and absolute discretion of the
General Partner. The foregoing authority shall not create any right or benefit
in favor of any Person.
B. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law.
C. The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee benefit plans funded by the Partnership for the benefit
of employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership or any of the
Partnership's Subsidiaries. The General Partner also is expressly authorized to
cause the Partnership to issue to it Partnership Units corresponding to REIT
Shares issued or sold by the General Partner pursuant to the Stock Option Plan
or any similar or successor plan and to repurchase such Partnership Units from
the General Partner to the extent necessary to permit the General Partner to
repurchase such REIT Shares in accordance with such plan.
D. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, such conflict avoidance agreements with
various Affiliates of the Partnership and the General Partner, on such terms as
the General Partner, in its sole and absolute discretion, believes are
advisable.
Section 7.7 Indemnification
---------------
A. The Partnership shall indemnify each Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including legal fees and expenses), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and either was committed in bad faith or
was the result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or (iii)
in the case of any criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. The termination of any
proceeding by judgment, order or settlement does not create a presumption that
the Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.7.A. The termination of any proceeding by conviction or
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upon a plea of nolo contendere or its equivalent, or any entry of an order of
probation prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this Section 7.7.A.
Any indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership. Notwithstanding the foregoing provisions, the General
Partner shall be entitled to reimbursement by the Partnership for any amounts
paid by it in satisfaction of indemnification obligations owed by the General
Partner to present or former directors of the General Partner or its
predecessors, as provided for in or pursuant to the Charter and Bylaws of the
General Partner.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity.
D. The Partnership may purchase and maintain insurance, on behalf of
the Indemnities and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participates or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of Section 7.7; and actions taken or
omitted by the Indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
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I. It is the intent of the Partners that any amounts paid by the
Partnership to the General Partner pursuant to this Section 7.7 shall be treated
as a "guaranteed payment" within the meaning of Section 707(c) of the Code.
Section 7.8 Liability of the General Partner
--------------------------------
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable or accountable in damages or
otherwise to the Partnership, any Partners or any Assignees for losses
sustained, liabilities incurred or benefits not derived as a result of errors in
judgment or mistakes of fact or law or of any act or omission if the General
Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the General Partner's stockholders collectively, that the General Partner is
under no obligation to give priority to the separate interests of the Limited
Partners or the General Partner's stockholders (including, without limitation,
the tax consequences to either) in deciding whether to cause the Partnership to
take (or decline to take) any actions.
C. Subject to its obligations and duties as General Partner set
forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
E. Notwithstanding anything herein to the contrary, except for
fraud, willful misconduct and gross negligence, or pursuant to any express
indemnities given to the Partnership by any Partner pursuant to any other
written instrument, no Partner shall have any personal liability whatsoever, to
the Partnership or to the other Partners, for the debts or liabilities of the
Partnership or its obligations hereunder, and the full recourse of the other
Partners shall be limited to the interest of such Partners in the Partnership.
To the fullest extent permitted by law, no officer, director or stockholder of
the General Partner shall be liable to the Partnership for money damages except
for (i) active and deliberate dishonesty established by a final judgment or (ii)
actual receipt of an improper benefit or profit in money, property or services.
Without limitation of the foregoing, and except for fraud, willful misconduct
and gross negligence, or pursuant to any such express indemnity, no property or
assets of any Partners, other than its interest in the Partnership, shall be
subject to levy, execution or other enforcement procedures for the satisfaction
of any judgment (or other judicial process) in favor of any other Partner(s) and
arising out of, or in connection with, this Agreement. This Agreement is
executed by the officers of the General Partner solely as officers of the same
and not in their own individual capacities.
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Section 7.9 Other Matters Concerning the General Partner
--------------------------------------------
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which such General Partner
reasonably believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
C. The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner to continue to qualify as a REIT or (ii) to avoid the General Partner
incurring any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
Section 7.10 Title to Partnership Assets
---------------------------
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
--------
however, that the General Partner shall use its best efforts to cause beneficial
- -------
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the
property of the Partnership in its books and records, irrespective of the name
in which legal title to such Partnership assets is held.
Section 7.11 Reliance by Third Parties
-------------------------
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to
34
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deal with the General Partner as if it were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby waives any
and all defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
ARTICLE 8.
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
-----------------------
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement or under the Act.
Section 8.2 Management of Business
----------------------
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operations, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent, representative, or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
--------------------------------------
Subject to any agreements entered into by a Limited Partner or its
Affiliates with the General Partner, the Partnership or a Subsidiary, any
Limited Partner and any officer, director, employee, agent, trustee, Affiliate
or stockholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition
with the Partnership. Neither the Partnership nor any Partners shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. Subject to such agreements, none of the Limited Partners
nor any other Person shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any business ventures of any
other Person, other than the General Partner, and such Person shall have no
obligation pursuant to this Agreement to offer any interest in any such business
ventures to the Partnership, any
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Limited Partner or any such other Person, even if such opportunity is of a
character which, if presented to the Partnership, any Limited Partner or such
other Person, could be taken by such Person.
Section 8.4 Return of Capital
-----------------
Except pursuant to the rights of Exchange set forth in Section 8.6, no
Limited Partner shall be entitled to the withdrawal or return of his Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. No Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions or, except to the
extent otherwise expressly provided in this Agreement, as to profits, losses,
distributions or credits.
Section 8.5 Rights of Limited Partners Relating to the Partnership
------------------------------------------------------
A. In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense:
(1) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by the General
Partner pursuant to the Exchange Act and each report sent to the
stockholders of the General Partner;
(2) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers
of attorney pursuant to which this Agreement, the Certificate and
all amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of cash
and a description and statement of any other property or services
contributed by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a
Partner.
B. The Partnership shall notify each Limited Partner in writing of
any adjustment made in the calculation of the REIT Shares Amount within 10
Business Days of the date such change becomes effective.
C. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole and absolute discretion to
be reasonable, any information that (i) the General Partner believes to be in
the nature of trade secrets or other information the
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disclosure of which the General Partner in good faith believes is not in the
best interests of the Partnership or the General Partner or (ii) the Partnership
or the General Partner is required by law or by agreements with unaffiliated
third parties to keep confidential.
Section 8.6 Exchange Rights
---------------
A. The Limited Partners shall have the following exchange rights:
(1) On or after the date one year after the Effective Date, each
Limited Partner who was a Limited Partner on December 27, 1993
and each Substituted Limited Partner who received his Partnership
Interest from a Limited Partner who was a Limited Partner on
December 27, 1993 shall have the right (subject to the terms and
conditions set forth herein) to require the General Partner to
acquire all or a portion of the Partnership Units held by such
Limited Partner (such Partnership Units being hereafter "Tendered
Units") in exchange for REIT Shares (an "Exchange"). Any
Exchange shall be exercised pursuant to a Notice of Exchange
delivered to the General Partner by the Limited Partner who is
exercising such right (the "Tendering Partner").
(2) Each Additional Limited Partner shall have the right (subject to
the terms and conditions as set forth herein) to require the
General Partner to acquire all or a portion of the Partnership
Units held by such Limited Partner (also referred to as "Tendered
Units") in an Exchange. Any such Exchange shall be exercised
pursuant to a Notice of Exchange delivered to the General Partner
by such Tendering Partner. Any such Exchange may not occur until
the first anniversary of the date on which such Limited Partner
is admitted to the Partnership, provided that the General Partner
in its sole and absolute discretion may agree to permit an
Exchange at an earlier time or times, either by agreement with
the Additional Limited Partner entered into at the time of such
admission or by agreement at any time thereafter, and such
agreement need not be reflected by an amendment hereto.
B. A Tendering Partner effecting an Exchange shall have the right to
receive, on the Specified Exchange Date, the REIT Shares Amount with respect to
the Tendered Units, subject to the limitations on ownership and transfer of REIT
Shares and provisions with respect to Excess Shares set forth in Article VII of
the Charter. The REIT Shares Amount shall be delivered as duly authorized,
validly issued, fully paid and nonassessable REIT Shares and, if applicable,
rights, free of any pledge, lien, encumbrance or restriction, other than those
provided in the Charter, the Bylaws of the General Partner, the Securities Act,
relevant state securities or blue sky laws and any applicable registration
rights agreement with respect to such REIT Shares entered into by the Tendering
Partner. Notwithstanding any delay in such delivery (but subject to Section
8.6.C), the Tendering Partner shall be deemed the owner of such REIT Shares and
rights for all purposes, including without limitation, rights to vote or
consent, receive dividends, and exercise rights, as of the Specified Exchange
Date.
C. Notwithstanding the provisions of Section 8.6.A and 8.6.B or any
other provision of this Agreement, a Limited Partner (i) shall not be entitled
to effect an Exchange to the extent the ownership or right to acquire REIT
Shares pursuant to such Exchange by such
37
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Partner on the Specified Exchange Date would cause such Partner or any other
Person to violate the restrictions on ownership and transfer of REIT Shares set
forth in Article VII of the Charter and (ii) shall have no rights under this
Agreement to acquire REIT Shares which would otherwise be prohibited under the
Charter. To the extent any attempted Exchange would be in violation of this
Section 8.6.C., it shall be null and void ab initio and such Limited Partner
shall not acquire any rights or economic interest in the REIT Shares otherwise
issuable upon such Exchange.
D. Notwithstanding anything herein to the contrary (but subject to
Section 8.6.C), with respect to any Exchange pursuant to this Section 8.6:
(1) All Partnership Units acquired by the General Partner pursuant
thereto shall automatically, and without further action required,
be converted into and deemed to be General Partner Interests
comprised of the same number of Partnership Units.
(2) Each Limited Partner may not effect an Exchange for less than 500
Partnership Units or, if the Limited Partner holds less than 500
Partnership Units, all of the Partnership Units held by such
Limited Partner.
(3) Each Limited Partner may not effect an Exchange during the period
after the Partnership Record Date with respect to a distribution
and before the record date established by the General Partner for
a distribution to its stockholders of some or all of its portion
of such distribution.
(4) Limited Partners who are Immediate Family members of Alexander
Haagen, Sr. or Seymour Kreshek may effect an Exchange only once
in each three-month period.
(5) The consummation of any Exchange shall be subject to the
expiration or termination of the applicable waiting period, if
any, under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
(6) [Intentionally Deleted].
(7) Each Tendering Partner shall continue to own all Partnership
Units subject to any Exchange, and be treated as a Limited
Partner with respect to such Partnership Units for all purposes
of this Agreement, until such Partnership Units are transferred
to the General Partner and paid for on the Specified Exchange
Date. Until a Specified Exchange Date, the Tendering Partner
shall have no rights as a stockholder of the General Partner.
E. Notwithstanding anything herein to the contrary (but subject to
Section 8.6.C), Limited Partners shall have the right solely upon any sale,
exchange, disposition or other transfer of any Property by the Operating
Partnership, to effect an Exchange for up to the amount of registered REIT
Shares which, when sold by the holders thereof, would equal or exceed the total
liability of each Tendering Partner for federal, state and local income and
franchise taxes and other taxes resulting from (i) such sale, exchange,
disposition or other transfer of such Property and (ii) the exchange of the
Tendered Units for REIT Shares.
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ARTICLE 9.
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
----------------------
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3 or Section 8.5.A.
Any records maintained by or on behalf of the Partnership in the regular course
of its business may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, micrographics or any other information storage device,
provided that the records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of the Partnership
shall be maintained, for financial and tax reporting purposes, on an accrual
basis in accordance with generally accepted accounting principles.
Section 9.2 Fiscal Year
-----------
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
-------
A. As soon as practicable, but in no event later than 105 days after
the close of each Partnership Year, or such later date as they are filed with
the Securities and Exchange Commission, the General Partner shall cause to be
mailed to each Limited Partner as of the close of the Partnership Year, an
annual report containing financial statements of the Partnership, or of the
General Partner if such statements are prepared solely on a consolidated basis
with the General Partner, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner.
B. As soon as practicable, but in no event later than 105 days after
the close of each calendar quarter (except the last calendar quarter of each
year) or such later date as they are filed with the Securities and Exchange
Commission, the General Partner shall cause to be mailed to each Limited Partner
as of the last day of the calendar quarter, a report containing unaudited
financial statements of the Partnership, or of the General Partner, if such
statements are prepared solely on a consolidated basis with the applicable law
or regulation, or as the General Partner determines to be appropriate.
ARTICLE 10.
TAX MATTERS
Section 10.1 Preparation of Tax Returns
--------------------------
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within 90 days of the close of each
taxable year, the tax information reasonably required by Limited Partners for
federal and state income tax reporting purposes. The Limited Partners shall
promptly provide the General Partner with such information relating to the
Contributed
39
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Properties, including tax basis and other relevant information, as may be
reasonably requested by the General Partner from time to time.
Section 10.2 Tax Elections
-------------
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code, including the election under Section 754 of the Code. The
General Partner shall have the right to seek to revoke any such election
(including without limitation, any election under Section 754 of the Code) upon
the General Partner's determination in its sole and absolute discretion that
such revocation is the best interests of the Partners.
Section 10.3 Tax Matters Partner
-------------------
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6223(c)(3) of
the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address and profit interest of each
of the Limited Partners; provided, however, that such information is provided to
-------- -------
the Partnership by the Limited Partners.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial proceedings being
referred to as "judicial review"), and in the settlement
agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within the time
prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner
shall not have the authority to enter into a settlement agreement
on behalf of such Partner or (ii) who is a "notice partner" (as
defined in Section 6231 of the Code) or a member of a "group" (as
defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative adjustment
at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of
such final adjustment, including the filing of a petition for
readjustment with the Tax Court or the United States Claims
Court, or the filing of a complaint for refund with the District
Court of the United States for the district in which the
Partnership's principal place of business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
40
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(4) to file a request for an administrative adjustment with the IRS
at any time and, if any part of such request is not allowed by
the IRS, to file an appropriate pleading (petition or complaint)
for judicial review with respect to such request;
(5) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to
be taken into account by a Partner for tax purposes, or an item
affected by such item; and
(6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters
partner in performing his duties as such (including legal and accounting fees)
shall be borne by the Partnership. Nothing herein shall be construed to
restrict the Partnership from engaging an accounting firm to assist the tax
matters partner in discharging his duties hereunder, so long as the compensation
paid by the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
-----------------------
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a 60-month period as provided in
Section 709 of the Code.
Section 10.5 Withholding
-----------
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within 15 days after notice from the General Partner that
such payment must be made unless (i) the Partnership withholds such payment from
a distribution which would otherwise be made to the Limited Partner or (ii) the
General Partner determines, in its sole and absolute discretion, that such
payment may be satisfied out of the available funds of the Partnership which
would, but for such payment, be distributed to the Limited Partner. Any amounts
withheld pursuant to the foregoing clauses (i) or (ii) shall be treated as
having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.5. In the event that a
41
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Limited Partner fails to pay any amounts owed to the Partnership pursuant to
this Section 10.5 when due, the General Partner may, in its sole and absolute
discretion, elect to make the payment to the Partnership on behalf of such
defaulting Limited Partner, and in such event shall be deemed to have loaned
such amount to such defaulting Limited Partner and shall succeed to all rights
and remedies of the Partnership as against such defaulting Limited Partner
(including, without limitation, the right to receive distributions). Any amounts
payable by a Limited Partner hereunder shall bear interest at the base rate on
corporate loans at large United States money center commercial banks, as
published from time to time in the Wall Street Journal, plus 1.0 percentage
-------------------
points (but not higher than the maximum lawful rate) from the date such amount
is due (i.e., 15 days after demand) until such amount is paid in full. Each
Limited Partner shall take such actions as the Partnership or the General
Partner shall request in order to perfect or enforce the security interest
created hereunder.
ARTICLE 11.
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
--------
A. The term "transfer," when used in this Article 11 with respect to
a Partnership Unit, shall be deemed to refer to a transaction by which the
General Partner purports to assign its General Partner Interest to another
Person or by which a Limited Partner purports to assign its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift (outright or
in trust), pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise. The term "transfer" when used in this Article
11 does not include any redemption of Partnership Units by the Partnership or
acquisition of Partnership Units from a Limited Partner by the General Partner
pursuant to Section 8.6. No part of the interest of a Limited Partner shall be
subject to the claims of any creditor, any spouse for alimony or support, or to
legal process, and may not be voluntarily or involuntarily alienated or
encumbered except as may be specifically provided for in this Agreement.
B. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void ab initio.
Section 11.2 Transfer of General Partner's Partnership Interest
--------------------------------------------------
A. The General Partner shall not withdraw from the Partnership and
shall not sell, assign, pledge, encumber or otherwise dispose of all or any
portion of its interest in the Partnership (whether by sale, disposition,
statutory merger or consolidation, liquidation or otherwise) without the Consent
of the Limited Partners. Upon any transfer of such a Partnership Interest
pursuant to the Consent of the Limited Partners and otherwise in accordance with
the provisions of this Section 11.2, the transferee shall become a Substitute
General Partner for all purposes herein, and shall be vested with the powers and
rights of the transferor General Partner, and shall be liable for all
obligations and responsible for all duties of the General Partner, once such
transferee has executed such instruments as may be necessary to effectuate such
admission and to confirm the agreement of such transferee to be bound by all the
terms and provisions of this Agreement with respect to the Partnership Interest
so acquired. It is a condition to any such transfer that the transferee
assumes, by express agreement in a form suitable for filing or
42
<PAGE>
recordation, as necessary, all of the obligations of the transferor General
Partner under this Agreement with respect to such transferred Partnership
interest, and no such transfer (other than pursuant to a statutory merger or
consolidation wherein all obligations and liabilities of the transferor General
Partner are assumed by a successor corporation by operation of law) shall
relieve the transferor General Partner of its obligations under this Agreement
without the Consent of the Limited Partners. In the event the General Partner
withdraws from the Partnership, in violation of this Agreement or otherwise, or
otherwise dissolves or terminates, or upon the bankruptcy of the General
Partner, a Majority In Interest of the Limited Partners may elect to continue
the Partnership business by selecting a Substitute General Partner in accordance
with the Act.
B. In addition to, and not in lieu of, the restrictions set forth
elsewhere in this Agreement, including without limitation in Section 11.2.A and
Section 7.3E hereof, the General Partner shall not engage in any merger,
consolidation or other combination with or into another person, sale of all or
substantially all of its assets or any reclassification, recapitalization or
change of its outstanding equity interests (each, a "Termination Transaction"),
unless (i) the Termination Transaction has been approved by a Consent of the
Partners, and (ii) except as otherwise provided in Section 11.2.C, in connection
with which all Limited Partners either will receive, or will have the right to
elect to receive, for each Partnership Unit an amount of cash, securities, or
other property equal to the product of the REIT Shares Amount and the greatest
amount of cash, securities or other property paid to a holder of one REIT Share
in consideration of one REIT Share pursuant to the terms of the Termination
Transaction; provided that, if, in connection with the Termination Transaction,
--------
a purchase, tender or exchange offer shall have been made to and accepted by the
holders of the outstanding REIT Shares, each Limited Partner shall receive, or
shall have the right to elect to receive, the greatest amount of cash,
securities, or other property which such holder would have received had it
exercised its right to Redemption (as set forth in Section 8.6) and received
REIT Shares in exchange for its Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer and had thereupon accepted
such purchase, tender or exchange offer and then such Termination Transaction
shall have been consummated.
C. In addition to, and not in lieu of, the restrictions set forth
elsewhere in this Agreement, including without limitation in Section 11.2.A and
Section 7.3.E hereof, the General Partner may merge, or otherwise combine its
assets, with another entity without satisfying the requirements of Section
11.2.B(ii) hereof if: (i) immediately after such merger or other combination,
substantially all of the assets directly or indirectly owned by the surviving
entity, other than Partnership Units hold, by such General Partner, are owned
directly or indirectly by the Partnership or another limited partnership or
limited liability company which is the survivor of a merger, consolidation or
combination of assets with the Partnership (in each case, the "Surviving
Partnership"); (ii) the Limited Partners own a percentage interest of the
Surviving Partnership based on the relative fair market value of the net assets
of the Partnerships (as determined pursuant to Section 11.2.E) and the other net
assets of the Surviving Partnership (as determined pursuant to Section 11.2.E)
immediately prior to the consummation of such transaction; (iii) the rights,
preferences and privileges of the Limited Partners in the Surviving Partnership
are at least as favorable as those in effect immediately prior to the
consummation of such transaction and as those applicable to any other limited
partners or non-managing members of the Surviving Partnership; and (iv) such
rights of the Limited Partners include the right to exchange their interests in
the Surviving Partnership for at least one of: (a) the consideration available
to such Limited Partners pursuant to Section 11.2.B or (b) if the ultimate
controlling
43
<PAGE>
person of the Surviving Partnership has publicly traded common equity
securities, with an exchange ratio based on the relative fair market value of
such securities (as determined pursuant to Section 11.2.E) and the REIT Shares.
D. In connection with any transaction described in Section 11.2.B or
Section 11.2.C hereof, the General Partner shall use its commercially reasonable
efforts to structure such Termination Transaction to avoid causing the Limited
Partners to recognize gain for federal income tax purposes by virtue of the
occurrence of or their participation in such Termination Transaction.
E. In connection with any transaction described in Section 11.2.B or
11.2.C, the relative fair market values shall be reasonably determined by the
General Partner as of the time of such transaction and, to the extent
applicable, shall be no less favorable to the Limited Partners than the relative
values reflected in the terms of such transaction.
Section 11.3 Limited Partners' Rights to Transfer
------------------------------------
A. Any Limited Partner may, at any time, without the consent of the
General Partner, (i) transfer all or any portion of its Partnership Interest to
the General Partner, subject to the provisions of Section 11.6, (ii) transfer
all or any portion of its Partnership Interest to an Affiliate, another original
Limited Partner or to an Immediate Family member, subject to the provisions of
Section 11.6, (iii) transfer all or any portion of its Partnership Interest
pursuant to its rights to effect an Exchange as provided in Section 8.6 hereof,
(iv) pledge all or any portion of its Partnership Interest to a lending
institution, which is not an Affiliate of such Limited Partner, as collateral or
security for a bona fide loan or other extension of credit, and transfer such
pledged Partnership Interest to such lending institution in connection with the
exercise of remedies under such loan or extension or credit, and (v) if such
Limited Partner is one of the initial Limited Partners of the Partnership and is
a partnership, such Limited Partner may distribute all of its Partnership
Interest to the partners of such partnership pursuant to a dissolution or
liquidation of the Limited Partner.
It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such transferred Partnership Interest and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under
this Agreement without the approval of the General Partner, in its sole and
absolute discretion. Notwithstanding the foregoing, any transferee of any
transferred Partnership Interest shall be subject to any and all ownership
limitations contained in the Charter which may limit or restrict such
transferee's ability to exercise its Exchange rights. Any transferee, whether
or not admitted as a Substituted Limited Partner, shall take subject to the
obligations of the transferor hereunder. Unless admitted as a Substituted
Limited Partner, no transferee, whether by a voluntary transfer, by operation of
law or otherwise, shall have any rights hereunder, other than the rights of an
Assignee as provided in Section 11.5.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but not
more rights than those enjoyed by other Limited
44
<PAGE>
Partners, for the purpose of settling or managing the estate, and such power as
the Incapacitated Limited Partner possessed to transfer all or any part of his
or its interest in the Partnership. The Incapacity of a Limited Partner, in and
of itself, shall not dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer otherwise permitted
under this Section 11.3 by a Limited Partner of his Partnership Units if, in the
opinion of legal counsel to the Partnership, such transfer would require the
filing of a registration statement under the Securities Act by the Partnership
or would otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Units.
D. No transfer by a Limited Partner of his Partnership Units
(including any Exchange) may be made to any person if (i) in the opinion of
legal counsel for the Partnership, it would result in the Partnership being
treated as an association taxable as a corporation, or (ii) such transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704 of
the Code.
Section 11.4 Substituted Limited Partners
----------------------------
A. No Limited Partner shall have the right to substitute a
transferee (including transferees pursuant to transfers permitted by Section
11.3, other than pursuant to Section 11.3 (v) as set forth below) as a Limited
Partner in his place. The General Partner shall, however, have the right to
consent to the admission of a transferee of the interest of a Limited Partner
pursuant to this Section 11.4 as a Substituted Limited Partner, which consent
may be given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner. Notwithstanding
the foregoing, transferees pursuant to Section 11.3(v) who were partners in the
Limited Partner at the time the Limited Partner became a Partner in this
Partnership may become Substitute Limited Partners and the General Partner
hereby consents in advance to the admission of such transferees as Substitute
Limited Partners; provided, however, in no event shall this exception apply to
Partnership Interests representing more than 40 percent of the Percentage
Interests of the Partnership.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
---------
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain and loss attributable to the
Partnership Units assigned to
45
<PAGE>
such transferee, the rights to transfer the Partnership Units provided in this
Article 11, and the rights to effect an Exchange provided in Section 8.6, but
shall not be deemed to be a holder of Partnership Units for any other purpose
under this Agreement, and shall not be entitled to effect a Consent with respect
to such Partnership Units on any matter presented to the Limited Partners for
approval (such Consent remaining with the transferor Limited Partner). In the
event any such transferee desires to make a further assignment of any such
Partnership Units, such transferee shall be subject to all the provisions of
this Article 11 to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions
------------------
A. No Limited Partner may withdraw from the Partnership other than
as a result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11, with respect to which the transferee
becomes a Substituted Limited Partner, or pursuant to an Exchange of all of its
Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of his Partnership
Units in a transfer permitted pursuant to this Article 11 where such transferee
was admitted as a Substituted Limited Partner or pursuant to the exercise of its
rights of Exchange of all of its Partnership Units under Section 8.6 shall cease
to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made as of the
first day of a fiscal quarter of the Partnership, unless the General Partner
otherwise consents, which shall not be unreasonably withheld.
D. [Intentionally Deleted].
E. In addition to any other restrictions on transfer herein
contained, in no event may any transfer or assignment of a Partnership Interest
by any Partner (including any Exchange, any other acquisition of Partnership
Units by the General Partner or any acquisition of Partnership Units by the
Partnership) be made (i) to any person or entity who lacks the legal right,
power or capacity to own a Partnership Interest; (ii) in violation of applicable
law; (iii) of any component portion of a Partnership Interest, such as the
Capital Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest, (iv) in the event such transfer would
cause the General Partner to cease to comply with the REIT Requirements; (v) if
such transfer would cause a termination of the Partnership for federal or state
income tax purposes (except as a result of the Exchange of all Partnership Units
held by all Limited Partners); (vi) if such transfer would, in the opinion of
counsel to the Partnership, cause the Partnership to cease to be classified as a
partnership for Federal income tax purposes (except as a result of the Exchange
of all Partnership Units held by all Limited Partners); (vii) if such transfer
would cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of ERISA, a "party-in-interest" (as defined in Section 3(14)
of ERISA) or a "disqualified person" (as defined in Section 4975(c) of the
Code); (viii) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.2-101; (ix) if such transfer requires the registration of such
Partnership Interest pursuant to any applicable federal or state securities
laws; (x) if such transfer causes the Partnership to become a "Publicly Traded
Partnership," as such term is defined in Sections 469(k)(2) or 7704(b) of the
Code or if such transfer would cause the Partnership to have more
46
<PAGE>
than 500 partners (including as partners those persons indirectly owning an
interest in the Partnership through a partnership, subchapter S corporation or
grantor trust) or to become a reporting Company under the Exchange Act; or (xi)
if such transfer subjects the Partnership to be regulated under the Investment
Company Act of 1940, the Investment Advisors Act of 1940 or the Employee
Retirement Income Security Act of 1974, each as amended.
ARTICLE 12.
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
--------------------------------------
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner with the consent of the Limited Partners shall be admitted to
the Partnership as the General Partner effective upon such transfer. Any such
transferee shall carry on the business of the Partnership without dissolution.
In each case, the admission shall be subject to the successor General Partner
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or instruments as may
be required to effect the admission.
Section 12.2 Admission of Additional Limited Partners
----------------------------------------
A. After the admission to the Partnership of the initial Limited
Partners on the date hereof, a Person (other than an existing Partner) who makes
a Capital Contribution to the Partnership in accordance with this Agreement
shall be admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Section 2.4 hereof and (ii) such other documents or instruments as may be
required in the discretion of the General Partner in order to effect such
Person's admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person and an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
Section 12.3 Amendment of Agreement and Certificate of Limited
-------------------------------------------------
Partnership
- -----------
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
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Section 12.4 Limit on Number of Partners
---------------------------
No Person shall be admitted to the Partnership as an Additional
Partner if the effect of such admission would be to cause the Partnership to
have more than 500 Partners, including as Partners for this purpose those
Persons indirectly owning an interest in the Partnership through another
partnership, subchapter S corporation or a grantor trust, or otherwise cause the
Partnership to become a reporting company under the Exchange Act.
ARTICLE 13.
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
-----------
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the
Act, unless, within 90 days after the withdrawal, a Majority in Interest of the
Limited Partners and at least a Majority in Interest of all the remaining
partners agree in writing, in their sole and absolute discretion, to continue
the business of the Partnership and to the appointment, effective as of the date
of withdrawal, of a substitute General Partner;
C. an election to dissolve the Partnership made by the General
Partner, subject to the Consent of the Limited Partners;
D. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
E. a Terminating Capital Transaction;
F. a bankruptcy of the General Partner within the meaning of the
Act, unless all of the remaining Partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of a date prior
to the date of such bankruptcy, of a substitute General Partner; or
G. the Exchange by all Partners (other than the General Partner) of
all Partnership Units.
Section 13.2 Winding Up
----------
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's
48
<PAGE>
business and affairs. The General Partner (or, in the event there is no
remaining General Partner, any Person elected by a Majority in Interest of the
Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include shares of stock in the General Partner) shall be applied and
distributed in the following order:
(1) First, to the payment and discharge of or provision for all of
the Partnership's debts and liabilities to creditors other than
the Partners;
(2) Second, to the payment and discharge of or provision for all of
the Partnership's debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of or provision for all of
the Partnership's debts and liabilities to the Partners; and
(4) The balance, if any, to the General Partner and Limited Partners
in accordance with their positive Capital Account balances,
determined after taking into account all Capital Account
adjustments for the Partnership taxable year during which the
liquidation occurs (other than those made as a result of the
liquidating distribution set forth in this Section 13.2.A(4)).
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
Section 13.3 Compliance with Timing Requirements of Regulations
--------------------------------------------------
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
If any Partner has a deficit balance in his Capital Account (after giving effect
to all contributions, distributions and allocations for the taxable years,
including the year during which such liquidation occurs), such Partner shall
have no
49
<PAGE>
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever. In the
discretion of the General Partner, a pro rata portion of the distributions that
would otherwise be made to the General Partner and Limited Partners pursuant to
this Article 13 may be:
(A) distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the General Partner, in the same
proportions and the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General partner and Limited Partners
pursuant to this Agreement; or
(B) withheld to provide a reasonable reserve for partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided that such withhold
amounts shall be distributed to the General Partner and Limited Partners as soon
as practicable.
Section 13.4 Deemed Distribution and Recontribution
--------------------------------------
Notwithstanding any other provision of this Article 13, in the event
the Partnership is liquidated within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's property
shall not be liquidated, the Partnership's liabilities shall not be paid or
discharged, and the Partnership's affairs shall not be wound up. Instead, the
Partnership shall be deemed to have distributed the Property in kind to the
General Partner and Limited Partners, who shall be deemed to have assumed and
taken such property subject to all Partnership liabilities, all in accordance
with their respective Capital Accounts. Immediately thereafter, the General
Partner and Limited Partners shall be deemed to have recontributed the
Partnership property in kind to the Partnership, which shall be deemed to have
assumed and taken such property subject to all such liabilities.
Section 13.5 Rights of Limited Partners
--------------------------
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of his Capital
Contribution. No Limited Partner shall have priority over any other Limited
Partner as to the return of his Capital Contributions, distributions or
allocations.
Section 13.6 Notice of Dissolution
---------------------
In the event a Liquidating Event occurs or an event occurs that would,
but for provisions of Section 13.1, result in a dissolution of the Partnership,
the General Partner shall, within 30 days thereafter, provide written notice
thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of the
General Partner) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Partnership regularly conduct business
(as determined in the discretion of the General Partner).
50
<PAGE>
Section 13.7 Cancellation of Certificate of Limited Partnership
--------------------------------------------------
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of California shall be
cancelled and such other actions as may be necessary to wind up the Partnership
shall be taken.
Section 13.8 Reasonable Time for Winding-Up
------------------------------
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
ARTICLE 14.
PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS
Section 14.1 Procedures For Actions And Consents of Partners
-----------------------------------------------
A. The actions requiring consent or approval of Limited Partners
pursuant to this Agreement, including Section 7.3, or otherwise pursuant to
applicable law, are subject to the following procedures.
B. Amendments to this Agreement may be proposed by the General
Partner or by any Limited Partners holding 20 percent or more of the Partnership
Units held by Limited Partners. Following such proposal, the General Partner
shall submit any proposed amendment to the Limited Partners. The General
Partner shall seek the written consent of the Partners on the proposed amendment
or shall call a meeting to vote thereon and to transact any other business that
it may deem appropriate. For purposes of obtaining a written consent, the
General Partner may require a response within a reasonable specified time, but
not less than 15 days, and failure to respond in such time period shall
constitute a consent which is consistent with the General Partner's
recommendation with respect to the proposal; provided, that, an action shall
-------- ----
become effective at such time as requisite consents are received even if prior
to such specified time.
C. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding 20 percent or more of the Limited Partnership
Interests. The call shall state the nature of the business to be transacted.
Notice of any such meeting shall be given to all Partners not less than seven
days nor more than 30 days prior to the data of such meeting. Partners may vote
in person or by proxy at such meeting. Whenever the vote or Consent of Partners
is permitted or required under this Agreement, such vote or Consent may be given
at a meeting of Partners or may be given in accordance with the procedure
prescribed in Section 14.1.D.
D. Any action required or permitted to be taken by the meeting of
the Partners may be taken without a meeting if a written consent setting forth
the action so taken is signed by the percentage as is expressly required by this
Agreement for the action in question. Such consent may be in one instrument or
in several instruments, and shall have the same force and effect as a vote of
the Percentage Interests of the Partners (expressly required by this
51
<PAGE>
Agreement). Such consent shall be filed with the General Partner. An action so
taken shall be deemed to have been taken at a meeting held on the effective date
so certified.
E. Each Limited Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Limited Partner executing it.
F. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate.
ARTICLE 15.
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
--------------------
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by
certified mail, postage prepaid, return receipt requested, or by other means of
written communication (including by telecopy, facsimile, or commercial courier
service) to the Partner or Assignee at the address set forth in Exhibit A or
such other address as the Partners shall notify the General Partner in writing.
Section 15.2 Titles and Captions
-------------------
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
--------------------
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 Further Action
--------------
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
--------------
This Agreement shall be binding upon an inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
52
<PAGE>
Section 15.6 Creditors
---------
None of the provisions of this Agreement shall be for the benefit of,
or shall be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
------
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon any breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
------------
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 Applicable Law
--------------
This Agreement shall be construed in accordance with and governed by
the laws (other than the law governing the choice of law) of the State of
California, without regard to the principles of conflicts of law. In the event
of a conflict between any provision of this Agreement and any non-mandatory
provision of the Act, the provisions of this Agreement shall control and take
precedence.
Section 15.10 Invalidity of Provisions
------------------------
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 Maximum Amount Paid or Credited to General Partner
--------------------------------------------------
To the extent that the amount paid or credited to the General Partner
or its officers, directors, employees or agents pursuant to Section 7.4 or
Section 7.7 would constitute gross income to the General Partner for purposes of
Sections 856(c)(2) or 856(c)(3) of the Code (a "General Partner Payment") then,
notwithstanding any other provision of this Agreement, the amount of such
General Partner Payments for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) 4.17% of
the General Partners' total gross income (but not including the amount
of any General Partner Payments) for the fiscal year which is
described in subsections (A) through (H) of Section 856(c)(2) of the
Code over (b) the amount of gross income (within the meaning of
Section 856(c)(2) of the Code) derived by the General Partner from
sources other than those described in subsections (A) through (H) of
Section 856(c)(2) of the Code (but not including the amount of any
General Partner Payments); or
53
<PAGE>
(ii) an amount equal to the excess, if any, of (a) 25% of
the General Partners' total gross income (but not including the amount
of any General Partner Payments) for the fiscal year which is
described in subsections (A) through (I) of Section 856(c)(3) of the
Code over (b) the amount of gross income (within the meaning of
Section 856(c)(3) of the Code) derived by the General Partner from
sources other than those described in subsections (A) through (I) of
Section 856(c)(3) of the Code (but not including the amount of any
General Partner Payments);
provided, however, that General Partner Payments in excess of the amounts set
- -------- -------
forth in paragraphs (i) or (ii) above may be made if the General Partner, as a
condition precedent, obtains the opinion of tax counsel that the receipt of such
excess amounts would not adversely affect the General Partner's ability to
qualify as a REIT. To the extent GP Payments may not be made in a year due to
the above limitations, such General Partner Payments shall carry over and be
treated as arising in the following year, provided, however, that such amounts
-------- -------
shall not carry over for more than five years, and if not paid within such five
year period, shall expire; provided further, that (i) as General Partner
----------------
Payments are made, such payments shall be applied first to carry over amounts
outstanding, if any, and (ii) with respect to carry over amounts for more than
one Partnership Year, such payments shall be applied to the earliest Partnership
Year first.
Section 15.12 Partition
---------
No Partner nor any successor-in-interest to a Partner shall have the
right while this Agreement remains in effect to have any property of the
Partnership partitioned, or to file a complaint or institute to any proceeding
at law or in equity to have such property of the Partnership partitioned, and
each Partner, on behalf of itself and its successors and assigns hereby waives
any such right. It is the intention of the Partners that the rights of the
parties hereto and their successors-in-interest to Partnership Property, as
among themselves, shall be governed by the terms of this Agreement, and that the
rights of the Partners and their successors-in-interest shall be subject to the
limitations and restrictions as set forth in this Agreement.
Section 15.13 No Third-Party Rights Created Hereby
------------------------------------
The provisions of this Agreement are solely for the purpose of
defining the interests of the Partners, inter se; and no other person, firm or
entity (i.e., a party who is not a signatory hereto or a permitted successor to
such signatory hereto) shall have any right, power, title or interest by way of
subrogation or otherwise, in and to the rights, powers, title and provisions of
this Agreement.
54
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
"GENERAL PARTNER"
CENTER TRUST, INC., a Maryland corporation
By: /s/ Edward D. Fox
---------------------------------------
Name: Edward D. Fox
Title: Chief Executive Officer and
President
55
<PAGE>
<TABLE>
<CAPTION>
Agreed Gross Asset
Name and Value of Value of
Address Cash Contributed Contributed Total Partnership Percentage
of Partner Contributions Property* Property Contributions Units Interest
- -------------------------------------- -------------- ------------ ------------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ed Krasnove
Saul Kreshek
Alex Kreshek
Russell Grosse
Margaret Lewicki
Ernest Grossman
Tom Corley
Gresham - RPR Associates
Peter T. Jouflas
Federal Way Shopping Center Associates
Scott Shanks
Hughes Investments
BARTFAM
CJJ Limited Partnership
Cecile C. Bartman
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Agreed Gross Asset
Name and Value of Value of
Address Cash Contributed Contributed Total Partnership Percentage
of Partner Contributions Property* Property Contributions Units Interest
- -------------------------------------- -------------- ------------ ------------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
HI-Loma
Speer Family Partnership
HI-NC
The Harry J.L. Frank, Jr. and Margaret
S. Frank Family Trust U/A 5/9/91
Cecile C. Bartman, Trustee under the
Will of Bernard Citron, deceased
Hughes Milliken Associates
Visalia MKP, Inc.
Myrtle Gronske
Holmes Development Group, Inc.
John L. Holmes
North Mountain Village Shopping
Center Limited Partnership, a
California limited partnership
</TABLE>
*Gross Asset Value net of Debt (if any) to which the Contributed
Property is subject.
A-2
<PAGE>
EXHIBIT B
NOTICE OF EXCHANGE
The undersigned hereby irrevocably (i) exchanges ____________
Partnership Units in CT Operating Partnership, L.P. in accordance with the terms
of the Amended and Restated Agreement of Limited Partnership of CT Operating
Partnership, L.P. and the Exchange Right referred to therein, (ii) surrenders
such Partnership Units and all right, title and interest therein, and (iii)
directs that the REIT Shares deliverable upon exercise of the right of Exchange
be delivered to the address specified below, and such REIT Shares be registered
or placed in the name(s) and at the address(es) specified below.
Dated: ________________________
Name of Limited Partner:
________________________________________________
(Signature of Limited Partner)
________________________________________________
(Street Address)
________________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
________________________________________________
REIT Shares are to be issued to:
Please insert social security or identifying number:
Name:
B-1
<PAGE>
EXHIBIT C
FORM OF UNIT CERTIFICATE
Certificate for OP Units
of
CT Operating Partnership, L.P.
No. __________________ _______________ OP UNITS
Center Trust, Inc., as the General Partner of CT Operating
Partnership, L.P., a California limited partnership (the "Operating
Partnership"), hereby certifies that _________________________________________
is a Limited Partner of the Operating Partnership whose Partnership Interests
therein, as set forth in the Amended and Restated Agreement of Limited
Partnership of CT Operating Partnership, L.P. (the "Partnership Agreement"),
under which the Operating Partnership is existing and as filed in the Office of
the Secretary of State of California (copies of which are on file at the
Operating Partnership's principal office at 3500 Sepulveda Boulevard, Manhattan
Beach, California), represent _________ units of limited partnership interest in
the Operating Partnership (the "OP Units").
THE OP UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT AS OF
DECEMBER 27, 1993 AS IT MAY BE AMENDED FROM TIME TO TIME (A COPY OF WHICH IS ON
FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN SUCH
AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE OP UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT
(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER.
DATED: CENTER TRUST, INC.
General Partner of CT Operating
Partnership, L.P.
ATTEST:
By: __________________________________ By: ____________________________
Steven M. Jaffe Edward D. Fox
Secretary Chief Executive Officer and
President
C-1
<PAGE>
EXHIBIT D
The term "Constructively Owns" means ownership determined through the
application of the constructive ownership rules of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code. Generally, these rules provide the
following:
a. an individual is considered as owning the Ownership Interest that
is owned, directly or constructively, by or for his spouse, his
children, his grandchildren, and his parents;
b. an Ownership Interest that is owned, directly or constructively,
by or for a partnership or estate is considered as owned
proportionately by its partners or beneficiaries;
c. an Ownership Interest that is owned, directly or constructively,
by or for a trust is considered as owned by its beneficiaries in
proportion to the actuarial interest of such beneficiaries
(provided, however, that in the case of a "grantor trust" the
Ownership Interest will be considered as owned by the grantors);
d. if 10 percent or more in value of the stock in a corporation is
owned, directly or constructively, by or for any person, such
person shall be considered as owning the Ownership Interest that
is owned, directly or constructively, by or for such corporation
in that proportion which the value of the stock which such person
so owns bears to the value of all the stock in such corporation;
e. an Ownership Interest that is owned, directly or constructively,
by or for a partner of a partnership or a beneficiary of an
estate or trust shall be considered as owned by the partnership,
estate, or trust;
f. if 10 percent or more in value of the stock in a corporation is
owned, directly or constructively, by or for any person, such
corporation shall be considered as owning the Ownership Interest
that is owned, directly or constructively, by or for such person;
g. if any person has an option to acquire an Ownership Interest
(including an option to acquire an option or any one of a series
of such options), such Ownership Interest shall be considered as
owned by such person;
h. an Ownership Interest that is constructively owned by a person by
reason of the application of the rules described in paragraphs
(a) through (g) above shall, for purposes of applying paragraphs
(a) through (g), be considered as directly owned by such person
provided, however, that (i) an Ownership Interest constructively
owned by an individual by reason of paragraph (a) shall not be
considered as owned by him for purposes of again applying
paragraph (a) in order to make another the constructive owner of
such Ownership Interest, (ii) an Ownership Interest
constructively owned by a partnership, estate, trust, or
corporation by
D-1
<PAGE>
reason of the application of paragraphs (e) or (f) shall not be
considered as owned by it for purposes of applying paragraphs
(b), (c), or (d) in order to make another the constructive owner
of such Ownership Interest, (iii) if an Ownership Interest may be
considered as owned by an individual under paragraphs (a) or (g),
it shall be considered as owned by him under paragraph (g), and
(iv) for purposes of the above described rules, an S corporation
shall be treated as a partnership and any shareholder of the S
corporation shall be treated as a partner of such partnership
except that this rule shall not apply for purposes of determining
whether stock in the S corporation is constructively owned by any
person.
i. For purposes of the above summary of the constructive ownership
rules, the term "Ownership Interest" means the ownership of stock
with respect to a corporation and, with respect to any other type
of entity, the ownership of an interest in either its assets or
net profits.
D-2
<PAGE>
EXHIBIT 10.2
THE SECOND AMENDED AND RESTATED 1993 STOCK OPTION AND
INCENTIVE PLAN FOR
OFFICERS, DIRECTORS AND
KEY EMPLOYEES OF
CENTER TRUST, INC.
AND
CT OPERATING PARTNERSHIP, L.P.
<PAGE>
THE SECOND AMENDED AND RESTATED 1993 STOCK OPTION AND
INCENTIVE PLAN FOR
OFFICERS, DIRECTORS AND
KEY EMPLOYEES OF
CENTER TRUST, INC.
