-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kw6NHaCK+u3LJv9TEd7cBGBHaIIpB7yvIPO+adBc6ybVjii22qCqLRiVo2qWfE5q FZLdQh/7+R+Q7HfU4fFqqA== 0000893750-99-000665.txt : 19991210 0000893750-99-000665.hdr.sgml : 19991210 ACCESSION NUMBER: 0000893750-99-000665 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19991209 GROUP MEMBERS: COMMONWEALTH ATLANTIC DEVELOPMENT INC. GROUP MEMBERS: COMMONWEALTH ATLANTIC HOLDING I INC. GROUP MEMBERS: COMMONWEALTH ATLANTIC LAND I INC. GROUP MEMBERS: COMMONWEALTH ATLANTIC LAND II INC. GROUP MEMBERS: COMMONWEALTH ATLANTIC LAND III INC. GROUP MEMBERS: COMMONWEALTH ATLANTIC LAND V INC. GROUP MEMBERS: COMMONWEALTH ATLANTIC OPERATING PROPERTIES INC. GROUP MEMBERS: COMMONWEALTH ATLANTIC PROPERTIES INC. GROUP MEMBERS: COMMONWEALTH ATLANTIC PROPERTIES INVESTORS TRUST GROUP MEMBERS: LAZARD FRERES & CO. LLC GROUP MEMBERS: LAZARD FRERES REAL ESTATE INVESTORS L.L.C. GROUP MEMBERS: LAZARD FRERES REAL ESTATE INVESTORS LLC GROUP MEMBERS: LF STRATEGIC REALTY INVESTORS L.P. GROUP MEMBERS: PROMETHEUS AAPT HOLDINGS, L.L.C. GROUP MEMBERS: RICHMOND LAND CORPORATION SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BRANDYWINE REALTY TRUST CENTRAL INDEX KEY: 0000790816 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 232413352 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-42789 FILM NUMBER: 99771428 BUSINESS ADDRESS: STREET 1: 14 CAMPUS BLVD STREET 2: STE 100 CITY: NEWTOWN SQUARE STATE: PA ZIP: 19073 BUSINESS PHONE: 6103255600 MAIL ADDRESS: STREET 1: TWO GREENTREE CENTRE STREET 2: SUITE 100 CITY: MARLTON STATE: NJ ZIP: 08053 FORMER COMPANY: FORMER CONFORMED NAME: LINPRO SPECIFIED PROPERTIES DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LAZARD FRERES REAL ESTATE INVESTORS LLC CENTRAL INDEX KEY: 0001042593 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 30 ROCKEFELLER PLAZA STREET 2: 63RD FL CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2126326000 MAIL ADDRESS: STREET 1: 30 ROCKEFELLER PLAZA STREET 2: 63RD FL CITY: NEW YORK STATE: NY ZIP: 10020 SC 13D/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO SCHEDULE 13D Under the Securities Exchange Act of 1934 BRANDYWINE REALTY TRUST (Name of Issuer) Common Shares, par value $0.01 per share (Title of Class of Securities) 105368203 (CUSIP Number) Scott D. Hoffman, Esq. Marjorie L. Reifenberg, Commonwealth Atlantic Lazard Freres & Co. LLC Esq. Properties Inc. 30 Rockefeller Plaza Lazard Freres Real Commonwealth Atlantic New York, NY 10020 Estate Investors L.L.C. Operating Properties Inc. (212) 632-6000 LF Strategic Realty Commonwealth Atlantic Investors L.P. Land I Inc. Prometheus AAPT Commonwealth Atlantic Holdings, L.L.C. Land II Inc. Commonwealth Atlantic Commonwealth Atlantic Properties Investors Land III Inc. Trust Commonwealth Atlantic 30 Rockefeller Plaza Land V Inc. New York, NY 10020 Richmond Land Corporation (212) 632-6000 Commonwealth Atlantic Holding I Inc. Commonwealth Atlantic Development Inc. 66 Canal Center Plaza, 7th Floor Alexandria, VA 23219 with a copy to: Mario Ponce, Esq. Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 (212) 455-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 17, 1999 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box /_/. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act. (Continued on following pages) -2- SCHEDULE 13D CUSIP No. 105368203 Page 3 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Lazard Freres & Co. LLC 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York 7 SOLE VOTING POWER NUMBER OF SHARES 4,107,143 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY None EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 4,107,143 WITH 10 SHARED DISPOSITIVE POWER None 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,107,143 -3- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% 14 TYPE OF REPORTING PERSON OO (limited liability company) -4- SCHEDULE 13D CUSIP No. 105368203 Page 5 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Lazard Freres Real Estate Investors L.L.C. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York 7 SOLE VOTING POWER NUMBER OF SHARES 4,107,143 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY None EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 4,107,143 WITH 10 SHARED DISPOSITIVE POWER None 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,107,143 -5- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% 14 TYPE OF REPORTING PERSON OO (limited liability company) -6- SCHEDULE 13D CUSIP No. 105368203 Page 7 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON LF Strategic Realty Investors L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 SOLE VOTING POWER NUMBER OF SHARES 4,107,143 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY None EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 4,107,143 WITH 10 SHARED DISPOSITIVE POWER None 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,107,143 -7- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% 14 TYPE OF REPORTING PERSON PN (limited partnership) -8- SCHEDULE 13D CUSIP No. 105368203 Page 9 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prometheus AAPT Holdings, L.L.C. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 SOLE VOTING POWER NUMBER OF SHARES 1,339,286 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY None EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 1,339,286 WITH 10 SHARED DISPOSITIVE POWER None 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,339,286 -9- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.2% 14 TYPE OF REPORTING PERSON OO (limited liability company) -10- SCHEDULE 13D CUSIP No. 105368203 Page 11 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Commonwealth Atlantic Operating Properties Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Virginia 7 SOLE VOTING POWER NUMBER OF SHARES 2,183,114 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY None EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 2,183,114 WITH 10 SHARED DISPOSITIVE POWER None 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,183,114 -11- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% 14 TYPE OF REPORTING PERSON CO -12- SCHEDULE 13D CUSIP No. 105368203 Page 13 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Commonwealth Atlantic Land II Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Virginia 7 SOLE VOTING POWER NUMBER OF SHARES 506,663 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,183,114 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 506,663 WITH 10 SHARED DISPOSITIVE POWER 2,183,114 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,689,777 -13- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.5% 14 TYPE OF REPORTING PERSON CO -14- SCHEDULE 13D CUSIP No. 105368203 Page 15 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Commonwealth Atlantic Land III Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Virginia 7 SOLE VOTING POWER NUMBER OF SHARES None BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,183,114 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON None WITH 10 SHARED DISPOSITIVE POWER 2,183,114 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,183,114 -15- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% 14 TYPE OF REPORTING PERSON CO -16- SCHEDULE 13D CUSIP No. 105368203 Page 17 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Commonwealth Atlantic Land V Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Virginia 7 SOLE VOTING POWER NUMBER OF SHARES None BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,183,114 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON None WITH 10 SHARED DISPOSITIVE POWER 2,183,114 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,183,114 -17- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% 14 TYPE OF REPORTING PERSON CO -18- SCHEDULE 13D CUSIP No. 105368203 Page 19 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Commonwealth Atlantic Land I Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION Virginia 7 SOLE VOTING POWER NUMBER OF SHARES None BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,183,114 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON None WITH 10 SHARED DISPOSITIVE POWER 2,183,114 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,183,114 -19- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% 14 TYPE OF REPORTING PERSON CO -20- SCHEDULE 13D CUSIP No. 105368203 Page 21 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Richmond Land Corporation 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York 7 SOLE VOTING POWER NUMBER OF SHARES None BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,183,114 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON None WITH 10 SHARED DISPOSITIVE POWER 2,183,114 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,183,114 -21- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% 14 TYPE OF REPORTING PERSON CO -22- SCHEDULE 13D CUSIP No. 105368203 Page 23 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Commonwealth Atlantic Holding I Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION Virginia 7 SOLE VOTING POWER NUMBER OF SHARES 2,183,114 BENEFICIALLY 8 SHARED VOTING POWER LY OWNED BY None EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 2,183,114 WITH 10 SHARED DISPOSITIVE POWER None 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,183,114 -23- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2% 14 TYPE OF REPORTING PERSON CO -24- SCHEDULE 13D CUSIP No. 105368203 Page 25 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Commonwealth Atlantic Properties Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Virginia 7 SOLE VOTING POWER NUMBER OF SHARES 2,767,856 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY None EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 2,767,856 WITH 10 SHARED DISPOSITIVE POWER None 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,767,856 -25- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.7% 14 TYPE OF REPORTING PERSON CO -26- SCHEDULE 13D CUSIP No. 105368203 Page 27 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Commonwealth Atlantic Properties Investors Trust 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION Maryland 7 SOLE VOTING POWER NUMBER OF SHARES None BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,767,856 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON None WITH 10 SHARED DISPOSITIVE POWER 2,767,856 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,767,856 -27- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.7% 14 TYPE OF REPORTING PERSON CO -28- SCHEDULE 13D CUSIP No. 105368203 Page 29 of 58 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Commonwealth Atlantic Development Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /_/ (b) /X/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION Virginia 7 SOLE VOTING POWER NUMBER OF SHARES 78,080 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY None EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 78,080 WITH 10 SHARED DISPOSITIVE POWER None 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 78,080 -29- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2% 