EXHIBIT 10.10
FIRST AMENDMENT TO
ADVISORY AGREEMENT
THIS FIRST AMENDMENT TO ADVISORY AGREEMENT is made as of May ___,
1997, by and between WESTFIELD AMERICA, INC., a Missouri corporation (formerly
known as CenterMark Properties, Inc.) ("Owner"), and WESTFIELD U.S. ADVISORY,
L.P., a Delaware limited partnership ("Advisor").
W I T N E S S E T H:
WHEREAS, Owner and Advisor are parties to that certain Advisory
Agreement (the "Original Advisory Agreement"), dated as of July 1, 1996; and
WHEREAS, Owner and Advisor desire to amend the Original Advisory
Agreement in the manner hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Owner and Advisor agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the respective meanings set forth in the Original Advisory Agreement.
2. AMENDMENT TO SECTION 3.1. Section 3.1 of the Original Advisory
Agreement is hereby amended by deleting such section in its entirety and
substituting the following therefor:
"3.1. ADVISORY FEE:
The Owner shall pay to the Advisor an annual Advisory
Fee equal to the lesser of (a) .55% of the Net Equity Value
of the Owner for such annual period, or (b) 25% of the
annual "Funds from Operations" (as hereinafter defined) in
excess of the "Advisory FFO Amount" (as hereinafter
defined). The Advisory Fee shall be paid in U.S. Dollars
and shall be payable quarterly in arrears at the end of each
calender quarter based on the budgeted annual Advisory Fee
for the then calender year, subject to final adjustment
within 90 days after the end of each calender year. The
Advisory Fee shall not be payable for the period through
December 31, 1997. The first payment on account of the
Advisory Fee shall be made on March 31, 1998 for the
quarterly period from January 1, 1998 through March 31,
1998.
"Funds from Operations" means net income (loss) (computed in
accordance with generally accepted accounting
principles ("GAAP")) excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for
consolidated partnerships and joint ventures. Additionally, the
Company subtracts the portion of the management fee which
pertains to leasing commissions which are capitalized in
accordance with GAAP. Funds from Operations shall be calculated
before payment of or deduction for the Advisory Fee.
"Advisory FFO Amount" means, as of the date hereof,
$_____________, which amount shall be subject to adjustment
whenever the Owner issues additional common stock so as to be
equal to the sum of the then applicable Advisory FFO Amount and
the "FFO Adjustment Factor" (as hereinafter defined). The FFO
Adjustment Factor shall be equal to 103% (except that 100% shall
be used with respect to common stock issued under the Owner's
dividend reinvestment plan) multiplied by (a) a fraction the
numerator of which is the aggregate "Funds from Operations
Available for Common Stock" (as hereinafter defined) of the Owner
for each of the four full calendar quarters immediately preceding
the date of the new issuance and the denominator of which is the
aggregate number of shares of common stock (on a fully diluted
basis as required by GAAP) of the Owner then outstanding
immediately prior to the date of the new issuance multiplied by
(b) the number of shares of common stock issued in the new
issuance (on a fully diluted basis as required by GAAP). "Funds
From Operations Available for Common Stock" means Funds from
Operations less (i) the Advisory Fee payable for the applicable
four full calendar period, and (ii) dividends paid or accrued on
the Owner's preferred shares during the applicable four full
calendar quarter period."
3. AMENDMENT TO SECTION 3.3. Section 3.3 of the Original Advisory
Agreement is hereby amended by (i) deleting the period at the end of Section
3.3(b) and substituting "; and" therefor and (ii) inserting the following as
new subparagraph (c):
"(c) all costs of preparing and filing required reports with the
Securities and Exchange Commission, the costs payable by the
Owner to any transfer agent and registrar in connection with the
listing and trading of the Owner's stock on the New York Stock
Exchange, the fees payable by the Owner to the New York Stock
Exchange in connection with its listing, costs of preparing,
printing and mailing the Owner's annual report to its
shareholders and proxy materials with respect to any annual
meeting of the shareholders of the Owner."