AND
CT OPERATING PARTNERSHIP, L.P.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS.................................................................... 2
1.1 General...................................................................... 2
-------
1.2 Award Limit.................................................................. 3
-----------
1.3 Beneficiary.................................................................. 3
-----------
1.4 Board........................................................................ 3
-----
1.5 Change in Control............................................................ 3
-----------------
1.6 Code......................................................................... 4
----
1.7 Committee.................................................................... 4
---------
1.8 Common Stock................................................................. 4
------------
1.9 Company...................................................................... 4
-------
1.10 Company Employee............................................................. 5
----------------
1.11 Company Subsidiary........................................................... 5
------------------
1.12 Corporate Transaction........................................................ 5
---------------------
1.13 Director..................................................................... 6
--------
1.14 Employee..................................................................... 6
--------
1.15 Exchange Act................................................................. 6
------------
1.16 Fair Market Value............................................................ 6
-----------------
1.17 General Partner Interest..................................................... 7
------------------------
1.18 HPMI......................................................................... 7
----
1.19 HPMI Director................................................................ 7
-------------
1.20 HPMI Employee................................................................ 7
-------------
1.21 HPMI Subsidiary.............................................................. 8
---------------
1.22 Incentive Stock Option....................................................... 8
----------------------
1.23 Independent Director......................................................... 8
--------------------
1.24 Non-Qualified Stock Option................................................... 8
--------------------------
1.25 Option....................................................................... 8
------
1.26 Optionee..................................................................... 9
--------
1.27 Operating Partnership........................................................ 9
---------------------
1.28 Operating Partnership Employee............................................... 9
------------------------------
1.29 Operating Partnership Subsidiary............................................. 9
--------------------------------
1.30 Ownership Limit.............................................................. 9
---------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
1.31 Plan......................................................................... 10
----
1.32 Property Management Agreement................................................ 10
-----------------------------
1.33 QDRO......................................................................... 10
----
1.34 Restricted Stock............................................................. 10
----------------
1.35 Restricted Stockholder....................................................... 10
----------------------
1.36 Rule 16b-3................................................................... 10
----------
1.37 Termination Of Directorship.................................................. 11
---------------------------
1.38 Termination of Employment.................................................... 11
-------------------------
1.39 Gender and Number............................................................ 12
-----------------
ARTICLE II SHARES SUBJECT TO PLAN........................................................ 12
2.1 Shares Subject to Plan....................................................... 12
----------------------
2.2 Add-back of Options and Restricted Stock..................................... 13
----------------------------------------
ARTICLE III GRANTING OF OPTIONS.......................................................... 14
3.1 Eligibility.................................................................. 14
-----------
3.2 Disqualification for Stock Ownership......................................... 15
------------------------------------
3.3 Qualification of Incentive Stock Options..................................... 15
----------------------------------------
3.4 Granting of Options.......................................................... 15
-------------------
ARTICLE IV TERMS OF OPTIONS.............................................................. 18
4.1 Option Agreement............................................................. 18
----------------
4.2 Option Price................................................................. 18
------------
4.3 Option Term.................................................................. 19
-----------
4.4 Option Vesting............................................................... 20
--------------
4.5 Limitations on Exercise of Options Granted to Independent Directors.......... 21
-------------------------------------------------------------------
4.6 Consideration................................................................ 22
-------------
4.7 Limitation in Terms of Option................................................ 23
-----------------------------
ARTICLE V EXERCISE OF OPTIONS............................................................ 23
5.1 Partial Exercise............................................................. 23
----------------
5.2 Time of Exercise............................................................. 23
----------------
5.3 Manner of Exercise........................................................... 23
------------------
5.4 Transfer of Shares to a Company Employee or Independent Director............. 25
----------------------------------------------------------------
5.5 Transfer of Shares to an HPMI Employee or HPMI Director...................... 25
-------------------------------------------------------
5.6 Transfer of Shares to an Operating Partnership Employee...................... 26
-------------------------------------------------------
5.7 Transfer of Payment to the Operating Partnership............................. 27
------------------------------------------------
5.8 Certain Timing Requirements.................................................. 28
---------------------------
5.9 Conditions to Issuance of Stock Certificates................................. 28
--------------------------------------------
5.10 Rights as Stockholders....................................................... 29
----------------------
5.11 Ownership and Transfer Restrictions.......................................... 29
-----------------------------------
5.12 Restrictions on Exercise of Option........................................... 30
----------------------------------
ARTICLE VI AWARD OF RESTRICTED STOCK..................................................... 31
6.1 Eligibility.................................................................. 31
-----------
6.2 Award of Restricted Stock.................................................... 31
-------------------------
ARTICLE VII TERMS OF RESTRICTED STOCK.................................................... 32
7.1 Restricted Stock Agreement................................................... 32
--------------------------
7.2 Consideration to the Company................................................. 32
----------------------------
</TABLE>
ii
<PAGE>
THE SECOND AMENDED AND RESTATED 1993 STOCK OPTION AND
INCENTIVE PLAN FOR
OFFICERS, DIRECTORS AND
KEY EMPLOYEES OF
CENTER TRUST, INC.
AND
CT OPERATING PARTNERSHIP, L.P.
Center Trust, Inc. (formerly known as CenterTrust Retail Properties,
Inc., formerly known as Alexander Haagen Properties, Inc.), a Maryland
corporation, adopted The 1993 Stock Option and Incentive Plan for Officers,
Directors and Key Employees of Center Trust, Inc., CT Operating Partnership,
L.P. (formerly known as Alexander Haagen Properties Operating Partnership, L.P.)
and Haagen Property Management, Inc. (the "Original Plan"), effective December
10, 1993, for the benefit of their eligible employees and directors. The
Original Plan was amended on August 14, 1995 and amended and restated on
February 28, 1996 (the "Amended and Restated Plan").
Subsequently, the Amended and Restated Plan was amended (i) in the
form of the First Amendment to the Amended and Restated Plan on November 19,
1996; (ii) in the form of the Second Amendment to the Amended and Restated Plan
on February 27, 1997; (iii) in the form of the Third Amendment to the Amended
and Restated Plan on May 30, 1997; (iv) in the form of the Fourth Amendment to
the Amended and Restated Plan on July 8, 1997; (v) in the form of the Fifth
Amendment to the Amended and Restated Plan on April 30, 1998; (vi) in the form
of the Sixth Amendment to the Amended and Restated Plan on February 9, 1999;
(vii) in the form of the Seventh Amendment to the Amended and Restated Plan on
June 7, 1999; and (viii) in the form of the Eighth Amendment to the Amended and
Restated Plan on June 7, 1999. This second amendment and restatement (the
"Plan") was adopted by the Board on March 23, 2000.
1
<PAGE>
The Plan consists of three plans: (i) one for the benefit of the key
employees of Center Trust, Inc. and the Company Subsidiaries (as defined below);
(ii) one for the benefit of Independent Directors (as defined below) and (iii)
one for the benefit of the key employees of CT Operating Partnership, L.P., a
California limited partnership, and the Operating Partnership Subsidiaries (as
defined below), the key employees of Haagen Property Management, Inc., a
California corporation, and the HPMI Subsidiaries (as defined below) and the
directors of Haagen Property Management, Inc.
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors and key Employees
to further the growth, development and financial success of the Company by
personally benefiting through the ownership of Company stock and/or rights which
recognize such growth, development and financial success.
(2) To enable the Company and the Operating Partnership to obtain and
retain the services of directors and key Employees (as such term is defined
below) considered essential to the long range success of the Company by offering
them an opportunity to own stock in the Company and/or rights which will reflect
the growth, development and financial success of the Company.
ARTICLE I
DEFINITIONS
1.1 General
-------
Wherever the following terms are used in this Plan they shall have the
meaning specified below, unless the context clearly indicates otherwise.
2
<PAGE>
1.2 Award Limit
-----------
"Award Limit" shall mean 500,000 shares of Common Stock.
1.3 Beneficiary
-----------
"Beneficiary" shall mean the person or persons properly designated by
the Optionee, including his spouse or heirs at law, to exercise such Optionee's
rights under this Plan in the event of the Optionee's death, or if the Optionee
has not designated such person or persons, or such person or persons shall all
have pre-deceased the Optionee, the executor or administrator of the Optionee's
estate. Designation, revocation and redesignation of Beneficiaries must be made
in writing in accordance with rules established by the Committee and shall be
effective upon delivery to the Committee.
1.4 Board
-----
"Board" shall mean the Board of Directors of the Company.
1.5 Change in Control
-----------------
"Change in Control" shall mean a change in ownership or control of the
Company effected through either of the following transactions:
(a) any person or related group of persons (other than the Company or
a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities pursuant to a tender or exchange
offer made directly to the Company's stockholders which the Board does not
recommend such stockholders to accept; or
3
<PAGE>
(b) there is a change in the composition of the Board over a period of
thirty-six (36) consecutive months (or less) such that a majority of the Board
members (rounded up to the nearest whole number) ceases, by reason of one or
more proxy contests for the election of Board members, to be comprised of
individuals who either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (i) who were still in office at the time such election or
nomination was approved by the Board.
1.6 Code
----
"Code" shall mean the Internal Revenue Code of 1986, as amended.
1.7 Committee
---------
"Committee" shall mean the Compensation Committee of the Board, or
another committee, or a subcommittee of the Board, appointed as provided in
Section 8.1.
1.8 Common Stock
------------
"Common Stock" shall mean the common stock of the Company, par value
$.01 per share, and any equity security of the Company issued or authorized to
be issued in the future, but excluding any preferred stock and any warrants,
options or other rights to purchase Common Stock. Debt securities of the
Company convertible into Common Stock shall be deemed equity securities of the
Company.
1.9 Company
-------
"Company" shall mean Center Trust, Inc., a Maryland corporation
(formerly known as CenterTrust Retail Properties, Inc., formerly known as
Alexander Haagen Properties, Inc.).
4
<PAGE>
1.10 Company Employee
----------------
"Company Employee" shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Company, or of
any corporation which is then a Company Subsidiary.
1.11 Company Subsidiary
------------------
"Company Subsidiary" shall mean any corporation in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. Except with respect to
Incentive Stock Options, "Company Subsidiary" shall also mean any partnership in
which the Company and/or any Company Subsidiary owns more than fifty percent
(50%) of the capital or profits interests; provided, however, that "Company
-------- -------
Subsidiary" shall not include the Operating Partnership nor any Operating
Partnership Subsidiary.
1.12 Corporate Transaction
---------------------
"Corporate Transaction" shall mean any of the following stockholder-
approved transactions to which the Company is a party:
(a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State in which the Company is incorporated, form a holding company or
effect a similar reorganization as to form whereupon this Plan and all Options
are assumed by the successor entity;
(b) the sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, in complete liquidation or
dissolution of the Company in a transaction not covered by the exceptions to
clause (a), above; or
5
<PAGE>
(c) any reverse merger in which the Company is the surviving entity
but in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities are transferred to
a person or persons different from those who held such securities immediately
prior to such merger.
1.13 Director
--------
"Director" shall mean a member of the Board.
1.14 Employee
--------
"Employee" shall mean any Company Employee, HPMI Employee or Operating
Partnership Employee.
1.15 Exchange Act
------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.16 Fair Market Value
-----------------
"Fair Market Value" of a share of Common Stock as of a given date
shall mean (i) the closing price of a share of Common Stock on the principal
exchange on which shares of Common Stock are then trading, if any (or as
reported on any composite index which includes such principal exchange), on such
date, or if shares were not traded on such date, then on the next preceding date
on which a trade occurred; or (ii) if Common Stock is not traded on an exchange
but is quoted on NASDAQ or a successor quotation system, the mean between the
closing representative bid and asked prices for the Common Stock on the trading
day previous to such date as reported by NASDAQ or such successor quotation
system; or (iii) if Common Stock is not publicly traded on an exchange and not
quoted on NASDAQ or a successor quotation system, the Fair Market Value of a
share of Common Stock as established by the Committee (or the
6
<PAGE>
Board, in the case of Options or Restricted Stock granted to Independent
Directors) acting in good faith.
1.17 General Partner Interest
-------------------------
"General Partner Interest" shall mean an ownership interest in the
Operating Partnership that is a general partnership interest and includes any
and all benefits to which the holder of such an interest may be entitled as
provided in the Amended and Restated Agreement of Limited Partnership of CT
Operating Partnership, L.P., as amended, together with all obligations of such
holder to comply with the terms and provisions of such agreement.
1.18 HPMI
----
"HPMI" shall mean Haagen Property Management, Inc., a California
corporation.
1.19 HPMI Director
-------------
"HPMI Director" shall mean a member of the board of directors of HPMI,
or of any corporation which is then an HPMI Subsidiary; provided, however, that
-------- -------
any director of HPMI, or of any HPMI Subsidiary, shall not be an HPMI Director
for purposes of granting Options or rights to acquire Restricted Stock after the
Property Management Agreement is terminated.
1.20 HPMI Employee
-------------
"HPMI Employee" shall mean any officer or other employee (as defined
in accordance with Section 3401(c) of the Code) of HPMI, or of any corporation
which is then an HPMI Subsidiary; provided, however, that any officer or other
-------- -------
employee of HPMI, or of any HPMI Subsidiary, shall not be an HPMI Employee for
purposes of granting Options or rights to acquire Restricted Stock after the
Property Management Agreement is terminated.
7
<PAGE>
1.21 HPMI Subsidiary
---------------
"HPMI Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with HPMI if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. "HPMI Subsidiary" shall also mean any
partnership in which HPMI and/or any HPMI Subsidiary owns more than fifty
percent (50%) of the capital or profits interests.
1.22 Incentive Stock Option
----------------------
"Incentive Stock Option" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Stock Option by the Committee.
1.23 Independent Director
--------------------
"Independent Director" shall mean a member of the Board who is not a
Company Employee, an HPMI Employee, an Operating Partnership Employee or an HPMI
Director.
1.24 Non-Qualified Stock Option
--------------------------
"Non-Qualified Stock Option" shall mean an Option which is not
designated as an Incentive Stock Option by the Committee.
1.25 Option
------
"Option" shall mean a stock option granted pursuant to this Plan. An
option granted under this Plan shall, as determined by the Committee, be either
a Non-Qualified Stock Option or an Incentive Stock Option; provided, however,
-------- -------
that Options granted to Operating Partnership Employees, HPMI Employees, HPMI
Directors and Independent Directors shall be Non-Qualified Stock Options.
8
<PAGE>
1.26 Optionee
--------
"Optionee" shall mean an Employee, HPMI Director or Independent
Director to whom an Option is granted under the Plan.
1.27 Operating Partnership
---------------------
"Operating Partnership" shall mean CT Operating Partnership, L.P., a
California limited partnership.
1.28 Operating Partnership Employee
------------------------------
"Operating Partnership Employee" shall mean any officer or other
employee (as defined in accordance with Section 3401(c) of the Code) of the
Operating Partnership, or any corporation which is then an Operating Partnership
Subsidiary.
1.29 Operating Partnership Subsidiary
--------------------------------
"Operating Partnership Subsidiary" shall mean any partnership in an
unbroken chain of partnerships beginning with the Operating Partnership if each
of the partnerships other than the last partnership in the unbroken chain then
owns more than fifty percent (50%) of the capital or profits interests in one of
the other partnerships. "Operating Partnership Subsidiary" shall also mean any
corporation in which the Operating Partnership and/or any Operating Partnership
Subsidiary owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock.
1.30 Ownership Limit
---------------
"Ownership Limit" shall mean that no person may own more than 9.8% (in
value or in number of shares, whichever is more restrictive) of the outstanding
Common Stock (as defined in the Company's Amended and Restated Charter) of the
Company.
9
<PAGE>
1.31 Plan
----
"Plan" shall mean The Second Amended and Restated 1993 Stock Option
and Incentive Plan for Officers, Directors and Key Employees of Center Trust,
Inc. and CT Operating Partnership, L.P.
1.32 Property Management Agreement
-----------------------------
"Property Management Agreement" shall mean the Property Management
Agreement between the Operating Partnership and HPMI made as of December 27,
1993, or any successor agreement thereto.
1.33 QDRO
----
"QDRO" shall mean a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.
1.34 Restricted Stock
----------------
"Restricted Stock" shall mean Common Stock awarded pursuant to Article
VII of this Plan.
1.35 Restricted Stockholder
----------------------
"Restricted Stockholder" shall mean an Employee or Independent
Director to whom Restricted Stock has been awarded under this Plan.
1.36 Rule 16b-3
----------
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended in the future.
10
<PAGE>
1.37 Termination Of Directorship
---------------------------
"Termination of Directorship" shall mean the time when an Optionee who
is an Independent Director or a HPMI Director ceases to be a director of the
Company or HPMI, respectively, for any reason, including, but not by way of
limitation, a termination by resignation, failure to be elected, death or
retirement. The Board, in its sole and absolute discretion, shall determine the
effect of all other matters and questions relating to Termination of
Directorship with respect to Independent Directors and the Committee, in its
sole and absolute discretion, shall determine the effect of all other matters
and questions relating to Termination of Directorship with respect to HPMI
Directors.
1.38 Termination of Employment
-------------------------
"Termination of Employment" shall mean the time when the employee-
employer relationship between the Optionee or Restricted Stockholder and the
Company, a Company Subsidiary, HPMI, an HPMI Subsidiary, the Operating
Partnership or an Operating Partnership Subsidiary is terminated for any reason,
with or without cause, including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement; but excluding (i)
terminations where there is a simultaneous reemployment or continuing employment
of an Optionee or Restricted Stockholder by the Company, a Company Subsidiary,
HPMI, an HPMI Subsidiary, the Operating Partnership or an Operating Partnership
Subsidiary, (ii) at the sole and absolute discretion of the Committee,
terminations which result in a temporary severance of the employee-employer
relationship, and (iii) at the discretion of the Committee, terminations which
are followed by the simultaneous establishment of a consulting relationship by
the Company, a Company Subsidiary, HPMI, an HPMI Subsidiary, the Operating
Partnership or an Operating Partnership Subsidiary with the former employee.
The Committee, in its sole and absolute
11
<PAGE>
discretion, shall determine the effect of all other matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment resulted from a discharge
for good cause, and all questions of whether particular leaves of absence
constitute Terminations of Employment; provided, however, that, with respect to
-------- -------
Incentive Stock Options, a leave of absence, change in status from an employee
to an independent contractor or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the extent
that, such leave of absence, change in status or other change interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under said Section. Notwithstanding
any other provision of this Plan, the Company, any Company Subsidiary, HPMI, any
HPMI Subsidiary, the Operating Partnership or any Operating Partnership
Subsidiary has an absolute and unrestricted right to terminate an Employee's
employment at any time for any reason whatsoever, with or without cause, except
to the extent expressly provided otherwise in writing.
1.39 Gender and Number
-----------------
Wherever the masculine gender is used it shall include the feminine
and neuter and wherever a singular pronoun is used it shall include the plural,
unless the context clearly indicates otherwise.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan
----------------------
(a) The shares of stock subject to Options or Restricted Stock Awards
shall be Common Stock, initially shares of the Company's common stock, par value
$.01 per share, as
12
<PAGE>
presently constituted, and the aggregate number of such shares which may be
issued upon exercise of such Options or upon any such awards under the Plan
shall not exceed 2,750,000 (which amount includes (i) the original 850,000
shares authorized to be issued upon exercise of such Options or upon any such
awards under the Plan, (ii) an additional 500,000 shares authorized to be issued
upon exercise of such Options or upon any such awards under the Plan by a
resolution of the Committee on February 27, 1997, (iii) an additional 650,000
shares authorized to be issued upon exercise of such Options on upon any such
awards under the Plan by a resolution of the Committee on May 30, 1997, and (iv)
an additional 750,000 shares authorized to be issued upon exercise of such
Options or upon any such awards under the Plan by a resolution of the Committee
on June 7, 1999). The shares of Common Stock issuable upon exercise or grant of
an Option, or as Restricted Stock, shall be previously authorized but unissued
shares.
(b) The maximum number of shares which may be subject to Options
granted under the Plan to any individual in any calendar year shall not exceed
the Award Limit. To the extent required by Section 162(m) of the Code, shares
subject to Options which are cancelled continue to be counted against the Award
Limit and if, after grant of an Option, the price of shares subject to such
Option is reduced, the transaction is treated as a cancellation of the Option
and a grant of a new Option and both the Option deemed to be canceled and the
Option deemed to be granted are counted against the Award Limit.
2.2 Add-back of Options and Restricted Stock
----------------------------------------
If any Option expires or is canceled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned, granted or awarded hereunder, subject to the
13
<PAGE>
limitations of Section 2.1. Furthermore, any shares subject to Options which are
adjusted pursuant to Section 9.3 and become exercisable with respect to shares
of stock of another corporation shall be considered canceled and may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Shares of Common Stock which are delivered by the Optionee or withheld by
the Company upon the exercise of any Option under this Plan, in payment of the
exercise price thereof, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. If any share of Restricted Stock is
forfeited by the Grantee or repurchased by the Company pursuant to Section 7.5
hereof, such share may again be optioned, granted or awarded hereunder, subject
to the limitations of Section 2.1. Notwithstanding the provisions of this
Section 2.2, no shares of Common Stock may again be optioned, granted or awarded
if such action would cause an Incentive Stock Option to fail to qualify as an
incentive stock option under Section 422 of the Code.
ARTICLE III
GRANTING OF OPTIONS
3.1 Eligibility
-----------
Subject to the Award Limit and the Ownership Limit, any Employee and
any HPMI Director selected by the Committee pursuant to Section 3.4(a)(i) shall
be eligible to be granted an Option. Subject to the Award Limit and the
Ownership Limit, each Independent Director of the Company shall be eligible to
be granted Options at the times and in the manner set forth in Section 3.4(d).
14
<PAGE>
3.2 Disqualification for Stock Ownership
------------------------------------
No person may be granted an Incentive Stock Option under this Plan if
such person, at the time the Incentive Stock Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any subsidiary or parent thereof (within the
meaning of Section 422 of the Code) unless such Incentive Stock Option conforms
to the applicable provisions of Section 422 of the Code.
3.3 Qualification of Incentive Stock Options
----------------------------------------
No Incentive Stock Option shall be granted unless such Option, when
granted, qualifies as an "incentive stock option" under Section 422 of the Code.
No Incentive Stock Option shall be granted to any person who is not a Company
Employee.
3.4 Granting of Options
-------------------
(a) The Committee shall from time to time, in its sole and absolute
discretion, and subject to applicable limitations of this Plan:
(i) Determine which Employees are key Employees and select
from among the key Employees and HPMI Directors (including Employees and
HPMI Directors to whom Options have previously been granted and/or shares
of Restricted Stock have previously been issued) such of them as in its
opinion should be granted Options;
(ii) Subject to the Award Limit and the Ownership Limit,
determine the number of shares to be subject to such Options granted to the
selected key Employees and HPMI Directors;
(iii) Determine whether such Options are to be Incentive Stock
Options or Non-Qualified Stock Options; provided, however, that any Option
-------- -------
granted to any
15
<PAGE>
HPMI Employee or HPMI Director or any Operating Partnership Employee shall
be a Non-Qualified Stock Option; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; provided, however, that the terms and conditions
-------- -------
of Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall include, but not be
limited to, such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code.
All Options granted with an exercise price equal to or greater than
the Fair Market Value of the Common Stock on the date of such grant shall be
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code unless the Committee otherwise determines.
(b) Upon the selection of a key Employee or HPMI Director to be
granted an Option, the Committee shall instruct the Secretary of the Company to
issue the Option and may impose such conditions on the grant of the Option as it
deems appropriate. Without limiting the generality of the preceding sentence,
the Committee may, in its sole and absolute discretion and on such terms as it
deems appropriate, require as a condition on the grant of an Option to an
Employee or HPMI Director that the Employee or HPMI Director surrender for
cancellation some or all of the unexercised Options or awards of Restricted
Stock which have been previously granted to him under this Plan or otherwise. An
Option, the grant of which is conditioned upon such surrender, may have an
option price lower (or higher) than the exercise price of such surrendered
Option, may cover the same (or a lesser or greater) number of shares as such
surrendered Option or Restricted Stock award, may contain such other terms as
the Committee deems appropriate, and shall be exercisable in accordance with its
terms, without regard to the
16
<PAGE>
number of shares, price, exercise period or any other term or condition of such
surrendered Option or Restricted Stock award.
(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such option from treatment as an
"incentive stock option" under Section 422 of the Code.
(d) Subject to the Award Limit and the Ownership Limit, when a person
is initially elected to the Board and is then an Independent Director, each such
new Independent Director automatically shall be granted an Option to purchase
5,000 shares of Common Stock (subject to adjustment as provided in Section 9.3)
on the date of his or her election to the Board. During the term of the Plan,
each then current Independent Director shall automatically be granted, on
January 1 of each year, an Option to purchase 3,000 shares of Common Stock
(subject to adjustment as provided in Section 9.3). On August 14, 1995 each then
current Independent Director shall automatically be granted an Option to
purchase 10,000 shares of Common Stock (subject to adjustment as provided in
Section 9.3). Members of the Board who are Company Employees who subsequently
retire from the Company and remain on the Board will not receive an initial
Option grant pursuant to the first sentence of this Section 3.4(d), but to the
extent that they are otherwise eligible, will receive, after retirement from
employment with the Company, Options as described in the second sentence of this
Section 3.4(d) and, if such a member is an Independent Director on August 14,
1995, will receive on such date Options as described in the third sentence of
this Section 3.4(d). All the foregoing Option grants authorized by this Section
3.4(d) are subject to stockholder approval of the Plan and to the Ownership
Limit and the Award Limit.
17
<PAGE>
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement
----------------
Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized officer of the Company
and which shall contain such terms and conditions as the Committee (or the
Board, in the case of Options granted to Independent Directors) shall determine,
consistent with this Plan. Stock Option Agreements evidencing Options intended
to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the Code. Stock
Option Agreements evidencing Incentive Stock Options shall contain such terms
and conditions as may be necessary to meet the applicable provisions of Section
422 of the Code.
4.2 Option Price
------------
The price per share of the shares subject to each Option shall be set
by the Committee; provided, however, that such price shall be no less than the
-------- -------
par value of a share of Common Stock, unless otherwise permitted by applicable
state law, and (i) in the case of Incentive Stock Options and Options intended
to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code, such price shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted; (ii)
in the case of Incentive Stock Options granted to an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
or parent thereof (within the meaning of Section 422 of the
18
<PAGE>
Code), such price shall not be less than 110% of the Fair Market Value of a
share of Common Stock on the date the Option is granted; and (iii) in the case
of Options granted to Independent Directors, such price shall equal 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted;
provided, however, that the price of each share subject to each Option granted
- -------- -------
to an Independent Directors at any time from the date of the initial public
offering of Common Stock through February 9, 1994 pursuant to the first sentence
of Section 3.4(d) upon his initial election to the Board shall equal the greater
of (i) 100% of the Fair Market Value of a share of Common Stock on the date such
Option is granted or (ii) the initial public offering price per share of Common
Stock ($18.00 per share).
4.3 Option Term
-----------
The term of an Option shall be set by the Committee in its sole and
absolute discretion; provided, however, that, (i) in the case of Options granted
-------- -------
to Independent Directors, the term shall be ten (10) years from the date the
Option is granted, without variation or acceleration hereunder, but subject to
Section 4.5, and (ii) in the case of Incentive Stock Options, the term shall not
be more than ten (10) years from the date the Incentive Stock Option is granted,
or five (5) years from such date if the Incentive Stock Option is granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any subsidiary or parent thereof (within the meaning of
Section 422 of the Code). Except as limited by requirements of Section 422 of
the Code and regulations and rulings thereunder applicable to Incentive Stock
Options, the Committee may extend the term of any outstanding Option granted to
an Employee or HPMI Director in connection with any Termination of Employment or
19
<PAGE>
Termination of Directorship of the Optionee, or amend any other term or
condition of such Option relating to such a termination.
4.4 Option Vesting
--------------
(a) The period during which the right to exercise an Option in whole
or in part vests in the Optionee shall be set by the Committee and the Committee
may determine that an Option may not be exercised in whole or in part for a
specified period after it is granted; provided, however, that, unless the
Committee otherwise provides in the terms of the Option or otherwise, no Option
shall be exercisable by any Optionee who is then subject to Section 16 of the
Exchange Act within the period ending six months and one day from the date the
Option is granted; and provided, further, that except as provided in this
Section 4.4(a) Options granted to Independent Directors shall become exercisable
in cumulative annual installments of twenty-five percent (25%) on each of the
first, second, third and fourth anniversaries of the date of Option grant,
without variation or acceleration hereunder except as provided in Section
9.3(b). At any time after grant of an Option, the Committee may, in its sole and
absolute discretion and subject to whatever terms and conditions it selects,
accelerate the period during which an Option (except an Option granted to an
Independent Director) vests. Notwithstanding any provision of this Section
4.4(a) or the Plan to the contrary, Options awarded to Tom Bradley, James Hankla
and Warren Fix prior to the approval by the stockholders of the transactions
contemplated by the Stock Purchase Agreement with LF Strategic Realty Investors,
L.P. and Prometheus Western Retail, LLC. shall become fully exercisable on the
date of such shareholder approval.
(b) No portion of an Option which is unexercisable at Termination of
Employment or Termination of Directorship, as applicable, shall thereafter
become exercisable, except as may be otherwise provided by the Committee in the
case of Options granted to
20
<PAGE>
Employees or HPMI Directors either in the Stock Option Agreement or by action of
the Committee following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of stock with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock option plans of the Company, any Company Subsidiary, HPMI,
any HPMI Subsidiary, the Operating Partnership and any Operating Partnership
Subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth
in the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.4(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.
4.5 Limitations on Exercise of Options Granted to Independent
---------------------------------------------------------
Directors
- ---------
Unless earlier terminated pursuant to Section 9.3(b)(ii) or
9.3(b)(vii), no Option granted to an Independent Director may be exercised to
any extent by anyone after the first to occur of the following events:
(a) The expiration of twelve (12) months from the date of the
Optionee's death; or
(b) the expiration of twelve (12) months from the date of the
Optionee's Termination of Directorship by reason of his permanent and total
disability (within the meaning of Section 22(e)(3) of the Code); or
(c) the expiration of three (3) months from the date of the
Optionee's Termination of Directorship for any reason other than such Optionee's
death or his permanent
21
<PAGE>
and total disability, unless the Optionee dies within said three-month period;
provided, however, Options granted to Warner Heineman prior to April 27, 1999,
- -------- -------
may be exercised at any time prior to the expiration of twelve (12) months
following Mr. Heineman's Termination of Directorship on July 14, 1999; or
(d) the expiration of ten years from the date the Option was granted.
4.6 Consideration
-------------
In consideration of the granting of a Non-Qualified Stock Option, the
Optionee shall agree, in the written Stock Option Agreement, to remain in the
employ of the Company, a Company Subsidiary, HPMI, an HPMI Subsidiary, the
Operating Partnership or an Operating Partnership Subsidiary (or to serve as an
Independent Director of the Company or as a director of HPMI, as applicable) for
a period of at least one year (or such shorter period as may be fixed in the
Stock Option Agreement or by action of the Committee or the Board following
grant of the Option) after the Non-Qualified Stock Option is granted (or until
the next annual meeting of the stockholders of the Company, in the case of an
Independent Director or HPMI Director). In consideration of the granting of an
Incentive Stock Option, the Optionee shall agree, in the written Stock Option
Agreement, to remain in the employ of the Company or a Company Subsidiary for a
period of at least one year (or such shorter period as may be fixed in the Stock
Option Agreement or by action of the Committee or the Board following grant of
the Option) after the Incentive Stock Option is granted. Nothing in this Plan or
in any Stock Option Agreement hereunder shall confer upon any Optionee any right
to continue in the employ of the Company, any Company Subsidiary, HPMI, any HPMI
Subsidiary, the Operating Partnership or any Operating Partnership Subsidiary or
as a director of the Company or HPMI, or shall interfere with or restrict in any
way the rights of the Company, any Company Subsidiary, HPMI, any
22
<PAGE>
HPMI Subsidiary, the Operating Partnership or any Operating Partnership
Subsidiary, which are hereby expressly reserved, to discharge any Optionee at
any time for any reason whatsoever, with or without good cause.
4.7 Limitation in Terms of Option
-----------------------------
The Company shall not grant an Option which will, or is likely to,
result in a violation of Section 5.12.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise
----------------
An exercisable Option may be exercised in whole or in part. However,
an Option shall not be exercisable with respect to fractional shares and the
Committee (or the Board, in the case of Options granted to Independent
Directors) may require that, by the terms of the Option, a partial exercise be
with respect to a minimum number of shares.
5.2 Time of Exercise
----------------
Options may be exercised only on the first business day of every
month.
5.3 Manner of Exercise
------------------
All or a portion of an exercisable Option shall be deemed exercised
upon delivery of all of the following to the Secretary of the Company or his
office:
(a) A written notice complying with the applicable rules established
by the Committee (or the Board, in the case of Options granted to Independent
Directors), stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Optionee or other person then entitled to exercise
the Option or such portion;
23
<PAGE>
(b) Such representations and documents as the Committee (or the
Board, in the case of Options granted to Independent Directors), in its sole and
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its sole and absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars; and
(c) In the event that the Option shall be exercised pursuant to
Section 9.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the shares
with respect to which the Option, or portion thereof, is exercised. However,
the Committee (or the Board, in the case of Options granted to Independent
Directors), may in its discretion (i) allow payment, in whole or in part,
through the delivery of shares of Common Stock owned by the Optionee duly
endorsed for transfer to the Company with a Fair Market Value on the date of
delivery equal to the aggregate exercise price of the Option or exercised
portion thereof or (ii) subject to the timing requirements of Section 5.8, if
applicable, allow payment, in whole or in part, through the surrender of shares
of Common Stock then issuable upon exercise of the Option having a Fair Market
Value on the date of Option exercise equal to the aggregate exercise price of
the Option or exercised portion thereof. In addition, at the sole and absolute
discretion of the Committee, the terms of Options granted to Employees may (x)
allow a delay in payment up to thirty (30) days from the date the Option, or
portion thereof, is exercised; (y) allow payment, in whole or in part, through
the delivery of property of any kind which constitutes good and
24
<PAGE>
valuable consideration; or (z) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (i), (ii) and (x).
5.4 Transfer of Shares to a Company Employee or Independent Director
----------------------------------------------------------------
As soon as practicable after receipt by the Company, pursuant to
Section 5.3(d), of payment for the shares with respect to which an Option (which
in the case of a Company Employee was issued to and is held by such Company
Employee in his or her capacity as a Company Employee), or portion thereof, is
exercised by an Optionee who is a Company Employee or Independent Director, with
respect to each such exercise, the Company shall transfer to the Optionee the
number of shares equal to
(a) the amount of the payment made by the Optionee to the Company
pursuant to Section 5.3(d), divided by
------- --
(b) the price per share of the shares subject to the Option as
determined pursuant to Section 4.2.
5.5 Transfer of Shares to an HPMI Employee or HPMI Director
-------------------------------------------------------
As soon as practicable after receipt by the Company, pursuant to
Section 5.3(d), of payment for the shares with respect to which an Option (which
was issued to and is held by an HPMI Employee or HPMI Director in his or her
capacity as an HPMI Employee or HPMI Director), or portion thereof, is exercised
by an Optionee who is an HPMI Employee or HPMI Director, with respect to each
such exercise:
(a) the Company shall transfer to the Optionee the number of shares
equal to (A) the amount of the payment made by the Optionee to the Company
pursuant to Section 5.3(d) divided by (B) the Fair Market Value of a share of
----------
Common Stock at the time of exercise (the "HPMI Optionee Purchased Shares");
25
<PAGE>
(b) the Company shall sell to the Operating Partnership the number of
shares (the "HPMI Partnership Purchased Shares") equal to the excess of (A) the
amount obtained by dividing (i) the amount of the payment made by the Optionee
to the Company pursuant to Section 5.3(d) by (ii) the price per share of the
shares subject to the Option as determined pursuant to Section 4.2, over (B) the
HPMI Optionee Purchased Shares;
The price to be paid by the Operating Partnership to the Company for
the HPMI Partnership Purchased Shares (the "HPMI Partnership Purchase Price")
shall be an amount equal to the product of (A) the number of HPMI Partnership
Purchased Shares multiplied by (B) the Fair Market Value of a share of Common
---------- --
Stock at the time of the exercise;
(c) as soon as practicable after receipt of the HPMI Partnership
Purchased Shares by the Operating Partnership, the Operating Partnership shall
transfer such shares to HPMI;
(d) as soon as practicable after receipt of the HPMI Partnership
Purchased Shares by HPMI, HPMI shall transfer such shares to the Optionee at no
additional cost, as additional compensation; and
(e) the value of any Options, Restricted Stock and other benefits
provided by the Operating Partnership to HPMI under this Plan are deemed to
constitute an additional management fee to HPMI from the Operating Partnership
under the Property Management Agreement equal to the value of such Options,
Restricted Stock and other benefits.
5.6 Transfer of Shares to an Operating Partnership Employee
-------------------------------------------------------
As soon as practicable after receipt by the Company, pursuant to
Section 5.3(d), of payment for the shares with respect to which an Option (which
was issued to and is held by a Partnership Employee in his or her capacity as a
Partnership Employee), or portion thereof, is
26
<PAGE>
exercised by an Optionee who is an Operating Partnership Employee, with respect
to each such exercise:
(a) the Company shall transfer to the Optionee the number of shares
equal to (A) the amount of the payment made by the Optionee to the Company
pursuant to Section 5.3(d) divided by (B) the Fair Market Value of a share of
----------
Common Stock at the time of exercise (the "Partnership Optionee Purchased
Shares");
(b) the Company shall sell to the Operating Partnership the number of
shares (the "Partnership Purchased Shares") equal to the excess of (A) the
amount obtained by dividing (i) the amount of the payment made by the Optionee
to the Company pursuant to Section 5.3(d) by (ii) the price per share of the
shares subject to the Option as determined pursuant to Section 4.2., over (B)
the Partnership Optionee Purchased Shares;
The price to be paid by the Operating Partnership to the Company for
the Partnership Purchased Shares (the "Partnership Purchase Price") shall be an
amount equal to the product of (A) the number of Partnership Purchased Shares
multiplied by (B) the Fair Market Value of a share of Common Stock at the time
- ---------- --
of the exercise; and
(c) as soon as practicable after receipt of the Operating Partnership
Purchased Shares by the Operating Partnership, the Operating Partnership shall
transfer such shares to the Optionee at no additional cost, as additional
compensation.
5.7 Transfer of Payment to the Operating Partnership
------------------------------------------------
As soon as practicable after receipt by the Company (i) of the amount
described in Section 5.3(d), and (ii) the Partnership Purchase Price described
in Section 5.6, the Company may contribute to the Operating Partnership an
amount of cash equal to such payment and the
27
<PAGE>
Operating Partnership shall issue additional General Partner Interests to the
Company on the terms set forth in the Partnership Agreement.
5.8 Certain Timing Requirements
---------------------------
With respect to Options granted prior to November 19, 1996, at the
sole and absolute discretion of the Committee (or Board, in the case of Options
granted to Independent Directors), shares of Common Stock issuable to the
Optionee upon exercise of the Option may be used to satisfy the Option exercise
price or the tax withholding consequences of such exercise, in the case of
persons subject to Section 16 of the Exchange Act, only (i) during the period
beginning on the third business day following the date of release of the
quarterly or annual summary statement of sales and earnings of the Company and
ending on the twelfth business day following such date or (ii) pursuant to an
irrevocable written election by the Optionee to use shares of Common Stock
issuable to the Optionee upon exercise of the Option to pay all or part of the
Option price or the withholding taxes made at least six months prior to the
payment of such Option price or withholding taxes.
5.9 Conditions to Issuance of Stock Certificates
--------------------------------------------
The Company, HPMI or the Operating Partnership shall not be required
to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange
28
<PAGE>
Commission or any other governmental regulatory body which the Committee or
Board shall, in its sole and absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee (or Board, in the case of
Options granted to Independent Directors) shall, in its sole and absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee (or Board, in the case of Options
granted to Independent Directors) may establish from time to time for reasons of
administrative convenience; and
(e) The receipt by the Company, HPMI, or the Operating Partnership of
full payment for such shares, including payment of any applicable withholding
tax.
5.10 Rights as Stockholders
----------------------
The holders of Options shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
5.11 Ownership and Transfer Restrictions
-----------------------------------
Shares acquired through the exercise of an Option shall be subject to
the restrictions on ownership and transfer set forth in the Company's Amended
and Restated Charter. The Committee (or Board, in the case of Options granted to
Independent Directors), in its sole and absolute discretion, may impose such
additional restrictions on the ownership and transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Stock Option Agreement and may
be
29
<PAGE>
referred to on the certificates evidencing such shares. The Committee may
require an Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting such Option to such Employee or (ii) one
year after the transfer of such shares to such Employee. The Committee may
direct that the certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.
5.12 Restrictions on Exercise of Option
----------------------------------
An Option is not exercisable if, in the sole and absolute discretion
of the Committee, the exercise of such Option would likely result in any of the
following:
(a) the Optionee's ownership of Common Stock being in violation of
the Ownership Limit set forth in the Company's Amended and Restated Charter;
(b) income to the Company that could impair the Company's status as a
real estate investment trust, within the meaning of Sections 856 through 860 of
the Code; or
(c) a transfer or sale, at any one time, of more than .1% (measured
in value or in number of shares, whichever is more restrictive) of the Company's
total Common Equity Stock (as defined in the Company's Amended and Restated
Charter) from the Company to the Operating Partnership pursuant to Section 5.5.
Notwithstanding any other provision of this Plan, the Optionee shall
have no rights under this Plan to acquire Common Stock which would otherwise be
prohibited under the Company's Amended and Restated Charter.
30
<PAGE>
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Eligibility
-----------
Subject to the Ownership Limit, Restricted Stock may be awarded to any
Employee whom the Committee, pursuant to Section 3.4(a)(i), determines is a key
Employee and to any Independent Director as the Board, in its sole and absolute
discretion, and subject to applicable limitations of this Plan, deems
appropriate. Subject to the Award Limit and the Ownership Limit, each
Independent Director shall also be eligible to be awarded Restricted Stock at
the time and in the manner set forth in Section 6.2(d) of this Plan.
6.2 Award of Restricted Stock
-------------------------
(a) The Committee (or the Board in the case of Independent Directors)
may from time to time, in its sole and absolute discretion:
(i) Select from among the Independent Directors and key
Employees (including Independent Directors and Employees to whom Options
have previously been granted and/or shares of Restricted Stock have
previously been issued) such of them as in its opinion should be awarded
Restricted Stock; and
(ii) Determine the purchase price, if any, and other terms and
conditions applicable to such Restricted Stock, consistent with this Plan.
(b) The Committee (or the Board in the case of Independent Directors)
shall establish the purchase price, if any, and form of payment for Restricted
Stock; provided, however, that such purchase price shall be no less than the par
-------- -------
value of the Common Stock to be purchased, unless otherwise permitted by
applicable state law; provided, further, that the
-------- -------
31
<PAGE>
purchase price of each share of Restricted Stock awarded to an Independent
Director pursuant to Section 6.2(d) of the Plan shall be $.01 per share. In all
cases, legal consideration shall be required for each issuance of Restricted
Stock.
(c) Upon the selection of a key Employee or Independent Director to
be awarded Restricted Stock, the Committee (or the Board in the case of
Independent Directors) shall instruct the Secretary of the Company to issue such
Restricted Stock and may impose such conditions on the issuance of such
Restricted Stock as it deems appropriate; provided, however, that each share of
-------- -------
restricted stock awarded to an Independent Director pursuant to Section 6.2(d)
of the Plan shall be subject to the restrictions set forth in Section 7.4(b) of
the Plan.
(d) On February 27, 1997, subject to stockholder approval and the
Award Limit and the Ownership Limit, each then current Independent Director
shall automatically be granted 1,000 shares of Restricted Shares (subject to
adjustment as provided in Section 9.3).
ARTICLE VII
TERMS OF RESTRICTED STOCK
7.1 Restricted Stock Agreement
--------------------------
Restricted Stock shall be issued only pursuant to a written Restricted
Stock Agreement, which shall be executed by the Restricted Stockholder and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board in the case of Independent Directors)
shall determine, consistent with this Plan.
7.2 Consideration to the Company
----------------------------
As consideration for the issuance of Restricted Stock, in addition to
payment of any purchase price, the Restricted Stockholder shall agree, in the
written Restricted Stock
32
<PAGE>
Agreement, to remain in the employ of the Company, Company Subsidiary, HPMI, an
HPMI Subsidiary, the Operating Partnership or an Operating Partnership
Subsidiary (or to serve as an Independent Director of the Company) for a period
of at least one year after the Restricted Stock is issued (or such shorter
period as may be fixed in the Restricted Stock Agreement or by action of the
Committee (or the Board in the case of Independent Directors) following grant of
the Restricted Stock) or until the next annual meeting of the stockholders of
the Company, in the case of an Independent Director. Nothing in this Plan or in
any Restricted Stock Agreement hereunder shall confer on any Restricted
Stockholder any right to continue in the employ of the Company, any Company
Subsidiary, HPMI, any HPMI Subsidiary, the Operating Partnership or any
Operating Partnership Subsidiary or as a director of the Company or shall
interfere with or restrict in any way the rights of the Company, any Company
Subsidiary, HPMI, any HPMI Subsidiary, the Operating Partnership or any
Operating Partnership Subsidiary, which are hereby expressly reserved, to
discharge any Restricted Stockholder at any time for any reason whatsoever, with
or without good cause.
7.3 Rights as Stockholders
----------------------
Upon delivery of the shares of Restricted Stock to the escrow holder
pursuant to Section 7.6, the Restricted Stockholder shall have, unless otherwise
provided by the Committee (or the Board in the case of Independent Directors),
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his Restricted Stock Agreement, including the right to receive
all dividends and other distributions paid or made with respect to the shares;
provided, however, that in the sole and absolute discretion of the Committee (or
- -------- -------
the Board in the case of Independent Directors), any extraordinary distributions
with respect to the Common Stock shall be subject to the restrictions set forth
in Section 7.4(a) or 7.4(b), as applicable. All shares of
33
<PAGE>
Restricted Stock shall be subject to the restrictions on ownership and transfer
set forth in the Company's Amended and Restated Charter.
7.4 Restriction
-----------
(a) All shares of Restricted Stock issued under this Plan (including
any shares received by holders thereof with respect to shares of Restricted
Stock as a result of stock dividends, stock splits or any other form of
recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee (or the Board in the
case of Independent Directors) shall provide, which restrictions may include,
without limitation, restrictions concerning voting rights and transferability
and restrictions based on duration of employment with the Company, Company
performance and individual performance; provided, however, that, unless the
-------- -------
Committee (or the Board in the case of Independent Directors) otherwise provides
in the terms of the Restricted Stock Agreement or otherwise, no share of
Restricted Stock granted to a person subject to Section 16 of the Exchange Act
shall be sold, assigned or otherwise transferred until at least six months and
one day have elapsed from the date on which the Restricted Stock was issued; and
provided, further, that by action taken after the Restricted Stock is issued,
- -------- -------
the Committee (or the Board in the case of Independent Directors) may, on such
terms and conditions as it may determine to be appropriate, remove any or all of
the restrictions imposed by the terms of the Restricted Stock Agreement.
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire.