14 TYPE OF REPORTING PERSON CO -30- Page 31 of 58 This Amendment No. 1, dated November 17, 1999, is filed by Lazard Freres & Co. LLC, a New York limited liability company ("Lazard"), Lazard Freres Real Estate Investors L.L.C., a New York limited liability company ("LFREI"), LF Strategic Realty Investors L.P., a Delaware limited partnership ("LF Realty"), Prometheus AAPT Holdings, L.L.C., a Delaware limited liability company ("Holdings"), Commonwealth Atlantic Operating Properties Inc., a Virginia corporation ("CAOP"), Commonwealth Atlantic Land II Inc., a Virginia corporation ("CAL"), Commonwealth Atlantic Development Inc., a Virginia corporation ("CADI"), Commonwealth Atlantic Land I Inc., a Virginia corporation ("CAL I"), Commonwealth Atlantic Land III Inc., a Virginia corporation ("CAL III"), Commonwealth Atlantic Land V Inc., a Virginia corporation ("CAL V"), Richmond Land Corporation, a Virginia corporation ("RLC"), Commonwealth Atlantic Holding I Inc., a Virginia corporation ("CAHI"), Commonwealth Atlantic Properties Inc., a Virginia real estate investment trust ("CAPI"), and Commonwealth Atlantic Properties Investors Trust, a Maryland real estate investment trust ("CAPIT", and together with Lazard, LFREI, LF Realty, Holdings, CAOP, CAL, CADI, CALI, CAL III, CAL V, RLC, CAHI and CAPI, the "Reporting Persons"). Capitalized terms used herein but not defined shall have the meanings ascribed thereto in the Schedule 13D dated July 31, 1999 filed by the Reporting Persons (the "Initial Schedule 13D"). This Amendment hereby amends and supplements the Initial Schedule 13D. All items not described herein remain as previously reported in the Initial Schedule 13D. Item 2. Identity and Background (a), (b), (c) and (f). Lazard joins the other Reporting Persons in filing this Statement. Lazard continues to disclaim any beneficial ownership of any of the shares of Common Stock reported in this Statement. The principal business office of Lazard is 30 Rockefeller Plaza, New York, New York, 10020. Lazard, a New York limited liability company, is the managing member of LFREI. Lazard's activities consist principally of financial advisory services. The name, business address and principal occupation or employment of the persons that could be viewed as controlling Lazard are set forth on Schedule 1 hereto and are incorporated by reference herein. The name, business address and principal occupation or employment of the executive officers of the Reporting Persons other than Lazard are set forth on Schedules 2 through 12 hereto and are incorporated by reference herein. Each executive officer listed on Schedules 2 through 12 is a citizen of the United States. (d) and (e). During the last five years, no Reporting Person nor, to the best knowledge of any Reporting Person, any of the persons listed on Schedules 1 through 12 (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) nor (ii) has been a -31- Page 32 of 58 party to any civil proceeding of a judicial or administrative body of competent jurisdiction, and is or was, as a result of such proceeding, subject to a judgment, decree or final order enjoining future violations or, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws. Item 4. Purpose of Transaction LF Realty may contemplate from time to time the disposition of all or a portion of the securities described in this Statement subject to any applicable contractual limitations. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer As previously reported, Holdings owns of record and beneficially 750,000 Preferred Shares. As discussed below, such Preferred Shares have been pledged as collateral under a certain credit facility. Pursuant to the terms of a facility letter, an amendment thereto, and the terms sheet thereto, dated November 17, 1999 (the "Facility"), as of November 17, 1999 a credit facility was made available by Merrill Lynch International ("MLI") to Prometheus Western Retail, L.L.C., a Delaware limited liability company ("Prometheus"), CAPIT, and Prometheus Investment Holding Corp. ("PIHC", and together with Prometheus and CAPIT, the "Borrowers"), jointly and severally as co-borrowers. In accordance with the terms of the Facility, LF Realty and Holdings (together, the "Guarantors," and together with the Borrowers, the "Obligors") entered into a Collateralised Guarantee with MLI (the "Collateralised Guarantee") on November 17, 1999 pursuant to which the Guarantors became co-guarantors jointly and severally of the obligations of the Borrowers arising under the Facility. The total amount available to the Borrowers under the Facility is $44,000,000. In accordance with the terms of the Facility, Holdings, Prometheus, and LF Realty (together, the "Pledgors") also entered into a Custodian Agreement with MLI (the "Custodian Agreement") on November 17, 1999. Pursuant to the terms of the Custodian Agreement and as contemplated by the Facility, MLI set up a collateral account (the "Collateral Account") to hold the 750,000 Preferred Shares owned by Holdings and certain other securities owned by Prometheus and LF Realty. Under the terms of the Custodian Agreement, upon the receipt of specific instructions from the Pledgors, MLI may, if applicable, exercise voting rights with respect to or sell the securities, including the Preferred Shares, deposited with MLI. MLI has a general lien on all securities, including the Preferred Shares, held by it as security for the obligations of the Pledgors under the Custodian Agreement -32- Page 33 of 58 for amounts becoming due or owing for safekeeping and administration. If the Pledgors fail to discharge any of their obligations under the Custodian Agreement when due, MLI is entitled to sell the securities, including the Preferred Shares, held by it and apply the proceeds of such sale towards the discharge of such obligations. Pursuant to the terms of the Facility, the Obligors have pledged in favor of MLI all of Obligors' right, title and interest in and to the securities, including the Preferred Shares held in the Collateral Account and all dividends, distributions and interest on and other proceeds of such securities. During the term of the Facility and until the Obligors' obligations under the Facility have been paid in full (i) none of the monies from time to time standing to the credit of the Collateral Account may be withdrawn, assigned or otherwise disposed of or encumbered except with MLI's prior written consent or as otherwise specifically provided in the Facility and (ii) the Obligors' may not create or have outstanding any call option, pledge, assignment, transfer, hypothecation, mortgage, charge, encumbrance, security interest or lien on or affecting any of the securities, including the Preferred Shares, credited to the Collateral Account except with MLI's prior written consent or as contemplated by the Facility or the Custodian Agreement. The Preferred Shares may be released from the Collateral Account and any pledge to MLI upon a reduction of the total amount available under the Facility by $25,000,000. All references to the Facility, the Collateralised Guarantee and the Custodian Agreement are qualified in their entirety by the full text of such agreements, copies of which are attached hereto as Exhibits 2, 3, 4 and 5 and are incorporated by reference herein. Item 7. Material to be Filed as Exhibits Exhibit 1 Joint Filing Agreement. Exhibit 2 Letter and Terms Sheet Agreement dated as of November 17, 1999 among Prometheus, CAPIT, PIHC, LF Realty, Holdings, MLI and MLIB. Exhibit 3 Amendment to the Letter and Terms Sheet Agreement. Exhibit 4 Collateralised Guarantee dated as of November 17, 1999 among the Guarantors and MLI. Exhibit 5 Custodian Agreement dated as of November 17, 1999 among the Pledgors and MLI. -33- Page 34 of 58 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. LAZARD FRERES & CO. LLC By: /s/ Scott D. Hoffman Name: Scott D. Hoffman Title: Managing Director After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. LAZARD FRERES REAL ESTATE INVESTORS L.L.C. By: /s/ John A. Moore Name: John A. Moore Title: Chief Financial Officer After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. LF STRATEGIC REALTY INVESTORS L.P. By: Lazard Freres Real Estate Investors L.L.C., its general partner By: /s/ John A. Moore Name: John A. Moore Title: Chief Financial Officer -34- Page 35 of 58 After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. PROMETHEUS AAPT HOLDINGS, L.L.C. By: LF Strategic Realty Investors L.P., its sole member By: Lazard Freres Real Estate Investors L.L.C., its general partner By: /s/ John A. Moore Name: John A. Moore Title: Chief Financial Officer After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. COMMONWEALTH ATLANTIC OPERATING PROPERTIES INC. By: /s/ John A. Moore Name: John A. Moore Title: Vice President After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. COMMONWEALTH ATLANTIC LAND II INC. By: /s/ John A. Moore Name: John A. Moore Title: Vice President -35- Page 36 of 58 After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. COMMONWEALTH ATLANTIC DEVELOPMENT INC. By: /s/ John A. Moore Name: John A. Moore Title: Vice President After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. COMMONWEALTH ATLANTIC PROPERTIES INVESTORS TRUST By: /s/ John A. Moore Name: John A. Moore Title: Vice President and Chief Financial Officer After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. COMMONWEALTH ATLANTIC PROPERTIES INC. By: /s/ John A. Moore Name: John A. Moore Title: Vice President -36- Page 37 of 58 After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. COMMONWEALTH ATLANTIC LAND III INC. By: /s/ John A. Moore Name: John A. Moore Title: Vice President After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. COMMONWEALTH ATLANTIC LAND V INC. By: /s/ John A. Moore Name: John A. Moore Title: Vice President After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. COMMONWEALTH ATLANTIC HOLDING I INC. By: /s/ John A. Moore Name: John A. Moore Title: Vice President -37- Page 38 of 58 After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. RICHMOND LAND CORPORATION By: /s/ John A. Moore Name: John A. Moore Title: Vice President After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. COMMONWEALTH ATLANTIC LAND I INC. By: /s/ John A. Moore Name: John A. Moore Title: Vice President -38- Page 39 of 58 SCHEDULE 1 Set forth below are the names and positions of each person that could be viewed as controlling Lazard Freres & Co. LLC. Except as otherwise indicated, the principal occupation of each person controlling Lazard Freres & Co. LLC is general member of Lazard Freres & Co. LLC, the business address of each such person is 30 Rockefeller Plaza, New York, New York 10020 and each person is a citizen of the United States. Lazard Groupement d'Interet Economique, a partnership organized under French law whose principal business is investments (including its investment in Lazard Freres & Co. LLC), and Lazard Partners Limited Partnership, a Delaware limited partnership whose principal business is serving as a holding company, also serve as general members of Lazard Freres & Co. LLC. Business Address and Principal Occupation Name of Controlling Person (if other than as indicated above) Citizenship - -------------------------- ---------------------------------- ----------- Michel A. David-Weill France John C. Adams Lazard Freres & Co. LLC 200 West Madison Suite 2200 Chicago, IL 60606 Eileen D. Alexanderson William R. Araskog Robert A. Baer, Jr. F. Harlan Batrus Gerardo Braggiotti Lazard Freres & Cie. Italy 121 Boulevard Haussmann 75382 Paris Cedex 08 France Patrick J. Callahan, Jr. Lazard Freres & Co. LLC 200 West Madison Suite 2200 Chicago, IL 60606 John V. Doyle Thomas F. Dunn Norman Eig -39- Page 40 of 58 Business Address and Principal Occupation (if other than as Name of Controlling Person indicated above) Citizenship - -------------------------- -------------------- ----------- Richard P. Emerson Peter R. Ezersky Eli H. Fink Jonathan F. Foster Albert H. Garner James S. Gold Steven J. Golub Robert L. Goodman Herbert W. Gullquist Thomas R. Haack Paul J. Haigney Ira O. Handler Yasushi Hatakeyama Japan Melvin L. Heineman Scott D. Hoffman Robert E. Hougie United Kingdom Kenneth M. Jacobs James L. Kempner Lee O. Kraus, Jr. Sandra A. Lamb -40- Page 41 of 58 Business Address and Principal Occupation Name of Controlling Person (if other than as indicated above) Citizenship - -------------------------- ---------------------------------- ----------- Robert C. Larson William R. Loomis, Jr. J. Robert Lovejoy Matthew J. Lustig Thomas E. Lynch Mark T. McMaster Michael G. Medzigian Richard W. Moore, Jr. Robert P. Morgenthau Steven J. Niemczyk James A. Paduano Louis Perlmutter Russell E. Planitzer Steven L. Rattner John R. Reinsberg L. Gregory Rice Barry W. Ridings Luis E. Rinaldini United Kingdom Bruno M. Roger Lazard Capital Markets France 121 Boulevard Haussmann 75382 Paris Cedex 08 France Michael S. Rome -41- Page 42 of 58 Business Address and Principal Occupation Name of Controlling Person (if other than as indicated above) Citizenship - -------------------------- ---------------------------------- ----------- Stephen H. Sands Frank A. Savage Gary S. Shedlin David A. Tanner David L. Tashjian J. Mikesell Thomas Lazard Freres & Co. LLC 200 West Madison Suite 2200 Chicago, IL 60606 Michael P. Triguboff Lazard Asset Management Australia Pacific Co. Level 39 Gateway 1 Macquarie Place Sydney NSW 2000 Australia Donald A. Wagner Ali E. Wambold Michael A. Weinstock Antonio F. Weiss Alexander E. Zagoreos -42- Page 43 of 58 SCHEDULE 2 The business address for each of the following persons is 30 Rockefeller Plaza, New York, NY 10020. Executive Officers of Lazard Freres Real Estate Investors L.L.C. Name of Officer Present and Principal Occupation - --------------- -------------------------------- Robert C. Larson Chairman Michael G. Medzigian President and Chief Executive Officer Mark S. Ticotin Chief Operating Officer John A. Moore Principal and Chief Financial Officer Douglas T. Healy Principal Marjorie L. Reifenberg Principal, General Counsel and Secretary Henry C. Herms Controller -43- Page 44 of 58 SCHEDULE 3 EXECUTIVE OFFICERS AND TRUSTEES OF CAPIT NAME OF OFFICER PRESENT OFFICE OR TRUSTEE BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Michael G. Medzigian 30 Rockefeller Plaza President and Trustee New York, NY 10020 Mark S. Ticotin 30 Rockefeller Plaza Vice President and Trustee New York, NY 10020 of CAPIT John A. Moore 30 Rockefeller Plaza Vice President, Chief New York, NY 10020 Financial Officer and Trustee of CAPIT Henry C. Herms 30 Rockefeller Plaza Treasurer of CAPIT New York, NY 10020 Marjorie L. Reifenberg 30 Rockefeller Plaza Secretary of CAPIT New York, NY 10020 -44- Page 45 of 58 SCHEDULE 4 EXECUTIVE OFFICERS AND DIRECTORS OF CAPI NAME OF OFFICER PRESENT OFFICE OR DIRECTOR BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Robert C. Larson 30 Rockefeller Plaza Chairman and Director New York, NY 10020 of CAPI Matthew J. Lustig 30 Rockefeller Plaza Director of CAPI New York, NY 10020 Mark S. Ticotin 30 Rockefeller Plaza Vice President of CAPI New York, NY 10020 John A. Moore 30 Rockefeller Plaza Vice President of CAPI New York, NY 10020 Christopher L. Keefer McGuire Woods Battle Assistant Secretary of & Boothe, LLP CAPI 8280 Greensboro Drive Suite 900, Tysons Corner McLean, VA 022102-3892 Henry C. Herms 30 Rockefeller Plaza Vice President of CAPI New York, NY 10020 Brent W. Sinnett 600 East Main Street Chief Financial Officer of Suite 2300 CAPI Richmond, VA 23219 Richard I. Gilchrist 66 Canal Center Plaza President and Director of 7th Floor CAPI Alexandria, VA 22314 Charles L. Menges McGuire Woods Battle Secretary of CAPI & Boothe, LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 Gregory L. Weinberger 30 Rockefeller Plaza Director of CAPI New York, NY 10020 -45- Page 46 of 58 Adrianne M. Horne CT Corporation System Director of CAPI Corporation Trust Center 1209 Orange Street Wilmington, DE 19801 Jeffrey I. Sofferman 66 Canal Center Plaza Vice President of CAPI 7th Floor Alexandria, VA 22314 -46- Page 47 of 58 SCHEDULE 5 EXECUTIVE OFFICERS AND DIRECTORS OF CAL I NAME OF OFFICER PRESENT OFFICE OR DIRECTOR BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Robert C. Larson 30 Rockefeller Plaza President and Director New York, NY 10020 of CAL I Mark S. Ticotin 30 Rockefeller Plaza Vice President of CAL I New York, NY 10020 John A. Moore 30 Rockefeller Plaza Vice President of CAL I New York, NY 10020 Christopher L. Keefer McGuire Woods Battle Assistant Secretary of & Boothe, LLP CAL I 8280 Greensboro Drive Suite 900, Tysons Corner McLean, VA 022102-3892 Henry C. Herms 30 Rockefeller Plaza Vice President of CAL I New York, NY 10020 Brent W. Sinnett 600 East Main Street Chief Financial Officer Suite 2300 of CAL I Richmond, VA 23219 Richard I. Gilchrist 66 Canal Center Plaza President and Director of 7th Floor CAL I Alexandria, VA 22314 Charles L. Menges McGuire Woods Battle Secretary of CAL I & Boothe, LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 Adrianne M. Horne CT Corporation System Director of CAL I Corporation Trust Center 1209 Orange Street Wilmington, DE 19801 -47- Page 48 of 58 Jeffrey I. Sofferman 66 Canal Center Plaza Vice President of CAL I 7th Floor Alexandria, VA 22314 -48- Page 49 of 58 SCHEDULE 6 EXECUTIVE OFFICERS AND DIRECTORS OF CAL NAME OF OFFICER PRESENT OFFICE OR DIRECTOR BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Robert C. Larson 30 Rockefeller Plaza President and Director New York, NY 10020 of CAL Mark S. Ticotin 30 Rockefeller Plaza Vice President of CAL New York, NY 10020 John A. Moore 30 Rockefeller Plaza Vice President of CAL New York, NY 10020 Christopher L. Keefer McGuire Woods Battle Assistant Secretary of CAL & Boothe, LLP 8280 Greensboro Drive Suite 900, Tysons Corner McLean, VA 022102-3892 Henry C. Herms 30 Rockefeller Plaza Vice President of CAL New York, NY 10020 Brent W. Sinnett 600 East Main Street Chief Financial Officer Suite 2300 of CAL Richmond, VA 23219 Richard I. Gilchrist 66 Canal Center Plaza President and Director of 7th Floor CAL Alexandria, VA 22314 Charles L. Menges McGuire Woods Battle Secretary of CAL & Boothe, LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 Camilia M. Denny CT Corporation System Director of CAL Corporation Trust Center 1209 Orange Street Wilmington, DE 19801 -49- Page 50 of 58 Jeffrey I. Sofferman 66 Canal Center Plaza Vice President of CAL 7th Floor Alexandria, VA 22314 -50- Page 51 of 58 SCHEDULE 7 EXECUTIVE OFFICERS AND DIRECTORS OF CAL III NAME OF OFFICER PRESENT OFFICE OR DIRECTOR BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Robert C. Larson 30 Rockefeller Plaza President and Director New York, NY 10020 of CAL III Mark S. Ticotin 30 Rockefeller Plaza Vice President of CAL III New York, NY 10020 John A. Moore 30 Rockefeller Plaza Vice President of CAL III New York, NY 10020 Christopher L. Keefer McGuire Woods Battle Assistant Secretary of & Boothe, LLP CAL III 8280 Greensboro Drive Suite 900, Tysons Corner McLean, VA 022102-3892 Henry C. Herms 30 Rockefeller Plaza Vice President of CAL III New York, NY 10020 Brent W. Sinnett 600 East Main Street Chief Financial Officer Suite 2300 of CAL III Richmond, VA 23219 Richard I. Gilchrist 66 Canal Center Plaza President and Director 7th Floor of Cal III Alexandria, VA 22314 Charles L. Menges McGuire Woods Battle Secretary of CAL III & Boothe, LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 Mary Ann Brzoska CT Corporation System Director of CAL III Corporation Trust Center 1209 Orange Street Wilmington, DE 19801 -51- Page 52 of 58 Jeffrey I. Sofferman 66 Canal Center Plaza Vice President of CAL III 7th Floor Alexandria, VA 22314 -52- Page 53 of 58 SCHEDULE 8 EXECUTIVE OFFICERS AND DIRECTORS OF CAL V NAME OF OFFICER PRESENT OFFICE OR DIRECTOR BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Robert C. Larson 30 Rockefeller Plaza President and Director New York, NY 10020 of CAL V Mark S. Ticotin 30 Rockefeller Plaza Vice President of CAL V New York, NY 10020 John A. Moore 30 Rockefeller Plaza Vice President of CAL V New York, NY 10020 Christopher L. Keefer McGuire Woods Battle Assistant Secretary of & Boothe, LLP CAL V 8280 Greensboro Drive Suite 900, Tysons Corner McLean, VA 022102-3892 Henry C. Herms 30 Rockefeller Plaza Vice President of CAL V New York, NY 10020 Brent W. Sinnett 600 East Main Street Chief Financial Officer Suite 2300 of CAL V Richmond, VA 23219 Richard I. Gilchrist 66 Canal Center Plaza President and Director 7th Floor of CAL V Alexandria, VA 22314 Charles L. Menges McGuire Woods Battle Secretary of CAL V & Boothe, LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 Bonnie A. Schuman CT Corporation System Director of CAL V Corporation Trust Center 1209 Orange Street Wilmington, DE 19801 Jeffrey I. Sofferman 66 Canal Center Plaza Vice President of CAL V 7th Floor Alexandria, VA 22314 -53- Page 54 of 58 SCHEDULE 9 EXECUTIVE OFFICERS AND DIRECTORS OF CADI NAME OF OFFICER PRESENT OFFICE OR DIRECTOR BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Robert C. Larson 30 Rockefeller Plaza President and Director New York, NY 10020 of CADI Mark S. Ticotin 30 Rockefeller Plaza Vice President of CADI New York, NY 10020 John A. Moore 30 Rockefeller Plaza Vice President of CADI New York, NY 10020 Christopher L. Keefer McGuire Woods Battle Assistant Secretary of & Boothe, LLP CADI 8280 Greensboro Drive Suite 900, Tysons Corner McLean, VA 022102-3892 Henry C. Herms 30 Rockefeller Plaza Vice President of CADI New York, NY 10020 Brent W. Sinnett 600 East Main Street Chief Financial Officer Suite 2300 of CADI Richmond, VA 23219 Richard I. Gilchrist 66 Canal Center Plaza President and Director 7th Floor of CADI Alexandria, VA 22314 Charles L. Menges McGuire Woods Battle Secretary of CADI & Boothe, LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 Mary Ann Brzoska CT Corporation System Director of CADI Corporation Trust Center 1209 Orange Street Wilmington, DE 19801 Jeffrey I. Sofferman 66 Canal Center Plaza Vice President of CADI 7th Floor Alexandria, VA 22314 -54- Page 55 of 58 SCHEDULE 10 EXECUTIVE OFFICERS AND DIRECTORS OF CAHI NAME OF OFFICER PRESENT OFFICE OR DIRECTOR BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Robert C. Larson 30 Rockefeller Plaza President and Director New York, NY 10020 of CAHI Mark S. Ticotin 30 Rockefeller Plaza Vice President of CAHI New York, NY 10020 John A. Moore 30 Rockefeller Plaza Vice President of CAHI New York, NY 10020 Christopher L. Keefer McGuire Woods Battle Assistant Secretary of & Boothe, LLP CAHI 8280 Greensboro Drive Suite 900, Tysons Corner McLean, VA 022102-3892 Henry C. Herms 30 Rockefeller Plaza Vice President of CAHI New York, NY 10020 Brent W. Sinnett 600 East Main Street Chief Financial Officer Suite 2300 of CAHI Richmond, VA 23219 Richard I. Gilchrist 66 Canal Center Plaza President and Director 7th Floor of CAHI Alexandria, VA 22314 Charles L. Menges McGuire Woods Battle Secretary of CAHI & Boothe, LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 Bonnie A. Schuman CT Corporation System Director of CAHI Corporation Trust Center 1209 Orange Street Wilmington, DE 19801 Jeffrey I. Sofferman 66 Canal Center Plaza Vice President of CAHI 7th Floor Alexandria, VA 22314 -55- Page 56 of 58 SCHEDULE 11 EXECUTIVE OFFICERS AND DIRECTORS OF CAOP NAME OF OFFICER PRESENT OFFICE OR DIRECTOR BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Robert C. Larson 30 Rockefeller Plaza President and Director New York, NY 10020 of CAOP Mark S. Ticotin 30 Rockefeller Plaza Vice President of CAOP New York, NY 10020 John A. Moore 30 Rockefeller Plaza Vice President of CAOP New York, NY 10020 Christopher L. Keefer McGuire Woods Battle Assistant Secretary of & Boothe, LLP CAOP 8280 Greensboro Drive Suite 900, Tysons Corner McLean, VA 022102-3892 Henry C. Herms 30 Rockefeller Plaza Vice President of CAOP New York, NY 10020 Brent W. Sinnett 600 East Main Street Chief Financial Officer Suite 2300 of CAOP Richmond, VA 23219 Richard I. Gilchrist 66 Canal Center Plaza President and Director 7th Floor of CAOP Alexandria, VA 22314 Charles L. Menges McGuire Woods Battle Secretary of CAOP & Boothe, LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 William J. Reif CT Corporation System Director of CAOP Corporation Trust Center 1209 Orange Street Wilmington, DE 19801 -56- Page 57 of 58 Jeffrey I. Sofferman 66 Canal Center Plaza Vice President of CAOP 7th Floor Alexandria, VA 22314 -57- Page 58 of 58 SCHEDULE 12 EXECUTIVE OFFICERS AND DIRECTORS OF RLC NAME OF OFFICER PRESENT OFFICE OR DIRECTOR BUSINESS ADDRESS WITH COMPANY - --------------- ---------------- -------------- Robert C. Larson 30 Rockefeller Plaza President and Director New York, NY 10020 of RLC Mark S. Ticotin 30 Rockefeller Plaza Vice President of RLC New York, NY 10020 John A. Moore 30 Rockefeller Plaza Vice President of RLC New York, NY 10020 Christopher L. Keefer McGuire Woods Battle Assistant Secretary of RLC & Boothe, LLP 8280 Greensboro Drive Suite 900, Tysons Corner McLean, VA 022102-3892 Henry C. Herms 30 Rockefeller Plaza Vice President of RLC New York, NY 10020 Brent W. Sinnett 600 East Main Street Chief Financial Officer Suite 2300 of RLC Richmond, VA 23219 Richard I. Gilchrist 66 Canal Center Plaza President and Director 7th Floor of RLC Alexandria, VA 22314 Charles L. Menges McGuire Woods Battle Secretary of RLC & Boothe, LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 William J. Reif CT Corporation System Director of RLC Corporation Trust Center 1209 Orange Street Wilmington, DE 19801 Jeffrey I. Sofferman 66 Canal Center Plaza Vice President of RLC 7th Floor Alexandria, VA 22314 -58- EX-1 2 JOINT FILING AGREEMENT In accordance with Rule 13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing with all other Reporting Persons (as such term is defined in the Schedule 13D referred to below) on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Common Shares, par value $0.01 per share, of Brandywine Realty Trust, a Maryland real estate investment trust, and that this Agreement may be included as an Exhibit to such joint filing. This Agreement may be executed in any number of counterparts, all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of the 8th day of December, 1999. LAZARD FRERES & CO. LLC By: /s/ Scott D. Hoffman --------------------------------------- Name: Scott D. Hoffman Title: Managing Director LAZARD FRERES REAL ESTATE INVESTORS L.L.C. By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Chief Financial Officer LF STRATEGIC REALTY INVESTORS L.P. By: Lazard Freres Real Estate Investors L.L.C., its general partner By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Chief Financial Officer PROMETHEUS AAPT HOLDINGS, L.L.C. By: LF Strategic Realty Investors L.P., its sole member By: Lazard Freres Real Estate Investors L.L.C., its general partner By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Chief Financial Officer COMMONWEALTH ATLANTIC OPERATING PROPERTIES INC. By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President COMMONWEALTH ATLANTIC LAND II INC. By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President COMMONWEALTH ATLANTIC DEVELOPMENT INC. By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President COMMONWEALTH ATLANTIC PROPERTIES INVESTORS TRUST By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President and Chief Financial Officer -2- COMMONWEALTH ATLANTIC PROPERTIES INC. By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President COMMONWEALTH ATLANTIC LAND III INC. By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President COMMONWEALTH ATLANTIC LAND V INC. By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President COMMONWEALTH ATLANTIC HOLDING I INC. By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President RICHMOND LAND CORPORATION By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President -3- COMMONWEALTH ATLANTIC LAND I INC. By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Vice President -4- EX-2 3 Merrill Lynch International 20 Farringdon Road P.O. Box 293 London EC1M 2NH Telephone: 0171 892 4920 Fax: 0171 892 4860 London EC1M 3NH Telephone: 0171 892 4920 Fax: 0171 892 4860 17 November 1999 - ------ Commonwealth Atlantic Properties Investors Trust Prometheus Investment Holding Corp. Prometheus Western Retail LLC c/o Lazard Freres Real Estate Investors L.L.C. 30 Rockefeller Plaza 50th Floor New York, NY 10020 Dear Sirs We write to set out the terms and conditions on which Merrill Lynch International ("MLI") offers revolving facilities (the "Facilities") to Commonwealth Atlantic Properties Investors Trust, Prometheus Investment Holding Corp. and Prometheus Western Retail, LLC, acting jointly and severally, as co-borrowers (collectively, the "Borrower") under which until further notice from MLI: (A) MLI makes available a credit facility, under which MLI is prepared to consider making to the Borrower cash advances (each such advance an "Advance"). (B) MLI makes available a securities lending facility, under which MLI is prepared to consider lending Securities to the Borrower (each such loan a "Securities Loan"). (C) MLI makes available a guarantee facility, under which MLI is prepared to consider issuing guarantees and/or indemnities in respect of the obligations of the Borrower to third parties (each such guarantee and/or indemnity ("Guarantee")), and (D) MLI makes available such other facilities as MLI and the Borrower may from time to time agree, all on the security of, among other things, the collateral provided by Prometheus Western Retail, LLC as set out in the Terms Sheet referred to below and the collateral provided by LF Strategic Realty Investors L.P. and Prometheus AAPT Holdings, L.L.C. (collectively, the "Guarantor") as set out in the Collateralised Guaranty dated of even date herewith executed by each Guarantor. The spread for the purposes of the Facilities shall be 2.625% per annum. The Facilities are subject to the terms and conditions set out in the attached Terms Sheet, and by its execution of the enclosed copy of this letter, the Borrower acknowledges receipt of the Terms Sheet and agrees to the terms and conditions set out in it. Please confirm your agreement to the above and your acceptance of the provisions of this letter and the Terms Sheet by completing, signing and returning the enclosed copy of this letter. Registered in England (No. 2312079) Registered Office: 25 Ropemaker Street, London EC2Y 9LY A Subsidiary of Merrill Lynch & Co., Inc., Delaware, U.S.A. Regulated by The Securities and Futures Authority Limited Member of the London Stock Exchange VAT No. GB 245 1224 93 Yours faithfully, For and on behalf of MERRILL LYNCH INTERNATIONAL /s/ John Piccitto ............................................................................ To: Merrill Lynch International c/o Merrill Lynch International Limited 20 Farringdon Road P.O. Box 293 London EC1M 3NH Dated 17 day of November, 1999 2 We accept the Facilities on the terms and conditions detailed in your letter and the attached Terms Sheet. Our address and other details for the purpose of Clause 19 of the Terms Sheet are set out below. Yours faithfully, ............................................................................. Commonwealth Atlantic Properties Investors Trust, a Maryland real estate investment trust c/o Lazard Freres Real Estate Investors L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: /s/ John A. Moore ----------------------------- Name: John A. Moore Title: Chief Financial Officer Prometheus Investment Holding Corp., a Delaware corporation c/o Lazard Freres Real Estate Investors, L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: /s/ John A. Moore ----------------------------- Name: John A. Moore Title: Chief Financial Officer Prometheus Western Retail, LLC, a Delaware limited liability company c/o Lazard Freres Real Estate Investors, L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: Prometheus Western Retail Trust, a Maryland real estate investment trust its managing member By: /s/ John A. Moore ----------------------------- Name: John A. Moore Title: Chief Financial Officer 3 MERRILL LYNCH INTERNATIONAL TERMS SHEET 1 Definitions In this Agreement: "Base Rate" means the floating annual rate equal to the rate of interest as quoted to MLI determined by Merrill Lynch International Bank Limited ("MLIB") to be its base rate, being calculated by reference to a weighted average of rates (at the weighted percentage indicated below) on the second Business Day before the first Business Day of each week at which MLIB offers deposits in the relevant currency in the London inter- bank market for terms of one night (25%), one week (50%) and one month (25%), or if at any time such base rate does not accurately reflect the cost to MLI of funding the relevant Advance or other amount, the floating annual rate certified by MLI to be equal to its cost of funding at the relevant time (Base Rate to change when and as the applicable floating annual rate changes). "Business Day" means a day on which (1) Dollar deposits may be dealt in on the London inter-bank market, (2) if the context so requires, deposits in any other relevant currency may be dealt in on the London inter-bank market, (3) banks are open in London and New York City and, if the context so requires, the