2
4. AMENDMENT TO SECTION 4.1. Section 4.1 of the Original Advisory
Agreement is hereby amended by deleting subsections A and B thereof in their
entirety and substituting the following therefor:
"A. TERM. From and after the date of the First Amendment to
Advisory Agreement, dated as of May ___, 1997, between Owner and
Manager, the term of this Agreement shall be for an initial term of
three years expiring on May ___, 2000. Thereafter, until this
Agreement is terminated in accordance with its terms, this Agreement
shall be deemed renewed automatically each year for an additional one
year period unless the trustee (the "WAT Trustee") of the Westfield
America Trust, an Australia publicly listed property trust, and 75% of
the Independent Directors (as such term is defined in the Third
Amended and Restated Articles of the Owner) of the Owner's Board of
Directors agree that either (i) there has been unsatisfactory
performance that is materially detrimental to the Owner or (ii) the
fees payable to Advisor are not fair, PROVIDED that Owner shall not
have the right to terminate this Agreement under clause (ii) above if
Advisor agrees to continue to provide advisory services for the
Property at a fee that the WAT Trustee and 75% of the independent
members of the Board have determined to be fair and PROVIDED FURTHER
that the WAT Trustee's agreement with respect to the matters set forth
in clauses (i) or (ii) will only be required if the WAT Trustee is the
owner of 10% or more of the outstanding capital stock of the Owner.
If Owner shall elect not to renew the term of this Agreement at the
expiration of the initial term or any extended term as set forth
above, Owner shall deliver to Advisor prior written notice of Owner's
determination not to renew this Agreement based on the terms set forth
in this subparagraph A not less than 30 days prior to the expiration
of the then existing term. If Owner elects not to renew this
Agreement, Owner shall designate the date, not less than 60 nor more
than 180 days from the date of the notice, on which Advisor shall
cease to provide services hereunder and this Agreement shall terminate
on such date.
B. NON-CURABLE TERMINATING EVENTS. (i) The Owner may terminate
this Advisory Agreement on not less than 30 days written notice to
Advisor upon the occurrence of any of the following events:
(x) the Bankruptcy of Advisor;
(y) an act of fraud, embezzlement or theft constituting a
felony against Owner or its Affiliates which causes it material
injury is perpetrated by Advisor or by Developer or by Manager in
its corporate capacity (as distinguished from the acts of any
employees of such entities which are taken without the approval
or complicity of the Board of Directors of such entities'
managing general partner) under this Agreement, the Management
Agreements, the Development Framework
3
Agreements, any Development Agreement or any Leasing
Agreement; or
(z) an Event of Default (as defined therein) shall have
occurred and be continuing under that certain Pledge
and Security Agreement, dated as of May , 1997, among the
Company and Westland Management, Inc., Westfield
Partners, Inc. and Westland Realty, Inc.
(ii) This Agreement shall terminate if Advisor shall notify Owner
that advisory services shall cease to be one of the principal business
undertakings of Westfield Holdings Limited in the United States,
PROVIDED that this Advisory Agreement shall continue for a period of
180 days after delivery of such notice to Owner if Owner shall be
reasonably satisfied with Advisor's ability to continue providing the
services required hereunder during such period."
5. ASSIGNMENT TO OPERATING PARTNERSHIP. Owner has advised Advisor
that it intends to form an operating partnership (the "Operating
Partnership") in which Owner or its wholly-owned subsidiary will be the sole
general partner and Owner or its subsidiaries will be the initial limited
partners. Following such formation, Owner intends to transfer all or
substantially all of its assets to the Operating Partnership and to conduct
substantially all of its operations through the Operating Partnership.
Advisor agrees that, following such formation and transfer, its obligations
under this Agreement will apply to both the Operating Partnership and the
Owner.
6. RATIFICATION. Except as amended hereby, the Original Advisory
Agreement is hereby ratified and remains in full force and effect.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Amendment may be detached
from any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Amendment
identical in form hereto but having attached to it one more additional signature
pages.
8. EFFECTIVE DATE. This Amendment shall be effective as of the
closing of the initial public offering of common stock of the Owner pursuant to
its Registration Statement on Form S-11 (No. 333-22731).
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
OWNER:
WESTFIELD AMERICA, INC.
----------------------------------
Name:
Title:
ADVISOR:
WESTFIELD U.S. ADVISORY, L.P.
By: Westfield Services, Inc.
a general partner
By:
-------------------------
Name:
Title:
5