(b) Notwithstanding any provision of this Section 7.4 to the
contrary, each share of Restricted Stock awarded to an Independent Director
pursuant to Section 6.2(d) of the Plan (including any shares received by holders
thereof with respect to shares of Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization) shall be subject
34
<PAGE>
to the following restrictions until such restrictions lapse in accordance with
Section 7.4(c): Neither the Restricted Stock nor any interest or right therein
or part thereof shall be liable for the debts, contracts, or engagements of the
Restricted Stockholder or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy) and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that, subject to the Ownership Limit (as defined in the organizational
documents of the Company), such restrictions shall not prevent transfers by will
or by the applicable laws of descent and distribution. Restricted Stock may not
be sold or encumbered until all restrictions are terminated, expire or lapse.
(c) Notwithstanding any provision of this Section 7.4 to the
contrary, the restrictions imposed pursuant to Section 7.4(b) on each share of
Restricted Stock awarded to an Independent Director pursuant to Section 6.2(d)
of the Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall lapse in the following cumulative
installments: (i) such restrictions shall lapse with respect to 333 of such
shares on February 27, 1998, provided that the Independent Director has not had
a Termination of Directorship prior to such date, (ii) such restrictions shall
lapse with respect to 333 of such shares on February 27, 1999, provided that the
Independent Director has not had a Termination of Directorship prior to such
date, and (iii) such restrictions shall lapse with respect to 334 of such shares
on February 27, 2000, provided that the Independent Director has not had a
Termination of Directorship prior to such date; provided, however, that
notwithstanding any provision of this Section 7.4(c) or the Plan to
35
<PAGE>
the contrary, the restrictions imposed pursuant to Section 7.4(b) on each share
of Restricted Stock awarded to Tom Bradley, James Hankla and Warren Fix pursuant
to Section 6.2(d) of the Plan (including any shares received by holders thereof
with respect to shares of Restricted Stock as a result of stock dividends, stock
splits or any other form of recapitalization) shall lapse upon the date that the
stockholders of the Company approve the transactions contemplated by the Stock
Purchase Agreement with LF Strategic Realty Investors, L.P. and Prometheus
Western Retail, LLC.
(d) Unless provided otherwise by the Committee (or the Board in the
case of Independent Directors), if no consideration was paid by the Restricted
Stockholder upon issuance, a Restricted Stockholder's rights in unvested
Restricted Stock shall lapse upon Termination of Employment or Termination of
Directorship.
7.5 Repurchase of Restricted Stock
------------------------------
The Committee (or the Board in the case of Independent Directors)
shall provide in the terms of each individual Restricted Stock Agreement that
the Company shall have the right to repurchase from the Restricted Stockholder
the Restricted Stock then subject to restrictions under the Restricted Stock
Agreement immediately upon a Termination of Employment or Termination of
Directorship for any reason at a cash price per share equal to the price paid by
the Restricted Stockholder for such Restricted Stock; provided, however, that in
-------- -------
the sole and absolute discretion of the Committee (or the Board in the case of
Independent Directors) provision may be made that no such right of repurchase
shall exist in the event of a Termination of Employment or Termination of
Directorship without cause, or following a change in control of the Company or
because of the Restricted Stockholder's retirement, death or disability, or
otherwise.
36
<PAGE>
7.6 Escrow
------
The Secretary of the Company or such other escrow holder as the
Committee (or the Board in the case of Independent Directors) may appoint shall
retain physical custody of each certificate representing Restricted Stock until
all of the restrictions imposed under the Restricted Stock Agreement with
respect to the shares evidenced by such certificate expire or shall have been
removed.
7.7 Legend
------
In order to enforce the restrictions imposed upon shares of Restricted
Stock hereunder, the Committee (or the Board in the case of Independent
Directors) shall cause a legend or legends to be placed on certificates
representing all shares of Restricted Stock that are still subject to
restrictions under Restricted Stock Agreements, which legend or legends shall
make appropriate reference to the conditions imposed thereby.
7.8 Section 83(b)
-------------
A Restricted Stockholder may not make an election under Section 83(b)
of the Code or any other analogous state or local law, regulation or other
provision with respect to the receipt of any share of Restricted Stock.
ARTICLE VIII
ADMINISTRATION
8.1 Compensation Committee
----------------------
The Compensation Committee (or another committee of the Board
appointed to administer this Plan) shall consist solely of two or more directors
appointed by and holding office at the pleasure of the Board, each of whom is
both a "non-employee director" as defined
37
<PAGE>
by Rule 16b-3 and an "outside director" for purposes of Section 162(m) of the
Code. Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.
8.2 Duties and Powers of Committee
------------------------------
It shall be the duty of the Committee to conduct the general
administration of this Plan in accordance with its provisions. The Committee
shall have the power to interpret this Plan, the Options and the Restricted
Stock, and the agreements pursuant to which the Options and Restricted Stock are
granted or awarded, and to adopt such rules for the administration,
interpretation, and application of this Plan as are consistent therewith and to
interpret, amend or revoke any such rules. Notwithstanding the foregoing, the
full Board, acting by a majority of its members in office, shall conduct the
general administration of the Plan with respect to Options and Restricted Stock
granted to Independent Directors. Any such grant or award under this Plan need
not be the same with respect to each Optionee or Restricted Stockholder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its sole and
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under this Plan except with
respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or any
regulations or rules issued thereunder, are required to be determined in the
sole and absolute discretion of the Committee.
38
<PAGE>
8.3 Majority Rule; Unanimous Written Consent
----------------------------------------
The Committee shall act by a majority of its members in attendance at
a meeting at which a quorum is present or by a memorandum or other written
instrument signed by all members of the Committee.
8.4 Compensation; Professional Assistance; Good Faith Actions
---------------------------------------------------------
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee or Board incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Board, the Company
and the Company's officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Optionees, Restricted Stockholders,
the Company, HPMI, the Operating Partnership and all other interested persons.
No members of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
any Option or any award of Restricted Stock, and all members of the Committee
and Board shall be fully protected by the Company in respect of any such action,
determination or interpretation.
8.5 No Liability
------------
No member of the Board or the Committee, or director, officer or
employee of the Company, any Company Subsidiary, HPMI, any HPMI Subsidiary, the
Operating Partnership or any Operating Partnership Subsidiary shall be liable,
responsible or accountable in damages or otherwise for any determination made or
other action taken or any failure to act by such person
39
<PAGE>
so long as such person is not determined to be guilty by a final adjudication of
willful misconduct with respect to such determination, action or failure to act.
8.6 Indemnification
---------------
To the fullest extent permitted by law, each of the members of the
Board and the Committee and each of the directors, officers and employees of the
Company, any Company Subsidiary, HPMI, any HPMI Subsidiary, the Operating
Partnership and any Operating Partnership Subsidiary shall be held harmless and
be indemnified by the Company for any liability, loss (including amounts paid in
settlement), damages or expenses (including reasonable attorneys' fees) suffered
by virtue of any determinations, acts or failures to act, or alleged acts or
failures to act, in connection with the administration of this Plan so long as
such person is not determined by a final adjudication to be guilty of willful
misconduct with respect to such determination, action or failure to act.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Not Transferable
----------------
Options and Restricted Stock under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution or pursuant to a QDRO, unless and until such Options have been
exercised, or the shares underlying such Options or awards have been issued, and
all restrictions imposed on such shares pursuant to the terms of the Stock
Option Agreement or Restricted Stock Agreement, as applicable, have lapsed;
provided, however, that no transfer shall be permitted to the extent such
- -------- -------
transfer violates the Ownership Limit; and provided, further, that subject to
-------- -------
the Ownership Limit, an Optionee may
40
<PAGE>
designate a Beneficiary to exercise his Option or other rights under this Plan
after his death. No Option or Restricted Stock award or interest or right
therein shall be liable for the debts, contracts or engagements of the Optionee
or Restricted Stockholder or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
During the lifetime of the Optionee, only he may exercise an Option
(or any portion thereof) granted to him under the Plan, unless it has been
disposed of pursuant to a QDRO. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement or
other agreement, may be exercised by his personal representative or by any
person empowered to do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution.
9.2 Amendment, Suspension or Termination of this Plan
-------------------------------------------------
Except as otherwise provided in this Section 9.2, this Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Board or the Committee. Notwithstanding
the foregoing, except as permitted by the applicable exemptive conditions of
Rule 16b-3, the provisions of the Plan relating to the formula Option grants to
Independent Directors, including the amount, price and timing thereof, shall not
be amended more than once in any six-month period other than to comport with
changes in the Code, the Employee Retirement Income Security Act, as amended, or
the respective rules
41
<PAGE>
thereunder, and such amendments must be adopted by action of the Board.
Furthermore, without approval of the Company's stockholders given within twelve
months before or after the action by the Committee or the Board, no action of
the Committee or the Board may, except as provided in Section 9.3, increase the
limits imposed in Section 2.1 on the maximum number of shares which may be
issued under this Plan or modify the Award Limit, and no action of the Committee
or the Board may be taken that would otherwise require stockholder approval as a
matter of applicable law, regulation or rule. No amendment, suspension or
termination of this Plan shall, without the consent of the holder of an Option
or Restricted Stock award, alter or impair any rights or obligations under any
Option or Restricted Stock award theretofore granted or awarded, unless the
award itself otherwise expressly so provides. No Option or Restricted Stock
award may be granted or awarded during any period of suspension or after
termination of this Plan, and in no event may any Incentive Stock Option be
granted under this Plan after the first to occur of the following events: (a)
the expiration of ten years from the date the Plan (prior to this amendment and
restatement) is adopted by the Board; or (b) the expiration of ten years from
the date the Plan (prior to this amendment and restatement) was approved by the
Company's stockholders.
9.3 Changes in Common Stock or Assets of the Company, Acquisition or
----------------------------------------------------------------
Liquidation of the Company and Other Corporate Events
- -----------------------------------------------------
(a) Subject to Section 9.3(d), in the event that the Committee (or
the Board, in the case of Options and Restricted Stock granted to Independent
Directors) determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the
42
<PAGE>
Company (including, but not limited to a Corporate Transaction), or exchange of
Common Stock or other securities of the Company, issuance of warrants or other
rights to purchase Common Stock or other securities of the Company, or other
similar corporate transaction or event, in the Committee's sole discretion (or
in the case of Options and Restricted Stock granted to Independent Directors,
the Board's sole discretion), affects the Common Stock such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to an Option or Restricted Stock award, then the
Committee (or the Board, in the case of Options and Restricted Stock granted to
Independent Directors) shall, in such manner as it may deem equitable, adjust
any or all of
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options may be granted under
the Plan or which may be granted as Restricted Stock (including, but not
limited to, adjustments of the limitations in Section 2.1 on the maximum
number and kind of shares which may be issued and adjustments of the Award
Limit),
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, and in the number
and kind of shares of outstanding Restricted Stock, and
(iii) the exercise price with respect to any Option.
(b) Subject to Sections 9.3(b)(vii), 9.3(d) and 9.8, in the event of
any Corporate Transaction or other transaction or event described in Section
9.3(a) or any unusual or nonrecurring transactions or events affecting the
Company, any affiliate of the Company, or the financial statements of the
Company or any affiliate, or of changes in applicable laws,
43
<PAGE>
regulations, or accounting principles, the Committee (or the Board, in the case
of Options and Restricted Stock granted to Independent Directors) in its
discretion is hereby authorized to take any one or more of the following actions
whenever the Committee (or the Board, in the case of Options and Restricted
Stock granted to Independent Directors) determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to any Option, or Restricted Stock award under this Plan, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or
principles:
(i) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee (or the Board, in the
case of Options and Restricted Stock granted to Independent Directors) may
provide, either by the terms of the Option Agreement or Restricted Stock
Agreement or by action taken prior to the occurrence of such transaction or
event and either automatically or upon the Optionee's or Restricted
Stockholder's request, for either the purchase of any such Option or
Restricted Stock for an amount of cash equal to the amount that could have
been attained upon the exercise of such Option or realization of the
Optionee's rights had such Option been currently exercisable or such
Restricted Stock been fully vested or the replacement of such Option or
Restricted Stock award with other rights or property selected by the
Committee (or the Board, in the case of Options and Restricted Stock
granted to Independent Directors) in its sole discretion;
(ii) In its sole and absolute discretion, the Committee (or the
Board, in the case of Options and Restricted Stock granted to Independent
Directors) may provide, either by the terms of the Option Agreement or
Restricted Stock Agreement or by action
44
<PAGE>
taken prior to the occurrence of such transaction or event that it cannot
vest or be exercised after such event;
(iii) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may provide, either by
the terms of the Option Agreement or by action taken prior to the
occurrence of such transaction or event, that for a specified period of
time prior to such transaction or event, such Option shall be exercisable
as to all shares covered thereby, notwithstanding anything to the contrary
in (i) Section 4.4 or (ii) the provisions of such Option Agreement;
(iv) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee (or the Board, in the
case of Options and Restricted Stock granted to Independent Directors) may
provide, either by the terms of such Option Agreement or Restricted Stock
Agreement or by action taken prior to the occurrence of such transaction or
event, that upon such event, such Option or Restricted Stock be assumed by
the successor or survivor corporation (or a parent or subsidiary thereof),
or shall be substituted for by similar options or awards covering the stock
of the successor or survivor corporation (or a parent or subsidiary
thereof), with appropriate adjustments as to the number and kind of shares
and prices; and
(v) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee (or the Board, in the
case of Options and Restricted Stock granted to Independent Directors) may
make adjustments in the number and type of shares of Common Stock (or other
securities or property) subject to outstanding Options, and in the number
and kind of outstanding Restricted Stock and/or
45
<PAGE>
in the terms and conditions of and the criteria included in, outstanding
Options and Restricted Stock and Options and Restricted Stock which may be
granted in the future.
(vi) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide either by the
terms of the Restricted Stock Agreement or by action taken prior to the
occurrence of such transaction or event that, for a specified period of
time prior to such event, the restrictions imposed under a Restricted Stock
Agreement upon some or all shares of Restricted Stock shall be terminated,
and some or all shares of such Restricted Stock shall cease to be subject
to repurchase under Section 7.5 or forfeiture under Section 7.4(d) upon
such transaction or event.
(vii) None of the foregoing discretionary terms of this Section
9.3(b) shall be permitted with respect to Options granted under Section
3.4(d) to Independent Directors and Restricted Stock granted to Independent
Directors to the extent that such discretion would be inconsistent with the
applicable exemptive conditions of Rule 16b-3. In the event of a Change in
Control or a Corporate Transaction, to the extent that the Board does not
have the ability under Rule 16b-3 to take or to refrain from taking the
discretionary actions set forth in Section 9.3(b)(iii) above, each Option
granted to an Independent Director shall be exercisable as to all shares
covered thereby upon such Change in Control or during the five days
immediately preceding the consummation of such Corporate Transaction and
subject to such consummation, notwithstanding anything to the contrary in
Section 4.4 or the vesting schedule of such Options. In the event of a
Corporate Transaction, to the extent that the Board does not have the
ability under Rule 16b-3 to take or to refrain from taking the
discretionary actions set forth in Section
46
<PAGE>
9.3(b)(ii) above, no Option granted to an Independent Director may be
exercised following such Corporate Transaction unless such Option is, in
connection with such Corporate Transaction, either assumed by the successor
or survivor corporation (or parent or subsidiary thereof) or replaced with
a comparable right with respect to shares of the capital stock of the
successor or survivor corporation (or parent or subsidiary thereof).
(c) Subject to Section 9.3(d) and 9.8, the Committee (or the Board,
in the case of Options and Restricted Stock granted to Independent Directors)
may, in its discretion, include such further provisions and limitations in any
Option Agreement or Restricted Stock Agreement, as it may deem equitable and in
the best interests of the Company.
(d) With respect to Incentive Stock Options and Options intended to
qualify as performance-based compensation under Section 162(m), no adjustment or
action described in this Section 9.3 or in any other provision of the Plan shall
be authorized to the extent that such adjustment or action would cause the Plan
to violate Section 422(b)(1) of the Code or would cause such option to fail to
so qualify under Section 162(m), as the case may be, or any successor provisions
thereto. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the
Committee (or the Board, in the case of Options and Restricted Stock granted to
Independent Directors) determines that the Option or Restricted Stock is not to
comply with such exemptive conditions. The number of shares of Common Stock
subject to any Option or award shall always be rounded to the next whole number.
47
<PAGE>
9.4 Approval of Amendment and Restatement of Plan by Stockholders
-------------------------------------------------------------
This amended and restated Plan will be submitted for the approval of
the Company's stockholders within twelve months after the date of the Board's
adoption of the amendment to Plan adopted on August 14, 1995, which is
incorporated herein. Options may be granted and Restricted Stock may be awarded
under the amended and restated Plan prior to such stockholder approval, provided
that such Options shall not be exercisable and such Restricted Stock shall not
vest prior to the time when this amended and restated Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said twelve-month period, all Options previously granted and all
Restricted Stock previously awarded under this amended and restated Plan shall
thereupon be cancelled and become null and void. If the amended and restated
Plan is not approved by stockholders by the end of such twelve-month period, the
Plan shall continue as it existed prior to such August 14, 1995 amendment and
all Options and Restricted Stock granted thereunder shall remain in effect in
accordance with their terms. With respect to Incentive Stock Options granted
after the date of the adoption of the Seventh Amendment, the Plan, as amended by
the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, the Fifth Amendment and the Sixth Amendment, shall constitute a new
plan for purposes of Section 422 of the Code. In the event the Seventh Amendment
is not approved by the Company's stockholders, Incentive Stock Options granted
after the date of the Board's adoption of the Seventh Amendment shall be
governed by the provisions of the Plan as it existed immediately prior to the
adoption of the Seventh Amendment.
9.5 Tax Withholding
---------------
The Company, HPMI and the Operating Partnership shall be entitled to
require payment in cash or deduction from other compensation payable to each
Optionee or Restricted
48
<PAGE>
Stockholder of any sums required by federal, state or local tax law to be
withheld with respect to the issuance, vesting or exercise of any Option or
Restricted Stock. Subject to the timing requirements of Section 5.8, if
applicable, the Committee (or the Board, in the case of Options and Restricted
Stock granted to Independent Directors) may in its sole and absolute discretion
and in satisfaction of the foregoing requirement allow such Optionee or
Restricted Stockholder to elect to have the Company, HPMI or the Operating
Partnership withhold shares of Common Stock otherwise issuable under such Option
or other award (or allow the return of shares of Common Stock) having a Fair
Market Value equal to the sums required to be withheld. If the Optionee or
Restricted Stockholder elects to advance such sums directly, written notice of
that election shall be delivered on or prior to such exercise and, whether
pursuant to such election or pursuant to a requirement imposed by the Company,
HPMI or the Operating Partnership, payment in cash or by check of such sums for
taxes shall be delivered within two days after the date of exercise. Elections
by such persons to have shares of Common Stock withheld for this purpose will be
subject to the following restrictions: (x) the election shall be subject to the
disapproval of the Committee (or the Board, in the case of Options and
Restricted Stock granted to Independent Directors), (y) if the person is subject
to Section 16 of the Exchange Act, the election shall be subject to such
additional restrictions as the Committee (or the Board, in the case of Options
and Restricted Stock granted to Independent Directors) may impose in an effort
to secure the benefits of any regulations thereunder, and (z) any stock
ownership resulting from such withholding shall not violate the Ownership Limit
set forth in the Company's Amended and Restated Charter. The Committee shall not
be obligated to issue shares and/or distribute cash to any person upon exercise
of any right until such payment has been received or shares have been so
withheld, unless withholding (or offset against a cash payment) as of or prior
to the date of
49
<PAGE>
such exercise is sufficient to cover all such sums due or which may be due with
respect to such exercise.
9.6 Loans
-----
The Committee may, in its sole and absolute discretion, extend one or
more loans to key Employees in connection with the exercise or receipt of
outstanding Options granted under this Plan, or the issuance of Restricted Stock
awarded under this Plan. The terms and conditions of any such loan shall be set
by the Committee.
9.7 Forfeiture Provisions
---------------------
Pursuant to its general authority to determine the terms and
conditions applicable to awards under the Plan, the Committee (or the Board, in
the case of Options and Restricted Stock granted to Independent Directors) shall
have the right (to the extent consistent with the applicable exemptive
conditions of Rule 16b-3) to provide, in the terms of Options or Restricted
Stock awards made under the Plan, or to require the recipient to agree by
separate written instrument, that (i) any proceeds, gains or other economic
benefit actually or constructively received by the recipient upon any receipt or
exercise of the Option or award, or upon the receipt or resale of any Common
Stock underlying such Option or award, must be paid to the Company, and (ii) the
Option or award shall terminate and any unexercised portion of such Option or
award (whether or not vested) shall be forfeited, if (a) a Termination of
Employment, or Termination of Directorship occurs prior to a specified date, or
within a specified time period following receipt or exercise of the Option or
award, or (b) the recipient at any time, or during a specified time period,
engages in any activity in competition with the Company, or which is inimical,
contrary or harmful to the interests of the Company, as further defined by the
Committee (or the Board, as applicable).
50
<PAGE>
9.8 Limitations Applicable to Section 16 Persons and Performance-
------------------------------------------------------------
Based Compensation
- ------------------
Notwithstanding any other provision of this Plan, this Plan, and any
Option granted, or Restricted Stock awarded, to any individual who is then
subject to Section 16 of the Exchange Act, shall be subject to any additional
limitations set forth in any applicable exemptive rule under Section 16 of the
Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that
are requirements for the application of such exemptive rule. To the extent
permitted by applicable law, the Plan, Options and Restricted Stock granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule. Furthermore, notwithstanding any other
provision of this Plan, any Option intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall be subject
to any additional limitations set forth in Section 162(m) of the Code (including
any amendment to Section 162(m) of the Code) or any regulations or rulings
issued thereunder that are requirements for qualification as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and this Plan
shall be deemed amended to the extent necessary to conform to such requirements.
9.9 Effect of Plan Upon Options and Compensation Plans
--------------------------------------------------
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Company Subsidiary, HPMI, any
HPMI Subsidiary, the Operating Partnership or any Operating Partnership
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, HPMI or the Operating Partnership (a) to establish any other forms of
incentives or compensation for employees and directors of the Company, any
Company Subsidiary, HPMI, any HPMI Subsidiary, the Operating Partnership or any
Operating
51
<PAGE>
Partnership Subsidiary or (b) to grant or assume options or other rights
otherwise than under this Plan in connection with any proper corporate or
partnership purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, firm or association.
9.10 Compliance with Laws
--------------------
This Plan, the granting and vesting of Options or Restricted Stock
under this Plan and the issuance and delivery of shares of Common Stock and the
payment of money under this Plan or under Options granted or Restricted Stock
awarded hereunder are subject to compliance with all applicable federal and
state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions, and
the person acquiring such securities shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, Options and
Restricted Stock granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.
9.11 Titles
------
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Plan.
52
<PAGE>
9.12 Governing Law
-------------
This Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of California
without regard to conflicts of laws thereof.
[signature page to follow]
53
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers duly authorized on this 23 day of March, 2000.
Center Trust, Inc., a Maryland corporation.
By: /s/ Edward D. Fox
----------------------------------------
Name: Edward D. Fox
Title: Chief Executive Officer and
President
CT Operating Partnership, L.P., a California
limited partnership.
By: Center Trust, Inc., a Maryland
corporation, in its capacity as General
Partner.
By: /s/ Edward D. Fox
----------------------------------------
Name: Edward D. Fox
Title: Chief Executive Officer and
President
S-1
<PAGE>
EXHIBIT 10.22
================================================================================
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
February 28, 2000
among
CT OPERATING PARTNERSHIP, L.P.
as Borrower
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
___________________________
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
CREDIT LYONNAIS, NEW YORK BRANCH,
as Syndication Agent
and
CIBC INC.
as Documentation Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I Definitions.............................................................................. 1
SECTION 1.01. Defined Terms................................................................. 1
SECTION 1.02. Classification of Loans and Borrowings........................................ 29
SECTION 1.03. Terms Generally............................................................... 29
SECTION 1.04. Accounting Terms; GAAP........................................................ 29
SECTION 2.01. Commitments................................................................... 30
SECTION 2.02. Loans and Borrowings.......................................................... 30
SECTION 2.03. Requests for Borrowings....................................................... 31
SECTION 2.04. Intentionally Deleted......................................................... 31
SECTION 2.05. Intentionally Deleted......................................................... 31
SECTION 2.06. Letters of Credit............................................................. 31
(a) General....................................................................... 32
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions......... 32
(c) Expiration Date............................................................... 32
(d) Participations................................................................ 32
(e) Reimbursement................................................................. 33
(f) Obligations Absolute.......................................................... 33
(g) Disbursement Procedures....................................................... 34
(h) Interim Interest.............................................................. 34
(i) Replacement of the Issuing Bank............................................... 35
(j) Cash Collateralization........................................................ 35
SECTION 2.07. Funding of Borrowings......................................................... 36
SECTION 2.08. Interest Elections............................................................ 36
SECTION 2.09. Termination and Reduction of Commitments...................................... 37
SECTION 2.10. Repayment of Loans; Evidence of Debt.......................................... 38
SECTION 2.11. Prepayment of Loans; Release of Mortgaged Property/Subsidiary Guaranty........ 39
SECTION 2.12. Fees.......................................................................... 41
SECTION 2.13. Interest...................................................................... 42
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 2.14. Alternate Rate of Interest.................................................. 43
SECTION 2.15. Increased Costs............................................................. 43
SECTION 2.16. Break Funding Payments...................................................... 44
SECTION 2.17. Taxes....................................................................... 45
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs................. 46
SECTION 2.19. Mitigation Obligations; Replacement of Lenders.............................. 48
ARTICLE III Representations and Warranties......................................................... 49
SECTION 3.01. Organization; Powers........................................................ 49
SECTION 3.02. Authorization; Enforceability............................................... 49
SECTION 3.03. Governmental Approvals; No Conflicts........................................ 49
SECTION 3.04. Financial Condition; No Material Adverse Change............................. 50
SECTION 3.05. Properties.................................................................. 50
SECTION 3.06. Litigation and Environmental Matters........................................ 52
SECTION 3.07. Compliance with Laws and Agreements......................................... 54
SECTION 3.08. Investment and Holding Company Status....................................... 54
SECTION 3.09. Taxes....................................................................... 54
SECTION 3.10. ERISA....................................................................... 55
SECTION 3.11. Disclosure.................................................................. 55
SECTION 3.12. Insurance................................................................... 55
SECTION 3.13. REIT Status................................................................. 55
SECTION 3.14. Ownership of Projects, Minority Holdings and Property....................... 56
ARTICLE IV Conditions............................................................................. 56
SECTION 4.01. Effective Date.............................................................. 56
SECTION 4.02. Each Credit Event........................................................... 58
ARTICLE V Affirmative Covenants.................................................................. 59
SECTION 5.01. Financial Statements and Other Information.................................. 59
(a) Quarterly Reports........................................................... 59
(i) Borrower Quarterly Financial Reports....................... 59
(ii) Company Quarterly Financial Reports........................ 59
(iii) Quarterly Compliance Certificates.......................... 60
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
<S> <C>
(iv) Quarterly Financial Statements With Respect to the Mortgaged
Properties................................................... 60
(b) Annual Reports................................................................ 60
(i) Borrower Financial Statements................................ 60
(ii) Company Financial Statements................................. 60
(iii) Annual Compliance Certificates............................... 61
(iv) Tenant Bankruptcy Reports.................................... 61
(v) Annual Financial Statements With Respect to the Mortgaged
Properties................................................... 61
SECTION 5.02. Notices of Material Events.................................................... 62
SECTION 5.03. Existence; Conduct of Business................................................ 65
SECTION 5.04. Payment of Obligations........................................................ 65
SECTION 5.05. Maintenance of Properties; Insurance.......................................... 65
SECTION 5.06. Books and Records; Inspection Rights.......................................... 65
SECTION 5.07. Compliance with Laws.......................................................... 66
SECTION 5.08. Use of Proceeds and Letters of Credit......................................... 66
SECTION 5.09. Company Status................................................................ 66
SECTION 5.10. Ownership of Projects, Minority Holdings and Property......................... 66
SECTION 5.11. Intentionally Deleted......................................................... 66
SECTION 5.12. Environmental Matters......................................................... 66
SECTION 5.13. Borrowing Base Determination/ Requirements.................................... 67
SECTION 5.14. Equity Infusion Requirement................................................... 69
ARTICLE VI Negative Covenants....................................................................... 69
SECTION 6.01. Indebtedness and Other Financial Covenants.................................... 69
(a) From and After the Effective Date............................................. 69
(i) Limitations on Indebtedness.......................................... 69
(ii) Minimum Facility Interest Coverage Ratio............................. 69
(iii) Minimum Fixed Charge Coverage Ratio.................................. 70
(iv) Restrictions on Stock Buyback........................................ 70
(b) Negative Pledge............................................................... 70
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
(c) Pro Forma Calculations........................................................ 70
SECTION 6.02. Liens......................................................................... 70
SECTION 6.03. Fundamental Changes........................................................... 71
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions..................... 71
SECTION 6.05. Hedging Agreements............................................................ 72
SECTION 6.06. Transactions with Affiliates.................................................. 72
SECTION 6.07. Intentionally Deleted......................................................... 72
SECTION 6.08. Margin Regulations; Securities Laws........................................... 72
SECTION 6.09. Negative Covenants of the Company............................................. 72
SECTION 6.10. Environmental Matters......................................................... 73
ARTICLE VII Events of Default........................................................................ 73
ARTICLE VIII The Administrative Agent................................................................. 76
ARTICLE IX Miscellaneous............................................................................ 79
SECTION 9.01. Notices....................................................................... 79
SECTION 9.02. Waivers; Amendments........................................................... 79
SECTION 9.03. Expenses; Indemnity; Damage Waiver............................................ 80
SECTION 9.04. Successors and Assigns........................................................ 82
SECTION 9.05. Survival...................................................................... 84
SECTION 9.06. Counterparts; Integration; Effectiveness...................................... 84
SECTION 9.07. Severability.................................................................. 85
SECTION 9.08. Right of Set-off.............................................................. 85
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.................... 85
SECTION 9.10. WAIVER OF JURY TRIAL.......................................................... 86
SECTION 9.11. Headings...................................................................... 86
SECTION 9.12. Confidentiality............................................................... 86
SECTION 9.13. Interest Rate Limitation...................................................... 87
</TABLE>
iv
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of February 28,
2000 among CT OPERATING PARTNERSHIP, L.P. (formerly known as Alexander Haagen
Properties Operating Partnership, L.P.), as Borrower, the LENDERS party hereto,
and THE CHASE MANHATTAN BANK, as Administrative Agent.
WHEREAS, pursuant to that certain Credit Agreement dated as of
December 31, 1997, among Borrower, the financial institutions listed on the
signature page thereof (the "Original Lenders") and the Administrative Agent
----------------
(the "Original Credit Agreement"), the Original Lenders agreed to make to
-------------------------
Borrower Loans (hereinafter defined) of up to $250,000,000 in aggregate
principal amount outstanding at any one time, for the purposes and upon the
terms and subject to the conditions set forth therein;
WHEREAS, as of May 18, 1998, pursuant to that certain Amended and
Restated Credit Agreement among Borrower, the Lenders (as defined therein) and
the Administrative Agent, the Original Credit Agreement was amended and restated
(the Original Credit Agreement, as so amended and restated, the "Amended Credit
--------------
Agreement");
- ---------
WHEREAS, as of the date hereof (i) $169,624,116.51 have been advanced
to Borrower, and are outstanding as Eurodollar Loans (as hereinafter defined)
and (ii) Letters of Credit (hereinafter defined) in the aggregate undrawn amount
of $4,802,475.00 have been issued and are outstanding, in each case pursuant to
the terms of the Amended Credit Agreement;
WHEREAS, the parties hereto have agreed to amend certain terms and
provisions of the Amended Credit Agreement and to restate the same as
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree that the
aforementioned recitals are true and correct and hereby incorporated herein and
that the Amended Credit Agreement is hereby amended and restated in its entirety
so that all of the terms and conditions contained in this Agreement shall
supersede and control the terms and conditions of the Amended Credit Agreement.
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
-------------
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
---
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
<PAGE>
"Adjusted EBITDA" means, for any Person, for any period, (i) EBITDA
-------- ------
for such person, for such period, as adjusted to eliminate the straight-lining
of rents, less (ii) the Capital Expenditure Deduction Amount for such Person's
----
Projects for such period.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
------------------
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Adjusted NOI" means, for any period, (a) with respect to any Project
------------
owned by the Consolidated Businesses, the NOI relating to such Project for such
period less (i) the Capital Expenditure Deduction Amount relating to such
----
Project, and (ii) a management fee of three percent (3%) of gross revenues from
such Project; and (b) with respect to any Project owned by a Minority Holding,
the portion allocable to Borrower, in accordance with GAAP, of the NOI relating
to such Project for such period less (i) the Capital Expenditure Deduction
----
Amount relating to such Project, and (ii) a management fee of three percent (3%)
of gross revenues from such Project, in each case for such period.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity
--------------------
as administrative agent for the Lenders hereunder, and any successor thereto
under this Agreement.
"Administrative Questionnaire" means an Administrative Questionnaire
----------------------------
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
---------
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Aggregate Value" means, with respect to the Mortgaged Properties, at
---------------
any date, the aggregate value thereof to be calculated as follows:
(i) with respect to Mortgaged Properties owned for not less
than four (4) fiscal quarters, as of the first day of each fiscal
quarter for the immediately preceding consecutive four (4) fiscal
quarters, an amount equal to Adjusted NOI relating to such Mortgaged
Properties for such period divided by 9.5%; and
(ii) with respect to Mortgaged Properties owned for less than
four (4) fiscal quarters, an amount equal to the Appraised Value for
such Mortgaged Properties.
"Agreement" means the Amended Credit Agreement, together with all
---------
Exhibits and Schedules thereto, as amended and restated by this Second Amended
and Restated Credit Agreement, together with all Exhibits and Schedules hereto
and as the same may be further amended, supplemented or otherwise modified from
time to time.
2
<PAGE>
"Alternate Base Rate" means, for any day, a rate per annum equal to
-------------------
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, the
---------------------
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate" means, effective as of January 1, 2000 (i) with
---------------
respect to any ABR Loan, 1%, and (ii) with respect to any Eurodollar Loan, 2.5%.
"Appraisal" means an MAI appraisal in compliance with FIRREA using
---------
methodologies reasonably acceptable to the Administrative Agent at the time such
appraisal is or was made and performed by a qualified and recognized
professional appraiser as may be selected or approved by the Administrative
Agent, having at least ten (10) years' prior experience in performing real
estate appraisals in the geographic area where the property being appraised is
located, having a recognized expertise in appraising properties operated as
retail shopping centers.
"Appraised Value" means, with respect to any Eligible Project, the
---------------
fair market value therefor as determined by and set forth in the Appraisal
relating thereto.
"Approving Lenders" means, at any time, Lenders having Commitments
-----------------
representing at least 80% of the sum of total Commitments at such time.
"Assessment Rate" means, for any day, the annual assessment rate in
---------------
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
-------- ----
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit B or any other form approved by the Administrative Agent.
3
<PAGE>
"Assignment of Leases" means the Assignment of Leases and Rents
--------------------
Agreement between the Administrative Agent and Borrower.
"Availability Period" means the period from and including the Closing
-------------------
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Available Credit" means, at any time, an amount equal to (i) the
----------------
lower of (A) the then effective Commitments of the Lenders, and (B) the
applicable Borrowing Base at such time, minus (ii) the total Credit Exposure of
-----
all the Lenders at such time.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
------------
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of
-----
the United States of America.
"Borrower" means CT Operating Partnership, L.P., a California limited
--------
partnership.
"Borrower's Investment" means, with respect to any Project, Borrower's
---------------------
or any of its Subsidiaries' investment in such Project (including all
investments constituting, evidencing or secured by an interest in property,
whether tangible or intangible and whether real, personal or mixed, that is used
or intended for use in, or in any manner connected with or relating to, the
ownership or leasing of such Project, specifically including, without
limitation, investments in Subsidiaries and Minority Holdings owning or leasing
Projects), at cost, on a consolidated basis, provided that in determining the
-------- ----
cost of such investments, there shall be included (i) the amount of all cash
paid and the value (as reasonably determined by the Company for purposes of such
investment) of any other property transferred therefor by Borrower or its
Subsidiary, (ii) the amount of all Indebtedness and other obligations assumed or
incurred by Borrower or its Subsidiary or to which Borrower or its Subsidiary
takes subject, and (iii) the value (as determined by the Company for the
purposes of such investment) of all equity securities of which the issuer is an
entity that is, or upon such investment will be, included within Borrower or its
Subsidiary and which are issued (otherwise than for cash) to, or retained by,
any person other than Borrower or its Subsidiary in connection with such
investment.
"Borrowing" means Loans of the same Type, made, converted or continued
---------
on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Base" means, subject to Section 5.13, 65% of the Aggregate
--------------
Value of the Mortgaged Properties at such time.
"Borrowing Base Certificate" means a certificate of Borrower
--------------------------
substantially in the form of Exhibit C.
---------
4
<PAGE>
"Borrowing Base Imbalance" has the meaning assigned to such term in
------------------------
Section 2.11(d) hereof.
"Borrowing Request" means a request by Borrower for a Borrowing in
-----------------
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City, New York, are authorized or
required by law to remain closed; provided that, when used in connection with a
-------- ----
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
------------
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditure Deduction Amounts" means, for any Project, the
-------------------------------------
greater of (i) the sum of (a) an amount per annum equal to $0.30 multiplied by
the number of square feet for such Project and (ii) as of the first day of each
calendar quarter, an amount equal to the actual Capital Expenditures for such
Project for the immediately preceding consecutive four calendar quarters.
"Capital Expenditures" means, for any period, the aggregate of all
--------------------
expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication) during such period that, in conformity with
GAAP, are required to be included in or reflected by the Company's, Borrower's
or any of its Subsidiaries' fixed asset accounts as reflected in any of their
respective balance sheets; provided, however, Capital Expenditures shall include
-------- -------
the sum of all expenditures by the Consolidated Businesses and the portion of
expenditures of Minority Holdings allocable to the Consolidated Businesses for
tenant improvements, leasing commissions, property level capital expenditures
(e.g., roof replacement, parking lot repairs, etc.) but not capital expenditures
in connection with expansions and initial developments and initial lease-up of
Projects.
"Capital Lease Obligations" of any Person means the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash and Cash Equivalents" means unrestricted (i) cash, (ii)
-------------------------
marketable direct obligations issued or unconditionally guaranteed by the United
States government and backed by the full faith and credit of the United States
government; and (iii) domestic and Eurodollar certificates of deposit and time
deposits, bankers' acceptances and floating rate certificates of deposit issued
by any commercial bank organized under the laws of the United States, any state
thereof, the District of Columbia, any foreign bank, or its branches or agencies
(fully protected against currency fluctuations), which, at the time of
acquisition, are rated A-1 (or better) by S&P or P-1 (or better) by Moody's
provided that such Cash and Cash Equivalents shall mature within one year of the
- -------- ----
acquisition thereof.
5
<PAGE>
"Change in Control" means (a) the acquisition of ownership, directly
-----------------
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) other than
Prometheus, of shares representing more than 25% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of the
Company; (b) occupation of a majority of the seats (other than vacant seats) on
the board of directors of the Company by Persons who were neither (i) nominated
by the board of directors of the Company nor (ii) appointed by directors so
nominated; or (c) the acquisition of direct or indirect Control of Borrower or
the Company by any Person or group other than Prometheus.
"Change in Law" means (a) the adoption of any law, rule or regulation
-------------
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Closing Date" means December 31, 1997.
------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Collateral" means all property and interests in property and proceeds
----------
thereof now owned or hereafter acquired by Borrower or any of its Subsidiaries
in or upon which a Lien is granted under any of the Collateral Documents.
"Collateral Documents" means, collectively, the Mortgages, the
--------------------
Assignments of Leases, the Environmental Indemnities, the Subordination and
Attornment Agreements and any other document now or hereafter executed and
delivered by Borrower or any of its Subsidiaries granting a Lien on any of its
property to secure payment of the Obligations.
"Commitment" means, with respect to each Lender, the commitment of
----------
such Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Credit Exposure hereunder, as such commitment (a) may be reduced
from time to time pursuant to Section 2.09, (b) may be reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04 and (c) shall be reduced proportionately from time to time as the
Commitment Amount is reduced pursuant to the conditions set forth in the
definition of Commitment Amount. The initial amount of each Lender's Commitment
is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to
-------------
which such Lender shall have assumed its Commitment, as applicable.
6
<PAGE>
"Commitment Amount" is the maximum aggregate amount of the
-----------------
Lenders' Commitment and shall be $175,000,000.00, subject to the
following conditions:
(i) Upon closing of a refinance, or a sale, of all three
(3) of the Covington, Rheem Valley and Montebello Town Square
Projects, the Commitment Amount will reduce by $40,000,000.00;
provided that, if the Covington, Rheem Valley and Montebello Town
- -------------
Square Projects are refinanced or sold separately, the Commitment
Amount will reduce by (a) $10,000,000.00 upon the refinancing or sale
of the Covington Project, (b) $10,000,000.00 upon the refinancing or
sale of the Rheem Valley Project and (c) $20,000,000.00 upon the
refinancing or sale of the Montebello Town Square Project;
(ii) Upon the sale of the Media City Center Enclosed Mall
(the "MCC"), the Commitment Amount will reduce by the greater of (A)
---
100% of the net proceeds thereof (after payment of customary and
reasonable closing expenses) or (B) $50,000,000.00;
(iii) Upon the sale or refinancing of the MCC Macy's, the
Commitment Amount will reduce by the greater of (A) 100% of the net
proceeds thereof (after payment of customary and reasonable closing
expenses)or (B) $10,000,000.00;
(iv) Upon the sale of the City Center Power Center, the
Commitment Amount will reduce by the greater of (A) 100% of the net
proceeds thereof (after payment of customary and reasonable closing
expenses)or (B) $43,000,000.00;
(v) Upon the sale of the MCC Tax Notes, the Commitment
Amount will reduce by the greater of (A) 100% of the net proceeds
thereof (after payment of customary and reasonable closing expenses)or
(B) $10,000,000.00.
To the extent that the Commitment Amount has not previously
been reduced below the following amounts, the Commitment Amount will
reduce to $135,000,000.00 as of March 31, 2000, and to $85,000,000.00
as of June 30, 2000. In no event will the reductions to the Commitment
Amount set forth in (i) through (v) above, reduce the Commitment
Amount below $50,000,000.00. Borrower shall, with each reduction to
the Commitment Amount as provided for herein, prepay the principal
amount of the Loans in accordance with the prepayment provisions
hereof, in an amount equal to the amount of the required reduction to
the Commitment Amount.
"Company" means Center Trust, Inc., a Maryland corporation, formerly
-------
known as Center Trust Retail Properties, Inc., formerly known as Alexander
Haagan Properties, Inc.
7
<PAGE>
"Compliance Certificate" means a certificate of Borrower substantially
----------------------
in the form of Exhibit D.
---------
"Consolidated Businesses" means the Company, Borrower and their
-----------------------
wholly- owned Subsidiaries.
"Contingent Obligation" as to any Person means, without duplication,
---------------------
(i) any contingent obligation of such Person required to be shown on such
Person's balance sheet in accordance with GAAP, and (ii) any obligation required
to be disclosed in the footnotes to such Person's financial statements in
accordance with GAAP, guaranteeing partially or in whole any non-recourse
Indebtedness, lease, dividend or other obligation, exclusive of contractual
indemnities (including, without limitation, any indemnity or price-adjustment
provision relating to the purchase or sale of securities or other assets) and
guarantees of non-monetary obligations (other than guarantees of completion)
which have not yet been called on or quantified, of such Person or of any other
Person. The amount of any Contingent Obligation described in clause (ii) shall
be deemed to be (a) with respect to a guaranty of interest or interest and
principal, or operating income guaranty, the sum of all payments required to be
made thereunder (which in the case of an operating income guaranty shall be
deemed to be equal to the debt service for the note secured thereby), calculated
at the interest rate applicable to such Indebtedness, through (i) in the case of
an interest or interest and principal guaranty, the stated date of maturity of
the obligation (and commencing on the date interest could first be payable
thereunder), or (ii) in the case of an operating income guaranty, the date
through which such guaranty will remain in effect, and (b) with respect to all
guarantees not covered by the preceding clause (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
guaranty is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as recorded on the balance sheet and on the footnotes to the
most recent financial statements of the applicable Borrower required to be
delivered pursuant hereto. Notwithstanding anything contained herein to the
contrary, guarantees of completion shall not be deemed to be Contingent
Obligations unless and until a claim for payment has been made thereunder, at
which time any such guaranty of completion shall be deemed to be a Contingent
Obligation in an amount equal to any such claim. Subject to the preceding
sentence, (i) in the case of a joint and several guaranty given by such Person
and another Person (but only to the extent such guaranty is recourse, directly
or indirectly to the applicable Borrower), the amount of the guaranty shall be
deemed to be 100% thereof unless and only to the extent that (X) such other
Person has delivered Cash and Cash Equivalents to secure all or any part of such
Person's guaranteed obligations or (Y) such other Person holds an Investment
Grade Credit Rating from either Moody's or S&P, and (ii) in the case of a
guaranty, (whether or not joint and several) of an obligation otherwise
constituting Indebtedness of such Person, the amount of such guaranty shall be
deemed to be only that amount in excess of the amount of the obligation
constituting Indebtedness of such Person. Notwithstanding anything contained
herein to the contrary, "Contingent Obligations" shall not be deemed to include
(i) guarantees of loan commitments or of construction loans to the extent the
same have not been drawn, or (ii) any obligations of Borrower or the Company
under the Haagen Agreement.
8
<PAGE>
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
"Credit Exposure" means, with respect to any Lender at any time, the
---------------
sum of the outstanding principal amount of such Lender's Loans and its LC
Exposure at such time.
"Default" means any event or condition which constitutes an Event of
-------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
-----------------
environmental matters disclosed in Schedule 3.06.
"dollars" or "$" refers to lawful money of the United States of
------- -
America.
"EBITDA" means, for any Person for any period, the Net Income (Loss)
------
of such Person for such period taken as a single accounting period, plus (a) the
----
sum of the following amounts of such Person and its subsidiaries for such period
determined on a consolidated basis in conformity with GAAP to the extent
included in the determination of such Net Income (Loss): (i) depreciation
expense, (ii) amortization expense and other non-cash charges, (iii) interest
expense, (iv) income tax expense, (v) extraordinary losses (and other losses on
asset sales not otherwise included in extraordinary losses determined on a
consolidated basis in conformity with GAAP), and (vi) minority interests in
Unconsolidated Entities, less (b) the sum of the following amounts of such
----
Person and its subsidiaries determined on a consolidated basis in conformity
with GAAP to the extent included in the determination of such Net Income (Loss):
(i) extraordinary gains (and in the case of Borrower, other gains on asset sales
not otherwise included in extraordinary gains determined on a consolidated basis
in conformity with GAAP), (ii) the applicable share of Net Income (Loss) of such
Person's Unconsolidated Entities; plus (c) the portion allocable to such Person
----
of EBITDA of such Person's Unconsolidated Entities.