principal financial centre of the country of each other relevant currency (or, in relation to Euro, on any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open), and (4) if the context so requires, the exchange or settlement system through which Securities are to be loaned, transferred or redelivered or Equivalent Securities are to be returned is open to settle such transfer. "Collateral" means all Securities, including any certificates and documents of or evidencing title to the same (and the claim represented thereby) and cash balances (and the debt represented thereby) in or credited to the Collateral Account all right, title and interest in and to which are, to the satisfaction of MLI, subject to the security created by or pursuant to this Agreement. "Collateral Account" means the one or more accounts, having such designations as MLI may determine, opened or to be opened by MLI pursuant to, or used for the purposes of, the Facilities for the Borrower with the Custodian or any other person (including MLIB or any other member of the Merrill Lynch Group) chosen by MLI in respect of Collateral, all such Collateral Accounts to be maintained under the complete discretion of MLI or such other person in each case pursuant to the Custodian Agreement. "Custodian" means MLI in its capacity as such under the Custodian Agreement. "Custodian Agreement" means the Custodian Agreement between MLI, Prometheus Western Retail LLC, LF Strategic Realty Investors L.P. and Prometheus AAPT Holdings LLC, as amended from time to time. "Dollar(s)" and "$" means lawful currency of the United States of America. "Equivalent Securities" or "Securities equivalent to" means securities of an identical type, nominal value, description and amount to particular Securities the subject of a Securities Loan (including any certificates and other documents of or evidencing title to the same). If and to the extent that such Securities are partly paid and a call is made or have been converted, subdivided, consolidated, redeemed, made the subject of a takeover, merger, capitalisation issue, rights issue or similar, the Equivalent Securities shall be as accordingly determined by MLI. "Hedging Contract" means any contract entered into by the Borrower and designated as such by the Borrower and MLI by exchange of letters substantially in the form set out in Schedule 1. "Letter" means the cover letter to, and forming part of, this Agreement as amended by First Amendment to Facility Letter ("First Amendment") dated 17 November 1999. "Merrill Lynch Group" means Merrill Lynch & Co., Inc. together with any company (whether now existing or hereafter formed) of which Merrill Lynch & Co., Inc. is or becomes a Subsidiary and all companies (whether now existing or hereafter formed or acquired) which are Subsidiaries of Merrill Lynch & Co., Inc. or any such company including, but not limited to, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any partnership, association, firm or other organisation (whether now existing or hereafter formed or acquired) which is owned or controlled (whether directly or indirectly and whether by the ownership of share capital, possession of voting power, contract or otherwise) by Merrill Lynch & Co., Inc. and/or any such company and/or one or more of their Subsidiaries including, but not limited to, Merrill Lynch International & Co. "Secured Liabilities" means all the Borrower's liabilities under or in connection with this Agreement, including any Advances, Securities Loans and Guarantees (including amounts payable under Clause 5.2). -2- "Securities" means the Collateral Securities (as set forth in Schedule 2) and shall include all other investments, as defined in the Financial Services Act 1986 (as amended or re-enacted from time to time) and physical commodities (or any certificates or documents of or evidencing title to any of the same) which may at any time be deposited with the Custodian to be held on the terms of the Custodian Agreement, in each case acceptable to MLI. "Subsidiary" means at any time, in relation to a company, any other company which is directly or indirectly controlled, or more than 50% of whose issued or outstanding shares or stock having general voting power in ordinary circumstances is beneficially owned directly or indirectly, by that first company. In this Terms Sheet, references to the "Agreement" or "this Agreement" mean and include (1) the Letter, (2) this Terms Sheet, (3) all letters (if any) exchanged in respect of Hedging Contracts and (4) all confirmations (if any), all as amended and supplemented from time to time, and it is acknowledged and agreed that all Advances and Securities Loans are made and all Guarantees are issued, in reliance on the fact that this Agreement forms a single agreement between the parties, and that the parties would not otherwise make or do any of the foregoing. Headings shall be ignored in construing this Agreement. 2 Credit Facility 2.1 Drawdown: Without prejudice to (A) any other requirements of MLI in relation to any Advance, and (B) MLI's right to refuse to make an Advance in its absolute discretion, Advances will be made as follows: 2.1.1 the Borrower may give to MLI notice satisfactory to MLI not later than 2 p.m. (London time) on the first (in the case of a Dollar Advance) or (in any other case) third Business Day before the proposed date (which must itself be a Business Day) of the relevant Advance requesting the Advance of all or part of the unused portion of the Facilities or 2.1.2 the Borrower hereby requests and authorises MLI to make Advances (without any further request by the Borrower) for the purposes of financing the payment by the Custodian on behalf of the Borrower pursuant to the Custodian Agreement for Securities purchased by the Borrower, to reimburse MLI for any payment which has been made by it pursuant to a Guarantee, and for such other purposes as may be agreed by the Borrower and MLI from time to time. -3- For this purpose, the unused portion of the Facilities at any date is the "Total Amount Available" specified in the First Amendment less the aggregate Dollar equivalent (as determined by MLI as at that date) of all outstanding Advances. 2.2 Repayment: The Borrower may, if it gives MLI not less than one Business Day's notice (in the case of a Dollar Advance) or (in any other case) three Business Days' notice (which shall be irrevocable) repay any Advance at any time, except that any Advance which has a fixed interest period shall be repaid (and shall, subject as otherwise provided in this Agreement, only be repaid) on the last day of that fixed interest period. Any such repayment must be accompanied by interest accrued on the amount repaid. In addition, the Borrower hereby requests and authorises MLI to apply funds made available to it by the Custodian pursuant to the Custodian Agreement in or towards repayment of any Advances (or any other amount debited to the Collateral Account) in the same currency. Funds so received which cannot be so applied will be credited to the Collateral Account. 2.3 Interest: Interest shall be calculated on the outstanding principal amount from time of each Advance at the rate per annum equal to the sum of the Spread specified in the Letter and Base Rate. The Borrower shall pay the unpaid interest accrued on each Advance monthly in arrears in the currency in which the relevant Advance is denominated. However, if MLI and the Borrower so agree in relation to an Advance, that Advance shall have a fixed interest period (and shall be repaid accordingly) and shall bear interest at the rate agreed between MLI and the Borrower for such Advance. The Borrower shall pay the unpaid interest accrued on any such Advance in arrears on the last day of the interest period for which it was made and in the currency in which the relevant Advance is denominated. 3 Securities Lending Facility 3.1 Making: MLI shall be entitled but not bound to act on the request of the Borrower to make a Securities Loan to the Borrower. A Securities Loan shall be effected by MLI delivering or crediting the relevant Securities in accordance with the Borrower's instructions, together with any appropriate instruments of transfer or the like. 3.2 Return: The Borrower shall return Securities equivalent to the Securities the subject of a Securities Loan by delivering or crediting those Equivalent Securities in accordance with MLI's instructions: -4- 3.2.1 in accordance with the terms of the request for that Securities Loan or 3.2.2 if earlier, upon notice from MLI of not less than the standard settlement time for those Equivalent Securities according to the exchange or settlement system through which the Securities the subject of the relevant Securities Loan were originally delivered. All returns of Equivalent Securities must be made together with any appropriate instruments of transfer or the like, and so that all right, title and interest in and to those Equivalent Securities shall vest in MLI, free from all liens, charges and encumbrances. 3.3 Interest and Dividends: Where a Securities Loan is outstanding over an income payment date or a record date for the relevant Securities, the Borrower shall, on the date of the payment or distribution of any interest, dividend or other distribution of any kind whatsoever (each a "Distribution") on or with respect to any Securities the subject of a Securities Loan, or on such other date as MLI and the Borrower may from time to time agree (the "Relevant Payment Date") pay and deliver a sum of money or property equivalent to the same (with any such endorsements or assignments as shall be customary and appropriate to effect the delivery) to MLI, irrespective of whether the Borrower received the same. In the case of any Distribution comprising a payment, unless agreed otherwise: 3.3.1 where and to the extent that MLI has funded a Securities Loan with Securities borrowed by MLI under a securities loan from a third party, the Borrower shall pay such amount and deliver such tax vouchers as may be relevant and appropriate so as to enable MLI (out of those payments/tax vouchers paid/delivered by the Borrower under this Clause 3.3) to meet its own obligations to pay amounts and/or deliver tax vouchers to the third party in respect of those same Distributions under the securities loan from the third party to MLI, and after taking account of all taxes of whatever nature arising in connection with either the payments from the Borrower to MLI under this Clause 3.3 or the payments from MLI to the third party and 3.3.2 where and to the extent MLI has funded a Securities Loan with Securities from MLI's own books, the Borrower shall pay to MLI such amount and deliver such tax vouchers as may be relevant and appropriate as shall ensure that MLI is placed in the same after-tax position (including for these purposes and for the avoidance of doubt any taxation arising under paragraph 4(3) of Schedule 23A of the Income and Corporation Taxes Act 1988 -5- and associated provisions concerning manufactured payments, but ignoring any taxation by reference to MLI's general profits) as if MLI had been the Holder of the relevant Securities at all relevant times. For the purposes of this Clause 3.3.2 "Holder" in relation to registered securities means the person whose name or whose nominee is shown on the relevant register of ownership and in relation to bearer Securities means the bearer thereof. 