"Effective Date" means the date hereof, provided that with respect to
--------------
the Applicable Rate, the Effective Date shall mean January 1, 2000.
"Eligible Minority Holdings" means Minority Holdings in which (i) the
--------------------------
Company, Borrower and/or any of its direct or indirect wholly-owned Subsidiaries
collectively have an ownership and/or income interest of greater than fifty
percent (50%), (ii) the Company, Borrower and/or any of its direct or indirect
wholly-owned Subsidiaries control the management of such Minority Holdings,
whether as the general partner or managing member of such Minority Holding, or
otherwise, (iii) the Company, Borrower and/or any of its direct or indirect
wholly-owned Subsidiaries, as general partner, managing member or otherwise, has
the ability, in its sole discretion, to grant Liens on the assets of such
Minority Holding, and (iv) there are no restrictions on the ability of such
Minority Holding to declare distributions or dividends, as the case may be.
9
<PAGE>
As used in this definition only, the term "control" shall mean the authority to
make major management decisions in its sole discretion and the management.
"Eligible Project Documents" means, with respect to any Eligible
--------------------------
Project, the following documents:
(a) A description of such Project, such description to include
the age and location of such Project together with a current rent roll
therefor;
(b) A copy of the most recent ALTA Owner's Policy of Title
Insurance (or commitment to issue such a policy to Borrower or its
Subsidiary or Eligible Minority Holding owning or to own such Project)
relating to such Project showing the identity of the fee titleholder
thereto and all matters of record as of its date;
(c) A PML study for such Project prepared by a consultant
acceptable to the Administrative Agent;
(d) Copies of all engineering, mechanical, structural and
maintenance studies performed by third party consultants with respect
to such Project;
(e) A "Phase I" environmental assessment of such Project prepared
by an environmental engineering firm acceptable to the Administrative
Agent, and any additional environmental studies or assessments
available to Borrower performed with respect to such Project;
(f) A Borrowing Base Certificate setting forth on a pro forma
basis the Borrowing Base and the Available Credit assuming that such
Project is accepted as an Eligible Project for the purposes of the
Borrowing Base; and
(g) Such other information as the Administrative Agent may
reasonably request in order to evaluate the Project;
provided that with respect to any Project, the Approving Lenders may waive
- -------- ----
delivery of any of the Eligible Project Documents.
"Eligible Projects" means, collectively, such of the Projects owned by
-----------------
Borrower or any of its direct or indirect wholly-owned Subsidiaries, as shall
either (i) be approved by the Approving Lenders or (ii) meet at any time and
from time to time, each of the following minimum criteria:
(a) such Project is Unencumbered;
(b) such Project is free of all material structural and title
defects other than Permitted Encumbrances;
10
<PAGE>
(c) such Project is, as of the date upon which such Project is
included in the Aggregate Value and as of the end of each succeeding
fiscal quarter, (i) in compliance, in all material respects, with all
applicable Environmental Laws, and (ii) not subject to any material
Environmental Liabilities and Costs, in each case as initially
verified by a written report of an environmental consultant reasonably
acceptable to the Administrative Agent;
(d) such Project is an unenclosed, anchored neighborhood shopping
center or power center, provided that (i) the provisions of this
-------- ----
clause (d) shall not be required for the Smitty's Tucson Project, and
(ii) the Media City Center Project may be enclosed;
(e) such Project is owned in fee simple by Borrower or its direct
or indirect wholly-owned Subsidiary provided that the Media City
-------- ----
Center Project may be included as an Eligible Project notwithstanding
that Borrower owns only a ground leasehold interest therein;
(f) such Project has, as of the date upon which such Project is
included in the Aggregate Value and as of the end of each succeeding
fiscal quarter, a PML of 20% or less of the replacement cost therefor,
in each case as initially verified by a PML study prepared by a
consultant reasonably acceptable to the Administrative Agent; and
(g) such Project is located in one of the following states:
Washington, California, Oregon, Arizona, Nevada, Utah or Idaho.
"Environmental Claim" means any notice of violation, action, claim,
-------------------
Environmental Lien, demand, abatement or other Order or direction (conditional
or otherwise) by any Governmental Authority or any other Person for personal
injury (including sickness, disease or death), tangible or intangible property
damage, damage to the environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or restriction,
resulting from or based upon (i) the existence, or the continuation of the
existence, of a Release (including, without limitation, sudden or non-sudden
accidental or non-accidental Releases) of, or exposure to, any Hazardous
Material or odor, audible noise or other nuisance, or other Release in, into or
onto the environment (including, without limitation, the air, soil, surface
water or groundwater) at, in, by, from or related to any property owned,
operated or leased by Borrower or any of its Subsidiaries or any activities or
operations thereof; (ii) the environmental aspects of the transportation,
storage, treatment or disposal of Hazardous Materials in connection with any
property owned, operated or leased by Borrower or any of its Subsidiaries or
their operations or facilities; or (iii) the violation, or alleged violation, of
any Environmental Laws, Orders or Environmental Permits of or from any
Governmental Authority relating to environmental matters connected with any
property owned, leased or operated by Borrower or any of its Subsidiaries.
11
<PAGE>
"Environmental Indemnity" means the Joint and Several Hazardous
-----------------------
Material Guaranty and Indemnification Agreement between the Administrative
Agent, Borrower, and the Guarantor (as defined therein).
"Environmental Laws" means any applicable federal, state, local or
------------------
foreign law (including common law), statute, code, ordinance, rule, regulation
or other requirement having the force or effect of law relating to the
environment, natural resources, or public or employee health and safety and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. (S) 9601 et seq., the
-- ---
Hazardous Materials Transportation Act, 49 U.S.C. (S) 1801 et seq., the Federal
-- ---
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. (S) 136 et seq., the
-- ---
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. (S) 6901 et seq., the
-- ---
Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., the Clean Air Act, 42
-- ---
U.S.C. (S) 7401 et seq., the Clean Water Act, 33 U.S.C. (S) 1251 et seq., the
-- --- -- ---
Occupational Safety and Health Act, 29 U.S.C. (S) 651 et seq. (to the extent the
-- ---
same relates to any Hazardous Materials), and the Oil Pollution Act of 1990, 33
U.S.C. (S) 2701 et seq., as such laws have been amended or supplemented, and the
-- ---
regulations promulgated pursuant thereto, and all analogous state and local
statutes.
"Environmental Liabilities and Costs" means, as to any Person, all
-----------------------------------
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand by any other Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, including,
without limitation, any thereof arising under any Environmental Law,
Environmental Permit, order or agreement with any Governmental Authority or
other Person, and which relate to any environmental, health or safety condition,
or a Release or threatened Release, and result from the past, present or future
operations of, or ownership of property by, such Person or any of its
Subsidiaries or Eligible Minority Holdings.
"Environmental Lien" means any Lien in favor of any Governmental
------------------
Authority arising under any Environmental Law.
"Environmental Permit" means any Permit required under any applicable
--------------------
Environmental Laws or Order and all supporting documents associated therewith.
"Equity Infusion" has the meaning assigned to such term in the
---------------
Security Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with Borrower, is treated as a single employer
under
12
<PAGE>
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
-----------
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
----------
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
----------------
VII.
"Excluded Taxes" means, with respect to the Administrative Agent, any
--------------
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which Borrower is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by Borrower under
Section 2.19(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.17(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from Borrower
with respect to such withholding tax pursuant to Section 2.17(a).
"Facility Interest Expense" means, for any period, the interest
-------------------------
expense of Borrower (whether paid, accrued or capitalized) with respect to the
Loans or LC
13
<PAGE>
Disbursements, calculated at the greater of (i) the actual interest rate
provided for herein, and (ii) an annual interest rate of 7.5%.
"FAD" means "funds available for distribution" and shall mean, for any
---
period, FFO, as adjusted to eliminate the straight-lining of rents, less Capital
Expenditures, for such period, whether payable or accrued as a liability.
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FFO" means "funds from operations" as defined in the National
---
Association of Real Estate Investment Trusts ("NAREIT") White Paper on Funds
------
From Operations as approved by the NAREIT Board of Governors on March 3, 1995.
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of Borrower.
"Fixed Charges" means, with respect to any fiscal period, the sum of
-------------
(a) Total Interest Expense and (b) the aggregate of all scheduled principal
payments on Total Outstanding Indebtedness according to GAAP made or required to
be made during such fiscal period for the Consolidated Businesses and Minority
Holdings (but excluding balloon payments of principal due upon the stated
maturity of an Indebtedness), and (c) the aggregate of all dividends payable on
the Company's or any of its consolidated Subsidiaries' preferred stock.
"Foreign Lender" means any Lender that is organized under the laws of
--------------
a jurisdiction other than that in which Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United
----
States of America.
"General Partner" means the Company and any successor general
---------------
partner(s) of Borrower.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
14
<PAGE>
"Guarantee" of or by any Person (the "guarantor") means any
--------- ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
---------------
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
--------
endorsements for collection or deposit in the ordinary course of business.
"Guaranty" means the Guaranty of even date herewith made by the
--------
Company for the benefit of the Lenders.
"Haagen Agreement" means that certain Separation Agreement and Release
----------------
dated as of November 24, 1997 by and between ALEXANDER HAAGEN, SR., ALEXANDER
HAAGEN III, CHARLOTTE HAAGEN, AUTUMN HAAGEN, ALEXANDER HAAGEN III & BETTY HAAGEN
TRUST fbo ALEXANDER HAAGEN IV UA 10/24/88, ALEXANDER HAAGEN III & BETTY HAAGEN
TRUST fbo AUTUMN HAAGEN UA 10/24/88, ALEXANDER HAAGEN III & BETTY HAAGEN TRUST
fbo ANDREW HAAGEN UA 10/28/88, HAAGEN LIVING TRUST DATED AUGUST 17, 1988, AS
AMENDED AND RESTATED AS OF APRIL 18, 1996, HAAGEN LIMITED PARTNERSHIP, and
LAZARD FRERES REAL ESTATE INVESTORS, LLC, LFSRI, PROMETHEUS, and the COMPANY,
BORROWER and HAAGEN PROPERTY MANAGEMENT, INC.
"Hazardous Material" means any substance, material or waste which is
------------------
regulated by any Governmental Authority of the United States as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic waste," "toxic
substance" or words of similar meaning or import under any provision of
Environmental Law, which includes, but is not limited to, petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"Hedging Agreement" means any interest rate protection agreement,
-----------------
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Improvements" means all buildings, fixtures, structures, parking
------------
areas, landscaping and all other improvements whether existing now or hereafter
constructed, together with all machinery and mechanical, electrical, HVAC and
plumbing systems presently located thereon and used in the operation thereof,
excluding (a) any such items owned by utility service providers, (b) any such
items
15
<PAGE>
owned by tenants or other third-parties unaffiliated with Borrower and (c)
any items of personal property.
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Initial Mortgaged Properties" means those Eligible Projects set forth
----------------------------
on Schedule 5.13.
-------------
"Interest Election Request" means a request by Borrower to convert or
-------------------------
continue a Borrowing in accordance with Section 2.08.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
---------------------
last day of each month, and (b) with respect to any Eurodollar Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than one month's duration, each day prior to the last day of such Interest
Period that occurs at intervals of one month duration after the first day of
such Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as Borrower may elect; provided, that (i) if any Interest Period
--------
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, (ii) any Interest Period
that commences on the last Business Day of a calendar month (or
16
<PAGE>
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period and (iii) Borrower may not elect
two, three or six month Interest Periods until 120 days after the Closing Date
or such earlier date as the Administrative Agent shall notify Borrower of the
completion of its syndication efforts. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
------------
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.06(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"Lazard Agreements" means, collectively, the Stockholders Agreement,
-----------------
the Stock Purchase Agreement and the Registration Rights Agreement.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to
---------------
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
-----------
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.
"Lease" means a lease, license, concession agreement or other
-----
agreement providing for the use or occupancy of any portion of any Project,
including all amendments, supplements, modifications and assignments thereof and
all side letters or side agreements relating thereto.
"Legal Proceedings" means any judicial, administrative or arbitral
-----------------
actions, suits, proceedings (public or private) or governmental proceedings.
"Lenders" means the Persons listed on Schedule 2.01 and any other
------- -------------
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Letter Agreement" means a letter agreement in the form attached as
----------------
Exhibit H hereto duly executed by Prometheus and LFSRI and duly acknowledged by
- ------- -
Borrower and the Company.
"Letter of Credit" means any letter of credit issued pursuant to this
----------------
Agreement.
17
<PAGE>
"LFSRI" means LF Strategic Realty Investors, L.P., a Delaware limited
-----
partnership.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent, from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
---------
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of
$4,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means, collectively, this Agreement, the Notes, the
--------------
Guaranty, the Security Agreement, the Subsidiary Guaranties, the Collateral
Documents and each certificate, agreement, document or other instrument executed
by Borrower or any of its Subsidiaries or the Company and delivered to the
Administrative Agent in connection with the transactions contemplated hereby, as
such agreements, documents or instruments may be amended, modified or
supplemented from time to time.
"Loan Year" means the period commencing on the Closing Date and ending
---------
on the anniversary thereof and each twelve (12) month period thereafter.
"Loans" means the loans made by the Lenders to Borrower pursuant to
-----
this Agreement and "Loan" means a Loan made pursuant to Section 2.03.
---- ------------
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation U and Regulation G of the Federal Reserve Board as in effect from
time to time.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, assets, operations, or condition, financial or otherwise, of the
Company,
18
<PAGE>
Borrower and the Subsidiaries taken as a whole, (b) the ability of Borrower or
the Company to perform any of their respective obligations under the Loan
Documents or (c) the rights of or benefits available to the Lenders under the
Loan Documents.
"Material Indebtedness" means Indebtedness (other than the Loans and
---------------------
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of Borrower and its Subsidiaries in an aggregate principal
amount exceeding $25,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of Borrower or any
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that Borrower or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
"Maturity Date" means December 31, 2000.
-------------
"MCC Tax Notes" means (i) that certain note dated December 6, 1990,
-------------
made by the Redevelopment Agency of the City of Burbank (the "City") in the
----
original amount of $33,000,000.00 and held by Borrower, and (ii) that certain
note dated December 15, 1989, made by the City in the original amount of
$18,500,00.00 and held by Borrower.
"Minority Holdings" means partnerships, joint ventures and
-----------------
corporations held or owned by Borrower and/or the Company which are not wholly-
owned by Borrower and/or the Company.
"Moody's" means Moody's Investors Service, Inc.
-------
"Mortgage Documents" means with respect to any Eligible Project, the
------------------
following documents, where applicable, in the forms accepted by the
Administrative Agent for the Initial Mortgaged Properties on the Closing Date
subject to appropriate revisions for state or property specific requirements:
(a) A duly executed and acknowledged Mortgage, Assignment of Leases
and Environmental Indemnity for such Eligible Project.
(b) a commitment for a title insurance policy (the "Title Insurance
---------------
Policy") issued by a title company reasonably acceptable to the Administrative
- ------
Agent, in such form and amounts as are reasonably acceptable to the
Administrative Agent, insuring that the Mortgage is a valid first priority Lien
on such Mortgaged Project subject only to such exceptions to title as shall be
acceptable to the Administrative Agent in its reasonable discretion and
containing such endorsements and affirmative insurance as the Administrative
Agent may reasonably require and as are obtainable in the applicable
jurisdiction, and true copies of each document, instrument or certificate
required by the terms of each such policy or Mortgage to be, or have been,
filed, recorded, executed or delivered in connection therewith;
(c) an opinion reasonably satisfactory to the Administrative Agent of
counsel and/or local counsel retained by Borrower with respect to the due
execution and
19
<PAGE>
delivery, validity and enforceability of the Mortgage Documents and such other
matters as may be reasonably required by the Administrative Agent;
(d) duly executed UCC-1 Financing Statements under the applicable
Uniform Commercial Code to be filed in connection with such Mortgage in form and
substance reasonably satisfactory to the Administrative Agent, to perfect the
Lien created by the applicable Mortgage;
(e) (i) duly executed and acknowledged estoppel certificates in form
and substance reasonably satisfactory to the Administrative Agent, each such
estoppel certificate to be received by the Administrative Agent not later than
45 days after the date through which rent has been paid as indicated in such
estoppel certificate, from such number of tenants of such Mortgaged Property as,
when aggregated with tenants of the other Mortgaged Properties included for
purposes of the Borrowing Base that have delivered acceptable estoppel
certificates, account for not less than 70% of the aggregate base rental
revenues from all of the Mortgaged Properties and (ii) duly executed and
acknowledged Subordination and Attornment Agreements (in recordable form and
otherwise in the form attached as Exhibit F hereto) from such number of tenants
---------
of such Mortgaged Property as, when aggregated with (y) tenants of the other
Mortgaged Properties included for purposes of the Borrowing Base that have
delivered acceptable Subordination and Attornment Agreements, and (z) other
tenants of such Mortgaged Property and such other Mortgaged Properties who
occupy the Mortgaged Properties under Leases that are, by their terms, subject
and subordinate to the Liens of the respective Mortgages, account for not less
than 70% of the aggregate base rental revenues from all of the Mortgaged
Properties. For purposes of subparagraphs (i) and (ii) of this paragraph (e),
with respect to each Mortgaged Property, the number of tenants of such Mortgaged
Property that have delivered acceptable estoppel certificates or Subordination
and Attornment Agreements shall be calculated as of the date of the Mortgage
unless the Administrative Agent shall, in it sole and absolute discretion,
permit calculation as of a later date;
(f) an ALTA survey and surveyor's certification for such Mortgaged
Property, in form and substance reasonably satisfactory to the Administrative
Agent and dated not more than six (6) months prior to the date such Project
becomes a Mortgaged Property;
(g) payment to the Administrative Agent, or as the Administrative
Agent may direct, of all title insurance premiums, documentary, stamp or
intangible taxes, recording fees and mortgage taxes payable in connection with
the recording of any of the Mortgage Documents or the issuance of the Title
Insurance Policy;
(h) an Appraisal for such Mortgaged Property; and
(i) such additional documents, information and materials relating to
such Mortgaged Property as the Administrative Agent may reasonably request.
20
<PAGE>
"Mortgage Property Release" has the meaning assigned to such term in
-------------------------
Section 2.11(e).
"Mortgaged Property" means any Eligible Project subject to a Mortgage
------------------
in favor of the Administrative Agent.
"Mortgages" means the mortgages or deeds of trust securing, inter
--------- -----
alia, the Obligations, made or required herein to be made by Borrower or any of
- ----
its Subsidiaries as such Mortgages may be amended, supplemented or otherwise
modified from time to time.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Income (Loss)" means, for any Person for any period, the
-----------------
aggregate of net income (or loss) of such Person and its subsidiaries for such
period, determined on a consolidated basis in conformity with GAAP.
"Net Offering Proceeds" means all cash or other assets received by the
---------------------
Company as a result of the sale of Stock or Stock Equivalents in the Company,
less reasonable costs and expenses paid or incurred by the Company in connection
with such sale.
"NOI" means net operating income determined in accordance with GAAP,
---
as adjusted to eliminate the straight-lining of rents.
"Non-Recourse Indebtedness" of any Person means all Indebtedness of
-------------------------
such Person with respect to which recourse for payment is limited to specific
assets encumbered by a Lien securing such Indebtedness; provided, however, that
-------- -------
personal recourse of a holder of Indebtedness against any obligor with respect
thereto for fraud, misrepresentation, misapplication of cash, waste and other
circumstances customarily excluded from non-recourse provisions in non-recourse
financing of real estate shall not, by itself, prevent any Indebtedness from
being characterized as Non-Recourse Indebtedness, provided further that if a
-------- ------- ----
personal recourse claim is made in connection therewith, such claim shall not
constitute Non-Recourse Indebtedness for the purposes of this Agreement.
"Note" means a promissory note in the form attached hereto as Exhibit
---- -------
A payable to a Lender, evidencing certain of the Obligations of Borrower to such
- -
Lender and executed by Borrower as set forth in Section 2.10 hereof, as the same
may be amended, supplemented, modified, replaced or restated from time to time;
"Notes" means, collectively, all of such Notes outstanding at any given time.
-----
"Notice of Breach" has the meaning assigned to such term in the Letter
----------------
Agreement.
"Obligations" means the Loans, the LC Exposure and all other advances,
-----------
debts, liabilities, obligations, covenants and duties owing by Borrower to the
Lenders, or
21
<PAGE>
any Affiliates of the Lenders (of every type and description, present or future,
whether or not evidenced by any note, guaranty or other instrument) arising
under this Agreement or under any other Loan Document, whether or not for the
payment of money, loan, guaranty, indemnification, foreign exchange transaction
or Hedging Agreement or in any other manner, whether direct or indirect
(including, without limitation, those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising under this
Agreement or under any other Loan Document. The term "Obligations" includes,
without limitation, all interest, charges, expenses, fees, attorneys' fees and
disbursements and any other sum chargeable to Borrower under this Agreement or
any other Loan Document.
"Other Taxes" means any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Order" means any order, injunction, judgment, decree, ruling,
-----
assessment or arbitration award.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"Permit" means any permit, approval, authorization, license, variance,
------
registration, permission or consent required from a Governmental Authority under
an applicable Requirement of Law.
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for taxes, assessments or governmental
charges or claims that are not yet due or are being contested in
compliance with Section 5.04;
(b) landlords', carriers', warehousemen's, mechanics',
materialmen's, repairmen's and other like Liens imposed by law,
arising in the ordinary course of business and securing obligations
that are not overdue by more than 30 days or are being contested in
compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
government contracts, utility payments, leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a
like nature, in each case in the ordinary course of business;
22
<PAGE>
(e) easements, zoning restrictions, rights-of-way, minor defects,
encroachments or irregularities in title and similar encumbrances on
Real Property imposed by law or arising in the ordinary course of
business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or
interfere with the ordinary conduct of business of Borrower or any
Subsidiary; and
(f) any Lien securing the Obligations.
provided that the term "Permitted Encumbrances" shall not include any Lien
- -------- ----
securing Indebtedness other than Liens securing the Obligations.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations
are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of
acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's acceptances
and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any State thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000;
(d) certificates of deposit in an amount less than or equal to
$100,000 in the aggregate issued by any other bank insured by the
Federal Deposit Insurance Corporation;
(e) money market funds invested primarily in one or more of the
foregoing; and
(f) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria
described in clause (c) above.
"Permitted Securities Options" means any stock options, restricted
----------------------------
stock and other rights of any kind in or with respect to Stock of the Company or
Borrower issued or granted to, or held by, any employee or director of the
Company or Borrower.
23
<PAGE>
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any
ERISA Affiliate is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"PML" with respect to any Project, means the probable maximum loss for
---
such Project for purposes of earthquake insurance coverage.
"Prepayment Date" has the meaning assigned to such term in Section
---------------
2.11(c) hereof.
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Project" means any retail properties owned, directly or indirectly,
-------
by any of the Consolidated Businesses or Minority Holdings and references to any
named Projects mean the Projects so identified on Schedule 5.13.
-------------
"Prometheus" means Prometheus Western Retail, LLC, a Delaware limited
----------
liability company.
"Property" means any Real Property or personal property, plant,
--------
building, facility, structure, equipment, General Intangible, Receivable, or
other asset owned or leased by any Consolidated Businesses or any Minority
Holding.
"Real Property" means all of present and future right, title and
-------------
interest (including, without limitation, any leasehold estate) in (i) any plots,
pieces or parcels of land, (ii) any Improvements of every nature whatsoever (the
rights and interests described in clauses (i) and (ii) above being the
"Premises"), (iii) all easements, rights of way, gores of land or any lands
occupied by streets, ways, alleys, passages, sewer rights, water courses, water
rights and powers, and public places adjoining such land, and any other
interests in property constituting appurtenances to the Premises, or which
hereafter shall in any way belong, relate or be appurtenant thereto, (iv) all
hereditaments, gas, oil, minerals (with the right to extract, sever and remove
such gas, oil and minerals), and easements, of every nature whatsoever, located
in, on or benefiting the Premises and (v) all other rights and privileges
thereunto belonging or appertaining and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to or of any of the rights
and interests described in clauses (iii) and (iv) above.
"Register" has the meaning set forth in Section 9.04.
--------
24
<PAGE>
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of June 1, 1997, between the Company and Prometheus.
"REIT" means a domestic trust or corporation that qualifies as a real
----
estate investment trust under the provisions of Sections 856, et seq. of the
-- ---
Code.
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" means any release, spill, emission, leaking, pumping,
-------
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching or migration on or into the indoor or outdoor environment or into or
out of any property.
"Released Property" has the meaning assigned to such term in Section
-----------------
2.11(e) hereof.
"Remedial Action" means all actions, including without limitation any
---------------
Capital Expenditures, required or necessary to (i) clean up, remove, treat or in
any other way address any Hazardous Material or other substance in the indoor or
outdoor environment, (ii) prevent the Release or threat of Release, or minimize
the further Release, of any Hazardous Material or other substance so it does not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (iii) perform pre-remedial studies and
investigations or post-remedial monitoring and care, or (iv) bring facilities on
any property owned or leased by Borrower or any of its Subsidiaries into
compliance with all Environmental Laws and Environmental Permits.
"Required Lenders" means, at any time, Lenders having Commitments
----------------
representing at least 66.7% of the sum of the total Commitments at such time.
"Requirement of Law" means, as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of such
Person, and all federal, state and local laws, rules and regulations, including,
without limitation, federal, state or local securities, antitrust and licensing
laws, all food, health and safety laws, and all applicable trade laws and
requirements, including, without limitation, all disclosure requirements of
Environmental Laws, ERISA and all orders, judgments, decrees or other
determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"Responsible Officer" means the President or any Senior Vice President
-------------------
or Financial Officer of the General Partner.
"S&P" means Standard & Poor's.
---
"Secured Indebtedness" means any Indebtedness secured by a Lien.
--------------------
25
<PAGE>
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
----------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable non-personal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Stock" means shares of capital stock, beneficial or partnership
-----
interests, participations or other equivalents (regardless of how designated) of
or in a corporation or equivalent entity, whether voting or non-voting, and
includes, without limitation, common stock and preferred stock.
"Stock Equivalents" means all securities (other than Stock)
-----------------
convertible into or exchangeable for Stock and all warrants, options or other
rights to purchase or subscribe for any stock, whether or not presently
convertible, exchangeable or exercisable.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as
------------------------
of July 1, 1997, by and among Prometheus, LFSRI and the Company.
"Stock Purchase Certification" has the meaning set forth in the
----------------------------
Security Agreement.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
June 1, 1997, by and among Lazard Freres Real Estate Investors, LLC, LFSRI,
Prometheus and the Company.
"Subordination and Attornment Agreement" means a Subordination, Non-
--------------------------------------
Disturbance and Attornment Agreement, (in recordable form and otherwise in the
form attached as Exhibit F hereto).
---------
"subsidiary" means, with respect to any Person (the "parent") at any
---------- ------
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the
26
<PAGE>
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.
"Subsidiary" means any subsidiary of the Company and/or Borrower.
----------
"Subsidiary Guarantor" means each direct or indirect wholly owned
--------------------
Subsidiary of the Company and/or Borrower which owns, either directly or
indirectly, all or any portion of any Project which is Unencumbered, of which
there are none as of the date hereof.
"Subsidiary Guaranty" means a guaranty, in substantially the form of
-------------------
Exhibit G, executed by each Subsidiary Guarantor, as such guaranty may be
- ------- -
amended, supplemented or otherwise modified from time to time.
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Three-Month Secondary CD Rate" means, for any day, the secondary
-----------------------------
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Adjusted EBITDA" means, for any period, the aggregate sum of
---------------------
the Adjusted EBITDA for the Consolidated Businesses.
"Total Interest Expense" means, for any period, the sum of (i)
----------------------
interest expense of the Consolidated Businesses paid during such period and (ii)
interest expense of the Consolidated Businesses accrued and/or capitalized for
such period and (iii) the portion of the interest expense of Minority Holdings
allocable to Borrower in accordance with GAAP and paid during such period and
(iv) the portion of the interest expense of Minority Holdings allocable to
Borrower in accordance with GAAP and accrued and/or capitalized for such period,
in each case including participating interest expense but excluding
extraordinary interest expense, and net of amortization of deferred costs
associated with new financings or refinancings of existing Indebtedness.
"Total Outstanding Indebtedness" means, for any period, the sum of (i)
------------------------------
the amount of Indebtedness of the Consolidated Businesses set forth on the then
most recent quarterly financial statements of Borrower, prepared in accordance
with GAAP, plus any
27
<PAGE>
additional Indebtedness incurred by the Consolidated Businesses since the time
of such statements, and (ii) the outstanding amount of Minority Holding
Indebtedness allocable in accordance with GAAP to any of the Consolidated
Businesses as of the time of determination, plus any additional Minority Holding
Indebtedness incurred by the Minority Holdings allocable in accordance with GAAP
to any of the Consolidated Businesses as of the time of determination, and (iii)
to the extent quantified, the Contingent Obligations of the Consolidated
Businesses and, to the extent allocable to the Consolidated Businesses in
accordance with GAAP, of the Minority Holdings.
"Total Outstanding Indebtedness Limitation" has the meaning set forth
-----------------------------------------
in Section 6.01(a) hereof.
"Total Value" means, for any period, the aggregate sum of (i) with
-----------
respect to any Project or Minority Holding, which has been owned by Borrower or
the Consolidated Businesses for not less than four (4) consecutive fiscal
quarters, as of the first day of each fiscal quarter for the immediately
preceding consecutive four (4) fiscal quarters, an amount equal to Adjusted NOI
relating to such Project or Minority Holding for such period divided by 9.5%,
----------
and (ii) with respect to any Project or Minority Holding, which has been owned
by Borrower or the Consolidated Businesses for less than four (4) consecutive
fiscal quarters, an amount equal to Borrower's Investment in such Project or
Minority Holding, and (iii) the Cash and Cash Equivalents of the Consolidated
Business.
"Transactions" means the execution, delivery and performance by
------------
Borrower of this Agreement, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder.
"Type", when used in reference to any Loan or Borrowing, refers to
----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Unconsolidated Entity" means, with respect to any Person, at any
---------------------
date, any other Person in whom such Person holds an investment, which investment
is accounted for in the financial statements of such Person on an equity basis
of accounting and whose financial results would not be consolidated under GAAP
with the financial results of such Person on the consolidated financial
statements of such Person, if such statements were prepared as of such date.
"Unencumbered" means, with respect to any Project, at any date of
------------
determination, the circumstance that such Project on such date:
(a) is not subject to any Liens (including restrictions on
transferability or assignability) of any kind (including any such Lien
or restriction imposed by (i) any agreement governing Indebtedness,
and (ii) the organizational documents of Borrower or any of its
Subsidiaries or Eligible Minority Holdings), but excluding Permitted
Encumbrances;
(b) is not subject to any agreement (including (i) any agreement
governing Indebtedness, and (ii) if applicable, the organizational
28
<PAGE>
documents of Borrower or any of its Subsidiaries or Eligible Minority
Holdings) which prohibits or limits the ability of Borrower or any of
its Subsidiaries or Eligible Minority Holdings to create, incur,
assume or suffer to exist any Lien upon such Project, other than
Permitted Encumbrances (excluding any agreement or organizational
document which limits generally the amount of Indebtedness which may
be incurred by Borrower or its Subsidiaries or Eligible Minority
Holdings); and
(c) is not subject to any agreement (including any agreement
governing Indebtedness) which entitles any Person to the benefit of
any Lien (other than Permitted Encumbrances) on such Project, or would
entitle any Person to the benefit of any such Lien upon the occurrence
of any contingency (including, without limitation, pursuant to an
"equal and ratable" clause).
For the purposes of this Agreement, any Project owned by a Subsidiary or
Eligible Minority Holding of Borrower shall not be deemed to be Unencumbered
unless both (i) such Project and (ii) all stock or ownership interests owned
directly or indirectly by Borrower in such Eligible Minority Holdings or
Subsidiary, is Unencumbered.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
--------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
--------------------------------------
of this Agreement, Loans may be classified and referred to by Type (e.g., a
"Eurodollar Loan"). Borrowings also may be classified and referred to by Type
(e.g., a "Eurodollar Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
---------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
29
<PAGE>
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
----------------------
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
--------
that, if Borrower notifies the Administrative Agent that Borrower requests an
- ----
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies Borrower
that the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions set
-----------
forth herein, each Lender agrees to make Loans to Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in (a) such Lender's Credit Exposure exceeding such Lender's Commitment
or (b) the sum of the total Credit Exposures exceeding the total Commitments;
provided, however, that at no time shall any Lender be obligated to make a Loan
- -------- -------
or Loans in excess of such Lender's Applicable Percentage of the Available
Credit. Within the foregoing limits and subject to the terms and conditions set
forth herein, Borrower may borrow, prepay and reborrow Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as
--------------------
part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
-------- ----
and no Lender shall be responsible for any other Lender's failure to make Loans
as required.
(b) Subject to Section 2.14, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as Borrower may request in accordance
herewith. Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that (i) any exercise of such option shall not affect the obligation of
- -------- ----
Borrower to repay such Loan in accordance with the terms of this Agreement and
(ii) each Lender shall use reasonable efforts to select a domestic or foreign
branch or Affiliate that would not result in Borrower being required to pay
additional amounts pursuant to Section 2.15 or Section 2.17.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $4,000,000. At the time that each ABR
Borrowing is
30
<PAGE>
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $1,000,000; provided that an ABR
-------- ----
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.06(e).
Borrowings of more than one Type may be outstanding at the same time; provided
--------
that there shall not at any time be more than a total of 6 Eurodollar Borrowings
- ----
outstanding.
(d) Notwithstanding any other provision of this Agreement, Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a Borrowing,
-----------------------
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 12:00 noon, New York City time, one
Business Day before the date of the proposed Borrowing; provided that any such
-------- ----
notice of an ABR Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.06(e) may be given not later than 10:00 a.m., New York
City time, on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period"; and
(v) the location and number of Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.07.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then Borrower shall be deemed to
have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
31
<PAGE>
SECTION 2.04. Intentionally Deleted.
---------------------
SECTION 2.05. Intentionally Deleted.
---------------------
SECTION 2.06. Letters of Credit.
-----------------
(a) General. Subject to the terms and conditions set forth herein,
-------
Borrower may request the issuance of Letters of Credit for its own account, in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the Availability Period. In the event of
any inconsistency between the terms and conditions of this Agreement and the
terms and conditions of any form of letter of credit application or other
agreement submitted by Borrower to, or entered into by Borrower with, the
Issuing Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
----------------------------------------------------------
Conditions. To request the issuance of a Letter of Credit (or the amendment,
- ----------
renewal or extension of an outstanding Letter of Credit), Borrower shall hand
deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
the date of issuance, amendment, renewal or extension, the date on which such
Letter of Credit is to expire (which shall comply with paragraph (c) of this
Section), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit. If requested by the Issuing Bank,
Borrower also shall submit a letter of credit application on the Issuing Bank's
standard form in connection with any request for a Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the LC Exposure shall not exceed
$25,000,000.00 and (ii) the sum of the total Credit Exposures shall not exceed
the total Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
---------------
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
--------------
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in
32
<PAGE>
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the Issuing Bank,
such Lender's Applicable Percentage of each LC Disbursement made by the Issuing
Bank and not reimbursed by Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to
Borrower for any reason. Each Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement
-------------
in respect of a Letter of Credit, Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 12:00 noon, New York City time, on the date that such LC
Disbursement is made, if Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 12:00 noon, New York City time, on (i) the Business Day that
Borrower receives such notice, if such notice is received prior to 10:00 a.m.,
New York City time, on the day of receipt, or (ii) the Business Day immediately
following the day that Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided that, Borrower may,
-------- ----
subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.03 or 2.05 that such payment be financed with an ABR Borrowing in
an equivalent amount and, to the extent so financed, Borrower's obligation to
make such payment shall be discharged and replaced by the resulting ABR
Borrowing. If Borrower fails to make such payment when due, the Administrative
Agent shall notify each Lender of the applicable LC Disbursement, the payment
then due from Borrower in respect thereof and such Lender's Applicable
Percentage thereof. Promptly following receipt of such notice, each Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from Borrower, in the same manner as provided in Section 2.07 with respect
to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to
------- --------
the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the Lenders.
Promptly following receipt by the Administrative Agent of any payment from
Borrower pursuant to this paragraph, the Administrative Agent shall distribute
such payment to the Issuing Bank or, to the extent that Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such
Lenders and the Issuing Bank as their interests may appear. Any payment made by
a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Loans as contemplated above) shall
not constitute a Loan and shall not relieve Borrower of its obligation to
reimburse such LC Disbursement.
(f) Obligations Absolute. Borrower's obligation to reimburse LC
--------------------
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the
33
<PAGE>
terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein; (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect; provided that payment by the Issuing Bank under such
-------- ----
Letter of Credit against presentation of such draft or document shall not have
constituted gross negligence or wilful misconduct of the Issuing Bank; (iii)
payment by the Issuing Bank under a Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such Letter of
Credit; provided that such payment shall not have constituted gross negligence
-------------
or wilful misconduct of the Issuing Bank; or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, Borrower's obligations
hereunder; provided that such other circumstance or happening shall not have
-------- ----
been the result of gross negligence or wilful misconduct of the Issuing Bank.
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
-------- ----
Issuing Bank from liability to Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by Borrower to the extent permitted by applicable law) suffered by Borrower that
are caused by the Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall
be deemed to have exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
-----------------------
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
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delay in giving such notice
34
<PAGE>
shall not relieve Borrower of its obligation to reimburse the Issuing Bank and
the Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
----------------
Disbursement, then, unless Borrower shall reimburse such LC Disbursement in full
on the date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that Borrower reimburses such LC Disbursement, at the
rate per annum then applicable to ABR Loans; provided that, if Borrower fails to
-------- ----
reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.13(d) shall apply. Interest accrued pursuant to this
paragraph shall be for the account of the Issuing Bank, except that interest
accrued on and after the date of payment by any Lender pursuant to paragraph (e)
of this Section to reimburse the Issuing Bank shall be for the account of such
Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
-------------------------------
replaced at any time by written agreement among Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Bank. At the time any such replacement shall become effective, Borrower
shall pay all unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to Section 2.12(b). From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the replacement of an Issuing Bank hereunder, the replaced
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
----------------------
be continuing, on the Business Day that Borrower receives notice from the
Administrative Agent or the Required Lenders demanding the deposit of cash
collateral pursuant to this paragraph, Borrower shall deposit in an account with
the Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; provided that the obligation
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to
Borrower described in clause (h) or (i) of Article VII. Such deposit shall be
held by the Administrative Agent as collateral for the payment and performance
of the obligations of Borrower under this Agreement. The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole
discretion of the Administrative Agent and at Borrower's risk and expense, such
deposits shall not bear interest. Interest or
35
<PAGE>
profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of Borrower for the LC Exposure at such time or, if
the maturity of the Loans has been accelerated (but subject to the consent of
the Required Lenders) be applied to satisfy other obligations of Borrower under
this Agreement. If Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to Borrower within three
Business Days after all Events of Default have been cured or waived.
SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make
---------------------
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to Borrower not later than 3:00 p.m., New York City time, by wire
transfer of immediately available funds to an account in the United States
designated by Borrower; provided that ABR Loans made to finance the
-------- ----
reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be
remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to Borrower
to but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
SECTION 2.08. Interest Elections. (a) Each Borrowing initially
------------------
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, Borrower may elect to convert
such Borrowing to a different Type or to continue such Borrowing and, in the
case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as
provided in this Section. Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising
36
<PAGE>
such Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) To make an election pursuant to this Section, Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to clauses
(iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of
the term "Interest Period."
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then Borrower shall be deemed to have selected
an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies Borrower, then, so long as an Event of Default
is continuing (i) no outstanding
37
<PAGE>
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing
at the end of the Interest Period applicable thereto.
SECTION 2.09. Termination and Reduction of Commitments. (a) Unless
----------------------------------------
previously terminated, the Commitments shall terminate on the Maturity Date.
(b) Borrower may at any time terminate, or from time to time reduce,
the Commitments; provided that (i) each reduction of the Commitments shall be in
-------- ----
an amount that is an integral multiple of $1,000,000 and not less than
$5,000,000 and (ii) Borrower shall not terminate or reduce the Commitments if,
after giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.11, the sum of the Credit Exposures would exceed the total
Commitments.
(c) Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (b) of this Section at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by Borrower pursuant to
this Section shall be irrevocable; provided that a notice of termination of the
-------- ----
Commitments delivered by Borrower may state that such notice is conditioned upon
the effectiveness of other credit facilities, in which case such notice may be
revoked by Borrower (by notice to the Administrative Agent on or prior to the
specified effective date) if such condition is not satisfied. Any termination or
reduction of the Commitments shall be permanent. Each reduction of the
Commitments shall be made ratably among the Lenders in accordance with their
respective Commitments.
SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) Borrower
------------------------------------
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan on the
Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder. All
amounts of principal and interest due and payable prior to January 1, 2000 shall
remain unaffected by the terms of this Agreement.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
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<PAGE>
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
------------
existence and amounts of the obligations recorded therein; provided that the
-------- ----
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of Borrower to
repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
Note. In such event, Borrower shall prepare, execute and deliver to such Lender
a Note payable to the order of such Lender (or, if requested by such Lender, to
such Lender and its registered assigns). Thereafter, the Loans evidenced by such
Note and interest thereon shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more Notes in such form
payable to the order of the payee named therein.
SECTION 2.11. Prepayment of Loans; Release of Mortgaged
-----------------------------------------
Property/Subsidiary Guaranty. (a) Borrower shall have the right at any time
- ----------------------------
and from time to time to prepay any Borrowing in whole or in part, subject to
prior notice in accordance with paragraph (b) of this Section.
(b) Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City
time, three Business Days before the date of prepayment, or (ii) in the case of
prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a notice of
-------------
prepayment is given in connection with a conditional notice of termination of
the Commitments as contemplated by Section 2.09, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with
Section 2.09; provided further that, if the actual aggregate amount of any
-------- ------- ----
prepayment differs from the amount represented in Borrower's prepayment notice,
Borrower shall promptly deliver a follow-up notice to the Administrative Agent
specifying the additional principal amount which was actually, or which shall be
prepaid and, if applicable, pay to the Administrative Agent in accordance with
the provisions of this Section 2.11, the unpaid balance of the actual aggregate
amount of any prepayment as set forth in such follow-up notice. Promptly
following receipt of any such notice, and, if applicable, follow-up notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.13.
(c) If at any time from and after the Closing Date, (i) the Company
or Borrower merges or consolidates with another Person and the Company or
Borrower as the case may be, is not the surviving entity, or (ii) the Company,
Borrower, any of its consolidated Subsidiaries ceases to provide property
management services (excluding for
39
<PAGE>
such purposes property management contracts with third parties that are
terminable on not more than 30 days' notice) to Projects accounting for at least
80% of the aggregate base rental revenues from all of the Projects in which
Borrower has an ownership interest (the date any such event shall occur being
the "Prepayment Date"), Borrower shall be required to prepay the Loans in their
---------------
entirety as if the Prepayment Date were the Maturity Date and, the Commitment
thereupon shall be terminated. Borrower shall immediately make such prepayment
on the principal amount prepaid and shall return or cause to be returned all
Letters of Credit to the Issuing Bank. In connection with the prepayment of any
Loan prior to the maturity thereof, Borrower shall also pay any applicable
expenses pursuant to Section 2.16 hereof. Each such prepayment shall be applied
to prepay ratably the Loans of the Lender. Amounts prepaid pursuant to this
clause (c) may not be reborrowed.
(d) If at any time the aggregate Credit Exposure of the Lenders at
such time exceeds the lower of the Borrowing Base or the then effective
Commitments at such time (a "Borrowing Base Imbalance"), Borrower shall prepay
------------------------
the Loans then outstanding in an amount equal to such excess, together with
accrued interest within one (1) Business Day of such event occurring.
(e) Provided that no Default or Event of Default has occurred and is
continuing, Borrower shall have the right, subject to the provisions of this
Section 2.11, to obtain a release of a Mortgaged Property from the Lien of the
Mortgage Documents relating thereto ("Mortgage Property Release"). In the event
-------------------------
Borrower seeks to obtain a Mortgage Property Release, the Administrative Agent
shall release such Mortgaged Property (the "Released Property") from the Lien of
-----------------
the Mortgage Documents relating thereto, but only upon satisfaction of all of
the following conditions:
(i) Any request for Mortgage Property Release shall be made in
writing to the Administrative Agent no less than five (5) Business
Days prior to the date of the requested Mortgage Property Release;
(ii) Borrower shall pay all of the Administrative Agent's
reasonable costs and expenses including counsel fees and
disbursements, incurred in connection with the Mortgage Property
Release and the review and approval of the documents and information
required to be delivered in connection therewith;
(iii) Borrower shall deliver to the Administrative Agent
simultaneously with the request referred to in clause (i) above, a
Borrowing Base Certificate signed by a Responsible Officer of
Borrower, representing and certifying the pro forma calculations after
--- -----
giving effect to the proposed Mortgage Property Release, and if such
pro forma Borrowing Base Certificate demonstrates that the Mortgage
Property Release would result in a Borrowing Base Imbalance, Borrower
shall, as a condition precedent to such Mortgage Property Release,
prepay Loans in accordance with clause (d) above; and
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<PAGE>
(f) Provided that no Default or Event of Default has occurred and is
continuing, Borrower shall have the right, subject to the provisions of this
Section 2.11, to obtain a release of a Subsidiary Guaranty in the event that the
applicable Subsidiary Guarantor proposes to encumber its Projects otherwise than
to secure the Obligations. In the event Borrower seeks such a release of a
Subsidiary Guaranty, the Administrative Agent shall release such Subsidiary
Guaranty, but only upon satisfaction of all of the following conditions:
(i) Any request for such release shall be made in writing to
the Administrative Agent no less than five (5) Business Days prior to
the date of the requested release;
(ii) Borrower shall pay all of the Administrative Agent's
reasonable costs and expenses including counsel fees and
disbursements, incurred in connection with such release and the review
and approval of the documents and information required to be delivered
in connection therewith; and
(iii) In the event that any of the Projects owned by the
applicable Subsidiary Guarantor are included for purposes of the
Borrowing Base, Borrower shall deliver to the Administrative Agent
simultaneously with the request referred to in clause (i) above, a
Borrowing Base Certificate signed by a Responsible Officer of
Borrower, representing and certifying the pro forma calculations after
--- -----
omitting such Projects, and if such pro forma Borrowing Base
Certificate demonstrates that the omission of such Projects would
result in a Borrowing Base Imbalance, Borrower shall prepay Loans in
accordance with clause (d) above.
SECTION 2.12. Fees. (a) Borrower agrees to pay to the
----
Administrative Agent for the account of each Lender an unused facility fee,
which shall accrue at a rate of 0.50% per annum on the daily amount of the
unused Commitment of such Lender during the period from and including the date
hereof to but excluding the date on which such Commitment terminates. Accrued
unused facility fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the date on which the Commitments
terminate, commencing as of the Effective Date but in no event later than
December 31, 1999, and nothing herein shall be deemed to affect the payment of
unused facility fees which have accrued prior to the Effective Date. All unused
facility fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(b) Borrower agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit, which shall accrue at a rate of 2.50% per annum on the
average daily amount of such Lender's LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but
41
<PAGE>
excluding the later of the date on which such Lender's Commitment terminates and
the date on which such Lender ceases to have any LC Exposure, and (ii) to the
Issuing Bank a fronting fee, which shall accrue at the rate or rates per annum
separately agreed upon between Borrower and the Issuing Bank on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure, as well as
the Issuing Bank's standard fees with respect to the issuance, amendment,
renewal or extension of any Letter of Credit or processing of drawings
thereunder. Participation fees and fronting fees accrued through and including
the last day of March, June, September and December of each year shall be
payable on the third Business Day following such last day, commencing as of the
Effective Date but in no event later than December 31, 1999, and nothing herein
shall be deemed to affect the payment of participation fees and fronting fees
which have accrued prior to the Effective Date; provided that all such fees
-------- ----
shall be payable on the date on which the Commitments terminate and any such
fees accruing after the date on which the Commitments terminate shall be payable
on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
facility fees and participation fees, to the Lenders. Fees paid shall not be
refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
--------
shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(a) The Loans comprising each Eurodollar Borrowing shall bear
interest, at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(b) Intentionally Deleted.
(c) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
42
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(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, upon termination of the
Commitments; provided that (i) interest accrued pursuant to paragraph (d) of
-------------
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end
of the Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and (iii)
in the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate or shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the
--------------------------
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted LIBO Rate
for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders
that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest
Period;
then the Administrative Agent shall give notice thereof to Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and, (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
---------------
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or the
Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
43
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Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then
Borrower will pay in accordance with clause (c) hereof to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or the Issuing Bank's capital or on the capital
of such Lender's or the Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such Change in Law
(taking into consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding company with respect to
capital adequacy), then from time to time Borrower will pay in accordance with
clause (c) hereof to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender's or the Issuing Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to Borrower and shall be conclusive absent
manifest error. Borrower shall pay such Lender or the Issuing Bank, as the case
may be, the amount shown as due on any such certificate within 10 days after
receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
--------
that Borrower shall not be required to compensate a Lender or the Issuing Bank
- ----
pursuant to this Section for any increased costs or reductions incurred more
than 180 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
-------- ------- ----
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
44
<PAGE>
SECTION 2.16. Break Funding Payments. In the event of (a) the
----------------------
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(b) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by Borrower pursuant to Section 2.19, then, in
any such event, Borrower shall compensate each Lender for the loss, cost and
expense actually incurred to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to Borrower
and shall be conclusive absent manifest error. Borrower shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of
-----
any obligation of Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if Borrower
-------- ----
shall be required by law to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) Borrower shall make such
deductions and (iii) Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed
45
<PAGE>
or asserted by the relevant Governmental Authority; provided that Borrower shall
-------------
not be required to indemnify the Administrative Agent, any Lender or the Issuing
Bank for any penalties, interest or expenses incurred as a result of gross
negligence or willful misconduct of the Administrative Agent, such Lender or the
Issuing Bank, as the case may be. A certificate as to the amount of such payment
or liability delivered to Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by Borrower to a Governmental Authority, Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Each Foreign Lender, so long as such Foreign Lender remains
lawfully able to do so, shall provide Borrower with Internal Revenue Service
form 1001 or 4224, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Foreign Lender is entitled to
benefits under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Agreement is effectively connected with
the conduct of a trade or business in the United States. If the form provided by
a Foreign Lender at the time such Foreign Lender first became a party to this
Agreement or at any time thereafter (other than by reason of a change in United
States law, or a change in the terms of any treaty to which the United States is
a party after the date hereof, or any interpretation thereof), indicates a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from the definition of "Indemnified
Taxes" for periods governed by such form. If any form or document referred to in
this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on the
date hereof by Internal Revenue Service form 1001 or 4224, that the Foreign
Lender reasonably considers to be confidential, the Foreign Lender shall give
notice thereof to Borrower and shall not be obligated to include in such form or
document such confidential information unless the failure to provide such
information would result in Borrower being required to pay such Lender
Indemnified Taxes or Other Taxes pursuant to this Section 2.17.
(f) For any period with respect to which a Foreign Lender has failed
to provide Borrower with the appropriate form pursuant to Section 2.17(e)
(unless such failure is due to a change in treaty, law or regulation, or any
interpretation thereof, occurring subsequent to the date on which a form
originally was required to be provided or because the Foreign Lender is not
lawfully able to do so), such Foreign Lender shall not be entitled to
indemnification under Section 2.17(a) with respect to Taxes imposed by the
United States.
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-
------------------------------------------------------
offs. (a) Borrower shall make each payment required to be made by it hereunder
- ----
46
<PAGE>
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to
12:00 noon, New York City time, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent
at its offices at 380 Madison Avenue, New York, New York, except payments to be
made directly to the Issuing Bank as expressly provided herein and except that
payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly
to the Persons entitled thereto. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in LC Disbursements than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Loans and participations
in LC Disbursements of other Lenders to the extent necessary so that the benefit
of all such payments shall be shared by the Lenders ratably in accordance with
the aggregate amount of principal of and accrued interest on their respective
Loans and participations in LC Disbursements; provided that (i) if any such
-------- ----
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to Borrower or
any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Borrower consents to the foregoing and agrees, to the
extent it may effectively do so under applicable law, that any Lender acquiring
a participation
47
<PAGE>
pursuant to the foregoing arrangements may exercise against Borrower rights of
set-off and counterclaim with respect to such participation as fully as if such
Lender were a direct creditor of Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that Borrower
will not make such payment, the Administrative Agent may assume that Borrower
has made such payment on such date in accordance herewith and may, in reliance
upon such assumption, distribute to the Lenders or the Issuing Bank, as the case
may be, the amount due. In such event, if Borrower has not in fact made such
payment, then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or Issuing Bank with interest thereon, for
each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b) or 2.18(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a)
----------------------------------------------
If any Lender requests compensation under Section 2.15, or if Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15, or if
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then
Borrower may, at its sole expense and effort (provided that the payment of such
-------- ----
expense shall not in any way affect the ability of Borrower to pursue damages
from any Lender which defaults in its obligation to fund Loans hereunder,
including, without limitation, any expenses related to finding a replacement
Lender), upon notice to such Lender and the Administrative Agent, require such
Lender to assign and delegate, without recourse (in accordance with and subject
to
48
<PAGE>
the restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) unless such assignment is to an existing Lender,
-------------
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Commitment is being assigned, the Issuing Bank), which consent
shall not unreasonably be withheld, (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and participations
in LC Disbursements accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.15 or payments required to be made pursuant to
Section 2.17, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling Borrower to require such assignment and
delegation cease to apply.
ARTICLE III
Representations and Warranties
------------------------------
Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of Borrower, the Company
--------------------
and their subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required. Neither Borrower, the Company nor any of their subsidiaries are
"foreign persons" within the meaning of Section 1445 of the Code.
SECTION 3.02. Authorization; Enforceability. (a) The
-----------------------------
Transactions have been duly authorized by all necessary partnership action of
Borrower and the General Partner has the requisite power and authority to
execute, deliver and perform this Agreement and the other Loan Documents on
behalf of Borrower. This Agreement has been duly executed and delivered by
Borrower and constitutes a legal, valid and binding obligation of Borrower,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
(b) Schedule 3.02(b) contains a diagram indicating as of the
Effective Date the ownership structure of Borrower, and any other Person in
which Borrower holds a direct or indirect partnership, joint venture or other
equity interest, indicating the nature of such interest with respect to each
Person included in such diagram and accurately sets
49
<PAGE>
forth (1) the correct legal name of such Person, the jurisdiction of its
incorporation or organization and the jurisdictions in which it is qualified to
transact business as a foreign corporation, or otherwise, and (2) the
authorized, issued and outstanding shares or interests of each class of
Securities of the Company. As of the Effective Date, none of such issued and
outstanding Securities is subject to any vesting, redemption, or repurchase
agreement, and there are no warrants or options (other than Permitted Securities
Options) outstanding with respect to such Securities, except as noted on such
Schedule. The outstanding Capital Stock of the Company is duly authorized,
validly issued, fully paid and nonassessable.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
------------------------------------
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws, partnership agreement or
other organizational documents of Borrower or any of its Subsidiaries, or the
Company or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon Borrower or any of its Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by Borrower or any of its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of Borrower or any of its Subsidiaries other than Permitted
Encumbrances.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
-----------------------------------------------
Each of Borrower and the Company has heretofore furnished to the Lenders (i) in
the case of the Company, its annual audited financial statements for the fiscal
year ended December 31, 1997, and the fiscal year ended December 31, 1998,
reported on by Deloitte & Touche, independent public accountants, and (ii) in
the case of Borrower, its unaudited annual financial statements for the fiscal
year ended December 31, 1997, and the fiscal year ended December 31, 1998
certified by its chief financial officer, and (iii) the quarterly financial
statements for each of the Borrower and the Company for the fiscal quarters
ended March 31, 1999, June 30, 1999, and September 30, 1999. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Company and Borrower and its
consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject, in the case of the Company's statements to year-end audit
adjustments.
(b) Neither the Company, Borrower nor any of Borrower's Subsidiaries has
any Contingent Obligation or liability for any taxes, long-term leases or
commitments, not reflected in the most recent audited financial statements
delivered to the Administrative Agent pursuant to this Agreement or otherwise
disclosed to the Administrative Agent and the Lenders in writing, which will
have or is reasonably likely to have a Material Adverse Effect.
(c) Schedule 3.04 sets forth, as of the Effective Date, all Indebtedness of
the Company, Borrower and Borrower's Subsidiaries and, as of the Effective Date,
except as set forth on Schedule 3.04, there are no defaults in the payment of
principal or interest on any such Indebtedness and no payments thereunder have
been deferred or
50
<PAGE>
extended beyond their stated maturity and there has been no material change in
the type or amount of such Indebtedness (except for the repayment of certain
Indebtedness) since the Effective Date.
SECTION 3.05. Properties. (a) Each of Borrower and its Subsidiaries
----------
and Eligible Minority Holdings own good and marketable fee simple absolute title
to all of the Real Property purported to be owned by them, which Real Property
is at the date hereof described in Schedule 3.05(a), and good and marketable
title to, or valid leasehold interests in, all other properties and assets
purported to be leased by Borrower or any of its Subsidiaries or Eligible
Minority Holdings. Each of Borrower and its Subsidiaries or Eligible Minority
Holdings received all deeds, assignments, waivers, consents, non-disturbance and
recognition or similar agreements, bills of sale and other documents, and have
duly effected all recordings, filings and other actions necessary to establish,
protect and perfect Borrower's and its Subsidiaries' or Eligible Minority
Holdings' right, title and interest in and to all such property except for such
documents or actions the failure to obtain or accomplish which would not have a
Material Adverse Effect.
(b) All material Real Property leased at the date hereof by Borrower or any
of its Subsidiaries or Eligible Minority Holdings is listed on Schedule 3.05(b).
Each of such leases is valid and enforceable in accordance with its terms and is
in full force and effect. Borrower has delivered to the Administrative Agent
true and complete copies of each of such leases and all documents affecting the
rights or obligations of Borrower or any of its Subsidiaries or Eligible
Minority Holdings which is a party thereto, including, without limitation, any
non-disturbance and recognition agreements, subordination agreements, attornment
agreements and agreements regarding the term or rental of any of the leases.
None of Borrower or any of its respective Subsidiaries or Eligible Minority
Holdings nor, to the knowledge of Borrower, any other party to any such lease is
in default of its obligations thereunder or has delivered or received any notice
of default under any such lease, nor has any event occurred which, with the
giving of notice, the passage of time or both, would constitute a default under
any such lease, except for defaults which in the aggregate have no Material
Adverse Effect.
(c) All components of all improvements included within the Projects owned
or leased, as lessee, by Borrower or any of its Subsidiaries or Eligible
Minority Holding (collectively, "Improvements"), including, without limitation,
the roofs and structural elements thereof and the heating, ventilation, air
conditioning, plumbing, electrical, mechanical, sewer, waste water, storm water,
paving and parking equipment, systems and facilities included therein, are in
good working order and repair, subject to such exceptions which are not
reasonably likely to have, in the aggregate, a Material Adverse Effect. All
water, gas, electrical, steam, compressed air, telecommunication, sanitary and
storm sewage lines and systems and other similar systems serving the Projects
owned or leased by Borrower or any of its Subsidiaries or are installed and
operating and are sufficient to enable the Real Property owned or leased by
Borrower and its respective Subsidiaries or Eligible Minority Holdings to
continue to be used and operated in the manner currently being used and
operated, and neither Borrower nor any of its Subsidiaries or Eligible Minority
Holdings has any knowledge of any factor or
51
<PAGE>
condition that reasonably could be expected to result in the termination or
material impairment of the furnishing thereof. No Improvement or portion thereof
is dependent for its access, operation or utility on any land, building or other
Improvement not included in the Real Property owned or leased by Borrower or any
of its Subsidiaries or Eligible Minority Holdings other than for access provided
pursuant to a recorded easement or other right of way establishing the right of
such access.
(d) All Permits required to have been issued or appropriate to enable all
Real Property owned or leased by Borrower or any of its Subsidiaries or Eligible
Minority Holdings to be lawfully occupied and used for all of the purposes for
which they are currently occupied and used have been lawfully issued and are in
full force and effect, other than those which in the aggregate have no Material
Adverse Effect.
(e) Neither Borrower nor any of its Subsidiaries or Eligible Minority
Holdings has received any notice, or has any knowledge, of any pending,
threatened or contemplated condemnation proceeding affecting any Real Property
owned or leased by Borrower or any of its Subsidiaries or Eligible Minority
Holdings or any part thereof, or any proposed termination or impairment of any
parking at any such owned or leased Real Property or of any sale or other
disposition of any Real Property owned or leased by Borrower or any of its
Subsidiaries or Eligible Minority Holdings or any part thereof in lieu of
condemnation, which in the aggregate, are reasonably likely to have a Material
Adverse Effect.
(f) Except for events or conditions not reasonably likely to have, in the
aggregate, a Material Adverse Effect, (i) no portion of any Real Property owned
or leased by Borrower or any of its Subsidiaries or Eligible Minority Holdings
has suffered any material damage by fire or other casualty loss which has not
heretofore been completely repaired and restored to its condition prior to such
casualty, and (ii) no portion of any Real Property owned or leased by Borrower
or any of its Subsidiaries or Eligible Minority Holdings is located in a special
flood hazard area as designated by any Federal Governmental Authorities.
(g) Each of Borrower and its Subsidiaries and Eligible Minority Holdings
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and
other intellectual property material to its business, and the use thereof by
Borrower and its Subsidiaries and Eligible Minority Holdings and does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are
------------------------------------
no Legal Proceedings pending against or, to the knowledge of Borrower,
threatened against or affecting Borrower or any of its Subsidiaries (i) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters (which Borrower represents and warrants to the Lenders and the
Administrative Agent would not reasonably be expected
52
<PAGE>
to have a Material Adverse Effect)) or (ii) that involve this Agreement or the
Transactions.
(b) Except for Disclosed Matters (which Borrower represents and
warrants to the Lenders and the Administrative Agent would not reasonably be
expected to have a Material Adverse Effect):
(i) to the best knowledge of Borrower and its Subsidiaries, all
Real Property leased or owned by Borrower or any of its Subsidiaries
or Eligible Minority Holdings free from contamination by any Hazardous
Material which could reasonably be expected to subject Borrower or any
of its Subsidiaries to Environmental Liabilities and Costs which would
have a Material Adverse Effect;
(ii) the operations of Borrower and each of its Subsidiaries or
Eligible Minority Holdings, and the operations at any Real Property
leased or owned by Borrower or any of its Subsidiaries or Eligible
Minority Holdings are in material compliance with all applicable
Environmental Laws;
(iii) neither Borrower nor any of its Subsidiaries or Eligible
Minority Holdings have liabilities with respect to Hazardous Materials
and, to the best knowledge of Borrower and its Subsidiaries, no facts
or circumstances exist which could give rise to liabilities with
respect to Hazardous Materials which could reasonably be expected to
subject Borrower or any of its Subsidiaries to Environmental
Liabilities and Costs which would have a Material Adverse Effect;
(iv) (A) Borrower and its Subsidiaries and Eligible Minority
Holdings and all Real Property owned or leased by Borrower or its
Subsidiaries and Eligible Minority Holdings have all Environmental
Permits necessary for the operations at such Real Property and are in
material compliance with such Environmental Permits, (B) there are no
Legal Proceedings pending nor, to the best knowledge of Borrower and
its Subsidiaries, threatened to revoke, or alleging the violation of,
such Environmental Permits, and (C) neither Borrower nor any of its
Subsidiaries or Eligible Minority Holdings have received any notice
from any source to the effect that there is lacking any Environmental
Permit required in connection with the current use or operation of any
property leased or owned by Borrower or any of its Subsidiaries or
Eligible Minority Holdings;
(v) neither Borrower's nor any of its Subsidiaries' or Eligible
Minority Holdings' current facilities and operations, nor, to the best
knowledge of Borrower and its Subsidiaries, any predecessor of
Borrower or any of its Subsidiaries or Eligible Minority Holdings, nor
any of Borrower's or its Subsidiaries' or Eligible Minority Holdings'
past
53
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facilities and operations, nor to the best knowledge of Borrower
and its Subsidiaries, any owner of premises leased or operated by
Borrower and its Subsidiaries and Eligible Minority Holdings, are
subject to any outstanding written Order or contract, including
Environmental Liens, with any Governmental Authority or other Person,
or to any federal, state, local, foreign or territorial investigation
respecting (A) Environmental Laws, (B) Remedial Action, (C) any
Environmental Claim, or (D) the Release or threatened Release of any
Hazardous Material;
(vi) neither Borrower nor any of its Subsidiaries or Eligible
Minority Holdings are subject to any pending Legal Proceeding alleging
the violation of any Environmental Law with respect to a Project nor,
to the best knowledge of Borrower and its Subsidiaries, are any such
proceedings threatened;
(vii) neither Borrower nor any of its Subsidiaries or Eligible
Minority Holdings nor, to the best knowledge of Borrower and its
Subsidiaries, any predecessor of Borrower or any of its Subsidiaries
or Eligible Minority Holdings, nor to the best knowledge of Borrower
and its Subsidiaries any owner of premises leased by Borrower or any
of its Subsidiaries or Eligible Minority Holdings, have filed any
notice under federal, state or local, territorial or foreign law
indicating past or present treatment, storage, or disposal of or
reporting a Release of Hazardous Material into the environment;
(viii) none of the operations of Borrower or any of its
Subsidiaries or Eligible Minority Holdings or, to the best knowledge
of Borrower and its Subsidiaries, of any predecessor of Borrower or
any of its Subsidiaries or Eligible Minority Holdings, or, to the best
knowledge of Borrower and its Subsidiaries, of any owner of premises
leased by Borrower or any of its Subsidiaries or Eligible Minority
Holdings, involve or previously involved the generation,
transportation, treatment, storage or disposal of hazardous waste, as
defined under 40 C.F.R. Part 261.3 (in effect as of the date of this
Agreement) or any state, local, territorial or foreign equivalent; and
(ix) there is not now, nor to the best knowledge of Borrower and
its Subsidiaries, has there been in the past, on, in or under any Real
Property leased or owned by Borrower or any of its Subsidiaries or
Eligible Minority Holdings, to the best knowledge of Borrower and its
Subsidiaries or any of their predecessors (A) any underground storage
tanks or surface tanks, dikes or impoundments (other than for surface
water), (B) any friable asbestos-containing materials, (C) any
polychlorinated biphenyls, or (D) any radioactive substances other
than naturally-occurring radioactive material.
54
<PAGE>
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of Borrower
-----------------------------------
and its Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the
-------------------------------------
Company, Borrower nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Company, Borrower and its
-----
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) Taxes that are being contested in good faith
by appropriate proceedings and for which Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
-----
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $250,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $250,000 the fair market value of
the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. Borrower has disclosed to the Lenders all
----------
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of Borrower to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the
55
<PAGE>
circumstances under which they were made, not misleading; provided that, with
-------- ----
respect to Projected financial information, Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.
SECTION 3.12. Insurance. Schedule 3.12 accurately sets forth all
---------
insurance policies and programs in effect with respect to the Property, assets
and business of Borrower and its Subsidiaries, as of January 1, 1999, specifying
for each such policy and program, (i) the amount thereof, (ii) the risks insured
against thereby, (iii) the name of the insurer and each insured party
thereunder, (iv) the policy or other identification number thereof, and (v) the
expiration date thereof. Borrower has delivered to the Administrative Agent
copies of all insurance policies set forth on Schedule 3.12. As of the
Effective Date, such insurance policies and programs (or substantially similar
policies and programs in compliance with Section 5.05 hereof) are in full force
and effect.
SECTION 3.13. REIT Status. The Company is organized in conformity
-----------
with the requirements for qualification as an equity-oriented REIT under the
Code. The Company has met all of the requirements for qualification as an
equity-oriented REIT under the Code for its fiscal year ended December 31, 1998.
The Company is in a position to qualify for its current fiscal year as a REIT
under the Code and its proposed methods of operation will enable it to so
qualify.
SECTION 3.14. Ownership of Projects, Minority Holdings and Property.
-----------------------------------------------------
Except with respect to encumbered Projects owned by special purpose entities
created for purposes of securitizing the mortgage loans encumbering the same,
ownership of all wholly owned Projects, Minority Holdings and other Property of
the Consolidated Businesses is held by Borrower and its direct or indirect
wholly-owned Subsidiaries and is not held directly by the Company.
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date. The obligations of the Lenders to make
--------------
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement and
all other Loan Documents to which it is a party, signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include telecopy transmission of a signed signature
page of each such Loan Document) that such party has signed a
counterpart of this Agreement and all other Loan Documents required to
be delivered by the Administrative Agent.
56
<PAGE>
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders
and dated the Effective Date) of Latham & Watkins, counsel for
Borrower, substantially in the form of Exhibit E, and covering such
---------
other matters relating to Borrower, the Company, this Agreement or the
Transactions as the Required Lenders shall reasonably request.
Borrower hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of
Borrower and the Company, the authorization of the Transactions and
any other legal matters relating to Borrower, the Company, and such
Subsidiaries, this Agreement or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the President, a Vice President
or a Financial Officer of the General Partner, confirming compliance
with the conditions set forth in paragraphs (a) and (b) of Section
4.02.
(e) No change in the business, assets, management, operations, or
financial condition of Borrower or any of its Properties shall have
occurred since September 30, 1997 which change, in the judgment of the
Administrative Agent, will have or is reasonably likely to have a
Material Adverse Effect.
(f) Except as disclosed to the Administrative Agent and the
Lenders, since September 30, 1997, neither Borrower nor the Company
shall not have (i) entered into any (as determined in good faith by
the Administrative Agent) commitment or transaction, including,
without limitation, transactions for borrowings and capital
expenditures, which are not in the ordinary course of Borrower's
business, (ii) declared or paid any dividends or other distributions,
(iii) established compensation or employee benefit plans, or (iv)
redeemed or issued any Stock or Stock Equivalents.
(g) Since September 30, 1997, no agreement or license relating to
the business, operations or employee relations of Borrower or any of
its Properties shall have been terminated, modified, revoked, breached
or declared to be in default, the termination, modification,
revocation, breach or default under which, in the reasonable judgment
of the Administrative Agent, would result in a Material Adverse
Effect.
(h) Since September 30, 1999, no material adverse change shall have
occurred in the conditions in the capital markets or the market for
loan syndications generally.
57
<PAGE>
(i) The Administrative Agent shall have received all fees and other
amounts due and payable by Borrower on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all
reasonable out-of-pocket expenses required to be reimbursed or paid by
Borrower hereunder.
(j) The Administrative Agent shall have received (i) a Borrowing
Base Certificate, dated the Effective Date and signed by a Responsible
Officer, together with copies of the Eligible Project Documents in
respect of each of the Eligible Projects shown listed thereon to the
extent not previously delivered, and (ii) a Compliance Certificate,
dated the Effective Date and signed by a Responsible Officer, in each
case reasonably satisfactory to the Administrative Agent.
(k) The Administrative Agent shall have received the Letter
Agreement.
(l) The Administrative Agent shall have received Mortgage Documents
in respect of each of the Initial Mortgaged Properties including,
without limitation, the payments specified in clause (g) of the
definition of Mortgaged Documents.
(m) The Administrative Agent shall have received (i) the Guaranty
duly executed by the Company, (ii) the Security Agreement duly
executed by the Company, together with Financing Statements (Form UCC-
1) under the Uniform Commercial Code of all jurisdictions as may be
necessary or, in the reasonable opinion of the Administrative Agent,
desirable to protect the security interest created thereunder and
(iii) each Subsidiary Guaranty, duly executed by the Subsidiary
Guarantor party thereto.
The Administrative Agent shall notify Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and binding.
SECTION 4.02. Each Credit Event. The obligation of each Lender to
-----------------
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of Borrower, the Company
and each Subsidiary Guarantor set forth in any of the Loan Documents
shall be true and correct in all material respects on and as of the
date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such
58
<PAGE>
Letter of Credit, as applicable, no Default or Event of Default shall
have occurred and be continuing.
(c) Borrower has not received written notice from the Required
Lenders that an event has occurred since the date of this Agreement
which has had, and continues to have, or is reasonable likely to have,
a Material Adverse Effect.
(d) The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, on such date does
not violate any Requirement of Law and is not enjoined, temporarily,
preliminary or permanently.
(e) The Administrative Agent shall have received a Borrowing Base
Certificate, dated as of the date of the proposed Borrowing and signed
by the President, a Vice President or a Financial Officer of the
General Partner, satisfactory to the Administrative Agent, together
with (to the extent not previously delivered) copies of the Eligible
Project Documents in respect of each Eligible Project listed thereon.
(f) In the event that such Loan is to be made or such Letter of
Credit is to be issued, amended, renewed or extended, the
Administrative Agent shall have received Mortgage Documents in respect
of each of the Eligible Projects included for purposes of the
Borrowing Base, including, without limitation, the payments specified
in clause (g) of the definition of Mortgaged Documents.
(g) The Administrative Agent shall not have received a Notice of
Breach.
(h) The Administrative Agent shall have received such additional
documents, information and materials as any Lender, through the
Administrative Agent, may reasonably request.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by Borrower
on the date thereof as to the matters specified in paragraphs (a) and (b) of
this Section.
ARTICLE V
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, Borrower covenants and agrees
with the Lenders that:
59
<PAGE>
SECTION 5.01. Financial Statements and Other Information. Borrower
------------------------------------------
will furnish to the Administrative Agent and each Lender:
(a) Quarterly Reports.
-----------------
(i) Borrower Quarterly Financial Reports. As soon as practicable, and
------------------------------------
in any event within forty-five (45) days after the end of each fiscal quarter in
each Fiscal Year (other than the last fiscal quarter in each Fiscal Year), a
consolidated balance sheet of Borrower and the related consolidated statements
of income, retained earnings and cash flow of Borrower (to be prepared and
delivered quarterly in conjunction with the other reports delivered hereunder at
the end of each fiscal quarter) for each such fiscal quarter, in each case in
the same form as the statements accepted by the Administrative Agent on the
Closing Date and, in comparative form, the corresponding figures for the
corresponding periods of the previous Fiscal Year, certified by a Financial
Officer of Borrower as fairly presenting the consolidated and consolidating
financial position of Borrower as of the dates indicated and the results of
their operations and cash flow for the months indicated in accordance with GAAP,
subject to normal year end audit adjustments.
(ii) Company Quarterly Financial Reports. As soon as practicable, and in
-----------------------------------
any event within forty-five (45) days after the end of each fiscal quarter in
each Fiscal Year (other than the last fiscal quarter in each Fiscal Year), the
Financial Statements of the Company and its Subsidiaries on Form 10-Q as at the
end of such period and a report setting forth in comparative form the
corresponding figures for the corresponding period of the previous Fiscal Year,
certified by a Financial Officer of the Company as fairly presenting the
consolidated and consolidating financial position of the Company and its
Subsidiaries as at the date indicated and the results of their operations and
cash flow for the period indicated in accordance with GAAP, subject to normal
adjustments.
(iii) Quarterly Compliance Certificates. Together with each delivery of
---------------------------------
any quarterly report pursuant to paragraph (a)(i) of this Section 5.01, Borrower
shall deliver (i) a Borrowing Base Certificate as of the end of such fiscal
quarter, executed by a Responsible Officer, together with (to the extent not
previously delivered) copies of the Eligible Project Documents in respect of
each of the Eligible Projects shown listed thereon, and (ii) a Compliance
Certificate as of the end of such fiscal quarter, executed by a Financial
Officer.
(iv) Quarterly Financial Statements With Respect to the Mortgaged
------------------------------------------------------------
Properties. As soon as practicable and in any event within forty-five (45) days
- ----------
after the end of each fiscal quarter in each Fiscal Year (other than the last
fiscal quarter in each Fiscal Year), a rent roll for each of the Mortgaged
Properties certified by a Financial Officer, together with a statement of gross
revenues, direct operating expenses, net income, capital expenditures, tenant
improvements and leasing commissions for each of the Mortgaged Properties as at
the end of such quarter, each of which statements shall (i) set forth in
comparative form, the figures for the corresponding periods during the previous
Fiscal Year, (ii) be prepared in reasonable detail and (iii) be certified by a
Financial Officer that they are complete and correct and that they fairly
present the gross
60
<PAGE>
revenues, direct operating expenses and net income of each such property as at
the end of such fiscal quarter, in accordance with GAAP (subject to normal,
year-end audit adjustments).
(b) Annual Reports.
--------------
(i) Borrower Financial Statements. As soon as practicable, and in any
-----------------------------
event within ninety (90) days after the end of each Fiscal Year, a consolidated
balance sheet of Borrower and the related consolidated statements of income,
retained earnings and cash flow of Borrower (to be prepared and delivered
annually in conjunction with the other reports delivered hereunder at the end of
each Fiscal Year) for each such Fiscal Year, in each case in the same form as
the statements accepted by the Administrative Agent on the Closing Date and, in
comparative form, the corresponding figures for the corresponding periods of the
previous Fiscal Year, certified by a Financial Officer of Borrower as fairly
presenting the consolidated and consolidating financial position of Borrower as
of the dates indicated and the results of their operations and cash flow for the
months indicated in accordance with GAAP, subject to normal year end audit
adjustments.
(ii) Company Financial Statements. As soon as practicable, and in any
----------------------------
event within ninety (90) days after the end of each Fiscal Year, the Financial
Statements of the Company and its Subsidiaries on Form 10-K as at the end of
such Fiscal Year and a report setting forth in comparative form the
corresponding figures from the consolidated Financial Statements of the Company
and its Subsidiaries for the prior Fiscal Year accompanied by a report thereon
of Deloitte & Touche or other independent certified public accountants
acceptable to the Administrative Agent, which report shall be unqualified as to
scope of audit and shall state that such financial statements fairly present the
consolidated financial position of the Company and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years (except for changes with which Deloitte & Touche or any such other
independent certified public accountants, if applicable, shall concur and which
shall have been disclosed in the notes to the financial statements)(which report
shall be subject to the confidentiality limitations set forth herein); and (iii)
in the event that the report referred to in clause (ii) above is qualified, a
copy of the management letter or any similar report delivered to the Company or
to any officer or employee thereof by such independent certified public
accountants in connection with such financial statements. The Administrative
Agent and each Lender (through the Administrative Agent) may, with the consent
of the Company (which consent shall not be unreasonably withheld), communicate
directly with such accountants, with any such communication to occur together
with a representative of the Company, at the expense of the Administrative Agent
(or the Lender requesting such communication), upon reasonable notice and at
reasonable times during normal business hours.
(iii) Annual Compliance Certificates. Together with each delivery of
------------------------------
any annual report pursuant to clauses (i) and (ii) of this Section 5.01(b),
Borrower shall
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<PAGE>
deliver a Compliance Certificate as of the end of such Fiscal Year, executed by
a Financial Officer.
(iv) Tenant Bankruptcy Reports. As soon as practicable, and in any event
-------------------------
within ninety (90) days after the end of each Fiscal Year, Borrower shall
deliver a written report, in form reasonably satisfactory to the Administrative
Agent, of all bankruptcy proceedings filed by or against any tenant of any of
the Projects, which tenant occupies two percent (2%) or more of the gross
leasable area in the Projects in the aggregate. Borrower shall deliver to the
Administrative Agent and the Lenders, immediately upon Borrower's learning
thereof, of any bankruptcy proceedings filed by or against, or the cessation of
business or operations of, any tenant of any of the Projects which tenant
occupies two percent (2%) or more of the gross leasable area in the Projects in
the aggregate.
(v) Annual Financial Statements With Respect to the Mortgaged Properties.
--------------------------------------------------------------------
As soon as practicable and in any event within ninety (90) days after the end of
each Fiscal Year a rent roll for each of the Mortgaged Properties, together with
a statement of gross revenues, direct operating expenses, net income, capital
expenditures, tenant improvements and leasing commissions for each of the
Mortgaged Properties for such Fiscal Year, in each case certified by a Financial
Officer, together with an audited statement of gross revenues and direct
operating expenses for each of the Properties for such Fiscal Year, each of
which audited statements shall (i) set forth in comparative form, the figures
for gross income and direct operating expenses for the previous Fiscal Year;
provided that a comparative form shall not be required for the audited
- -------- ----
statements delivered for the Fiscal Year 1997, (ii) be prepared in reasonable
detail, (iii) be accompanied by a report thereon of Deloitte & Touche or other
independent public accountants of comparable recognized national standing
acceptable to the Lender, (iv) be unqualified as to scope of audit and (v) state
that such consolidated statement presents fairly the gross revenues and direct
operating expenses as at the end of such Fiscal Year of each such statement in
accordance with GAAP.
(c) Concurrently with any delivery of financial statements under clause (a)
or (b) above, a certificate of a Financial Officer of Borrower (i) certifying as
to whether a Default has occurred and is continuing and, if a Default has
occurred and is continuing, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.01(a) or (b), as
applicable and (iii) stating whether any change in GAAP or in the application
thereof has occurred since the date of the audited financial statements referred
to in Section 3.04 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate;
(d) Intentionally Deleted;
(e) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of Borrower
or any
62
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Subsidiary, or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. (a) Borrower will furnish
--------------------------
to the Administrative Agent and each Lender prompt written notice of the
following:
(i) the occurrence of any Default;
(ii) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or
affecting Borrower or any Affiliate thereof that, if adversely
determined, could reasonably be expected to result in a Material
Adverse Effect;
(iii) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in a Material Adverse Effect;
(iv) the occurrence of any one of the events (i) through (iv)
contemplated in the definition of Commitment Amount; and
(v) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
(b) Borrower shall deliver to the Administrative Agent and the Lenders
written notice of each of the following not less than five (5) Business Days
after the occurrence thereof: (a) a sale, transfer or other disposition of
assets, in a single transaction or series of related transactions, for
consideration in excess of $10,000,000, (b) an acquisition of assets, in a
single transaction or series of related transactions, for consideration in
excess of $20,000,000, and (c) the grant of a Lien with respect to assets, in a
single transaction or series of related transactions, in connection with
Indebtedness aggregating an amount in excess of $20,000,000. Simultaneously
with delivery of any such notice, Borrower shall be deemed to have represented
and warranted to the Administrative Agent that Borrower is in compliance with
this Agreement and the other Loan Documents both on a historical basis and on a
pro forma basis, exclusive of the property sold, transferred and/or encumbered
and inclusive of the property to be acquired or the indebtedness to be incurred.
To the extent such proposed transaction would result in a failure to comply with
the financial covenants set forth herein, proceeds of such transaction (together
with such additional amounts as may be required), in an amount, as determined by
the Administrative Agent, equal to that which would be required to reduce the
Obligations so that Borrower will be in compliance with the covenants set forth
herein upon the consummation of the contemplated transaction, shall be applied
to prepay the Obligations.
(c) Borrower shall promptly notify the Administrative Agent upon obtaining
knowledge of the bankruptcy or cessation of substantially all of the operations
63
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of any tenant to which greater than two percent (2%) of Borrower's share of
consolidated minimum rent is attributable.
(d) promptly and in any event within ten days of Borrower or any Subsidiary
learning of any of the following, written notice to the Administrative Agent of
any of the following:
(i) the Release of any Hazardous Material on or from any
property owned or leased by Borrower of any of its Subsidiaries or
Eligible Minority Holdings and any written order, notice, permit,
application or other written communication or report received by
Borrower, any of its Subsidiaries or Eligible Minority Holdings in
connection with or relating to any such Release, unless such Release
is not reasonably likely to subject Borrower or any of its
Subsidiaries to Environmental Liabilities and Costs which would have a
Material Adverse Effect;
(ii) any notice or claim to the effect that Borrower, any of its
Subsidiaries or any Eligible Minority Holdings is or may be liable to
any Person as a result of the Release or threatened Release of any
Hazardous Material into the environment which liability would have a
Material Adverse Effect;
(iii) receipt by Borrower, any of its Subsidiaries or Eligible
Minority Holdings or any Operator of notification that any real or
personal property of Borrower or any of its Subsidiaries is subject to
an Environmental Lien;
(iv) any Remedial Action taken by Borrower or any of its
Subsidiaries or Eligible Minority Holdings or any other Person on
their behalf in response to any Hazardous Material on, under or about
any Real Property owned or leased by Borrower or any of its
Subsidiaries or Eligible Minority Holdings, unless such Remedial
Action is not reasonably likely to subject Borrower or any of its
Subsidiaries or Eligible Minority Holdings to Environmental
Liabilities and Costs which would have a Material Adverse Effect;
(v) receipt by Borrower or any of its Subsidiaries or Eligible
Minority Holdings of any notice of violation of, or knowledge by
Borrower or any of its Subsidiaries or any Eligible Minority Holdings
that there exists a condition which may result in a violation by
Borrower or any of its Subsidiaries or Eligible Minority Holdings of,
any Environmental Law, unless such violation is not reasonably likely
to subject Borrower or any of its Subsidiaries to Environmental
Liabilities and Costs which would have a Material Adverse Effect;
64
<PAGE>
(vi) any proposed Capital Expenditure by Borrower or any of its
Subsidiaries or Eligible Minority Holdings intended or designed to
implement any existing or additional Remedial Action, unless such
expenditures are not reasonably likely to have a Material Adverse
Effect;
(vii) the commencement of any judicial or administrative
proceeding or investigation alleging a violation of any Environmental
Law; or
(viii) any proposed acquisition of stock, assets or Real Property,
or any proposed leasing of property by Borrower, or any of its
Subsidiaries or Eligible Minority Holdings, unless such action is not
reasonably likely to subject Borrower and its Subsidiaries to
Environmental Liabilities and Costs to Borrower which would have a
Material Adverse Effect; and
(e) promptly, such additional financial and other information respecting
the financial or other condition of Borrower or any of its Subsidiaries or
Eligible Minority Holdings or the status or condition of any Real Property owned
or leased by Borrower or its Subsidiaries or Eligible Minority Holdings, or the
operation thereof which Borrower is entitled to or can otherwise reasonably
obtain, as the Administrative Agent from time to time reasonably requests; and
(f) upon written request by any Lender through the Administrative Agent, a
report providing an update of the status of any Environmental Claim, Remedial
Action or any other issue identified in any notice or report required pursuant
to this Section 5.02
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. Borrower will, and
------------------------------
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business.
SECTION 5.04. Payment of Obligations. Borrower will, and will cause
----------------------
each of its Subsidiaries to, pay its obligations, including Tax liabilities,
that, if not paid, could result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b)
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
65
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SECTION 5.05. Maintenance of Properties; Insurance. Borrower will,
------------------------------------
and will cause each of its Subsidiaries to, (a) keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, and (b) maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are listed on Schedule 3.12 or substantially similar policies and programs as
are acceptable to the Administrative Agent. Notwithstanding the foregoing (i)
Borrower will, on or before January 15, 1998, deliver to the Administrative
Agent evidence satisfactory to the Administrative Agent that the earthquake
insurance coverage listed on Schedule 3.12 has been increased by at least $20
million, and (ii) the Administrative Agent shall be entitled to review, on an
annual basis, the earthquake insurance coverage maintained by Borrower and its
Subsidiaries and the probable maximum loss values in connection therewith, and
to require such additional insurance coverage as the Administrative Agent shall
determine, in its reasonable discretion, is required based on such review.
SECTION 5.06. Books and Records; Inspection Rights. Borrower will,
------------------------------------
and will cause each of its Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender, unless an Event of Default has occurred
and is continuing, at the expense of any such Lender, upon reasonable prior
notice and during normal business hours, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested.
SECTION 5.07. Compliance with Laws. Borrower will, and will cause
--------------------
each of its Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds and Letters of Credit. No part of the
-------------------------------------
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations G, U and X. Letters of Credit will be issued only to
support performance obligations or escrow deposits or as additional support for
other operating purposes and partial credit enhancements for Indebtedness. The
proceeds of the Loans, will be used only for the purposes of:
(a) acquisition of retail Projects similar to and consistent with the
types of Projects owned and/or operated by Borrower on the Closing Date, located
in the following states: Washington, California, Oregon, Arizona, Nevada, Utah
or Idaho; and
(b) refinancing of existing Indebtedness for borrowed money secured by
Projects;
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(c) redevelopment of Projects; and
(d) general corporate purposes of Borrower and its Subsidiaries;
provided that no more than 10% of the Available Credit shall be used for such
- -------------
purpose at any time.
SECTION 5.09. Company Status. The Company shall at all times (1)
--------------
remain a publicly traded company listed on the American Stock Exchange; (2)
retain direct or indirect management and control of Borrower, and (3) operate
its business at all times so as to satisfy all requirements necessary to qualify
as an equity-oriented REIT under the Code. The Company will maintain adequate
records so as to comply with all record-keeping requirements relating to the
qualification of the Company as an equity-oriented REIT as required by the Code
and applicable regulations of the Department of the Treasury promulgated
thereunder and will properly prepare and timely file with the IRS all returns
and reports required thereby. The Company will request from its shareholders
all shareholder information required by the Code and applicable regulations of
the Department of Treasury promulgated thereunder.
SECTION 5.10. Ownership of Projects, Minority Holdings and Property.
-----------------------------------------------------
The ownership of substantially all wholly owned Projects, Minority Holdings and
other Property of the Consolidated Businesses shall be held by Borrower and its
Subsidiaries and shall not be held directly by the Company.
SECTION 5.11. Intentionally Deleted.
---------------------
SECTION 5.12. Environmental Matters. (a) Borrower shall comply and
---------------------
shall cause each of its Subsidiaries and Eligible Minority Holdings and each
property owned or leased by such parties to comply in all material respects with
all applicable Environmental Laws currently or hereafter in effect.
(b) If Administrative Agent or Lenders at any time have a reasonable
basis to believe that there may be a material violation of any Environmental Law
by Borrower or any of its Subsidiaries and Eligible Minority Holdings related to
any Real Property owned or leased by Borrower or any of its Subsidiaries and
Eligible Minority Holdings, or Real Property adjacent to such Real Property,
then Borrower agrees, upon request from the Administrative Agent, to provide the
Administrative Agent, at Borrower's expense, with such reports, certificates,
engineering studies or other written material or data as the Administrative
Agent or Lenders may reasonably require so as to reasonably satisfy the
Administrative Agent and Lenders that Borrower or such Subsidiary, Eligible
Minority Holding or Real Property owned or leased by them is in material
compliance with all applicable Environmental Laws. Furthermore, Administrative
Agent shall have the right to inspect during normal business hours any Real
Property owned or leased by Borrower or any of its Subsidiaries or Eligible
Minority Holdings if at any time Administrative Agent or Lenders have a
reasonable basis to believe that there may be such a material violation of
Environmental Law.
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(c) Borrower shall, and shall cause each of its Subsidiaries and
Eligible Minority Holdings to, take such Remedial Action or other action as
required by Environmental Laws, as any Governmental Authority requires, except
to the extent contested in good faith and by proper proceedings, or as is
appropriate and consistent with good business practice.
SECTION 5.13. Borrowing Base Determination/ Requirements. (a) As of
------------------------------------------
the Effective Date, the Administrative Agent and the Lenders have accepted the
Projects listed on Schedule 5.13 as Eligible Projects for the purposes of the
-------- ----
Borrowing Base as of the Effective Date, provided that the parties acknowledge
-------- ----
and agree that:
(i) Borrower owns only a ground leasehold interest in the Media City
Center Project, but the Administrative Agent and the Lenders have agreed, as a
one time waiver only, to accept such Project as an Eligible Project. After the
sale or refinancing of any one portion of Borrower's interest in the Media City
Center Project (other than the MCC Tax Notes), the Borrowing Base will reduce to
50% of the Aggregate Value of the Mortgaged Properties at such time. After the
sale of more than one portion of Borrower's interest in the Media City Center
Project (other than the MCC Tax Notes), the Borrowing Base will reduce to 40% of
the Aggregate Value of the Mortgaged Properties at such time;
(ii) the Montebello Project has a PML of more than 20% of the
replacement cost thereof, but the Administrative Agent and the Lenders have
agreed, as a one time waiver only, to accept such Project as an Eligible
Project; and
(iii) with respect to the Ross Center, Pacific Linen, Vancouver Park
and Frontier Village Projects, the portion of the Borrowing Base relating to
such Projects shall at all times be the sum of 50% of the Aggregate Value of the
Ross Center, Pacific Linen, Vancouver Park and Frontier Village Projects.