3.4 Fees: The Borrower shall pay such fees in respect of Securities Loans as shall be agreed with MLI from time to time. Such fees shall be payable monthly in arrears. 3.5 Title: Notwithstanding the use of expressions such as "Securities Loan", "Borrower", "loan", "loaned", "borrowed", "return" and "returned" which are used in relation to Securities Loans to reflect market terminology, title to Securities the subject of a Securities Loan shall pass to the Borrower, and the Borrower shall be obliged to return Equivalent Securities. 3.6 Rights and Remedies: It is agreed in relation to legal proceedings that neither party will seek specific performance of the other's obligation to deliver, redeliver, credit or return Securities or Equivalent Securities, but without prejudice to any other rights it may have. 4 Intentionally Omitted 5 Guarantee Facilities 5.1 Issue: MLI (in this Clause 5 and Clause 7 and in relation to a Guarantee provided by it, an "Issuer") shall be entitled but not bound to act on the request of the Borrower to provide a Guarantee. 5.2 Indemnity: The Borrower hereby unconditionally and irrevocably: 5.2.1 agrees on demand to indemnify the Issuer of any Guarantee from and against any and all actions, proceedings, costs, claims, demands, damages, expenses, losses, charges and liabilities which may be brought, made or preferred against the Issuer or which the Issuer may suffer, incur or sustain in relation to or arising out of its providing any Guarantee (including (A) any payment(s) which may be payable by or claimed or demanded from the Issuer pursuant to a Guarantee, and (B) any taxes required to be paid by the Issuer on account of which it makes any deduction or withholding from any such payment) together with interest on all such amounts from the date(s) on which -6- the same are incurred by the Issuer in accordance with Clause 8.2 5.2.2 authorises the Issuer to rely without further enquiry on documents presented under any Guarantee which appear on their face to be in compliance with the terms and conditions of that Guarantee (for which purpose the Issuer shall apply the same standards and have the same protections as set out in the Uniform Customs and Practice for Documentary Credits (1993 Revision, ICC Publication No. 500 or its subsequent revisions)) and on first claim or demand to make any payment which may or may appear to be claimed or demanded from the Issuer in relation to or arising out of any Guarantee without requiring or obtaining any evidence or proof that the amount claimed or demanded is due and payable and without any notice or reference to or the agreement of or further authority from the Borrower and 5.2.3 agrees that any payment which the Issuer shall make in accordance or purported accordance with a Guarantee shall be binding on the Borrower and shall be accepted by the Borrower as conclusive evidence of the Issuer's liability to make such payment. 5.3 Fees: The Borrower shall pay to the Issuer of any Guarantee such fees in respect thereof and at such times as shall be agreed with the Issuer from time to time. 6 Security 6.1 Security Provisions: 6.1.1 The Borrower, as continuing security for the due payment of the Secured Liabilities and with full title guarantee, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby irrevocably pledges, grants and creates a first priority lien on, and security interest in favour of MLI all the Borrower's right, title and interest in and to all Securities, and all related documents, from time to time held by or for the account or to the order of MLI (whether in its capacity as Custodian under the Custodian Agreement or otherwise) or in or credited to the Collateral Account and the claims represented thereby and all security entitlements related thereto (together, the "Pledged Securities"). The security created by or pursuant to this Agreement shall affect and include all dividends, distributions and interest on and other proceeds of -7- the Pledged Securities or other property hereby pledged or charged, whether capital or income, and all property distributed, paid, accruing or offered at any time on, to, in respect of or in substitution for, any of the Pledged Securities or other property hereby pledged or charged, in each case only to the extent that any of the foregoing are paid or delivered to MLI for credit to the Collateral Account. 6.1.2 The Borrower, as continuing security for the due payment of the Secured Liabilities and with full title guarantee, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby irrevocably pledges, grants and creates a first priority lien on, and security interest in favour of MLI all monies and investment property (and all the Borrower's right, title and interest in and to such monies and the debt represented thereby and investment property) from time to time standing to the credit of the Collateral Account, in whatever currency, and including any interest accrued or accruing thereon. 6.1.3 The Borrower, as continuing security for the due payment of the Secured Liabilities and with full title guarantee, hereby conveys and assigns absolutely to MLI the Hedging Contracts and all its rights and benefits under or in connection with the Hedging Contracts, including in particular all monies paid or payable in respect thereof and all other rights or benefits thereunder or in connection therewith (together, the "Pledged Contracts"). Provided that, upon receipt from the Borrower of a request made after termination of the Facilities and subject to the Secured Liabilities (other than contingent liabilities under (a) the Guarantees and (b) any indemnification provisions contained in this Agreement, the Custodian Agreement or any other document evidencing or securing the Facilities (as defined in the Letter) (collectively, the "Contingent Liabilities")), having been duly and properly paid in full, MLI shall at the expense of the Borrower re-assign to the Borrower so much (if any) of the Pledged Contracts and the Pledged Securities as then remains and/or execute a formal release with respect thereto. 6.1.4 None of the monies from time to time standing to the credit of the Collateral Account (nor the Borrower's right, title and interest in and to such monies) shall, during the continuance of the Facilities and until the Secured Liabilities (other than the Contingent Liabilities) have been duly and properly paid in full, be capable of being withdrawn, assigned or otherwise disposed of or encumbered except with MLI's prior -8- written consent or as otherwise specifically provided in this Agreement. Any such consent of MLI (and any payment whether with or without such consent) shall operate as a release of the relevant monies and the provisions of this Agreement shall continue to apply to the Collateral Account and the monies from time to time standing to the credit thereof. 6.1.5 The Borrower hereby undertakes to MLI that, at all times during the continuance of the Facility and until the Secured Liabilities (other than the Contingent Liabilities) have been properly and duly paid in full: (i) it will on demand duly pay any calls, subscription monies and/or other monies payable on or in respect of any of the Pledged Securities and will perform all obligations undertaken by it under or in connection with Hedging Contracts in accordance with their terms. If it does not do so, MLI may (but shall not be obliged to) do so and, if MLI does so, the Borrower shall on demand indemnify MLI against such payment or performance and (ii) it will not (nor will it agree, conditionally or unconditionally, to) create or have outstanding any call option, pledge, assignment, transfer, hypothecation, mortgage, charge, encumbrance, security interest or lien on or affecting any of the Pledged Securities (except as contemplated by this Agreement or the Custodian Agreement or with MLI's prior written consent). MLI acknowledges that the Borrower may request consent to options, assignments and transfers (including agreements therefor) on or of Pledged Securities in the normal course of its trading operations and MLI will consider any such request in good faith. 6.1.6 Without prejudice to 6.1.4 above or Clause 11.2, MLI is authorised to debit the Secured Liabilities to any account of the Borrower with MLI and MLI is authorised to combine or consolidate such account with the Collateral Account and/or set off, transfer or apply any monies standing to the credit of the Collateral Account in or towards satisfaction of any of the Secured Liabilities. 6.1.7 The security created by or pursuant to this Agreement shall be a continuing security notwithstanding any intermediate payment or settlement of account and, without prejudice to the generality of the foregoing, shall, subject to the last sentence of Clause 6.1.3, continue in full force and effect -9- until MLI reassigns or executes a formal release with respect to such security, which it may do in whole or from time to time in part, and any withdrawal or other disposal of any of the property subject to the security created by or pursuant to this Agreement shall operate as a release of such property, and the provisions of this Agreement shall continue to apply to the remainder thereof. The security created by or pursuant to this Agreement shall be in addition to and shall not prejudice any other security, guarantee, indemnity, right or remedy of whatever nature which MLI now or at any time has in respect of any of the Secured Liabilities. 6.2 Further Assurance: The Borrower, at its own expense, will execute or cause to be executed all such documents, and will do or cause to be done all such things, which are reasonably requested by MLI (1) to enable MLI to enjoy, exercise or enforce its rights as a secured party under the Facilities and (2) to evidence, and to establish and maintain the perfection and first priority of, MLI's security interest in the Pledged Securities, the Collateral Account (and the monies for the time being standing to the credit thereof and the debt represented thereby) and the Pledged Contracts and the perfection of MLI's security interest in the other property hereby pledged or charged. Without limiting the generality of the foregoing the Borrower, at its own expense, will execute and give or file, or both, all notices and documents (including, but not limited to, notice of the security created by or pursuant to this Agreement) in such manner, to such persons and at such places as may be reasonably requested by MLI to establish and maintain the perfection and, as appropriate, first priority of MLI's said security interest. The Borrower irrevocably and by way of security authorises MLI, if the Borrower does not do so, to take any step contemplated by this Clause 6.2 (but MLI shall have no obligation to do so). 