(b) If Borrower desires that the Administrative Agent and the
Approving Lenders accept an additional Project as an Eligible Project for the
purposes of the Borrowing Base, Borrower shall so notify the Administrative
Agent, in writing and deliver to the Administrative Agent, a duly executed and
completed due diligence request form in the form attached as Exhibit I hereto.
---------
In lieu of the Administrative Agent ordering the environmental reports and
building condition survey as contemplated by such form, the Administrative Agent
will accept environmental reports and building condition surveys prepared by
consultants approved by the Administrative Agent (a list of initially approved
environmental consultants and initially approved building condition consultants
is attached hereto as Exhibit J) provided such reports or surveys comply with
--------- --------
the Administrative Agent's requirements as to scope of work as set forth on
Exhibit K hereto and the Administrative Agent receives the original reliance
letters, (in the form attached as Exhibit L hereto or otherwise in form and
---------
substance reasonably acceptable to the Administrative Agent) in favor of the
Administrative Agent, the Lenders and their respective successors and assigns,
and holders of any participation interests in the Loan. The acceptance of such
Project in the Borrowing Base shall be subject to the approval of the
Administrative Agent and the Approving Lenders, which approval shall not be
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unreasonably withheld, conditioned or delayed, provided such Project shall meet
--------
the requirements for Eligible Projects specified herein and provided further
-------- -------
that a Project shall not be accepted as an Eligible Project unless and until
- ----
Borrower has delivered to the Administrative Agent, (i) Mortgage Documents in
respect of such Project including, without limitation, the payments specified in
clause (g) of the definition of Mortgage Documents, and (ii) the Eligible
Project Documents relating to such Project in form and substance reasonably
satisfactory to the Administrative Agent and the Approving Lenders. The
Administrative Agent shall notify Borrower of the Administrative Agent's and the
Approving Lenders' acceptance or rejection of such Project as an Eligible
Project within ten (10) Business Days after the Administrative Agent receives
the written request from Borrower for such Project to be accepted as an Eligible
Project for the purpose of the Borrowing Base, provided that Borrower has
-------------
complied with the terms and provisions of this Section 5.13(b).
(c) Borrower shall promptly notify the Administrative Agent in writing in
the event that at any time Borrower or any of its Subsidiaries receives or
otherwise gains knowledge that (i) any Project included in a prior Borrowing
Base Certificate as an Eligible Project, ceases, for any reason whatsoever, to
be an Eligible Project, or (ii) that the Aggregate Value of the Eligible Project
is less than 90% of the Aggregate Value for such Eligible Project reflected in
the most recent Borrowing Base Certificate delivered pursuant hereto, or (iii)
the Loans and LC Exposure, outstanding at such time exceed the lower of the then
effective Commitments or the Borrowing Base at such time as a result of any
decrease in the Borrowing Base, and the amount of such excess. In the event of
a Borrowing Base Imbalance, Borrower shall prepay the Loans or a portion thereof
as required pursuant to Section 2.11(d).
(d) The Administrative Agent, at the expense of the Lenders (but such
expense to be reimbursed by Borrower in the event that a Project fails to meet
requirements for an Eligible Project in any material respect) may make physical
and other verifications of any Projects included as Eligible Projects in any
reasonable manner and through any medium that the Administrative Agent considers
advisable, and Borrower shall furnish all such assistance and information as the
Administrative Agent may require in connection therewith.
(e) At any time there shall be not less than six (6) Mortgaged Properties
included in the Collateral.
(f) The Administrative Agent shall have the right, at the expense of
Borrower, to require reappraisals of the Mortgaged Properties if the same are
required pursuant to a Requirement of Law, provided that no more than one
-------- ----
reappraisal shall be required in any twelve (12) month period.
(g) Notwithstanding anything to the contrary set forth herein, a Project
shall cease to be an Eligible Project if it shall cease to comply with the
requirements therefor set forth herein.
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SECTION 5.14. Equity Infusion Requirement. Borrower shall cause the
---------------------------
Company to comply with its obligations set forth in Section 4 of the Security
Agreement.
ARTICLE VI
Negative Covenants
------------------
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness and Other Financial Covenants.
------------------------------------------
(a) From and After the Effective Date:
---------------------------------
(i) Limitations on Indebtedness. Neither Borrower nor any of
---------------------------
its Subsidiaries shall directly or indirectly create, incur, assume or
otherwise become or remain directly or indirectly liable with respect
to any Indebtedness, except Indebtedness which, when aggregated with
Indebtedness of Borrower or any of its Subsidiaries and Minority
Holdings Indebtedness allocable in accordance with GAAP to Borrower or
any Subsidiary of Borrower, would not exceed, at any time, seventy-
five percent (75%) of Total Value ("Total Outstanding Indebtedness
------------------------------
Limitation"). In addition, except in its capacity as the General
----------
Partner, the Company shall not incur, directly or indirectly, any
Indebtedness other than the Guaranty.
(ii) Minimum Facility Interest Coverage Ratio. As of the
----------------------------------------
first day of each calendar quarter for the immediately preceding
calendar quarter, the ratio of (y) the aggregate sum of Adjusted NOI
from the Mortgaged Properties, to (z) Facility Interest Expense for
such quarter shall not be less than 2.00 to 1.00.
(iii) Minimum Fixed Charge Coverage Ratio. As of the first day
-----------------------------------
of each calendar quarter for the immediately preceding calendar
quarter, the ratio of (A) Total Adjusted EBITDA, to (B) Fixed Charges
shall not be less than 1.50 to 1.00.
(iv) Restrictions on Stock Buyback. The Company shall not,
-----------------------------
without the prior written consent of the Required Lenders, make any
payment on account of the purchase, redemption, retirement or
acquisition of (1) any shares of the Company's capital stock, or (2)
any option, warrant or other right to acquire shares of the Company's
capital stock; provided that the purchase, redemption, retirement or
acquisition of (1) or (2) shall be permitted without the prior written
consent of the Required
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Lenders if (A) from management leaving the Company and (B) not in
excess of $1,000,000.00 in any calendar year.
(b) Negative Pledge. From and after the date hereof, neither
---------------
Borrower nor the Company will, and will not permit any Subsidiary, to enter into
any agreement containing any provision prohibiting the creation or assumption of
any Lien upon any Eligible Projects, or restricting the ability of Borrower to
amend or modify this Agreement or any other Loan Document.
(c) Pro Forma Calculations. Borrower shall comply with the
----------------------
financial ratios set forth in this Section 6.01 as of the date of each
Borrowing. Borrower shall recalculate the financial ratios by adding the deemed
amount equal to the Borrowing to the Indebtedness reflected on the most recently
available financial statements, and adding thereto any Indebtedness incurred
since the date of such financial statement and adding thereto the value of such
assets (determined at cost) acquired with such Indebtedness to Total Value.
Borrower shall deliver a Compliance Certificate, signed by Borrower representing
and certifying that the pro forma calculations as of the date of the draw
---------
demonstrate Borrower's compliance with the covenants and financial ratios set
forth in this Section 6.01.
SECTION 6.02. Liens. Borrower will not, and will not permit any
-----
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) Liens with respect to Capital Leases of Equipment entered
into in the ordinary course of business of Borrower pursuant to which
the aggregate Indebtedness under such Capital Leases does not exceed
$5,000,000 for any Project; and
(c) Liens securing Secured Indebtedness comprising, as of the
date hereof, the Liens securing the Secured Indebtedness set forth on
Schedule 3.04, subject to the limitations in Section 6.01(b).
-------------
SECTION 6.03. Fundamental Changes. (a) Borrower will not, and will
-------------------
not permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of its assets (in each case, whether now
owned or hereafter acquired), or liquidate or dissolve, except (i) in connection
with the issuance transfer, conversion or repurchase of limited partnership
interests in Borrower, and (ii) if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (x) any
Person may merge into Borrower in a transaction in which Borrower is the
surviving corporation and (y) any Person may merge into any Subsidiary in a
transaction in which the surviving corporation is a Subsidiary.
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<PAGE>
(b) Borrower will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by Borrower and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
--------------------------------------------
Acquisitions. Borrower will not, and will not permit any of its Subsidiaries
- ------------
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) Investments in Real Property; provided that (i) the aggregate
-------- ----
Investments by Borrower and its consolidated Subsidiaries in unimproved Real
Property and Properties under construction shall not exceed 10% of Total Value,
and (ii) Projects that are not located in the States of Washington, California,
Oregon, Arizona, Nevada, Utah or Idaho, shall not exceed 10% of Total Value;
(c) Investments including loans) in Borrower's Subsidiaries;
provided that Borrower shall not create or acquire any direct or indirect
wholly-owned Subsidiary which owns any Project that is Unencumbered after the
Effective Date unless, concurrently with the creation or acquisition thereof,
such Subsidiary executes and delivers to the Administrative Agent a Subsidiary
Guaranty;
(d) Investments in Minority Holdings; provided that the aggregate
-------- ----
Investments of the type set forth in this clause (d) shall not exceed 20% of
Total Value;
(e) Investments in notes secured by mortgages on any Real Property
of any Person; provided that the aggregate Investments of the type set forth in
-------- ----
this clause (e) shall not exceed 10% of Total Value; and
(f) additional Investments in an amount outstanding at any time not
to exceed $10,000,000.
SECTION 6.05. Hedging Agreements. Borrower will not, and will not
------------------
permit any of its Subsidiaries to, enter into any Hedging Agreement, other than
Hedging Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which Borrower or any Subsidiary is exposed in the conduct of
its business or the management of its liabilities.
SECTION 6.06. Transactions with Affiliates. Neither Borrower nor any
----------------------------
of its Subsidiaries shall directly or indirectly enter into or permit to exist
any transaction (including, without limitation, the purchase, sale, lease or
exchange of any
72
<PAGE>
property or the rendering of any service) with any holder or holders of more
than five percent (5%) of any class of equity Securities of Borrower, or with
any Affiliate of Borrower which is not its Subsidiary, on terms less favorable
to Borrower or any of its Subsidiaries, as applicable, than those that might be
obtained in an arm's length transaction at the time from Persons who are not
such a holder or Affiliate. Nothing contained in this Section 6.06 shall
prohibit (a) increases in compensation and benefits for officers and employees
of Borrower or any of its Subsidiaries which are customary in the industry or
consistent with the past business practice of Borrower or such Subsidiary,
provided that no Event of Default or Default has occurred and is continuing; (b)
- -------- ----
payment of customary partners' indemnities; or (c) performance of any
obligations arising under the Loan Documents or (d) the performance by the
Company and Borrower of their obligations under the Lazard Agreements.
SECTION 6.07. Intentionally Deleted.
---------------------
SECTION 6.08. Margin Regulations; Securities Laws. Neither Borrower
-----------------------------------
nor any of its Subsidiaries, shall use all or any portion of the proceeds of any
credit extended under this Agreement to purchase or carry Margin Stock.
SECTION 6.09. Negative Covenants of the Company.
---------------------------------
(a) The Company will not acquire any assets of any nature
whatsoever, other than additional units in Borrower.
(b) From and after the date hereof, the Company will not incur any
Indebtedness or any other obligations or liabilities except (x) in its capacity
as the general partner of Borrower in connection with transactions entered into
in the ordinary course of business, and (y) Indebtedness, the net proceeds of
which are contributed to Borrower simultaneously with the incurrence thereof by
the Company.
(c) From and after the date hereof, the Company will not retain any
Net Offering Proceeds, and the same will be contributed by the Company to
Borrower simultaneously with receipt thereof by the Company.
(d) The Company shall not enter into any merger or consolidation, or
liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), or
convey, lease, sell, transfer or otherwise dispose of, in one transaction or
series of transactions, any of its business or assets, including its interests
in Borrower. Notwithstanding the foregoing, the Company shall be permitted to
merge with another Person so long as the Company is the surviving Person
following such merger.
SECTION 6.10. Environmental Matters. (a) Borrower shall not, and
---------------------
shall not permit any of its Subsidiaries or Eligible Minority Holdings or, to
the extent reasonably practicable, any other Person to dispose of any Hazardous
Material in violation of any Environmental Laws by placing it in or on the
ground or waters of any property owned or leased by Borrower or any of its
Subsidiaries or Eligible Minority Holdings.
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<PAGE>
(b) Borrower shall not, and shall not permit any of its Subsidiaries
or Eligible Minority Holdings, or, to the extent practicable, authorize any
other Person to, dispose or to arrange for the disposal of any Hazardous
Material on behalf of Borrower or any of its Subsidiaries or Eligible Minority
Holdings except in material compliance with all applicable Environmental Laws
currently and hereinafter in effect.
ARTICLE VII
Events of Default
-----------------
If any of the following events ("Events of Default") shall occur:
-----------------
(a) Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as
the same shall become due and payable, whether at the due date thereof
or at a date fixed for prepayment thereof or otherwise;
(b) Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or any other Loan
Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of Borrower or any Subsidiary in or in connection with this
Agreement or any other Loan Document or any amendment or modification
hereof or thereof or waiver hereunder or thereunder, or in any report,
certificate, financial statement or other document furnished pursuant
to or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Article VI;
(e) Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement or any other Loan
Document (other than those specified in clause (a), (b) or (d) of this
Article), and such failure shall continue unremedied for a period of
30 days after written notice thereof from the Administrative Agent to
Borrower (which notice will be given at the request of any Lender);
(f) Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) and such
failure shall continue beyond any applicable grace period in respect
of any Material Indebtedness, when and as the same shall become due
and payable;
74
<PAGE>
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits the holder or holders of any Material Indebtedness
or any trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness
-------- ----
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness unless prohibited by
this Agreement;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Company, Borrower or any Subsidiary or
its debts, or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
the Company, Borrower or any Subsidiary or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) the Company, Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter
in effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in
clause (h) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company, Borrower or any
Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against
it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(j) the Company, Borrower or any Subsidiary shall become unable,
admit in writing or fail generally to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 shall be rendered against Borrower,
any Subsidiary or any combination thereof and, except to the extent
payment of the same shall be covered by insurance, the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally
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taken by a judgment creditor to attach or levy upon any assets of
Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in a Material
Adverse Effect;
(m) a Change in Control shall occur;
(n) an event shall occur which has a Material Adverse Effect;
(o) the Company shall fail to (i) maintain its status as a REIT for
federal income tax purposes, (ii) continue as a general partner of
Borrower, (iii) comply with all Requirements of Law applicable to it
and its businesses and Properties, in each case where the failure to
so comply individually or in the aggregate will have or is reasonably
likely to have a Material Adverse Effect, (iv) remain listed on the
American Stock Exchange, or (v) file all tax returns and reports
required to be filed by it with any Governmental Authority as and when
required to be filed or to pay any taxes, assessments, fees or other
governmental charges upon it or its Property, assets, receipts, sales,
use, payroll, employment, licenses, income, or franchises which are
shown in such returns, reports or similar statements to be due and
payable as and when due and payable, except for taxes, assessments,
fees and other governmental charges (A) that are being contested by
the Company in good faith by an appropriate proceeding diligently
pursued, (B) for which adequate reserves have been made on its books
and records, and (C) the amounts the non-payment of which would not,
individually or in the aggregate, result in a Material Adverse Effect
and such failure under this clause (v), to the extent curable, shall
remain uncured for a period of thirty (30) days after notice thereof
from the Administrative Agent to Borrower;
(p) the Company shall merge or liquidate with or into any other
Person and, as a result thereof and after giving effect thereto, (i)
the Company is not the surviving Person or (ii) such merger or
liquidation would effect an acquisition of or Investment in any Person
not otherwise permitted under the terms of this Agreement;
(q) Borrower or any of its Subsidiaries shall have entered into any
consent or settlement decree or agreement or similar arrangement with
an Governmental Authority or any judgment, order, decree or similar
action shall have been entered against Borrower or any of its
Subsidiaries, in each case based on or arising from the violation of
or pursuant to any Environmental Law, or the generation, storage,
transportation, treatment, disposal or Release of any Hazardous
Material and, in connection with all the foregoing, Borrower and its
Subsidiaries are likely to incur
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Environmental Liabilities and Costs which would have a Material
Adverse Effect; or
(r) the Equity Infusion shall not have occurred by the outside
dates provided in Section 4 of the Security Agreement;
then, and in every such event (other than an event with respect to Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of Borrower accrued hereunder, shall
become due and payable immediately, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by Borrower; and in
case of any event with respect to Borrower described in clause (h) or (i) of
this Article, the Commitments shall automatically terminate and the principal of
the Loans then outstanding, together with accrued interest thereon and all fees
and other obligations of Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by Borrower. In addition to the remedies
set forth above, the Administrative Agent may exercise any remedies provided for
in the Collateral Documents, if any, or by applicable law.
ARTICLE VIII
The Administrative Agent
------------------------
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative
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Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02), and (c) except as expressly set forth herein, the Administrative Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to Borrower or any of its Subsidiaries that
is communicated to or obtained by the bank serving as Administrative Agent or
any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or willful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by
Borrower or a Lender, and the Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents
of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and Borrower.
Upon any such resignation, the
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Required Lenders shall have the right to appoint a successor provided that, if
-------- ----
an Event of Default is not continuing, such appointment shall be subject to the
consent of Borrower, such consent not to be unreasonably withheld, conditioned
or delayed. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint
a successor Administrative Agent which shall be a bank with an office in New
York, New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between Borrower and
such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices. Except in the case of notices and other
-------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) If to Borrower, to CT Operating Partnership, L.P., 3500 North
Sepulveda Boulevard, Manhattan Beach, California 90266, Attention:
Steven M. Jaffe, Esq. (Telecopy No. 310-546-3396), with a copy to
Latham & Watkins, 633 West Fifth Street, Suite 4000, Los Angeles,
California 90071, Attention: Glen B. Collyer, Esq. (Telecopy No. 213-
891-8763);
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
270 Park Avenue, New York, New York 10017, Attention of John
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Mix (Telecopy No. (212) 270-3513), with a copy to the Legal
Department, The Chase Manhattan Bank, 270 Park Avenue, New York 10017,
Attention of William Viets, Esq. (Telecopy No. 212-270-2873), with a
copy to Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New
York 10153, Attention of J. Philip Rosen, Esq. (Telecopy No. 212-310-
8007);
(c) if to the Issuing Bank, to it at The Chase Manhattan Bank, 55
Water Street, Room 1710, New York, New York 10041, Attention of
Standing Letter of Credit Department (Telecopy No. 212-638-8200); and
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
-------------------
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Issuing Bank and the
Lenders hereunder are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by Borrower therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Without limiting the generality of the foregoing,
the making of a Loan or issuance of a Letter of Credit shall not be construed as
a waiver of any Default, regardless of whether the Administrative Agent, any
Lender or the Issuing Bank may have had notice or knowledge of such Default at
the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by Borrower and the Required Lenders or by Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
-------- ----
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Exposure or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such payment (other than interest under
Section 2.13(d)), or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change
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Section 2.18(b) or (c) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender, (v)
change any of the provisions of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender, (vi) change the definitions of Available Credit, Borrowing Base,
Eligible Project or Aggregate Value without the written consent of each Lender
(provided that the foregoing shall not include changes in any defined terms used
- --------- ----
in such definitions), (vii) release Guarantor or, except as provided in Section
2.11(f) hereof, any Subsidiary Guarantor from its obligations under the Guaranty
or any Subsidiary Guaranty, as applicable, without the written consent of each
Lender, (viii) release any Mortgaged Property otherwise than in compliance with
Section 2.11(e) hereof without the written consent of each Lender, (ix) accept
an additional Project as an Eligible Project except in accordance with Section
5.13(b), or (x) amend this Section 9.02(b) without the written consent of each
Lender; provided further that no such agreement shall amend, modify or otherwise
-------- ------- ----
affect the rights or duties of the Administrative Agent or the Issuing Bank
hereunder without the prior written consent of the Administrative Agent or the
Issuing Bank, as the case may be.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) Borrower
----------------------------------
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement or any amendments, modifications or waivers
of the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all reasonable out-of-pocket expenses incurred by the Administrative
Agent, the Issuing Bank or, if an Event of Default has occurred and is
continuing, any Lender, including the reasonable fees, charges and disbursements
of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made or Letters of Credit issued hereunder, including all such
reasonable out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) Borrower shall indemnify the Administrative Agent, the Issuing
Bank and each Lender, and each Related Party of any of the foregoing Persons
(each such Person being called an "Indemnitee") against, and hold each
----------
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related reasonable expenses, including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee, actually incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions
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contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any misrepresentation or breach of warranty under Section 5.12 or
any Environmental Claim or any Environmental Lien or any Remedial Action arising
out of or based upon anything relating to Real Property owned or leased by
Borrower or any of its Subsidiaries; or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
-------- ----
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence or willful
misconduct of such Indemnitee.
(c) To the extent that Borrower fails to pay any amount required to be paid
by it to the Administrative Agent or the Issuing Bank under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Administrative Agent
or the Issuing Bank, as the case may be, such Lender's Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
-------- ----
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent or the
Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, Borrower shall not assert,
and hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later than five
days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
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(b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it); provided that (i) except in
-------- ----
the case of an assignment to a Lender or an Affiliate of a Lender, the
Administrative Agent (and, in the case of an assignment of all or a portion of a
Commitment or any Lender's obligations in respect of its LC Exposure, the
Issuing Bank) and prior to the occurrence of an Event of Default, Borrower must
give their prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of Borrower
and the Administrative Agent otherwise consent, (iii) each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender's rights and obligations under this Agreement, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, and
(v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and provided further that
-------- ------- ----
any consent of Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (h) or (i) of Article VII has
occurred and is continuing. Subject to acceptance and recording thereof
pursuant to paragraph (d) of this Section, from and after the effective date
specified in each Assignment and Acceptance the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
--------
the Register shall be conclusive, and Borrower, the Administrative Agent, the
Issuing Bank and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by Borrower, the Issuing Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
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(d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the assignee's completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(e) Any Lender may, without the consent of Borrower, the Administrative
Agent or the Issuing Bank, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
-----------
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (i) such Lender's obligations under
-------- ----
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) Borrower, the Administrative Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
-------- ----
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, Borrower agrees that each Participant shall be entitled to the benefits
of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to paragraph (b) of this
Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.18(c) as though it were a
Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with Borrower's prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of Borrower, to comply with Section 2.17(e) as though it
were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
-------- ----
interest shall release a Lender
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from any of its obligations hereunder or substitute any such pledgee or assignee
for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
--------
and warranties made by Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement
and any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Set-off. If an Event of Default shall have
----------------
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set-off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time
85
<PAGE>
held and other obligations at any time owing by such Lender or Affiliate to or
for the credit or the account of Borrower against any of and all the obligations
of Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured; provided that, each of
-------- ----
the Lenders shall, and hereby does, agree that it will not exercise such rights
of set-off without the prior written consent of the Administrative Agent. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of set-off) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process. (a) This Agreement shall be construed in accordance with and governed
- -------
by the law of the State of New York.
(b) Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State court or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against Borrower or its properties in the courts of any
jurisdiction.
(c) Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
--------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
86
<PAGE>
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
--------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
---------------
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the written consent of Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, the Issuing
Bank or any Lender on a nonconfidential basis from a source other than Borrower.
For the purposes of this Section, "Information" means all information received
-----------
from Borrower relating to Borrower or its business, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by Borrower. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
------------------------
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
-------
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
------------
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and
87
<PAGE>
Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or periods
shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
88
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CT OPERATING PARTNERSHIP, L.P., a
California limited partnership
By: CENTER TRUST, INC., a Maryland
corporation, general partner
/s/ Stuart J.S. Gullard
By:____________________________
Name: Stuart J.S. Gullard
Title: Sr. Vice President and
Chief of Financial Officer
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
89
<PAGE>
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
/s/ John F. Mix
By:______________________________________
Name: John F. Mix
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
90
<PAGE>
CREDIT LYONNAIS, NEW YORK BRANCH
/s/ Bruce F. Evans
By:___________________________
Name: Bruce F. Evans
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
91
<PAGE>
FIRST AMERICAN BANK TEXAS, S.S.B.
/s/ Amy Engelberg
By:___________________________
Name: Amy Engelberg
Title: Assistant Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
92
<PAGE>
MELLON BANK, N.A.
/s/ Michael P. Gage
By:___________________________
Name: Michael P. Gage
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
93
<PAGE>
CIBC INC.
/s/ D. Jones Armstrong
By:__________________________
Name: D. Jones Armstrong
Title: Authorized Signature
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
94
<PAGE>
CHANG HWA COMMERCIAL BANK
/s/ James Line
By:___________________________
Name: James Line
Title: Vice President and
General Manager
95
<PAGE>
SCHEDULE 2.01
COMMITMENTS
Lender Commitment/1/ Applicable Percentage
------ ------------- ---------------------
The Chase Manhattan Bank $45,325,000.00 25.9%
Credit Lyonnais, New York Branch $45,325,000.00 25.9%
CIBC $38,850,000.00 22.2%
First American Bank Texas, S.S.B. $14,000,000.00 8.0%
Mellon Bank, N.A. $17,500,000.00 10.0%
Chang Hwa Commercial Bank $14,000,000.00 8.0%
TOTAL $ 175,000,000
==============
________________
/1/ Each Lender's Commitment shall be reduced proportionately as the Commitment
Amount is reduced pursuant to the conditions specified in the definition of
Commitment Amount.
96
<PAGE>
SCHEDULES:
Schedule 2.01 -- Commitments
Schedule 3.02(b) -- Ownership Structure
Schedule 3.04 -- Existing Indebtedness
Schedule 3.05(a) -- Real Property
Schedule 3.05(b) -- Leased Properties
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Insurance
Schedule 5.13 -- Initial Mortgaged Properties
EXHIBITS:
Exhibit A -- Form of Note
Exhibit B -- Form of Assignment and Acceptance
Exhibit C -- Form of Borrowing Base Certificate
Exhibit D -- Form of Compliance Certificate
Exhibit E -- Form of Opinion of Borrower's Counsel
Exhibit F -- Form of Subordination and Attornment Agreement
Exhibit G -- Form of Subsidiary Guaranty
Exhibit H -- Form of Letter Agreement
Exhibit I -- Form of Due Diligence Request Form
Exhibit J -- Approved Environmental Consultants List
Exhibit K -- Scope of Work Requirements
Exhibit L -- Form of Reliance Letter
97
<PAGE>
EXHIBIT 10.23
Employment Agreement for Edward D. Fox
This Employment Agreement (this "Agreement") is made and entered as of
---------
January 1, 1999 (the "Effective Date") by and between Edward D. Fox (the
--------------
"Executive") and Center Trust, Inc. (the "Company") and CT Operating
- ---------- -------
Partnership, L.P. (the "Partnership"). (The Company and the Partnership are
------------
hereinafter collectively referred to as the "Employers.")
----------
The Employers and Executive previously entered into that certain
employment agreement dated as of March 30, 1998 (as amended)(the "Prior
-----
Agreement"). The parties agree that, except as set forth herein, the Prior
- ---------
Agreement is terminated as of the Effective Date.
1. Positions and Duties. The Employers hereby employ Executive as the
--------------------
President and Chief Executive of the Company and as an employee of the
Partnership during the "Term of Employment" (as hereinafter defined) of this
Agreement, with powers and duties consistent with such position and Executive's
stature and experience and as may be required by the Board of Directors ("the
"Board") of the Company and the General Partner (the "General Partner") of the
----- ---------------
Partnership (the "Duties"). In addition, for so long as Executive is elected by
------
the Company's stockholders to serve as a member of the Board, then for so long
as Executive is an employee of the Company, Executive agrees to serve as a
member thereof. The Duties shall be generally performed at the offices of the
Company where located from time to time. In addition, the Duties may be
performed by Executive from time to time on a temporary travel basis at such
other locations as the Company or the Partnership shall reasonably request
consistent with their reasonable business needs. Executive shall report to the
Board and the General Partner. Executive shall have such executive power and
authority as shall reasonably be required to enable Executive to discharge the
duties of such offices. In addition, Executive has been elected by the Board to
serve as Chairman of the Board of Directors (however, this shall not entitle
Executive to remain as Chairman and Executive may be removed as Chairman by the
Board pursuant to the Company Bylaws).
Executive shall use Executive's good faith best efforts and judgement
in performing Executive's duties as required and to act in the best interest of
the Employers. Executive shall be employed full time by the Employers and shall
devote such time, attention and energies to the business of the Employers as are
reasonably necessary to satisfy Executive's required responsibilities and duties
hereunder. Executive may engage in other specified limited activities for
Executive's own account while employed hereunder, including charitable,
community activities and limited business activities with the approval of the
Employers (e.g. serving as an owner and a non-executive chairman of CommonWealth
Pacific LLC and CommonWealth Partners LLC (with no day-to-day responsibilities)
and as an owner and an officer of the Sacramento Kings and the Arco Arena (with
no day-to-day responsibilities)), provided that such other activities do not
interfere with the performance of Executive's duties hereunder.
2. Term. The term of this Agreement will commence on the Effective
----
Date and shall continue until December 31, 2001 (the "Initial Term") unless
------------
earlier terminated as provided below. At the expiration of each year during the
Initial Term and each anniversary
<PAGE>
thereafter, the term of this Agreement shall automatically be extended for an
additional year (the "Extension Term") (such that there shall always be a
--------------
"rolling" three year term) unless either party shall have given written notice
to the other party at least ninety (90) days prior to the end of a given year
that it does not desire to continue to extend the term of this Agreement. If
Executive's employment term under this Agreement is extended for an Extension
Term, it shall thereafter or during any Extension Term be terminable (other than
upon expiration) only as provided in Section 7. References herein to either the
"Term" or the "Term of Employment" of this Agreement shall refer to both such
Initial Term and any Extension Term, as they may be terminated pursuant to
Section 7 below.
3. Salary. Commencing on the Effective Date, and for the duration of
------
the Term of Employment, the Company shall pay to Executive a fixed annual salary
in the amount of Three Hundred Seventy Five Thousand Dollars ($375,000) per
year, payable in equal installments, no less frequently than monthly, in
accordance with the Company's prevailing payroll policy (the "Fixed Annual
------------
Salary"). The Fixed Annual Salary of Executive shall be reviewed on an annual
- ------
basis and may be increased (but not decreased), if appropriate, on an annual
basis.
For the year ending December 31, 1999, the Fixed Annual Salary shall
be payable in Company restricted stock (the "Salary Stock"), deemed earned
------------
effectively on a bi-weekly basis but issued on a quarterly basis. The Salary
Stock shall be priced at 85% of the average stock price for the prior calendar
quarter. Dividends on the Salary Stock shall be paid to Executive quarterly (on
that date when dividends are paid to shareholders) as if the Salary Stock was
issued prorata on a quarterly basis over the calendar year.
Pursuant to the Prior Agreement, the Employers paid Executive a bonus
in the amount of Ninety Three Thousand Dollars ($93,000) on March 9, 1999
covering the period from January 1, 1999 to March 9, 1999. Such amount shall be
paid in restricted stock priced at 85% of the average stock price over such
period.
In addition to the Fixed Annual Salary, the Employers may pay
Executive a discretionary bonus ("Bonus") on an annual basis; provided that for
-----
the calendar year ending December 31, 1999 the Bonus shall be prorated to cover
the period from March 10 through December 31, 1999. For the calendar year
ended December 31, 1999, Employers may pay Executive a Bonus in an amount no
greater than Three Hundred Seventy Five Thousand Dollars ($375,000). The amount
of Bonus for the calendar year ended December 31, 1999 paid to Executive shall
be based on several factors at the discretion of the Employers which shall
include the substantial achievement of the goals (e.g. completion of the
recapitalization program, achieving stated FFO targets, etc.) set forth in that
certain Business Plan dated as of July 9, 1999 and may include such other
factors related to Executive's performance and that of the Company as the Board
deems appropriate.
For the Employers' years after 1999 the Employers may pay Executive a
Bonus in an amount to be determined by the Board in their sole discretion
(provided that so long as Executive's performance is satisfactory in accordance
with criteria to be reasonably determined
2
<PAGE>
by the Board and the Executive and the Company performs at a level not less than
the prior year, the Bonus shall be in an amount not less than the amount paid in
the prior year [annualized]). For all calendar years beginning 2000 the Bonus
shall be payable in cash.
Executive and Employers agree that for the year ended December 31,
1999 the Bonus shall be paid in Company restricted stock (the "Bonus Stock").
-----------
Such Bonus Stock shall be priced at 85% of the average stock price over the
prior calendar year. Dividends on the Bonus Stock shall be paid to Executive as
if the Bonus Stock was issued prorata on a quarterly basis over the 1999
calendar year.
4. Expenses. In accordance with the Employers' policies, the
--------
Employers will promptly reimburse Executive for all reasonable travel and
business expenses paid or incurred by Executive in the performance of his duties
hereunder. The Employers shall promptly reimburse Executive for all reasonable
expenses incurred by Executive with respect to professional memberships and
continuing education upon evidence of receipt in accordance with the Employers'
policies.
5. Long Term Incentive Compensation. As a further inducement to
--------------------------------
Executive, the Company shall grant to Executive 225,000 restricted shares of the
Company's common stock (the "Incentive Stock "). The Incentive Stock shall fully
---------------
vest subject to the satisfaction of a two tiered vesting requirement. The first
vesting requirement is that for each quarter's Incentive Stock to vest, the
Company shall employ Executive on the last day of the calendar quarter in
question ("Time Component"). The second vesting requirement is that at the end
--------------
of each calendar year, upon the date that the Board of Directors determines the
Bonus as set forth in paragraph 3 above, the Board shall make a similar
determination as to the success of Executive and the Company in reaching
corporate goals and based upon such determination the Board in its sole
discretion shall approve the vesting of such amount of shares as it deems
appropriate ("Performance Component"). The Incentive Stock shall be granted such
---------------------
that there shall always be 225,000 shares of Incentive Stock outstanding and
unvested with respect to the Performance Component, even if they are vested with
respect to the Time Component. As the Incentive Stock vests under the Time
Component a similar increase in unvested Incentive Stock shall occur so that
there shall always be 225,000 shares of Incentive Stock that is unvested. For
example, at the end of the first quarter, provided the Time Component is
satisfied, Executive shall be vested in 18,750 shares of Incentive Stock subject
only to satisfaction of the Performance Component (thereby reducing the total
amount of unvested Incentive Stock to 206,250 shares) and the amount of
outstanding unvested Incentive Stock shall be increased by 18,750 shares to
bring the total unvested amount back up to 225,000 shares.
Dividends on the vested and unvested Incentive Stock shall be paid to
Executive as follows on that date when dividends are paid to shareholders:
Executive shall be paid for each calendar year hereunder the dividends on 225,
000 shares irrespective of whether either the Performance Component or Time
Component for vesting is satisfied. In each of the following years, Executive
shall receive the dividends on all Incentive
3
<PAGE>
Stock deemed "vested" by the Board under the Time Component and Performance
Component to date and on the then outstanding 225,000 shares of Incentive Stock.
For example, on October 20, 1999 (the anticipated date for payment of the third
quarter dividend) Executive would be paid the following dividends relative to
the Incentive Stock:
Dividends on the then outstanding 225,000 shares
On April 20, 2000 (the anticipated date for payment of the first quarter
dividend for 2000), assuming that the Board approved the vesting of 70,000
shares of Incentive Stock (i.e. the Board did not approve the full 75,000
available) relative to Executive's 1999 performance, Executive would be paid the
following dividends relative to the Incentive Stock:
Dividends on the then outstanding 225,000 shares
Dividends on 70,000 fully vested shares
At no time shall Executive receive dividends on more than 225,000 shares of
unvested Incentive Stock.
The Company and Executive agree that in consideration of entering into this
Agreement, the 300,000 stock options issued to Executive pursuant to the Prior
Agreement are hereby cancelled and of no further force or effect.
5.1. Executive Benefits. During the Term of Employment, Executive shall be
------------------
entitled to the following benefits (collectively, the "Executive Benefits"):
------------------
(a) Executive shall be entitled to vacation benefits in accordance
with the Employers' normal vacation policies but in no event less than a paid
vacation of four (4) weeks each year. Such vacation shall be taken at such time
or times during the applicable year as may be determined by Executive subject to
the Employers' reasonable business needs.
(b) Executive and his eligible dependents shall be included in
group hospital, surgical, medical and dental benefit plans of the Employers in
accordance with the Employers' policies.
(c) Except as otherwise provided herein, Executive shall be
entitled to participate in any profit-sharing, stock option, pension or other
plans, benefits or policies generally available to other currently existing
officers of the Employers' on the terms generally applicable to such officers,
if and to the extent that Executive is eligible to participate in accordance
with the provisions of any such plans or benefits, provided, however, that any
-------- -------
such benefits or plans are not duplicative of those provided in this Section 6.
Nothing in this Section 6(c) is intended or shall be construed to require the
Employers to institute any plan or benefits, or to maintain or refrain from
amending or terminating any such existing plan or benefits.
(d) The Employers shall provide Executive with an automobile
allowance of $500 per month.
4
<PAGE>
6. Allocation of Costs of Compensation and Benefits. The obligation
------------------------------------------------
of the Employers to pay Executive the compensation and benefits provided under
this Agreement shall be allocated between the Company and the Partnership based
upon the amount of the services provided by Executive to each of them, as they
shall agree from time to time, provided, however, that in the event of a default
by the Employers in paying such compensation and benefits, the Employers shall
be jointly and severally liable to Executive for such compensation and benefits.
7. Termination.
-----------
(a) The Employers shall have the right, at their election, to
terminate the Term of Employment for "good cause" (defined below). Executive
will have no right to any further Fixed Annual Salary from and after termination
for "good cause," or to accrue any Executive Benefits thereafter. For purposes
of this Agreement, the Employers shall have "good cause" to terminate
Executive's employment hereunder upon a finding by the Board or the General
Partner that Executive has (1) engaged in acts or omissions with respect to the
Employers which constitute intentional misconduct which has a material adverse
effect on the Company or Employers or a commission of a felony; (2) personally
received a benefit in money, property or services from the Employers or from
another person dealing with the Employers (in excess of de minimis amounts) in
known violation of applicable law (which is not returned in kind or value); (3)
breached his confidentiality covenant with the Employers which has a material
adverse effect on the Company or Employers; (4) breached his fiduciary duty of
loyalty to the Employers under applicable law; (5) failed to satisfactorily
perform services for the Employers which have been reasonably requested of him
by the Board or the General Partner and which are consistent with the terms of
the Agreement; (6) failed to achieve the performance goals reasonably set forth
for Executive from time to time; or (7) failed to otherwise comply with the
terms of this Agreement; provided, however, that "good cause" shall not exist
-------- -------
with respect to items (5), (6), and (7) unless and until the Employers provide
Executive with (a) at least sixty (60) days prior written notice of their
intention to terminate his employment for good cause, and (b) a reasonable
opportunity and a reasonable period of time to cure any curable acts or
omissions on which the finding of good cause is based. If Executive cures such
acts or omissions on which the finding of good cause is based during the sixty
(60) day period (or such reasonable time period thereafter provided Executive is
diligently and in good faith pursuing such cure), the Employers shall not have
good cause to terminate Executive's employment hereunder. Notwithstanding the
forgoing, no notice prior to "good cause" termination shall be required from the
Employers to Executive with respect to items (1) through (4). Should the
Employers terminate the Term of Employment in accordance with the provisions of
this Section 7(a) items (1) through (4), the Employers shall pay to Executive
upon the date of termination only his Fixed Annual Salary through the date of
termination and any bonus which Executive has been awarded as of the date of
termination which has not yet been paid to him and any other vested benefits or
rights. Should the Employers terminate the Term of Employment in accordance
with the provisions of this Section 7(a) items (5) through (7), the Employers
shall pay to Executive in cash upon the date of termination his Fixed Annual
Salary through the date of termination which has not yet been paid to him, any
other vested benefits and rights and an additional twelve (12) months Fixed
Annual Salary.
5
<PAGE>
(b) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive's employment with the Employers is not
for any specified term and may be terminated by the Employers at any time, for
any reason, with or without cause, without liability except with respect to the
payments provided for by this Section 7(b). Accordingly, the Employers shall
have the right, at their election, to terminate the Term of Employment without
"good cause," cause of any kind, or for any reason or no reason whatsoever, by
giving Executive at least ninety (90) days written notice of their intention to
terminate the Term of Employment. Should the Employers terminate the Term of
Employment in accordance with the provisions of this Section 7(b), the Employers
shall pay to Executive, in cash, not later than the effective date of such
termination, a sum equal to any unpaid Fixed Annual Salary accrued to date as
well as a pro rata portion of the prior calendar year's annual bonus and a sum
in cash equivalent to one year of Executive's Fixed Annual Salary ($375,000 for
the year ended December 31, 1999) and one year's Bonus (which for the year ended
December 31, 1999 only shall not be discretionary and shall be fixed in the
amount of $375,000 for the year ended December 31, 1999) In addition, any
Options and Restricted Shares (either Incentive Stock, Bonus Stock or otherwise)
then held by Executive shall immediately and fully vest without condition. All
other benefits provided for in this Agreement and compensation payable under
this Agreement shall cease on such date of termination of employment except to
the extent accrued as of such date.
(c) Executive shall have the right, at his election, to terminate the
Term of Employment for "Employers' Material Breach," which shall consist of the
Employers' failure or refusal to comply with a material term of this Agreement
or for "Good Reason" (defined below). The Employers and Executive hereby agree
that the following shall constitute a "failure or refusal to comply with a
material term of this Agreement": the Employers' failure or refusal to comply
with the provisions of Sections 3, 4, 5, or 6 hereof unless such failure or
refusal to comply arises out of a bona fide dispute. In order to terminate the
Term of Employment, Executive shall be required to give written notice
specifying the claimed breach or Good Reason and the Employers shall have failed
to correct the claimed breach or Good Reason, if the same is curable, or alter
the objectionable pattern of conduct specified in the applicable written notice,
thirty (30) days (ten (10) days in the case of a breach based upon non-payment
of compensation due under this Agreement) or such reasonable time period
thereafter provided the Company is diligently and in good faith pursuing such
cure (however such additional time period shall not be applicable in the case of
non-payment of compensation) after the receipt of the applicable notice. "Good
Reason" shall mean (a) any removal of Executive from the offices of President,
Chief Executive Officer or Chairman of the Board without cause and without
Executive's prior written consent; (b) any material decrease in Executive's
authority or responsibilities as Chief Executive Officer, President or Chairman
of the Board of the Company without Executive's prior written consent; (c) if
Executive is not elected by the Company's shareholders to serve as a member of
the Board; (d) any attempt to terminate or avoid the indemnity obligations of
the Company by the Company set forth in that certain Indemnity Agreement dated
as of August 14, 1997 by and between the Executive and the Company (except as
may be provided in said Indemnity Agreement); or (e) the occurrence of a
"Change of Control"(as defined below). Should Executive terminate the Term of
Employment due to Employers' Material Breach or for Good Reason in accordance
with the provisions of this Section 7(c) the Employers shall pay to
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Executive, in cash not later than the effective date of such termination, (a)
any unpaid Fixed Annual Salary accrued to date as well as a pro rata portion of
the prior calendar year's annual bonus and (b) a sum in cash equivalent to one
year of Executive's Fixed Annual Salary ($375,000 for the calendar year ended
December 31, 1999) and one year's Bonus (which shall not be discretionary and
shall be fixed in the amount of $375,000 for the calendar year ended December
31, 1999). In addition, any Options and Restricted Stock (either Incentive
Stock, Bonus Stock or otherwise) then held by Executive shall immediately and
fully vest without condition. All other benefits provided for in this Agreement
and compensation payable under this Agreement shall cease on such date of
termination of employment except to the extent accrued as of such date.
"Change of Control" shall mean an event as a result of which: (1) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934, as amended, (the "Exchange Act")) other than Prometheus
------------
Western Retail, LLC or LF Strategic Realty Investors L.P. or their affiliates
(collectively, Lazard Entities") or any employee benefit plan maintained by the
---------------
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act, except that a person has the right to acquire, whether such
right is exercisable immediately or only upon the passage of time), directly or
indirectly, of more than 40% of the total voting power of the voting stock of
the Company ; (2) the Company consolidates with or merges with or into another
corporation or sells, assigns, conveys, transfers, leases or otherwise disposes
of all or substantially all of its assets to any person, or any corporation
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding voting stock of the Company
is changed into or exchanged for cash, securities or other property, other than
any such transaction where (A) the outstanding voting stock of the Company is
changed into or exchanged for (x) voting stock of the surviving or transferee
corporation or (y) cash, securities (whether or not including voting stock) or
other property, and (B) the holders of the voting stock of the Company
immediately prior to such transaction own, directly or indirectly, not less than
60% of the voting power of the voting stock of the surviving corporation
immediately after such transaction; or (3) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
the Company (which individuals shall be deemed to include any "new" directors
whose election or appointment by such Board or whose nomination for election by
the stockholders of the Company was approved by a vote of at least 66 2/3% of
the directors then still in office who were either directors at the beginning of
such period or whose election, appointment or nomination was previously so
approved) cease for any reason to constitute a majority of the Board of the
Company then in office; or (4) the Company is liquidated or dissolved or adopts
a plan of liquidation.
(d) Executive shall have the right, at his election, to terminate the
Term of Employment for any or no reason, other than due to Employers' Material
Breach or for Good Reason, by giving the Employers at least sixty (60) days
written notice of his intention to terminate the Term of Employment. Should
Executive terminate the Term of Employment in accordance with the provisions of
this Section 7(d), the Employers shall pay to Executive only his Fixed Annual
Salary through the date of termination and any bonus which Executive has been
awarded as of the date of termination but which has not yet been paid to him.
7
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(e) The Term of Employment shall terminate automatically upon
Executive's death or upon Executive's physical or mental disability or infirmity
which, in the opinion of a competent physician selected by the Employers,
renders Executive unable to perform his duties under this Agreement for more
than 90 days in any 180 day period. Upon the termination of the Term of
Employment in accordance with the provisions of this Section 7(e), the Employers
shall pay to Executive (or, in the event of his death, his designated
beneficiary or estate) his Fixed Annual Salary through the date of termination
and any bonus which Executive might have been awarded as of the date of
termination (based upon the prior year's bonus (or $375,000 if within the first
year of the Term of Employment) but which has not yet been paid to him. In
addition, the Employers' shall continue to pay to Executive (or, in the event of
his death, his designated beneficiary or estate) his Fixed Annual Salary (and
continue to provide health insurance benefits to the parties previously insured
under Executive's policy) for a twelve (12) month period ending on the first
anniversary of Executive's death or termination of employment by reason of
disability.
(f) Executive hereby acknowledges and agrees that all personal
property and equipment furnished to or prepared by Executive in the course of or
incident to his employment by the Employers belongs to the Employers and shall
be promptly returned to the Employers immediately upon the termination of the
Term of Employment. Upon the termination of the Term of Employment, Executive
shall be deemed to have resigned from all offices and directorships then held
with the Employers or any affiliate of the Employers.
8. Reserved.
9. Reserved.
10. Mitigation. The Employers and Executive agree that Executive shall have
----------
no duty of Accordingly, the parties agree that any compensation earned by
Executive after the date of his termination of employment hereunder shall not be
used to offset any severance benefit payable pursuant to Section 7.
11. Confidential Information. During the Term of Employment and for a one
------------------------
year period thereafter Executive agrees not to disclose to any person not
employed by the Employers or any affiliated entity and not engaged to render
services to the Employers or any affiliated entity any confidential information
obtained while in the employ of the Employers; provided, however, that the
-------- -------
restrictions contained herein shall not apply to information that (i) was in
Executive's possession prior to any disclosure by the Employers, (ii) is or
becomes generally available to the public other than as a result of disclosure
by Executive in violation of this Agreement, (iii) is or becomes available to
Executive on a non-confidential basis from a source other than the Employers or
their representatives) which is not, to Executive's knowledge, prohibited from
transmitting the information to Executive or his representatives by a
contractual, legal, fiduciary or other obligation, (iv) was independently
acquired or developed by Executive without violating Executive's obligations
under this Agreement, or (v) is furnished to a third party by the Employers or
any representative of the Employers without similar non-disclosure restrictions
on the third party's use of such information. In addition, this Section 12 shall
not
8
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preclude Executive from the use or disclosure of information known generally to
the public or of information not considered confidential by the Employers or any
affiliated entity or from making disclosures required by law or court order or
to carry out Executive's duties hereunder.
For purposes of this Agreement, the term "confidential information" shall
include all information of any nature and in any form which is owned by the
Employers and which is not publicly available or generally known to persons
engaged in businesses similar to that of the Employers, including, but not
limited to, research techniques; patents and patent applications; inventions and
improvements, whether patentable or not; development projects; computer software
and related documentation and materials; designs, practices, processes, methods,
know-how and other facts related to sales, advertising, promotions, financial
matters, customers, customer lists or customers' purchases of goods or services
from the Employers; industry contracts; and all other secrets and information of
a confidential and proprietary nature.
12. Insurance. During the term of this Agreement, the Company shall use
---------
its best efforts to maintain, at its expense, officers and directors fiduciary
liability insurance that would cover Executive in an amount of no less than $15
million.
13. Disputes. Any dispute or controversy arising under, out of, in
--------
connection with or in relation to this Agreement shall, at the election and upon
written demand of any party to this Agreement, be finally determined and settled
by arbitration in Los Angeles, California, in accordance with the rules and
procedures of the American Arbitration Association, and judgment upon the award
may be entered in any court having jurisdiction thereof. If any legal action or
any arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement
(including the occurrence of an Employers' Material Breach), the successful or
prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action or proceeding, in addition to any other
relief that may be granted; provided, however, that neither party shall be
-------- -------
entitled to recover more than $100,000 from the other pursuant to this Section
13.
14. Binding on Successors. This Agreement shall be binding upon and inure
---------------------
to the benefit of the Employers, Executive and their respective successors,
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
15. Governing Law. This Agreement is being made and executed in and is
-------------
intended to be performed in the State of California and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of California, without regard to the conflict of laws principles
thereof.
16. Validity. The invalidity or unenforceability of any provision or
--------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
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<PAGE>
17. Notices. Any notice, request, claim, demand, document and other
-------
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Employers, addressed to the Employers' principal offices
to the attention of General Counsel, at 3500 Sepulveda Blvd., Manhattan Beach,
California 90266;
(b) If to Executive, to him at the address set forth below under this
signature; or at any other address, as any party shall have specified by notice
in writing to the other parties.
18. Entire Agreement. As of the Effective Date, the terms of this
----------------
Agreement are intended by the parties to be the final expression of their
agreement with respect to the employment of Executive by the Employers and may
not be contradicted by evidence of any prior or contemporaneous agreement. The
Prior Agreement is hereby terminated as of the Effective Date (except for the
obligation to pay that certain bonus as set forth in the Prior Agreement in
paragraph 3 which became due and payable on March 9, 1999 and which remains
unpaid as of the Effective Date). The parties further intend that this Agreement
shall constitute the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial, administrative
or other legal proceeding to vary the terms of this Agreement.
19. Amendments; Waivers. This Agreement may not be modified, amended, or
-------------------
terminated except by an instrument in writing and signed by Executive and the
Employers.
20. No Effect on Other Contractual Rights. The provisions of this
-------------------------------------
Agreement, and any other payment provided for hereunder shall not in any way
diminish Executive's rights under any employee benefit plan, program or
arrangement of the Employers to which he may be entitled as an employee of the
Employers.
10
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
EXECUTIVE:
EDWARD D. FOX
______________________________________________
Street Address
City
State
Zip
THE COMPANY:
CENTER TRUST, INC.,
a Maryland corporation
By:___________________________________________
Its:________________________________________
THE PARTNERSHIP:
CT OPERATING PARTNERSHIP, L.P.,
a California limited partnership
By: CENTER TRUST, INC., a Maryland corporation
By:_____________________________________
Its:___________________________________
11
<PAGE>
EXHIBIT 10.24
Employment Agreement for Stuart Gulland
This Employment Agreement (this "Agreement") is made and entered as of
the 1st day of January, 1999, ("Effective Date") by and between Center Trust,
Inc. and CT Operating Partnership, L.P. (collectively the "Company"), and Stuart
Gulland ("Executive").
The Company and Executive previously entered into that certain
employment agreement dated as of March 1, 1998 (the "Prior Agreement"). The
parties agree that the Prior Agreement is terminated as of the Effective Date.
1. Positions and Duties. The Company hereby employs Executive as the
--------------------
Senior Vice President and Chief Financial Officer during the "Term of
Employment" (as hereinafter defined) of this Agreement, with powers and duties
consistent with such position and such additional or different duties as may be
required by the President and/or the Board of Directors (the "Board") of Center
Trust, Inc., ("Duties"). The Duties shall be generally performed at the offices
of the Company where located from time to time. In addition, the Duties may be
performed by Executive from time to time on a temporary travel basis at such
other locations as Company shall reasonably request consistent with its
reasonable business needs. Executive shall report to the President of the
Company and to the Board. Executive shall be employed full time and shall
devote such time, attention and energies to the business of the Company as are
reasonably necessary to satisfy Executive's responsibilities and duties
hereunder. Executive shall use his good faith best efforts to promote the
Company's products and services.
2. Term. The term of this Agreement will commence on the Effective
----
Date and shall continue until December 31, 2000 (the "Initial Term") unless
earlier terminated as provided in Section 9. At the expiration of each year of
the Initial Term and each anniversary thereafter, the term of this Agreement
shall automatically be extended for an additional one year (the "Extension
Term") unless either party shall have given written notice to the other party at
least sixty (60) days prior to the end of the Initial Term or the Extension
Term, as the case may be, that it does not desire to extend the term of this
Agreement. During any Extension Term, this Agreement may be earlier terminated
as provided in Section 9. References herein to either the "Term" or the "Term
of Employment" of this Agreement shall refer to both such Initial Term and any
Extension Term.
3. Salary. Commencing on the Effective Date, and for the duration of
------
the Term of Employment, the Company shall pay to Executive a fixed annual salary
in the amount of Two Hundred Thirty Thousand Dollars ($230,000) per year,
payable in equal installments, no less frequently than monthly, in accordance
with the Company's prevailing payroll policy (the "Fixed Annual Salary"). The
Fixed Annual Salary of Executive shall be reviewed on an annual basis and may be
increased, if appropriate, on an annual basis.
In addition to the Fixed Annual Salary, Executive may be eligible for
a bonus (the "Bonus"), at the sole discretion of the President and the Board or
any compensation or similar committee thereof. (The maximum Bonus potential for
Executive shall be 75% of Executive's fixed annual salary). The amount of
Bonus for the calendar year ended December 31, 1999 paid to Executive shall be
based on several factors at the discretion of the Company which shall include
the substantial achievement of the goals (e.g. completion of the
recapitalization program, achieving stated FFO targets, etc.) set forth in that
certain Business Plan dated as of July 9, 1999 and may include such other
factors related to Executive's performance and that of the Company and the Board
deems appropriate. For the years after 1999 the Company may pay Executive a
Bonus in an amount to be determined by the Company in its sole discretion.
Any Bonus, to the extent awarded by the Company at the end of each
fiscal year, shall be earned and paid on an annual basis in accordance with
Company practice.
4. Expenses. In accordance with Company policies, the Company will
--------
promptly reimburse Executive for all reasonable travel and other business
expenses paid or incurred by Executive in the performance of his duties
hereunder. The Company shall promptly reimburse the Executive for all
reasonable expenses incurred by the Executive with respect to professional
memberships and continuing education upon evidence of receipt in accordance with
Company policies.
5. Incentive Compensation. As a further inducement to Executive, the
----------------------
Company has concurrently herewith entered into a Restricted Stock Agreement with
Executive whereby it grants Executive One Hundred Thousand (100,000) shares of
Restricted Stock of the Company (as defined in the Restricted Stock Agreement)
(the "Incentive Stock"), subject to certain vesting requirements.
---------------
<PAGE>
The vesting requirement is that at the end of each calendar year,
upon the date that the Board of Directors determines the Bonus as set forth in
paragraph 3 above, the Board shall make a determination as to the success of
Executive in reaching corporate goals and based upon such determination the
Board in its sole discretion shall approve the vesting of up to one-third of the
Incentive Stock as it deems appropriate ("Performance Vesting Component").
----------- -----------------
Notwithstanding anything to the contrary contained in this Agreement,
regardless of the failure of Executive to satisfy the Performance Vesting
Component, one hundred percent (100%) of the Incentive Stock shall be fully
vested on the last day of the seventh year subsequent to the Effective Date
provided that the Executive is employed by the Company on such date.
Dividends on the vested and unvested Incentive Stock shall be paid to
Executive on that date when dividends are paid to shareholders.
The Company and Executive agree that in consideration of entering into
this Agreement, the 100,000 stock options issued to Executive pursuant to the
Prior Agreement are hereby cancelled and of no further force or effect.
6. Executive Benefits. During the Term of Employment, Executive
------------------
shall be entitled to the following benefits (collectively, the "Executive
Benefits"):
(a) Executive shall be entitled to vacation benefits in accordance
with the Company's normal vacation policies but in no event less than a paid
vacation of four (4) weeks each year. Such vacation shall be taken at such time
or times during the applicable year as may be determined by Executive subject to
the Company's reasonable business needs.
(b) Executive and his eligible dependents shall be included in
group hospital, surgical, medical and dental benefit plans of the Company in
accordance with Company policies.
(c) Except as otherwise provided herein, Executive shall be
entitled to participate in any profit-sharing, stock option, pension, 401(k)
plans, or other plans, benefits or policies generally available to other
currently existing officers of the Company on the terms generally applicable to
such officers, if and to the extent that Executive is eligible to participate in
accordance with the provisions of any such plans or benefits; provided, however,
that any such benefits or plans are not duplicative of those provided in this
Section 6. Nothing in this Section 6(c) is intended or shall be construed to
require the Company to institute any plan or benefits, or to maintain or refrain
from amending or terminating any such existing plan or benefits.
7. Reserved.
8. Reserved.
9. Termination.
-----------
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<PAGE>
(a) The Company shall have the unilateral right, at its election
and in its sole discretion, to terminate Executive's employment at any time
during the Term of Employment so long as "good cause" (defined below) exists.
Should the Company terminate the Term of Employment in accordance with the "good
cause" provisions of this Section 9(a), notwithstanding anything herein to the
contrary, the Company shall pay to Executive only his Fixed Annual Salary
through the date of termination, any bonus which Executive has been awarded as
of the date of termination but which has not yet been paid to him and any other
vested benefits or rights. All other benefits provided for in this Agreement and
compensation payable under this Agreement shall cease on such date of
termination of employment except to the extent accrued as of such date. For
purposes of this Agreement, the Company shall have "good cause" to terminate the
Executive's employment hereunder upon a finding by the President of the Company
or the Board that the Executive has (1) engaged in acts or omissions with
respect to the Company which constitute intentional misconduct or a knowing
violation of law; (2) personally received a benefit in money, property or
services from the Company or from another person dealing with the Company (in
excess of de minimis amounts) in violation of applicable law; (3) breached his
confidentiality covenant with the Company; (4) breached his fiduciary duty of
loyalty to the Company under applicable law; (5) engaged in gross negligence in
the performance of his duties to the Company; (6) failed to satisfactorily
perform services for the Company which have been reasonably requested of him by
the Board or the President of the Company and which are consistent with the
terms of the Agreement; or (7) failed to achieve the performance goals
reasonably set forth for Executive from time to time; provided, however, that
-------- -------
"good cause" shall not exist with respect to items (5), (6) and (7) unless and
until the Company provides the Executive with (a) at least fifteen (15) days
prior written notice of its intention to terminate his employment for good
cause, and (b) a reasonable opportunity and a reasonable period of time to cure
any curable acts or omissions on which the finding of good cause is based. If
the Executive cures the acts or omissions on which the finding of good cause is
based during the fifteen (15) day period, the Company shall not have good cause
to terminate the Executive's employment hereunder. Notwithstanding the forgoing,
no notice prior to "good cause" termination shall be required from the Company
to the Executive with respect to items (1) through (4).
(b) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive's employment with the Company may be
terminated by the Company at any time, for any reason, with or without cause,
without liability except with respect to the payments provided for by this
Section 9(b). Accordingly, the Company shall have the right, at its election,
to shorten the Term of Employment without "good cause," cause of any kind, or
for any reason or no reason whatsoever, by giving Executive at least thirty (30)
days written notice of its intention to shorten the Term of Employment in which
event the Company shall pay to Executive, in cash, not later than the effective
date of such termination, a sum equal to 24 months of Executive's Fixed Annual
Salary and two years of Bonus payments (deemed for this purpose to be two times
the prior year's bonus), less withholding for applicable taxes. In addition, the
Incentive Stock granted pursuant to Section 5 above shall immediately and fully
vest as follows: In the event that Executive's employment is terminated under
the provisions of this Section prior to the last day of the first year
subsequent to the Effective Date, 100% of the Incentive Stock shall fully vest
without condition; during the second calendar year subsequent to the Effective
Date, two-thirds of the Incentive Stock shall immediately vest without
condition; and during the third calendar year subsequent to the Effective Date,
one-third of the Incentive Stock shall immediately and fully vest without
condition; after the last day of the third calendar year there shall be no
vesting of the Incentive Stock. In the event that the Executive's employment is
terminated after the completion of a calendar year but before the Board has
determined the appropriate vesting of the Incentive Shares pursuant to the
Performance Vesting Component set forth above, the Executive shall immediately
vest in one-third of the Incentive Stock representing the Performance Vesting
for the prior calendar year. Further, any options granted prior to or
subsequent to the Effective Date and any restricted stock other than the
Incentive Stock held by the Executive shall immediately and fully vest without
condition. All other benefits provided for in this Agreement and compensation
payable in this Agreement shall cease on such date of termination of employment
except to the extent accrued as of such date.
(c) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his election,
to terminate the Term of Employment in the event of the "Company's Material
Breach," which shall consist of the Company's failure or refusal to comply with
a material term of this Agreement. The Company and Executive hereby agree that
the following shall constitute a "failure or refusal to comply with a material
term of this Agreement": the Company's failure or refusal to comply with the
provisions of Sections 3, 4, 5, or 6 hereof unless such failure or refusal to
comply arises out of a bona fide dispute. In order to terminate the Term of
Employment, Executive shall be required to give written notice specifying the
claimed breach and the Company shall have failed to correct the claimed breach,
if such breach is curable, or alter the objectionable pattern of conduct
specified in the applicable written notice, thirty (30) days (ten (10) days in
the case of a breach based upon non-payment of compensation due under this
Agreement) after the receipt of the applicable notice. Executive shall also
have the right to terminate the Term of Employment in the event of (i) any
removal of Executive from the office of Senior Vice President and Chief
Financial Officer without good cause (as defined in Section 9(a)) and without
3
<PAGE>
Executive's prior written consent, or (ii) any material decrease in Executive's
authority or responsibilities as Senior Vice President and Chief Financial
Officer without Executive's prior written consent, or (iii) a "Change of
Control" (as defined below). Should Executive terminate the Term of Employment
in accordance with the provisions of this Section 9(c), the Company shall pay to
Executive, in cash, not later than the effective date of such termination, a sum
equivalent to 24 months of the Executive's Fixed Annual Salary and two years of
Bonus payments (deemed for this purpose to be two times the prior year's bonus).
In addition, the Incentive Stock granted pursuant to Section 5 above shall
immediately and fully vest as follows: In the event that Executive's employment
is terminated under the provisions of this Section prior to the last day of the
first year subsequent to the Effective Date, 100% of the Incentive Stock shall
fully vest without condition; during the second calendar year subsequent to the
Effective Date, two-thirds of the Incentive Stock shall immediately vest
without condition; and during the third calendar year subsequent to the
Effective Date, one-third of the Incentive Stock shall immediately and fully
vest without condition; after the last day of the third calendar year there
shall be no vesting of the Incentive Stock. In the event that the Executive's
employment is terminated after the completion of a calendar year but before the
Board has determined the appropriate vesting of the Incentive Shares pursuant to
the Performance Vesting Component set forth above, the Executive shall
immediately vest in one-third of the Incentive Stock representing the
Performance Component for the prior calendar year. Further, any options
granted prior to or subsequent to the Effective Date, as well as any restricted
stock other than the Incentive Stock held by Executive, shall immediately and
fully vest without condition. All other benefits provided for in this Agreement
and compensation payable under this Agreement shall cease on such date of
termination of employment except to the extent accrued as of such date. In the
event the Company elects to not renew this Agreement as specified in Section 2
above and Executive elects to terminate his employment with the Company within
60 days of receipt of such notice of nonrenewal, such termination shall be
deemed to be a termination pursuant to this subparagraph (c) and Executive shall
be entitled to the severance benefits set forth in this subparagraph (c).
"Change of Control" shall mean an event whereby Executive does not
remain as an executive officer of the Company and associated therewith: (1) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934, as amended, (the "Exchange Act")) other than Prometheus
Western Retail, LLC or LF Strategic Realty Investors LP. or their affiliates
(collective, "Lazard Entities") or any employee benefit plan maintained by the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act, except that a person has the right to acquire, whether such
right is exercisable immediately or only upon the passage of time), directly or
indirectly, of more than 40% of the total voting power of the voting stock of
the Company; (2) the Company consolidates with or merges with or into another
corporation or sells, assigns, conveys, transfers, leases or otherwise disposes
of all substantially all of its assets to any person, or any corporation
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding voting stock of the Company
is changed into or exchanged for cash, securities or other property, other than
any such transactions where (A) the outstanding voting stock of the Company is
changed into or exchanged for (x) voting stock of the surviving or transferee
corporation or (y) cash, securities (whether or not including voting stock) or
other property, and (B) the holders of the voting stock of the Company
immediately prior to such transaction own, directly or indirectly, not less than
60% of the voting power of the voting stock of the surviving corporation
immediately after such transaction; or (3) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
the Company (which individuals shall be deemed to include any "new" directors
whose election or appointment by such Board or whose nomination for election by
the stockholders of the Company was approved by a vote of at least 66 2/3% of
the directors then still in office who were either directors at the beginning of
such period or whose election, appointment or nomination was previously so
approved) ceased for any reason to constitute a majority of the Board of the
Company then in office; or (4) the Company is liquidated or dissolved or adopts
a plan of liquidation.
(d) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his election,
to shorten the Term of Employment for any or no reason, other than due to
Company's Material Breach, by giving the Company at least sixty (60) days
written notice of his intention to terminate the Term of Employment. Should
Executive terminate the Term of Employment in accordance with the provisions of
this Section 9(d), the Company shall pay to Executive only his Fixed Annual
Salary through the date of termination and any bonus which Executive has been
awarded as of the date of termination but which has not yet been paid to him.
All other benefits provided for in this Agreement and compensation payable under
this Agreement shall cease on such date of termination of employment except to
the extent accrued as of such date.
(e) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, the Term of Employment shall terminate
automatically upon Executive's death or upon Executive's physical or mental
disability or infirmity, which in the opinion of a competent physician selected
by the Company, renders the Executive unable to perform the essential functions
of his position under this Agreement for more than 90 days in any 180 day
period. Upon the termination of
4
<PAGE>
the Term of Employment in accordance with the provisions of this Section 9(e),
the Company shall pay to Executive (or, in the event of his death, his
designated beneficiary or estate) only his Fixed Annual Salary through the date
of termination and any bonus which Executive has been awarded as of the date of
termination but which has not yet been paid to him. All other benefits provided
for in this Agreement and compensation payable under this Agreement shall cease
on such date of termination of employment except to the extent accrued as of
such date.
(f) Executive hereby acknowledges and agrees that all personal
property and equipment furnished to or prepared by Executive in the course of or
incident to his employment by the Company belongs to the Company and shall be
promptly returned to the Company immediately upon the termination of this
Agreement. Upon the termination of Executive's employment under any subsection
of this Section 9, Executive shall be deemed to have resigned from all offices
and directorships then held with the Company or any affiliate, effective the
date of his termination.
10. Mitigation. The Company and Executive agree that Executive shall
----------
have no duty of mitigation. Accordingly, the parties agree that any
compensation earned by Executive after the date of his termination of employment
hereunder shall not be used to offset any severance or other benefits payable
pursuant to Section 9.
11. Confidential and Proprietary Information.
----------------------------------------
Executive acknowledges that during the course of his employment
hereunder, he has been given and will have access to and be exposed to trade
secrets and confidential information in written, oral, electronic and other form
regarding the Company and its business, products and employees, including,
without limitation, leasing plans; development plans; acquisition strategies;
underwriting process; advertising and sales materials; research, and related
materials; vendor and industry information; practices, processes, techniques,
methods, and know-how; the identities of the Company's tenants, customers and
potential customers (hereinafter referred to collectively as "Customers"); and
the Company's business methods, practices, strategies, forecasts, pricing and
marketing techniques. Executive expressly agrees to use such information only
for purposes of carrying out his duties for the Company and not for any other
purpose. Except as required by law, Executive will not otherwise disclose such
information, directly or indirectly, to any third party or entity.
All trade secrets, reports, manuals, and other ideas and materials
developed by Executive during the period of his employment, either solely or in
collaboration with others, which relate to the actual or anticipated business of
the Company, which result from or are suggested by any work Executive may do for
the Company, (collectively, the "Developments") shall be the sole and exclusive
property of the Company. Executive agrees to assign to the Company his entire
right and interest in any such Development, and will execute any documents in
connection therewith that the Company may reasonably request.
Executive acknowledges that the provisions of this Section 11 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 11 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation. Accordingly, Executive agrees
that if he violates the provisions of this Section 11, in addition to any other
remedy which may be available at law or in equity, the Company shall be entitled
to specific performance and injunctive relief, without posting bond or other
security, and without the necessity of proving actual damages.
12. Non-Solicitation. During the term of this Agreement, Executive
----------------
shall not divert or subvert any Company opportunity for continued existing
business or prospective business to his own benefit or for the benefit of any
third parties, nor shall Executive induce or attempt to induce any Customer to
reduce its business with the Company. Additionally, during the term of this
Agreement and for one (1) year after its termination, Executive shall not,
directly or indirectly, either of himself or for any other person, firm, company
or corporation, call upon, solicit, divert, take away or accept business from,
or attempt to solicit, divert, take away or accept business from any of the
Customers of the Company upon whom he called or whom he solicited or to whom he
catered or with whom he became acquainted after entering the employ of the
Company. Executive further acknowledges that, during the term of this Agreement
and for one (1) year after its termination, he shall not, directly or
indirectly, offer employment to, seek to hire, induce, solicit, encourage, or
attempt to induce any professional employee of the Company to seek or accept
employment with any other person or entity. Executive acknowledges that even an
unsuccessful solicitation of the Company's employees will negatively impact the
morale, commitment and performance of the employees in question, and that any
such solicitation may cause substantial financial loss to the Company.
5
<PAGE>
Executive acknowledges that the provisions of this Section 12 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 12 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation. Accordingly, Executive agrees
that if he violates the provisions of this Section 12, in addition to any other
remedy which may be available at law or in equity, the Company shall be entitled
to specific performance and injunctive relief, without posting bond or other
security, and without the necessity of proving actual damages.
13. Reserved
14. Disputes. Except as set forth in Sections 11 and 12 herein, any
--------
and all disputes, grievances, demands, causes of action or controversies
whatsoever (including but not limited to tort and contract claims, and claims
upon any law, statute, order or regulation) (hereinafter "Claims"), arising
under, out of, in connection with or in relation to (i) Executive's employment
with the Company; (ii) questions of arbitrability under this Agreement; (iii)
any relationship between Executive and the Company before, at the time of
entering, during the term of, upon or after expiration or determination of this
Agreement; or (iv) the performance, interpretation and breach of this Agreement,
shall, upon written demand of either party to this Agreement, be finally
determined and settled by arbitration in Los Angeles, California, in accordance
with the then existing JAMS/Endispute Arbitration Rules and Procedures for
Employment Disputes, and judgment upon the award may be entered in any court
having jurisdiction thereof. The prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in the arbitration, in
addition to any other relief, including equitable and injunctive relief, that
may be granted. This dispute resolution process shall survive the termination
of Executive's employment.
15. Binding on Successors. This Agreement shall be binding upon and
---------------------
inure to the benefit of the Company, the Executive and their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
16. Governing Law. This Agreement is being made and executed in and is
-------------
intended to be performed in the State of California and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of California, without regard to the conflict of laws principles
thereof.
17. Validity. The invalidity or unenforceability of any provision or
--------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
18. Notices. Any notice, request, claim, demand, document and other
-------
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company, addressed to its principal offices to the
attention of President, at 3500 Sepulveda Blvd., Manhattan Beach, California
90266;
(b) If to the Executive, to him at the address set forth below
under this signature; or at any other address as any party shall have specified
by notice in writing to the other parties.
19. Entire Agreement. As of the Effective Date, the terms of this
----------------
Agreement are intended by the parties to be the final expression of their
agreement with respect to the employment of the Executive by the Company and may
not be contradicted by evidence of any prior or contemporaneous agreement, and
the previously existing employment agreement between the Executive and the
Company is hereby terminated and superseded by this Agreement as of the
Effective Date. The parties further intend that this Agreement shall constitute
the complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any proceeding to vary the terms of this
Agreement.
6
<PAGE>
20. Amendments; Waivers. This Agreement may not be modified,
-------------------
amended, or terminated except by an instrument in writing and signed by the
Executive and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
EXECUTIVE:
--------------------------------------------
STUART GULLAND
--------------------------------------------
Street Address
--------------------------------------------
City State Zip
COMPANY:
CT OPERATING PARTNERSHIP, L.P.
a California limited partnership
By: CENTER TRUST,
INC., a Maryland corporation
By:
-----------------------------------
Its:
----------------------------------
7
<PAGE>
EXHIBIT 10.25
Employment Agreement for William Hewitt
This Employment Agreement (this "Agreement") is made and entered as of the
1st day of January, 1999, ("Effective Date") by and between CenterTrust, Inc.
and CT Operating Partnership, L.P. (collectively the "Company"), and William
Hewitt ("Executive").
The Company and Executive previously entered into that certain employment
agreement dated as May 1, 1998 (the "Prior Agreement"). The parties agree that
the Prior Agreement (except for the terms of Paragraph 8 thereof regarding the
granting and vesting of certain Restricted Stock) is terminated as of the
Effective Date.
1. Positions and Duties. The Company hereby employs Executive as the
--------------------
Senior Vice President ofLeasing and Operations during the "Term of Employment"
(as hereinafter defined) of this Agreement, with powers and duties consistent
with such position, including the management of the leasing and operations of
the Company's properties and such additional or different duties as may be
required by the President and/or the Board of Directors (the "Board") of
CenterTrust, Inc. ("Duties"). The Duties shall be generally performed at the
offices of the Company where located from time to time. In addition, the Duties
may be performed by Executive from time to time on a temporary travel basis at
such other locations as Company shall reasonably request consistent with its
reasonable business needs. Executive shall report to the President of the
Company and to the Board. Executive shall be employed full time and shall
devote such time, attention, and energies to the business of the Company as are
reasonably necessary to satisfy Executive's responsibilities and duties
hereunder. Executive shall use his good faith best efforts to promote the
Company's products and services.
2. Term. The term of this Agreement will commence on the Effective Date
----
and shall continue until December 31, 2000 (the "Initial Term") unless earlier
terminated as provided in Section 9. At the expiration of each year of the
Initial Term and each anniversary thereafter, the term of this Agreement shall
automatically be extended for an additional one year (the "Extension Term")
unless either party shall have given written notice to the other party at least
sixty (60) days prior to the end of the Initial Term or the Extension Term, as
the case may be, that it does not desire to extend the term of this Agreement.
During any Extension Term, this Agreement may be earlier terminated as provided
in Section 9. References herein to either the "Term" or the "Term of Employment"
of this Agreement shall refer to both such Initial Term and any Extension Term.
3. Salary. Commencing on the Effective Date, and for the duration of the
------
Term of Employment, the Company shall pay to Executive a fixed annual salary in
the amount of Two Hundred Fifty Thousand Dollars ($250,000) per year, payable in
equal installments, no less frequently than monthly, in accordance with the
Company's prevailing payroll policy (the "Fixed Annual Salary"). The Fixed
Annual Salary of Executive shall be reviewed on an annual basis and may be
increased, if appropriate, on an annual basis.
In addition to the Fixed Annual Salary, Executive may be eligible for a
bonus (the "Bonus"), at the sole discretion of the President and the Board or
any compensation or similar committee thereof. Any Bonus may be based on the
Executive's management of the leasing and operations of the properties of the
Company and the success of the leasing program, as well as other factors
determined by the Company in its sole discretion from time to time. Any Bonus,
to the extent awarded by the Company at the end of each fiscal year, shall be
earned and paid on an annual basis in accordance with Company practice. The
amount of Bonus for the calendar year ended December 31, 1999 paid to Executive
shall be based on several factors at the discretion of the Company which shall
include the substantial achievement of the goals (e.g. completion of the
recapitalization program, achieving stated FFO targets, etc.) set forth in that
certain Business Plan dated as of July 9, 1999 and may include such other
factors related to Executive's performance and that of the Company and the Board
deems appropriate. For the years after 1999 the Company may pay Executive a
Bonus in an amount to be determined by the Company in its sole discretion.
Any Bonus, to the extent awarded by the Company at the end of each fiscal
year, shall be earned and paid on an annual basis in accordance with Company
practice.
4. Expenses. In accordance with Company policies, the Company will
--------
promptly reimburse Executive for all reasonable travel and other business
expenses paid or incurred by Executive in the performance of his duties
hereunder. The
<PAGE>
Company shall promptly reimburse the Executive for all reasonable expenses
incurred by the Executive with respect to professional memberships and
continuing education upon evidence of receipt in accordance with Company
policies.
5. Incentive Compensation. As a further inducement to Executive, the
----------------------
Company has concurrently herewith entered into a Restricted Stock Agreement with
Executive whereby it grants Executive Fifty Thousand (50,000) shares of
Restricted Stock of the Company (as defined in the Restricted Stock Agreement)
(the "Incentive Stock"), subject to certain vesting requirements.
The vesting requirement is that at the end of each calendar year, upon
the date that the Board of Directors determines the Bonus as set forth in
paragraph 3 above, the Board shall make a determination as to the success of
Executive in reaching corporate goals and based upon such determination the
Board in its sole discretion shall approve the vesting of up to one third of the
Incentive Stock as it deems appropriate ("Performance Vesting Component").
Notwithstanding anything to the contrary contained in this Agreement,
regardless of the failure of Executive to satisfy the Performance Vesting
Component, one hundred percent (100%) of the Incentive Stock shall be fully
vested on the last day of the seventh year subsequent to the Effective Date
provided that the Executive is employed by the Company on such date.
Dividends on the vested and unvested Incentive Stock shall be paid to
Executive on that date when dividends are paid to shareholders.
The Company and Executive agree that in consideration of entering into
this Agreement, the 100,000 stock options issued to Executive pursuant to the
Prior Agreement are hereby cancelled and of no further force or effect.
6. Executive Benefits. During the Term of Employment, Executive shall be
------------------
entitled to the following benefits (collectively, the "Executive Benefits"):
(a) Executive shall be entitled to vacation benefits in accordance
with the Company's normal vacation policies. Such vacation shall be taken at
such time or times during the applicable year as may be determined by Executive
subject to the Company's reasonable business needs.
(b) Executive and his eligible dependents shall be included in group
hospital, surgical, medical and dental benefit plans of the Company in
accordance with Company policies.
(c) Except as otherwise provided herein, Executive shall be entitled
to participate in any profit-sharing, stock option, pension, 401(k) plans, or
other plans, benefits or policies generally available to other currently
existing officers of the Company on the terms generally applicable to such
officers, if and to the extent that Executive is eligible to participate in
accordance with the provisions of any such plans or benefits; provided, however,
-------- -------
that any such benefits or plans are not duplicative of those provided in this
Section 6. Nothing in this Section 6(c) is intended or shall be construed to
require the Company to institute any plan or benefits, or to maintain or refrain
from amending or terminating any such existing plan or benefits.
(d) The Company shall provide Executive with an automobile allowance of
five hundred dollars ($500) per month.
7. Reserved.
8. Reserved
9. Termination.
-----------
(a) The Company shall have the unilateral right, at its election and
in its sole discretion, to terminate Executive's employment at any time during
the Term of Employment so long as "good cause" (defined below) exists. Should
the Company terminate the Term of Employment in accordance with the "good cause"
provisions of this Section 9(a), notwithstanding anything herein to the
contrary, the Company shall pay to Executive only his Fixed Annual Salary
through the
2
<PAGE>
date of termination, any bonus which Executive has been awarded as of the date
of termination but which has not yet been paid to him and any other vested
benefits or rights. All other benefits provided for in this Agreement and
compensation payable under this Agreement shall cease on such date of
termination of employment except to the extent accrued as of such date. For
purposes of this Agreement, the Company shall have "good cause" to terminate the
Executive's employment hereunder upon a finding by the President of the Company
or the Board that the Executive has (1) engaged in acts or omissions with
respect to the Company which constitute intentional misconduct or a knowing
violation of law; (2) personally received a benefit in money, property or
services from the Company or from another person dealing with the Company (in
excess of de minimis amounts) in violation of applicable law; (3) breached his
confidentiality covenant with the Company; (4) breached his fiduciary duty of
loyalty to the Company under applicable law; (5) engaged in gross negligence in
the performance of his duties to the Company; or (6) failed to satisfactorily
perform services for the Company which have been reasonably requested of him by
the Board or the President of the Company and which are consistent with the
terms of the Agreement; provided, however, that "good cause" shall not exist
-------- -------
with respect to items (5) and (6) unless and until the Company provides the
Executive with (a) at least fifteen (15) days prior written notice of its
intention to terminate his employment for good cause, and (b) a reasonable
opportunity and a reasonable period of time to cure any curable acts or
omissions on which the finding of good cause is based. If the Executive cures
the acts or omissions on which the finding of good cause is based during the
fifteen- (15) day period, the Company shall not have good cause to terminate the
Executive's employment hereunder. Notwithstanding the forgoing, no notice prior
to "good cause" termination shall be required from the Company to the Executive
with respect to items (1) through (4).
(b) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive's employment with the Company may be
terminated by the Company at any time, for any reason, with or without cause,
without liability except with respect to the payments provided for by this
Section 9(b). Accordingly, the Company shall have the right, at its election,
to shorten the Term of Employment without "good cause," cause of any kind, or
for any reason or no reason whatsoever, by giving Executive at least thirty (30)
days written notice of its intention to shorten the Term of Employment in which
event the Company shall pay to Executive, in cash, in equal payments (not less
than monthly), a sum equal to twenty-four (24) months of the Executive's Fixed
Annual Salary and two years of Bonus payments (deemed for this purpose to be two
times the prior year's bonus), less withholding for applicable taxes In
addition, the Incentive Stock granted pursuant to Section 5 above shall
immediately and fully vest as follows: In the event that Executive's employment
is terminated under the provisions of this Section prior to the last day of the
first year subsequent to the Effective Date, 100% of the Incentive Stock shall
fully vest without condition; during the second calendar year subsequent to the
Effective Date, two- thirds of the Incentive Stock shall immediately vest
without condition; and during the third calendar year subsequent to the
Effective Date, one-third of the Incentive Stock shall immediately and fully
vest without condition; after the last day of the third calendar year there
shall be no vesting of the Incentive Stock. In the event that the Executive's
employment is terminated after the completion of a calendar year but before the
Board has determined the appropriate vesting of the Incentive Shares pursuant to
the Performance Vesting Component set forth above, the Executive shall
immediately vest in one-third of the Incentive Stock representing the
Performance Vesting for the prior calendar year. Further, any Options and
Restricted Stock other than the Incentive Stock then held by Executive shall
immediately and fully vest without condition. All other benefits provided for
in this Agreement and compensation payable in this Agreement shall cease on such
date of termination of employment except to the extent accrued as of such date.
(c) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his election,
to terminate the Term of Employment in the event of the "Company's Material
Breach," which shall consist of the Company's failure or refusal to comply with
a material term of this Agreement. The Company and Executive hereby agree that
the following shall constitute a "failure or refusal to comply with a material
term of this Agreement": the Company's failure or refusal to comply with the
provisions of Sections 3, 4, 5, or 6 hereof unless such failure or refusal to
comply arises out of a bona fide dispute. In order to terminate the Term of
Employment, Executive shall be required to give written notice specifying the
claimed breach and the Company shall have failed to correct the claimed breach,
if such breach is curable, or alter the objectionable pattern of conduct
specified in the applicable written notice, thirty (30) days (ten (10) days in
the case of a breach based upon non-payment of compensation due under this
Agreement) after the receipt of the applicable notice. Executive shall also have
the right to terminate the Term of Employment in the event of (i) any removal of
Executive from the office of Senior Vice President of Leasing and Operations
without good cause (as defined in Section 9(a)) and without Executive's prior
written consent, or (ii) any material decrease in Executive's authority or
responsibilities as Senior Vice President of Leasing and Operations without
Executive's prior written consent, or (iii) a "Change of Control" (as defined
below).Should Executive terminate the Term of Employment in accordance with the
provisions of this Section 9(c), the Company shall pay to Executive, in cash, in
equal payments (not less than monthly) , a sum equivalent to twenty-four (24)
months of the Executive's
3
<PAGE>
Fixed Annual Salary and two years of Bonus payments (deemed for this purpose to
be two times the prior year's bonus) less withholding for applicable taxes. In
addition, the Incentive Stock granted pursuant to Section 5 above shall
immediately and fully vest as follows: In the event that Executive's employment
is terminated under the provisions of this Section prior to the last day of the
first year subsequent to the Effective Date, 100% of the Incentive Stock shall
fully vest without condition; during the second calendar year subsequent to the
Effective Date, two- thirds of the Incentive Stock shall immediately vest
without condition; and during the third calendar year subsequent to the
Effective Date, one-third of the Incentive Stock shall immediately and fully
vest without condition; after the last day of the third calendar year there
shall be no vesting of the Incentive Stock. In the event that the Executive's
employment is terminated after the completion of a calendar year but before the
Board has determined the appropriate vesting of the Incentive Shares pursuant to
the Performance Vesting Component set forth above, the Executive shall
immediately vest in one-third of the Incentive Stock representing the
Performance Vesting for the prior calendar year. Further, any Options and any
Restricted Stock other than the Incentive Stock then held by Executive shall
immediately and fully vest without condition. All other benefits provided for in
this Agreement and compensation payable under this Agreement shall cease on such
date of termination of employment except to the extent accrued as of such date.
In the event the Company elects to not renew this Agreement as specified in
Section 2 above and Executive elects to terminate his employment with the
Company within 60 days of receipt of such notice of nonrenewal, such termination
shall be deemed to be a termination pursuant to this subparagraph (c) and
Executive shall be entitled to the severance benefits set forth in this
subparagraph (c).
"Change of Control" shall mean an event whereby Executive does not remain
as an executive officer of the Company and associated therewith: (1) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934, as amended, (the "Exchange Act")) other than Prometheus
Western Retail, LLC or LF Strategic Realty Investors LP. or their affiliates
(collective, "Lazard Entities") or any employee benefit plan maintained by the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act, except that a person has the right to acquire, whether such
right is exercisable immediately or only upon the passage of time), directly or
indirectly, of more than 40% of the total voting power of the voting stock of
the Company; (2) the Company consolidates with or merges with or into another
corporation or sells, assigns, conveys, transfers, leases or otherwise disposes
of all substantially all of its assets to any person, or any corporation
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding voting stock of the Company
is changed into or exchanged for cash, securities or other property, other than
any such transactions where (A) the outstanding voting stock of the Company is
changed into or exchanged for (x) voting stock of the surviving or transferee
corporation or (y) cash, securities (whether or not including voting stock) or
other property, and (B) the holders of the voting stock of the Company
immediately prior to such transaction own, directly or indirectly, not less than
60% of the voting power of the voting stock of the surviving corporation
immediately after such transaction; or (3) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
the Company (which individuals shall be deemed to include any "new" directors
whose election or appointment by such Board or whose nomination for election by
the stockholders of the Company was approved by a vote of at least 66 2/3% of
the directors then still in office who were either directors at the beginning of
such period or whose election, appointment or nomination was previously so
approved) ceased for any reason to constitute a majority of the Board of the
Company then in office; or (4) the Company is liquidated or dissolved or adopts
a plan of liquidation.
(d) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his election,
to shorten the Term of Employment for any or no reason, other than due to
Company's Material Breach, by giving the Company at least sixty (60) days
written notice of his intention to terminate the Term of Employment. Should
Executive terminate the Term of Employment in accordance with the provisions of
this Section 9(d), the Company shall pay to Executive only his Fixed Annual
Salary through the date of termination and any bonus which Executive has been
awarded as of the date of termination but which has not yet been paid to him.
All other benefits provided for in this Agreement and compensation payable under
this Agreement shall cease on such date of termination of employment except to
the extent accrued as of such date.
(e) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, the Term of Employment shall terminate
automatically upon Executive's death or upon Executive's physical or mental
disability or infirmity, which in the opinion of a competent physician selected
by the Company, renders the Executive unable to perform the essential functions
of his position under this Agreement for more than 90 days in any 180 day
period. Upon the termination of the Term of Employment in accordance with the
provisions of this Section 9(e), the Company shall pay to Executive (or, in the
event of his death, his designated beneficiary or estate) only his Fixed Annual
Salary through the date of termination and any
4
<PAGE>
bonus which Executive has been awarded as of the date of termination but which
has not yet been paid to him. All other benefits provided for in this Agreement
and compensation payable under this Agreement shall cease on such date of
termination of employment except to the extent accrued as of such date.
(f) Executive hereby acknowledges and agrees that all personal
property and equipment furnished to or prepared by Executive in the course of or
incident to his employment by the Company belongs to the Company and shall be
promptly returned to the Company immediately upon the termination of this
Agreement. Upon the termination of Executive's employment under any subsection
of this Section 9, Executive shall be deemed to have resigned from all offices
and directorships then held with the Company or any affiliate, effective the
date of his termination.
10. Mitigation. The Company and Executive agree that Executive shall
----------
have no duty of mitigation. Accordingly, the parties agree that any
compensation earned by Executive after the date of his termination of employment
hereunder shall not be used to offset any severance or other benefits payable
pursuant to Section 9.
11. Confidential and Proprietary Information.
----------------------------------------
Executive acknowledges that during the course of his employment
hereunder, he has been given and will have access to and be exposed to trade
secrets and confidential information in written, oral, electronic and other form
regarding the Company and its business, products and employees, including,
without limitation, leasing plans; development plans; acquisition strategies;
underwriting process; advertising and sales materials; research, and related
materials; vendor and industry information; practices, processes, techniques,
methods, and know-how; the identities of the Company's tenants, customers and
potential customers (hereinafter referred to collectively as "Customers"); and
the Company's business methods, practices, strategies, forecasts, pricing and
marketing techniques. Executive expressly agrees to use such information only
for purposes of carrying out his duties for the Company and not for any other
purpose. Except as required by law, Executive will not otherwise disclose such
information, directly or indirectly, to any third party or entity.
All trade secrets, reports, manuals, and other ideas and materials
developed by Executive during the period of his employment, either solely or in
collaboration with others, which relate to the actual or anticipated business of
the Company, which result from or are suggested by any work Executive may do for
the Company, (collectively, the "Developments") shall be the sole and exclusive
property of the Company. Executive agrees to assign to the Company his entire
right and interest in any such Development, and will execute any documents in
connection therewith that the Company may reasonably request.
Executive acknowledges that the provisions of this Section 11 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 11 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation. Accordingly, Executive agrees
that if he violates the provisions of this Section 11, in addition to any other
remedy which may be available at law or in equity, the Company shall be entitled
to specific performance and injunctive relief, without posting bond or other
security, and without the necessity of proving actual damages.
12. Non-Solicitation. During the term of this Agreement, Executive shall
----------------
not divert or subvert any Company opportunity for continued existing business or
prospective business to his own benefit or for the benefit of any third parties,
nor shall Executive induce or attempt to induce any Customer to reduce its
business with the Company. Additionally, during the term of this Agreement and
for one (1) year after its termination, Executive shall not, directly or
indirectly, either of himself or for any other person, firm, company or
corporation, call upon, solicit, divert, take away or accept business from, or
attempt to solicit, divert, take away or accept business from any of the
Customers of the Company upon whom he called or whom he solicited or to whom he
catered or with whom he became acquainted after entering the employ of the
Company. Executive further acknowledges that, during the term of this Agreement
and for one (1) year after its termination, he shall not, directly or
indirectly, offer employment to, seek to hire, induce, solicit, encourage, or
attempt to induce any professional employee of the Company to seek or accept
employment with any other person or entity. Executive acknowledges that even an
unsuccessful solicitation of the Company's employees will negatively impact the
morale, commitment and performance of the employees in question, and that any
such solicitation may cause substantial financial loss to the Company.
Executive acknowledges that the provisions of this Section 12 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 12 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation. Accordingly, Executive agrees
that if he violates the provisions of this
5
<PAGE>
Section 12, in addition to any other remedy which may be available at law or in
equity, the Company shall be entitled to specific performance and injunctive
relief, without posting bond or other security, and without the necessity of
proving actual damages.