6.3 MLI's Responsibilities: Except as provided in the Custodian Agreement, MLI shall at all times while any Collateral remains credited to the Collateral Account use reasonable care in connection therewith but shall not thereby be responsible for the value of the Collateral or the other property hereby pledged or charged or, except to the extent otherwise specifically agreed, for the collection or payment of any dividends, distributions, interest or other receipts in respect of Pledged Securities, other property hereby pledged or charged or Hedging Contracts or the delivery or receipt of any securities or other property in respect of Hedging Contracts nor to ensure the taking up of any securities, rights, monies or other property distributed, paid, accruing or offered at any time on, to, in respect of or in substitution for any of the Collateral or the other property hereby pledged or charged. -10- 6.4 Value and Margin Calls: The Borrower hereby agrees that it will, immediately upon MLI at any time making a request or delivering to the Borrower (whether under this Agreement or in its capacity as Custodian under the Custodian Agreement) a statement reflecting a shortfall in the margin referred to below, deposit additional Securities acceptable to MLI and/or monies with MLI for the credit of the Customer Account (as defined in the custodian Agreement) as MLI may require in order to ensure that the amount of the outstanding Advances divided by the aggregate of the market value of the Securities and the monies standing to the credit of the Customer Account will at no time exceed the Maintenance Margin (as defined in the Letter), the Secured Liabilities (all as determined by MLI). 6.5 MLI shall have all rights and remedies as a secured party at law or in equity including, without limitation, the rights of a secured party under the Uniform Commercial Code. 7 Cancellation and Repayment 7.1 General: The Borrower will (A) after an Event of Default has occurred on demand of MLI at any time or (B) after MLI has given written notice to the Borrower that it has determined that it is or will become unlawful or contrary to any directive or the like of any governmental or other regulatory body or authority for MLI to carry out all or any of its obligations under or in connection with this Agreement on demand of MLI at any time: 7.1.1 repay to MLI all or any Advances then outstanding together with accrued interest thereon and any other sum then payable under or in connection with this Agreement and/or 7.1.2 return to MLI Securities equivalent to all or any Securities the subject of any Securities Loan(s) and/or 7.1.3 pay to the Issuer an amount (as conclusively determined by the Issuer) equal to the Issuer's maximum outstanding liability (whether actual or contingent) under all Guarantees provided by it. Without prejudice to Clause 6 or any other provision of this Agreement any amount so received by the Issuer in respect of its liability under Guarantees may be retained by the Issuer for the purpose of payment and/or paid in accordance with the relevant Guarantee and/or paid into the Collateral Account and retained there for the purpose of application and/or applied by MLI in or towards satisfaction of the Borrower's obligations under or in connection with this Agreement. -11- Upon the making of any such demand under (A) or (B) above the Facilities shall be cancelled (but in each case without prejudice to rights and obligations then existing). 7.2 Securities Loans: If the Borrower fails or is unable to MLI's satisfaction to return any Securities equivalent to the Securities the subject of a Securities Loan in accordance with any notice or demand under 7.1.2 above or on such other date on which in accordance with this Agreement it is obliged to do so, MLI shall have the right on the Borrower's behalf to purchase from such source(s), at such time(s) and at such price(s) as it thinks appropriate Equivalent Securities and the Borrower shall on demand pay in the currency/ies specified by MLI to MLI all amounts (including costs, expenses, commissions and taxes thereon) incurred in connection with such purchase, together with interest on all such amounts from the date(s) on which the same are incurred by MLI in accordance with Clause 8.2. However, if for any reason MLI does not or is unable to exercise such right, upon notice to the Borrower, the Borrower's obligation to return the relevant Equivalent Securities will be automatically replaced by an obligation on the Borrower to pay to MLI an amount in cash equal to the market value of those Equivalent Securities as derived from rates offered by a dealer reasonably chosen by MLI or, if in MLI's reasonable belief that would not produce a commercially reasonable result, the amount it would cost MLI to purchase those Equivalent Securities, together with all costs, expenses, commissions and taxes thereon which would be incurred in connection therewith (such value or, as the case may be, amount and the currency to be as determined by MLI). 7.3 Intentionally Omitted. 7.4 Margin Call not Required: Any action referred to in this Clause 7 may be taken by MLI without request for additional Securities or monies by way of margin call. 8 Payments 8.1 Taxes: All sums payable by the Borrower under or in connection with this Agreement shall be paid free and clear of any restrictions or conditions, without set-off or counterclaim, and free and clear of, and (subject as hereinafter provided) without deduction for, any taxes, deductions or withholdings of any nature. If any deduction or withholding on account of any such tax or other amount is required by law to be made from any such sum, the Borrower shall pay in the same manner and at the same time such additional amounts as will result in receipt by MLI free from any liability in respect of any such deduction or withholding, of such amount as would have been received by it had no such deduction or withholding been required to be made. Notwithstanding -12- the foregoing, the Borrower shall not be responsible for income and "doing business" taxes imposed upon MLI. 8.2 Default Interest: If the Borrower does not pay any sum payable under or in connection with this Agreement when due, it shall pay interest on the amount from time to time outstanding in respect of that overdue sum for the period beginning on its due date and ending on the date of its receipt by MLI(the "payee"), both before and after judgement. Such interest shall be calculated from time to time at the rate per annum equal to the sum of the Spread and the rate certified by the payee as being equal to its cost of funding that overdue sum for such period(s) as the payee may from time to time reasonably select. Such interest shall be payable on demand. All interest payable under this Clause 8.2 which is not paid when due shall be added to the overdue sum and itself bear interest accordingly. 8.3 Non-Business Days: If any payment falls to be made on a day which is not a Business Day, it shall be postponed so as to fall on the next succeeding Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not). Interest shall be adjusted accordingly. 9 Warranties The Borrower represents and warrants to and for the benefit of MLI that: 9.1 the Borrower is duly organised and validly existing under the laws of its jurisdiction of establishment and has the power and authority to own its assets and to conduct the business which it conducts 9.2 its entry into, exercise of its rights and/or performance of or compliance with its obligations under this Agreement do not and will not violate (1) any law to which it is subject, (2) any of its constitutional documents or (3) any agreement to which it is a party or which is binding on it or its assets 9.3 it has the power to enter into, exercise its rights and perform and comply with its obligations under this Agreement and has taken all necessary action to authorise the execution, delivery and performance of this Agreement 9.4 it will obtain and maintain in effect and comply with the terms of all necessary consents, registrations and the like of or with any government or other regulatory body or authority applicable to this Agreement (other than any "doing business" consents, registrations and the like which MLI is required by applicable law to obtain or maintain) -13- 9.5 its obligations under this Agreement are valid, binding and enforceable at law 9.6 it is not in default under any agreement to which it is a party or by which it or its assets is or are bound and no litigation, arbitration or administrative proceedings are current or pending, which default, litigation, arbitration or administrative proceedings are material in the context of this Agreement 9.7 it is not necessary or advisable in order to ensure the validity, effectiveness, performance or enforceability of this Agreement or the perfection of the security created by or pursuant to this Agreement that any document be filed, registered or recorded in any public office or elsewhere that have not already been filed, registered or recorded 9.8 except by this Agreement, the Custodian Agreement and the Collateralised Guaranty (as defined in the Custodian Agreement), neither Prometheus Western Retail LLC nor any Guarantor (as defined in the Letter) (collectively, the "Securities Holders") has assigned, transferred or otherwise disposed of the Collateral (or its rights, title and interest to and in the Collateral) or its rights and benefits under or in connection with the Hedging Contracts, either in whole or in part, nor agreed to do so, and will not at any time do so or agree to do so, and it will at all times be the sole beneficial owner of and fully guarantee title to all Collateral and rights and benefits which are now owned by any such Securities Holder 9.9 except for the security created by or pursuant to this Agreement, the Custodian Agreement and the Collateralised Guaranty, no mortgage, charge, pledge, lien, claim or other similar encumbrance or security of any kind exists on or over the Collateral (or its right, title and interest in and to the Collateral) or its rights and benefits under or in connection with the Hedging Contracts, either in whole or in part, nor has it agreed to create any such other security nor will it at any time do so or agree to do so and 9.10 each of the above representations and warranties will be correct and complied with in all respects during the continuance of the Facilities and until all the Secured Liabilities (other than the Contingent Liabilities) have been duly and properly paid in full, as if repeated then by reference to then existing circumstances. 