13. Reserved
14. Disputes. Except as set forth in Sections 11 and 12 herein, any and
--------
all disputes, grievances, demands, causes of action or controversies whatsoever
(including but not limited to tort and contract claims, and claims upon any law,
statute, order or regulation) (hereinafter "Claims"), arising under, out of, in
connection with or in relation to (i) Executive's employment with the Company;
(ii) questions of arbitrability under this Agreement; (iii) any relationship
between Executive and the Company before, at the time of entering, during the
term of, upon or after expiration or determination of this Agreement; or (iv)
the performance, interpretation and breach of this Agreement, shall, upon
written demand of either party to this Agreement, be finally determined and
settled by arbitration in Los Angeles, California, in accordance with the then
existing JAMS/Endispute Arbitration Rules and Procedures for Employment
Disputes, and judgment upon the award may be entered in any court having
jurisdiction thereof. The prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in the arbitration, in
addition to any other relief, including equitable and injunctive relief, that
may be granted. This dispute resolution process shall survive the termination of
Executive's employment.
15. Binding on Successors. This Agreement shall be binding upon and
---------------------
inure to the benefit of the Company, the Executive and their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
16. Governing Law. This Agreement is being made and executed in and is
-------------
intended to be performed in the State of California and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of California, without regard to the conflict of laws principles
thereof.
17. Validity. The invalidity or unenforceability of any provision or
--------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
18. Notices. Any notice, request, claim, demand, document and other
-------
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company, addressed to its principal offices to the
attention of President, at 3500 Sepulveda Blvd., Manhattan Beach, California
90266;
(b) If to the Executive, to him at the address set forth below under
this signature; or at any other address as any party shall have specified by
notice in writing to the other parties.
19. Entire Agreement. As of the Effective Date, the terms of this
----------------
Agreement are intended by the parties to be the final expression of their
agreement with respect to the employment of the Executive by the Company and may
not be contradicted by evidence of any prior or contemporaneous agreement, and
the previously existing employment agreement between the Executive and the
Company is hereby terminated and superseded by this Agreement as of the
Effective Date. The parties further intend that this Agreement shall constitute
the complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any proceeding to vary the terms of this
Agreement.
20. Amendments; Waivers. This Agreement may not be modified, amended, or
-------------------
terminated except by an instrument in writing and signed by the Executive and
the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
EXECUTIVE:
______________________________________
WILLIAM HEWITT
6
<PAGE>
_______________________________________
Street Address
_______________________________________
City State Zip
COMPANY:
CT OPERATING PARTNERSHIP, L.P.
a California limited partnership
By: CENTER TRUST,
INC., a Maryland corporation
By:__________________________
Its:_________________________
7
<PAGE>
EXHIBIT 10.26
Employment Agreement for Steven Jaffe
This Employment Agreement (this "Agreement") is made and entered as of
the1st day of January, 1999, ("Effective Date") by and between Center Trust,
Inc., and CT Operating Partnership, L.P. (collectively the "Company"), and
Steven Jaffe ("Executive").
The Company and Executive previously entered into that certain employment
agreement dated as March 1, 1998 (the "Prior Agreement"). The parties agree
that the Prior Agreement (except for the provisions regarding the granting and
vesting of certain stock options) is terminated as of the Effective Date.
1. Positions and Duties. The Company hereby employs Executive as the
--------------------
Senior Vice President, General Counsel and Corporate Secretary during the "Term
of Employment" (as hereinafter defined) of this Agreement, with powers and
duties consistent with such position and Executive's stature and experience,
including the management of the Legal Department of the Company and such
additional or different duties as may be required by the President and/or the
Board of Directors ("the "Board") of Center Trust, Inc. ("Duties"). The Duties
shall be generally performed at the offices of the Company where located from
time to time. In addition, the Duties may be performed by Executive from time
to time on a temporary travel basis at such other locations as Company shall
reasonably request consistent with its reasonable business needs. Executive
shall report to the President of the Company and to the Board. Executive shall
be employed full time and shall devote such time, attention and energies to the
business of the Company as are reasonably necessary to satisfy Executive's
responsibilities and duties hereunder. Executive shall use his good faith best
efforts to promote the Company's products and services.
2. Term. The term of this Agreement will commence on the Effective
----
Date and shall continue until December 31, 2000 (the "Initial Term") unless
earlier terminated as provided in Section 9. At the expiration of the Initial
Term and each anniversary thereafter, the term of this Agreement shall
automatically be extended for an additional one year (the "Extension Term")
unless either party shall have given written notice to the other party at least
sixty (60) days prior to the end of the Initial Term or the Extension Term, as
the case may be, that it does not desire to extend the term of this Agreement.
During any Extension Term, this Agreement may be earlier terminated as provided
in Section 9. References herein to either the "Term" or the "Term of
Employment" of this Agreement shall refer to both such Initial Term and any
Extension Term.
3. Salary. Commencing on the Effective Date, and for the duration of the
------
Term of Employment, the Company shall pay to Executive a fixed annual salary in
the amount of Two Hundred Twenty Thousand Dollars ($220,000) per year, payable
in equal installments, no less frequently than monthly, in accordance with the
Company's prevailing payroll policy (the "Fixed Annual Salary"). The Fixed
Annual Salary of Executive shall be reviewed on an annual basis and may be
increased, if appropriate, on an annual basis. In addition to the Fixed Annual
Salary, Executive may be eligible for a bonus, at the sole discretion of the
President and the Board or any compensation or similar committee thereof. Any
bonus may be based on the Executive's supervision of the legal services provided
to the Company (and the productivity thereof), as well as other factors
determined by the Company in its sole discretion from time to time. Any bonus,
to the extent awarded by the Company at the end of each fiscal year, shall be
earned and paid on an annual basis in accordance with Company practice.
4. Expenses. In accordance with Company policies, the Company will
--------
promptly reimburse Executive for all reasonable travel and other business
expenses paid or incurred by Executive in the performance of his duties
hereunder. The Company shall promptly reimburse the Executive for all
reasonable expenses incurred by the Executive with respect to professional
memberships and continuing education upon evidence of receipt in accordance with
Company policies.
5. Incentive Compensation. As a further inducement to Executive, as of
----------------------
November 18, 1999, the Company has granted Executive options to acquire 125,000
shares of the Company's common stock at a price of $10.00 per share vesting
annually over a four year period on a pro rata basis ("Options").
6. Executive Benefits. During the Term of Employment, Executive shall be
------------------
entitled to the following benefits (collectively, the "Executive Benefits"):
(a) Executive shall be entitled to vacation benefits in accordance
with the Company's normal vacation policies. Such vacation shall be taken at
such time or times during the applicable year as may be determined by Executive
subject to the Company's reasonable business needs.
(b) Executive and his eligible dependents shall be included in group
hospital, surgical, medical and dental benefit plans of the Company in
accordance with Company policies.
<PAGE>
(c) Except as otherwise provided herein, Executive shall be entitled
to participate in any profit-sharing, stock option, pension, 401(k) plans, or
other plans, benefits or policies generally available to other currently
existing officers of the Company on the terms generally applicable to such
officers, if and to the extent that Executive is eligible to participate in
accordance with the provisions of any such plans or benefits; provided, however,
-------- -------
that any such benefits or plans are not duplicative of those provided in this
Section 6. Nothing in this Section 6(c) is intended or shall be construed to
require the Company to institute any plan or benefits, or to maintain or refrain
from amending or terminating any such existing plan or benefits.
(d) The Company shall provide Executive with an automobile allowance
of five hundred dollars ($500) per month.
7. Reserved.
8. Reserved.
9. Termination.
-----------
(a) The Company shall have the unilateral right, at its election and
in its sole discretion, to terminate Executive's employment at any time during
the Term of Employment so long as "good cause" (defined below) exists. Should
the Company terminate the Term of Employment in accordance with the "good cause"
provisions of this Section 9(a), notwithstanding anything herein to the
contrary, the Company shall pay to Executive only his Fixed Annual Salary
through the date of termination, any bonus which Executive has been awarded as
of the date of termination but which has not yet been paid to him and any other
vested benefits or rights. All other benefits provided for in this Agreement
and compensation payable under this Agreement shall cease on such date of
termination of employment except to the extent accrued as of such date. For
purposes of this Agreement, the Company shall have "good cause" to terminate the
Executive's employment hereunder upon a finding by the President of the Company
or the Board that the Executive has (1) engaged in acts or omissions with
respect to the Company which constitute intentional misconduct or a knowing
violation of law; (2) personally received a benefit in money, property or
services from the Company or from another person dealing with the Company (in
excess of de minimis amounts) in violation of applicable law; (3) breached his
confidentiality covenant with the Company; (4) breached his fiduciary duty of
loyalty to the Company under applicable law; (5) engaged in gross negligence in
the performance of his duties to the Company; (6) failed to satisfactorily
perform services for the Company which have been reasonably requested of him by
the Board or the President of the Company and which are consistent with the
terms of the Agreement; or (7) failed to achieve the performance goals
reasonably set forth for Executive from time to time; provided, however, that
-------- -------
"good cause" shall not exist with respect to items (5), (6) and (7) unless and
until the Company provides the Executive with (a) at least fifteen (15) days
prior written notice of its intention to terminate his employment for good
cause, and (b) a reasonable opportunity and a reasonable period of time to cure
any curable acts or omissions on which the finding of good cause is based. If
the Executive cures the acts or omissions on which the finding of good cause is
based during the fifteen-(15) day period, the Company shall not have good cause
to terminate the Executive's employment hereunder. Notwithstanding the
forgoing, no notice prior to "good cause" termination shall be required from the
Company to the Executive with respect to items (1) through (4).
(b) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive's employment with the Company may be
terminated by the Company at any time, for any reason, with or without cause,
without liability except with respect to the payments provided for by this
Section 9(b). Accordingly, the Company shall have the right, at its election,
to shorten the Term of Employment without "good cause," cause of any kind, or
for any reason or no reason whatsoever, by giving Executive at least thirty (30)
days written notice of its intention to shorten the Term of Employment in which
event the Company shall pay to Executive, in cash, not later than the effective
date of such termination, a sum equal to twelve (12) months of the Executive's
Fixed Annual Salary and one year of Bonus payments (deemed for this purpose to
be the prior year's bonus), less withholding for applicable taxes. In addition,
the Options granted pursuant to Section 5 above and any options granted prior to
or subsequent to the Effective Date and any Restricted Stock held by the
Executive shall immediately and fully vest without condition. All other
benefits provided for in this Agreement and compensation payable in this
Agreement shall cease on such date of termination of employment except to the
extent accrued as of such date.
(c) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his election,
to terminate the Term of Employment in the event of the "Company's Material
Breach," which shall consist of the Company's failure or refusal to comply with
a material term of this Agreement. The Company and Executive hereby agree that
the following shall constitute a "failure or refusal to comply with a material
term of this Agreement": the Company's failure or refusal to comply with the
provisions of Sections 3, 4, 5, or 6 hereof unless such failure or
2
<PAGE>
refusal to comply arises out of a bona fide dispute. In order to terminate the
Term of Employment, Executive shall be required to give written notice
specifying the claimed breach and the Company shall have failed to correct the
claimed breach, if such breach is curable, or alter the objectionable pattern of
conduct specified in the applicable written notice, thirty (30) days (ten (10)
days in the case of a breach based upon non-payment of compensation due under
this Agreement) after the receipt of the applicable notice. Executive shall also
have the right to terminate the Term of Employment in the event (i) any removal
of Executive from the office of Senior Vice President, General Counsel and
Corporate Secretary without good cause (as defined in Section 9(a)) and without
Executive's prior written consent, or (ii) any material decrease in Executive's
authority or responsibilities as Senior Vice President, General Counsel and
Corporate Secretary without Executive's prior written consent, or (iii) a
"Change of Control" (as defined below). Should Executive terminate the Term of
Employment in accordance with the provisions of this Section 9(c), the Company
shall pay to Executive, in cash, not later than the effective date of such
termination, a sum equivalent to twelve (12) months of the Executive's Fixed
Annual Salary and one year of Bonus payments (deemed for this purpose to be the
prior year's bonus), less withholding for applicable taxes. In addition, the
Options granted hereunder in Section 5 herein and any Options granted prior or
subsequent to the Effective Date, as well as any Restricted Stock held by
Executive, shall immediately and fully vest without condition. All other
benefits provided for in this Agreement and compensation payable under this
Agreement shall cease on such date of termination of employment except to the
extent accrued as of such date. In the event the Company elects to not renew
this Agreement as specified in Section 2 above and Executive elects to terminate
his employment with the Company within 60 days of receipt of such notice of
nonrenewal, such termination shall be deemed to be a termination pursuant to
this subparagraph (c) and Executive shall be entitled to the severance benefits
set forth in this subparagraph (c).
"Change of Control" shall mean an event whereby Executive does not
remain as an executive officer of the Company and associated therewith: (1) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934, as amended, (the "Exchange Act")) other than Prometheus
Western Retail, LLC or LF Strategic Realty Investors LP. or their affiliates
(collective, "Lazard Entities") or any employee benefit plan maintained by the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act, except that a person has the right to acquire, whether such
right is exercisable immediately or only upon the passage of time), directly or
indirectly, of more than 40% of the total voting power of the voting stock of
the Company; (2) the Company consolidates with or merges with or into another
corporation or sells, assigns, conveys, transfers, leases or otherwise disposes
of all substantially all of its assets to any person, or any corporation
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding voting stock of the Company
is changed into or exchanged for cash, securities or other property, other than
any such transactions where (A) the outstanding voting stock of the Company is
changed into or exchanged for (x) voting stock of the surviving or transferee
corporation or (y) cash, securities (whether or not including voting stock) or
other property, and (B) the holders of the voting stock of the Company
immediately prior to such transaction own, directly or indirectly, not less than
60% of the voting power of the voting stock of the surviving corporation
immediately after such transaction; or (3) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
the Company (which individuals shall be deemed to include any "new" directors
whose election or appointment by such Board or whose nomination for election by
the stockholders of the Company was approved by a vote of at least 66 2/3% of
the directors then still in office who were either directors at the beginning of
such period or whose election, appointment or nomination was previously so
approved) ceased for any reason to constitute a majority of the Board of the
Company then in office; or (4) the Company is liquidated or dissolved or adopts
a plan of liquidation.
(d) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his
election, to shorten the Term of Employment for any or no reason, other than due
to Company's Material Breach, by giving the Company at least sixty (60) days
written notice of his intention to terminate the Term of Employment. Should
Executive terminate the Term of Employment in accordance with the provisions of
this Section 9(d), the Company shall pay to Executive only his Fixed Annual
Salary through the date of termination and any bonus which Executive has been
awarded as of the date of termination but which has not yet been paid to him.
All other benefits provided for in this Agreement and compensation payable under
this Agreement shall cease on such date of termination of employment except to
the extent accrued as of such date.
(e) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, the Term of Employment shall terminate
automatically upon Executive's death or upon Executive's physical or mental
disability or infirmity, which in the opinion of a competent physician selected
by the Company, renders the Executive unable to perform the essential functions
of his position under this Agreement for more than 90 days in any 180 day
period. Upon the termination of the Term of Employment in accordance with the
provisions of this Section 9(e), the Company shall pay to Executive (or, in the
event of his death, his designated beneficiary or estate) only his Fixed Annual
Salary through the date of termination and any bonus which Executive has been
awarded as of the date of termination but which has not yet been paid to him.
All other benefits
3
<PAGE>
provided for in this Agreement and compensation payable under this Agreement
shall cease on such date of termination of employment except to the extent
accrued as of such date.
(f) Executive hereby acknowledges and agrees that all personal
property and equipment furnished to or prepared by Executive in the course of or
incident to his employment by the Company belongs to the Company and shall be
promptly returned to the Company immediately upon the termination of this
Agreement. Upon the termination of Executive's employment under any subsection
of this Section 9, Executive shall be deemed to have resigned from all offices
and directorships then held with the Company or any affiliate, effective the
date of his termination.
10. Mitigation. The Company and Executive agree that Executive shall have
----------
no duty of mitigation. Accordingly, the parties agree that any compensation
earned by Executive after the date of his termination of employment hereunder
shall not be used to offset any severance or other benefits payable pursuant to
Section 9.
11. Confidential and Proprietary Information.
----------------------------------------
Executive acknowledges that during the course of his employment
hereunder, he has been given and will have access to and be exposed to trade
secrets and confidential information in written, oral, electronic and other form
regarding the Company and its business, products and employees, including,
without limitation, leasing plans; development plans; acquisition strategies;
underwriting process; advertising and sales materials; research, and related
materials; vendor and industry information; practices, processes, techniques,
methods, and know-how; the identities of the Company's tenants, customers and
potential customers (hereinafter referred to collectively as "Customers"); and
the Company's business methods, practices, strategies, forecasts, pricing and
marketing techniques. Executive expressly agrees to use such information only
for purposes of carrying out his duties for the Company and not for any other
purpose. Except as required by law, Executive will not otherwise disclose such
information, directly or indirectly, to any third party or entity.
All trade secrets, reports, manuals, and other ideas and materials
developed by Executive during the period of his employment, either solely or in
collaboration with others, which relate to the actual or anticipated business of
the Company, which result from or are suggested by any work Executive may do for
the Company, (collectively, the "Developments") shall be the sole and exclusive
property of the Company. Executive agrees to assign to the Company his entire
right and interest in any such Development, and will execute any documents in
connection therewith that the Company may reasonably request.
Executive acknowledges that the provisions of this Section 11 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 11 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation. Accordingly, Executive agrees
that if he violates the provisions of this Section 11, in addition to any other
remedy which may be available at law or in equity, the Company shall be entitled
to specific performance and injunctive relief, without posting bond or other
security, and without the necessity of proving actual damages.
12. Non-Solicitation. During the term of this Agreement, Executive
----------------
shall not divert or subvert any Company opportunity for continued existing
business or prospective business to his own benefit or for the benefit of any
third parties, nor shall Executive induce or attempt to induce any Customer to
reduce its business with the Company. Additionally, during the term of this
Agreement and for one (1) year after its termination, Executive shall not,
directly or indirectly, either of himself or for any other person, firm, company
or corporation, call upon, solicit, divert, take away or accept business from,
or attempt to solicit, divert, take away or accept business from any of the
Customers of the Company upon whom he called or whom he solicited or to whom he
catered or with whom he became acquainted after entering the employ of the
Company. Executive further acknowledges that, during the term of this Agreement
and for one (1) year after its termination, he shall not, directly or
indirectly, offer employment to, seek to hire, induce, solicit, encourage, or
attempt to induce any professional employee of the Company to seek or accept
employment with any other person or entity. Executive acknowledges that even an
unsuccessful solicitation of the Company's employees will negatively impact the
morale, commitment and performance of the employees in question, and that any
such solicitation may cause substantial financial loss to the Company.
Executive acknowledges that the provisions of this Section 12 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 12 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation. Accordingly, Executive agrees
that if he violates the provisions of this
4
<PAGE>
Section 12, in addition to any other remedy which may be available at law or in
equity, the Company shall be entitled to specific performance and injunctive
relief, without posting bond or other security, and without the necessity of
proving actual damages.
13. Reserved
14. Disputes. Except as set forth in Sections 11 and 12 herein, any and
--------
all disputes, grievances, demands, causes of action or controversies whatsoever
(including but not limited to tort and contract claims, and claims upon any law,
statute, order or regulation) (hereinafter "Claims"), arising under, out of, in
connection with or in relation to (i) Executive's employment with the Company;
(ii) questions of arbitrability under this Agreement; (iii) any relationship
between Executive and the Company before, at the time of entering, during the
term of, upon or after expiration or determination of this Agreement; or (iv)
the performance, interpretation and breach of this Agreement, shall, upon
written demand of either party to this Agreement, be finally determined and
settled by arbitration in Los Angeles, California, in accordance with the then
existing JAMS/Endispute Arbitration Rules and Procedures for Employment
Disputes, and judgment upon the award may be entered in any court having
jurisdiction thereof. The prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in the arbitration, in
addition to any other relief, including equitable and injunctive relief, that
may be granted. This dispute resolution process shall survive the termination of
Executive's employment.
15. Binding on Successors. This Agreement shall be binding upon and inure
---------------------
to the benefit of the Company, the Executive and their respective successors,
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
16. Governing Law. This Agreement is being made and executed in and is
-------------
intended to be performed in the State of California and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of California, without regard to the conflict of laws principles
thereof.
17. Validity. The invalidity or unenforceability of any provision or
--------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
18. Notices. Any notice, request, claim, demand, document and other
-------
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company, addressed to its principal offices to the
attention of President, at 3500 Sepulveda Blvd., Manhattan Beach, California
90266;
(b) If to the Executive, to him at the address set forth below under
this signature; or at any other address as any party shall have specified by
notice in writing to the other parties.
19. Entire Agreement. As of the Effective Date, the terms of this
----------------
Agreement are intended by the parties to be the final expression of their
agreement with respect to the employment of the Executive by the Company and may
not be contradicted by evidence of any prior or contemporaneous agreement, and
the previously existing employment agreement between the Executive and the
Company is hereby terminated and superseded by this Agreement as of the
Effective Date. The parties further intend that this Agreement shall constitute
the complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any proceeding to vary the terms of this
Agreement.
5
<PAGE>
20. Amendments; Waivers. This Agreement may not be modified,
-------------------
amended, or terminated except by an instrument in writing and signed by the
Executive and the Company.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date and year first above written.
EXECUTIVE:
____________________________________
STEVEN JAFFE
____________________________________
Street Address
____________________________________
City State Zip
COMPANY:
CT OPERATING PARTNERSHIP, L.P.
a California limited partnership
By: CENTER TRUST,
INC., a Maryland corporation
By:_________________________
Its:________________________
Center Trust, Inc.,
A Maryland corporation
By:__________________________________
Its:_________________________________
6
<PAGE>
EXHIBIT 10.27
Employment Agreement for Joseph Paggi
This Employment Agreement (this "Agreement") is made and entered as of the
1st day of Januaryl, 1998, ("Effective Date") by and between CenterTrust, Inc.
and CT Operating Partnership, L.P. (collectively the "Company"), and Joseph
Paggi ("Executive").
The Company and Executive previously entered into that certain employment
agreement dated as April 27, 1998 (the "Prior Agreement"). The parties agree
that the Prior Agreement (except for the terms of Paragraph 8 thereof regarding
the granting and vesting of certain Restricted Stock) is terminated as of the
Effective Date.
1. Positions and Duties. The Company hereby employs Executive as the
--------------------
Senior Vice President of Assets during the "Term of Employment" (as hereinafter
defined) of this Agreement, with powers and duties consistent with such
position, including the management of the Company's properties and such
additional or different duties as may be required by the President and/or the
Board of Directors ("the "Board") of CenterTrust, Inc. ("Duties"). The Duties
shall be generally performed at the offices of the Company where located from
time to time. In addition, the Duties may be performed by Executive from time
to time on a temporary travel basis at such other locations as Company shall
reasonably request consistent with its reasonable business needs. Executive
shall report to the President of the Company and to the Board. Executive shall
be employed full time and shall devote such time, attention, and energies to the
business of the Company as are reasonably necessary to satisfy Executive's
responsibilities and duties hereunder. Executive shall use his good faith best
efforts to promote the Company's products and services.
2. Term. The term of this Agreement will commence on the Effective Date
----
and shall continue until December, 2000 (the "Initial Term") unless earlier
terminated as provided in Section 9. At the expiration of each year of the
Initial Term and each anniversary thereafter, the term of this Agreement shall
automatically be extended for an additional one year (the "Extension Term")
unless either party shall have given written notice to the other party at least
sixty (60) days prior to the end of the Initial Term or the Extension Term, as
the case may be, that it does not desire to extend the term of this Agreement.
During any Extension Term, this Agreement may be earlier terminated as provided
in Section 9. References herein to either the "Term" or the "Term of Employment"
of this Agreement shall refer to both such Initial Term and any Extension Term.
3. Salary. Commencing on the Effective Date, and for the duration of the
------
Term of Employment, the Company shall pay to Executive a fixed annual salary in
the amount of Two Hundred Thousand Dollars ($200,000) per year, payable in equal
installments, no less frequently than monthly, in accordance with the Company's
prevailing payroll policy (the "Fixed Annual Salary"). The Fixed Annual Salary
of Executive shall be reviewed on an annual basis and may be increased, if
appropriate, on an annual basis.
In addition to the Fixed Annual Salary, Executive may be eligible for
a bonus (the "Bonus"), at the sole discretion of the President and the Board or
any compensation or similar committee thereof. Any Bonus may be based on
factors determined by the Company in its sole discretion from time to time. Any
Bonus, to the extent awarded by the Company at the end of each fiscal year,
shall be earned and paid on an annual basis in accordance with Company practice.
The amount of Bonus for the calendar year ended December 31, 1999 paid to
Executive shall be based on several factors at the discretion of the Company
which shall include the substantial achievement of the goals (e.g. completion of
the recapitalization program, achieving stated FFO targets, etc.) set forth in
that certain Business Plan dated as of July 9, 1999 and may include such other
factors related to Executive's performance and that of the Company and the Board
deems appropriate. For the years after 1999 the Company may pay Executive a
Bonus in an amount to be determined by the Company in its sole discretion.
Any Bonus, to the extent awarded by the Company at the end of each
fiscal year, shall be earned and paid on an annual basis in accordance with
Company practice.
4. Expenses. In accordance with Company policies, the Company will
--------
promptly reimburse Executive for all reasonable travel and other business
expenses paid or incurred by Executive in the performance of his duties
hereunder. The Company shall promptly reimburse the Executive for all reasonable
expenses incurred by the Executive with respect to professional memberships and
continuing education upon evidence of receipt in accordance with Company
policies.
5. Incentive Compensation. As a further inducement to Executive, the
----------------------
Company has concurrently herewith entered into a Restricted Stock Agreement with
Executive whereby it grants Executive Fifty Thousand (50,000) shares of
<PAGE>
Restricted Stock of the Company (as defined in the Restricted Stock Agreement)
(the "Incentive Stock"), subject to certain vesting requirements.
The vesting requirement is that at the end of each calendar year, upon
the date that the Board of Directors determines the Bonus as set forth in
paragraph 3 above, the Board shall make a similar determination as to the
success of Executive in reaching corporate goals and based upon such
determination the Board in its sole discretion shall approve the vesting of up
to one third of the Incentive Stock as it deems appropriate ("Performance
Vesting Component").
Notwithstanding anything to the contrary contained in this Agreement,
regardless of the failure of Executive to satisfy the Performance Vesting
Component, one hundred percent (100%) of the Incentive Stock shall be fully
vested on the last day of the seventh year subsequent to the Effective Date
provided that the Executive is employed by the Company on such date.
Further, notwithstanding anything contained herein to the contrary, in
the event that Executive's employment is terminated for any reason, Executive
shall fully vest in one hundred percent (100%) of the Incentive Stock provided
that Executive is at least 66 years old on such date of termination.
Dividends on the vested and unvested Incentive Stock shall be paid to
Executive on that date when dividends are paid to shareholders.
The Company and Executive agree that in consideration of entering into
this Agreement, the 100,000 stock options issued to Executive pursuant to the
Prior Agreement are hereby cancelled and of no further force or effect.
Notwithstanding anything contained herein to the contrary,
6. Executive Benefits. During the Term of Employment, Executive shall be
------------------
entitled to the following benefits (collectively, the "Executive Benefits"):
(a) Executive shall be entitled to four weeks of vacation per year in
accordance with the Company's normal vacation policies. Such vacation shall be
taken at such time or times during the applicable year as may be determined by
Executive subject to the Company's reasonable business needs.
(b) Executive and his eligible dependents shall be included in group
hospital, surgical, medical and dental benefit plans of the Company in
accordance with Company policies.
(c) Except as otherwise provided herein, Executive shall be entitled
to participate in any profit-sharing, stock option, pension, 401(k) plans, or
other plans, benefits or policies generally available to other currently
existing officers of the Company on the terms generally applicable to such
officers, if and to the extent that Executive is eligible to participate in
accordance with the provisions of any such plans or benefits; provided, however,
-------- -------
that any such benefits or plans are not duplicative of those provided in this
Section 6. Nothing in this Section 6(c) is intended or shall be construed to
require the Company to institute any plan or benefits, or to maintain or refrain
from amending or terminating any such existing plan or benefits.
(d) The Company shall provide Executive with an automobile allowance of
five hundred dollars ($500) per month.
7. Reserved.
8. Reserved
9. Termination.
-----------
(a) The Company shall have the unilateral right, at its election and
in its sole discretion, to terminate Executive's employment at any time during
the Term of Employment so long as "good cause" (defined below) exists. Should
the
2
<PAGE>
Company terminate the Term of Employment in accordance with the "good cause"
provisions of this Section 9(a), notwithstanding anything herein to the
contrary, the Company shall pay to Executive only his Fixed Annual Salary
through the date of termination, any bonus which Executive has been awarded as
of the date of termination but which has not yet been paid to him and any other
vested benefits or rights. All other benefits provided for in this Agreement and
compensation payable under this Agreement shall cease on such date of
termination of employment except to the extent accrued as of such date. For
purposes of this Agreement, the Company shall have "good cause" to terminate the
Executive's employment hereunder upon a finding by the President of the Company
or the Board that the Executive has (1) engaged in acts or omissions with
respect to the Company which constitute intentional misconduct or a knowing
violation of law; (2) personally received a benefit in money, property or
services from the Company or from another person dealing with the Company (in
excess of de minimis amounts) in violation of applicable law; (3) breached his
confidentiality covenant with the Company; (4) breached his fiduciary duty of
loyalty to the Company under applicable law; (5) engaged in gross negligence in
the performance of his duties to the Company; (6) failed to satisfactorily
perform services for the Company which have been reasonably requested of him by
the Board or the President of the Company and which are consistent with the
terms of the Agreement; or (7) failed to achieve the performance goals
reasonably set forth for Executive from time to time; provided, however, that
-------- -------
"good cause" shall not exist with respect to items (5), (6) and (7) unless and
until the Company provides the Executive with (a) at least fifteen (15) days
prior written notice of its intention to terminate his employment for good
cause, and (b) a reasonable opportunity and a reasonable period of time to cure
any curable acts or omissions on which the finding of good cause is based. If
the Executive cures the acts or omissions on which the finding of good cause is
based during the fifteen- (15) day period, the Company shall not have good cause
to terminate the Executive's employment hereunder. Notwithstanding the forgoing,
no notice prior to "good cause" termination shall be required from the Company
to the Executive with respect to items (1) through (4).
(b) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive's employment with the Company may be
terminated by the Company at any time, for any reason, with or without cause,
without liability except with respect to the payments provided for by this
Section 9(b). Accordingly, the Company shall have the right, at its election,
to shorten the Term of Employment without "good cause," cause of any kind, or
for any reason or no reason whatsoever, by giving Executive at least thirty (30)
days written notice of its intention to shorten the Term of Employment in which
event the Company shall pay to Executive, in cash, not later than the effective
date of such termination, a sum equal to 24 months of Executive's Fixed Annual
Salary and two years of Bonus payments (deemed for this purpose to be two times
the prior year's bonus), less withholding for applicable taxes.. In addition,
the Incentive Stock granted pursuant to Section 5 above shall immediately and
fully vest as follows: In the event that Executive's employment is terminated
under the provisions of this Section prior to the last day of the first year
subsequent to the Effective Date, 100% of the Incentive Stock shall fully vest
without condition; during the second calendar year subsequent to the Effective
Date, two- thirds of the Incentive Stock shall immediately vest without
condition; and during the third calendar year subsequent to the Effective Date,
one-third of the Incentive Stock shall immediately and fully vest without
condition; after the last day of the third calendar year there shall be no
vesting of the Incentive Stock. In the event that the Executive's employment is
terminated after the completion of a calendar year but before the Board has
determined the appropriate vesting of the Incentive Shares pursuant to the
Performance Vesting Component set forth above, the Executive shall immediately
vest in one-third of the Incentive Stock representing the Performance Vesting
for the prior calendar year. Further, any options and Restricted Stock other
than the Incentive Stock then held by Executive shall immediately and fully
vest without condition. All other benefits provided for in this Agreement and
compensation payable in this Agreement shall cease on such date of termination
of employment except to the extent accrued as of such date.
(c) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his election,
to terminate the Term of Employment in the event of the "Company's Material
Breach," which shall consist of the Company's failure or refusal to comply with
a material term of this Agreement. The Company and Executive hereby agree that
the following shall constitute a "failure or refusal to comply with a material
term of this Agreement": the Company's failure or refusal to comply with the
provisions of Sections 3, 4, 5, or 6 hereof unless such failure or refusal to
comply arises out of a bona fide dispute. In order to terminate the Term of
Employment, Executive shall be required to give written notice specifying the
claimed breach and the Company shall have failed to correct the claimed breach,
if such breach is curable, or alter the objectionable pattern of conduct
specified in the applicable written notice, thirty (30) days (ten (10) days in
the case of a breach based upon non-payment of compensation due under this
Agreement) after the receipt of the applicable notice. Executive shall also have
the right to terminate the Term of Employment in the event of (i) any removal of
Executive from the office of Senior Vice President of Assets without good cause
(as defined in Section 9(a)) and without Executive's prior written consent, or
(ii) any material decrease in Executive's authority or responsibilities as
Senior Vice President of Assets without Executive's prior written consent, or
(iii) a "Change of Control" (as defined below).Should Executive terminate the
Term of
3
<PAGE>
Employment in accordance with the provisions of this Section 9(c), the Company
shall pay to Executive, in cash, not later than the effective date of such
termination, sum equal to 24 months of Executive's Fixed Annual Salary and two
years of Bonus payments (deemed for this purpose to be two times the prior
year's bonus), less withholding for applicable taxes. In addition, the Incentive
Stock granted pursuant to Section 5 above shall immediately and fully vest as
follows: In the event that Executive's employment is terminated under the
provisions of this Section prior to the last day of the first year subsequent to
the Effective Date, 100% of the Incentive Stock shall fully vest without
condition; during the second calendar year subsequent to the Effective Date,
two-thirds of the Incentive Stock shall immediately vest without condition; and
during the third calendar year subsequent to the Effective Date, one-third of
the Incentive Stock shall immediately and fully vest without condition; after
the last day of the third calendar year there shall be no vesting of the
Incentive Stock. In the event that the Executive's employment is terminated
after the completion of a calendar year but before the Board has determined the
appropriate vesting of the Incentive Shares pursuant to the Performance Vesting
Component set forth above, the Executive shall immediately vest in one-third of
the Incentive Stock representing the Performance Vesting for the prior calendar
year. Further, any Options and any Restricted Stock other than Incentive Stock
then held by Executive shall immediately and fully vest without condition. All
other benefits provided for in this Agreement and compensation payable under
this Agreement shall cease on such date of termination of employment except to
the extent accrued as of such date. In the event the Company elects to not renew
this Agreement as specified in Section 2 above and Executive elects to terminate
his employment with the Company within 60 days of receipt of such notice of
nonrenewal, such termination shall be deemed to be a termination pursuant to
this subparagraph (c) and Executive shall be entitled to the severance benefits
set forth in this subparagraph (c).
"Change of Control" shall mean an event whereby Executive does not remain
as an executive officer of the Company and associated therewith: (1) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934, as amended, (the "Exchange Act")) other than Prometheus
Western Retail, LLC or LF Strategic Realty Investors LP. or their affiliates
(collective, "Lazard Entities") or any employee benefit plan maintained by the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act, except that a person has the right to acquire, whether such
right is exercisable immediately or only upon the passage of time), directly or
indirectly, of more than 40% of the total voting power of the voting stock of
the Company; (2) the Company consolidates with or merges with or into another
corporation or sells, assigns, conveys, transfers, leases or otherwise disposes
of all substantially all of its assets to any person, or any corporation
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding voting stock of the Company
is changed into or exchanged for cash, securities or other property, other than
any such transactions where (A) the outstanding voting stock of the Company is
changed into or exchanged for (x) voting stock of the surviving or transferee
corporation or (y) cash, securities (whether or not including voting stock) or
other property, and (B) the holders of the voting stock of the Company
immediately prior to such transaction own, directly or indirectly, not less than
60% of the voting power of the voting stock of the surviving corporation
immediately after such transaction; or (3) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
the Company (which individuals shall be deemed to include any "new" directors
whose election or appointment by such Board or whose nomination for election by
the stockholders of the Company was approved by a vote of at least 66 2/3% of
the directors then still in office who were either directors at the beginning of
such period or whose election, appointment or nomination was previously so
approved) ceased for any reason to constitute a majority of the Board of the
Company then in office; or (4) the Company is liquidated or dissolved or adopts
a plan of liquidation.
(d) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, Executive shall have the right, at his election,
to shorten the Term of Employment for any or no reason, other than due to
Company's Material Breach, by giving the Company at least sixty (60) days
written notice of his intention to terminate the Term of Employment. Should
Executive terminate the Term of Employment in accordance with the provisions of
this Section 9(d), the Company shall pay to Executive only his Fixed Annual
Salary through the date of termination and any bonus which Executive has been
awarded as of the date of termination but which has not yet been paid to him.
All other benefits provided for in this Agreement and compensation payable under
this Agreement shall cease on such date of termination of employment except to
the extent accrued as of such date.
(e) Notwithstanding anything to the contrary contained in this
Agreement, including Section 2, the Term of Employment shall terminate
automatically upon Executive's death or upon Executive's physical or mental
disability or infirmity, which in the opinion of a competent physician selected
by the Company, renders the Executive unable to perform the essential functions
of his position under this Agreement for more than 90 days in any 180 day
period. Upon the termination of the Term of Employment in accordance with the
provisions of this Section 9(e), the Company shall pay to Executive (or, in the
4
<PAGE>
event of his death, his designated beneficiary or estate) only his Fixed Annual
Salary through the date of termination and any bonus which Executive has been
awarded as of the date of termination but which has not yet been paid to him.
All other benefits provided for in this Agreement and compensation payable under
this Agreement shall cease on such date of termination of employment except to
the extent accrued as of such date.
(f) Executive hereby acknowledges and agrees that all personal
property and equipment furnished to or prepared by Executive in the course of or
incident to his employment by the Company belongs to the Company and shall be
promptly returned to the Company immediately upon the termination of this
Agreement. Upon the termination of Executive's employment under any subsection
of this Section 9, Executive shall be deemed to have resigned from all offices
and directorships then held with the Company or any affiliate, effective the
date of his termination.
10. Mitigation. The Company and Executive agree that Executive shall
----------
have no duty of mitigation. Accordingly, the parties agree that any
compensation earned by Executive after the date of his termination of employment
hereunder shall not be used to offset any severance or other benefits payable
pursuant to Section 9.
11. Confidential and Proprietary Information.
----------------------------------------
Executive acknowledges that during the course of his employment
hereunder, he has been given and will have access to and be exposed to trade
secrets and confidential information in written, oral, electronic and other form
regarding the Company and its business, products and employees, including,
without limitation, leasing plans; development plans; acquisition strategies;
underwriting process; advertising and sales materials; research, and related
materials; vendor and industry information; practices, processes, techniques,
methods, and know-how; the identities of the Company's tenants, customers and
potential customers (hereinafter referred to collectively as "Customers"); and
the Company's business methods, practices, strategies, forecasts, pricing and
marketing techniques. Executive expressly agrees to use such information only
for purposes of carrying out his duties for the Company and not for any other
purpose. Except as required by law, Executive will not otherwise disclose such
information, directly or indirectly, to any third party or entity.
All trade secrets, reports, manuals, and other ideas and materials
developed by Executive during the period of his employment, either solely or in
collaboration with others, which relate to the actual or anticipated business of
the Company, which result from or are suggested by any work Executive may do for
the Company, (collectively, the "Developments") shall be the sole and exclusive
property of the Company. Executive agrees to assign to the Company his entire
right and interest in any such Development, and will execute any documents in
connection therewith that the Company may reasonably request.
Executive acknowledges that the provisions of this Section 11 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 11 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation. Accordingly, Executive agrees
that if he violates the provisions of this Section 11, in addition to any other
remedy which may be available at law or in equity, the Company shall be entitled
to specific performance and injunctive relief, without posting bond or other
security, and without the necessity of proving actual damages.
12. Non-Solicitation. During the term of this Agreement, Executive
----------------
shall not divert or subvert any Company opportunity for continued existing
business or prospective business to his own benefit or for the benefit of any
third parties, nor shall Executive induce or attempt to induce any Customer to
reduce its business with the Company. Additionally, during the term of this
Agreement and for one (1) year after its termination, Executive shall not,
directly or indirectly, either of himself or for any other person, firm, company
or corporation, call upon, solicit, divert, take away or accept business from,
or attempt to solicit, divert, take away or accept business from any of the
Customers of the Company upon whom he called or whom he solicited or to whom he
catered or with whom he became acquainted after entering the employ of the
Company. Executive further acknowledges that, during the term of this Agreement
and for one (1) year after its termination, he shall not, directly or
indirectly, offer employment to, seek to hire, induce, solicit, encourage, or
attempt to induce any professional employee of the Company to seek or accept
employment with any other person or entity. Executive acknowledges that even an
unsuccessful solicitation of the Company's employees will negatively impact the
morale, commitment and performance of the employees in question, and that any
such solicitation may cause substantial financial loss to the Company.
Executive acknowledges that the provisions of this Section 12 are
reasonable and necessary to protect the legitimate interests of the Company, and
any violation of this Section 12 will result in irreparable injury to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such violation would not be reasonable or adequate
compensation the Company for such a violation. Accordingly, Executive agrees
that if he violates the provisions of this
5
<PAGE>
Section 12, in addition to any other remedy which may be available at law or in
equity, the Company shall be entitled to specific performance and injunctive
relief, without posting bond or other security, and without the necessity of
proving actual damages.
13. Reserved
14. Disputes. Except as set forth in Sections 11 and 12 herein, any
--------
and all disputes, grievances, demands, causes of action or controversies
whatsoever (including but not limited to tort and contract claims, and claims
upon any law, statute, order or regulation) (hereinafter "Claims"), arising
under, out of, in connection with or in relation to (i) Executive's employment
with the Company; (ii) questions of arbitrability under this Agreement; (iii)
any relationship between Executive and the Company before, at the time of
entering, during the term of, upon or after expiration or determination of this
Agreement; or (iv) the performance, interpretation and breach of this Agreement,
shall, upon written demand of either party to this Agreement, be finally
determined and settled by arbitration in Los Angeles, California, in accordance
with the then existing JAMS/Endispute Arbitration Rules and Procedures for
Employment Disputes, and judgment upon the award may be entered in any court
having jurisdiction thereof. The prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in the arbitration, in
addition to any other relief, including equitable and injunctive relief, that
may be granted. This dispute resolution process shall survive the termination
of Executive's employment.
15. Binding on Successors. This Agreement shall be binding upon and inure
---------------------
to the benefit of the Company, the Executive and their respective successors,
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
16. Governing Law. This Agreement is being made and executed in and is
-------------
intended to be performed in the State of California and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of California, without regard to the conflict of laws principles
thereof.
17. Validity. The invalidity or unenforceability of any provision or
--------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
18. Notices. Any notice, request, claim, demand, document and other
-------
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company, addressed to its principal offices to the
attention of President, at 3500 Sepulveda Blvd., Manhattan Beach, California
90266;
(b) If to the Executive, to him at the address set forth below under
this signature; or at any other address as any party shall have specified by
notice in writing to the other parties.
19. Entire Agreement. As of the Effective Date, the terms of this
----------------
Agreement are intended by the parties to be the final expression of their
agreement with respect to the employment of the Executive by the Company and may
not be contradicted by evidence of any prior or contemporaneous agreement, and
the previously existing employment agreement between the Executive and the
Company is hereby terminated and superseded by this Agreement as of the
Effective Date. The parties further intend that this Agreement shall constitute
the complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any proceeding to vary the terms of this
Agreement.
6
<PAGE>
20. Amendments; Waivers. This Agreement may not be modified,
-------------------
amended, or terminated except by an instrument in writing and signed by the
Executive and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
EXECUTIVE:
--------------------------------------
JOSEPH PAGGI
--------------------------------------
Street Address
--------------------------------------
City State Zip
COMPANY:
CT OPERATING PARTNERSHIP, L.P.
a California limited partnership
By: CENTER TRUST,
INC., a Maryland corporation
By:___________________________
Its:__________________________
7
<PAGE>
CENTER TRUST, INC. EXHIBIT 21.1
LIST OF SUBSIDIARIES
CENTERTRUST RETAIL PROPERTIES FINANCE III, LLC (Nevada)
KING MINERAL, LLC (California)
CT FINANCE PARTNERSHIP, LP. (California)
CT RETAIL PROPERTIES FINANCE I, LLC (Delaware)
CT RETAIL PROPERTIES FINANCE II, LLC (Delaware)
CT RETAIL PROPERTIES FINANCE III, LLC (Delaware)
CT RETAIL PROPERTIES FINANCE IV, LLC (Delaware)
CT RETAIL PROPERTIES FINANCE V, LLC (Delaware)
CT RETAIL PROPERTIES FINANCE VI, LLC (Delaware)
CT RETAIL PROPERTIES FINANCE VII, LLC (Delaware)
CT OPERATING PARTNERSHIP, LP (California)
CT FINANCE, INC. (Delaware)
HAAGEN CENTRAL (California)
VERMONT-SLAUSON SHOPPING CENTER, LTD (California)
WILLOWBROOK CENTER PARTNERSHIP (California)
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-07673 of Center Trust, Inc. (the "Company") on Form S-3 and Registration
Statement No. 33-73306 of the Company on Form S-8 of our report dated March 22,
2000, appearing in this Annual Report on Form 10-K of the Company for the year
ended December 31, 1999.
/s/ Deloitte & Touche
March 28, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,204
<SECURITIES> 0
<RECEIVABLES> 12,267
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,030,689
<DEPRECIATION> 143,610
<TOTAL-ASSETS> 955,579
<CURRENT-LIABILITIES> 0
<BONDS> 683,016
0
0
<COMMON> 266
<OTHER-SE> 227,288
<TOTAL-LIABILITY-AND-EQUITY> 955,579
<SALES> 0
<TOTAL-REVENUES> 144,887
<CGS> 0
<TOTAL-COSTS> 43,008
<OTHER-EXPENSES> 14,089<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,649
<INCOME-PRETAX> 33,141
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (6,483)
<CHANGES> 0
<NET-INCOME> 26,657
<EPS-BASIC> 1.04
<EPS-DILUTED> 1.04
<FN>
<F1>Includes depreciation and amortization of $21,217, $4,786 allocated to minority
interests, $8,440 in G&A costs and $23,991 gain on sale of assets.
</FN>
</TABLE>