10 Events of Default It shall be an Event of Default if: -14- 10.1 the Borrower does not pay any sum payable under or in connection with this Agreement or any other agreement with MLI, MLIB or any other member of the Merrill Lynch Group on its due date or 10.2 the Borrower does not return any Equivalent Securities required to be returned under this Agreement on their due date or 10.3 any representation, warranty or statement by the Borrower in this Agreement or in any document delivered under this Agreement is not complied with or is or proves to have been incorrect in any material respect when made or, if it had been made on any later date by reference to the circumstances then existing, would have been incorrect in any material respect on that later date or 10.4 the Borrower does not comply with its obligations under Clause 6.4 promptly, which may in the circumstances at MLI's discretion be immediately, and in any event not later than MLI's close of business on the next Business Day after the shortfall occurs or 10.5 the Borrower fails duly to perform any one or more of its other obligations under this Agreement or any other agreement with MLI, MLIB or any other member of the Merrill Lynch Group and, other than in the case of Clause 6.4, if, in MLI's opinion, that default is capable of remedy it is not, in MLI's opinion, remedied within 15 days after notice of that default has been given to the Borrower or 10.6 any provision of this Agreement which is material to the interests of MLI is not (or is claimed by the Borrower not to be) in full force and effect and, other than in the case of Clause 6.4, if, in MLI's opinion, such circumstance is capable of remedy it is not, in MLI's opinion, remedied within 30 days after notice thereof has been given to the Borrower or 10.7 MLI reasonably determines by written notice to the Borrower that the security (in whole or in part) created by or pursuant to this Agreement is not in full force and effect or does not have the priority stated herein or 10.8 a distress, attachment, execution or other legal process is levied, enforced or sued out on or against any item of Collateral by any third party or 10.9 a distress, attachment, execution or other legal process is levied, enforced or sued out on or against any other asset of the Borrower and is not discharged or stayed within 7 days and, in MLI's conclusive opinion, such event has or could have a material adverse effect on MLI or -15- 10.10 any step is taken or legal proceeding started by any person in the bankruptcy or insolvency of the Borrower or for the appointment of a receiver, administrator, trustee or similar of the Borrower or of any or all of the revenues and assets of the Borrower or for the liquidation, winding-up, administration, dissolution or reorganisation of the Borrower or its merger with or into any other person(s) (together "Winding-up") (except on terms approved by MLI before that step is taken) and, in the case of any such step or proceeding taken or started against it, the same (1) results in a judgement of bankruptcy or insolvency or the making of any such appointment or the making of an order for Winding-up, or (2) is not discharged within 60 days or 10.11 any indebtedness of the Borrower in respect of monies borrowed or raised of not less than $500,000 or its equivalent (1) is not paid when due nor within any applicable grace period in any agreement relating to that indebtedness, or (2) becomes due and payable before its normal maturity by reason of a default or event of default, however described or 10.12 the Borrower is insolvent, is unable to pay its debts as they fall due, stops, suspends or threatens to stop or suspend payment of all or a material part of its debts, begins negotiations or takes any proceeding or other step with a view to readjustment, rescheduling or deferral of all of its indebtedness or any part of its indebtedness which it would or might otherwise be unable to pay when due or proposes or makes a general assignment or an arrangement or composition with or for the benefit of creditors or 10.13 any event occurs which under the laws of any relevant jurisdiction has an effect equivalent to any of the events referred to in this Clause 10. If any person (the "Guarantor") has provided to MLI a guarantee or other performance assurance (the "Performance Assurance Agreement") of the Borrower's obligations under this Agreement and the Custodian Agreement, then it shall also be an Event of Default if any of the events referred to in any of Clauses 10.1, 10.3, 10.5, 10.6 and 10.9 to 10.13 (all inclusive) occurs in relation to the Guarantor (and for this purpose references, however expressed, to "the Borrower" and "this Agreement" respectively shall be deemed to be references to "the Guarantor" and "the Performance Assurance Agreement"). -16- 11 Enforcement If the Borrower fails or is unable to MLI's satisfaction duly to comply with any demand under Clause 7.1(B) or (C), MLI may at any time thereafter: 11.1 without further notice to the Borrower and without prejudice to any other right or remedy, dispose or procure the disposal, by sale or otherwise, of all or from time to time part of the Pledged Securities (including any securities or other property delivered or deliverable under Clause 13, any Hedging Contracts or the Custodian Agreement) or other property hereby pledged or charged or otherwise realise or procure the realisation of the same, in such manner and at such price or prices (whether payable or deliverable immediately, on a deferred basis or by instalments) without being responsible for any loss or diminution in price, as it may think fit, close out or liquidate any option, future, long position or short position which the Borrower may have (by sale, purchase or otherwise howsoever), take possession of all or from time to time part of such Pledged Securities or other property hereby pledged or charged and proceed forthwith to sell, assign, give options to purchase, contract to sell or otherwise dispose of and deliver such Pledged Securities or other property hereby pledged or charged or any part thereof in one or more parts at public or private sale at any exchange, broker's board or at any of MLI's offices or elsewhere at such prices and on such terms as MLI deems appropriate, and exercise all or any rights conferred by and collect any proceeds of and monies, securities or other property paid or delivered under or otherwise receive and realise the benefits of the Hedging Contracts and the Custodian Agreement, all without demand for performance, advertisement or other notice of any kind, and apply the proceeds thereof and all cash balances in the Collateral Account or otherwise hereby pledged or charged as follows: 11.1.1 first, in or towards payment of all amounts (including costs, expenses, commissions and taxes) arising as a result thereof 11.1.2 secondly, in or towards payment and satisfaction of the Secured Liabilities in such order and manner as MLI may determine 11.1.3 thirdly, in payment of any surplus to the Borrower or other person entitled thereto. Provided always that MLI shall not be obliged to apply any part of such proceeds in accordance with sub-clause 11.1.3 until all Secured Liabilities (other than the Contingent Liabilities) have been discharged to the satisfaction of MLI and until after each of them has exercised all set-offs and other rights which it is expressed to be entitled to make or exercise under this Agreement. Until such time such proceeds and -17- compensation shall be held in or credited to the Collateral Account or such other account with MLI as MLI may (in its absolute discretion) decide. Upon any disposal of any such Pledged Securities or other property hereby pledged or charged or realisation in respect of any Hedging Contracts or the Custodian Agreement made or purported to be made under the provisions of this Clause, a certificate of any officer or employee of MLI that a default has occurred and that the power to do so has become exercisable shall be conclusive evidence of that fact in favour of any purchaser or other person to whom any of such Pledged Securities or other property hereby pledged or charged may be transferred under such disposal or, as the case may be, any person liable under or in respect of any such Hedging Contract or the Custodian Agreement and the Borrower agrees to indemnify MLI (on a full indemnity basis) against any claim which may be made against it by such purchaser or person by reason of any defect in title to any such Pledged Securities or other property hereby pledged or charged unless such claim has arisen as a result of the negligence or wilful misconduct of MLI. 11.2 in addition to any general lien, right to combine or consolidate accounts, set-off or other similar right to which it may be entitled at law, by contract, or otherwise, MLI may at any time without notice to the Borrower, debit any liabilities of the Borrower under or in connection with this Agreement to any account of the Borrower with it (including without limitation the Collateral Account) and combine or consolidate all or any one or more of the Borrower's then existing accounts (including without limitation the Collateral Account) with, and liabilities of the Borrower to, it and/or set off, transfer or apply any sum(s) standing to the credit of any one or more of the Borrower's accounts with it (including without limitation the Collateral Account) in or towards satisfaction of any of the liabilities of the Borrower to MLI, whether present or future, actual or contingent. 11.3 do all such other acts and things as it may consider necessary or desirable in connection with the realisation of the security created by or pursuant to this Agreement. MLI shall have authority to purchase one currency with another for purposes of this Clause 11. 12 Indemnity The Borrower shall on demand indemnify MLI (in this Clause 12, the "Indemnified Party") against: 12.1 any funding and any other costs, expenses or liabilities (including loss of profit and including taxes (other than taxes on the overall net -18- income of the Indemnified Party), any stamp duty or similar tax, legal fees and value added tax) sustained or incurred by the Indemnified Party (1) to render this Agreement (including the security created by or pursuant to this Agreement) enforceable and admissible in evidence in the courts referred to in Clause 20; (2) in the administration of this Agreement (including the making of Securities Loans and the return of Equivalent Securities); (3) as a result of the assignment, exercise or performance of any Hedging Contract(s); (4) in protecting or enforcing the Indemnified Party's rights under this Agreement and/or any amendment; (5) as a result of the occurrence or continuance of any Event of Default or default by the Borrower under this Agreement (whether in connection with any act or thing done as set out in Clause 11 or otherwise); or (6) as a result of the receipt or recovery by the Indemnified Party (whether or not as a result of any application in accordance with Clause 2.2) of all or any part of an Advance which has a fixed interest period otherwise than on the last day of that fixed interest period and 12.2 all costs, expenses and losses sustained or incurred by the Indemnified Party as a result of or in connection with the payment of any amount due under this Agreement, whether as a result of any judgement or order, the winding up or bankruptcy of the Borrower, or otherwise, in a currency other than that due under this Agreement, including any variation between the rate of exchange at which such amount is converted into such currency for the purpose of such judgement or order or otherwise, and the rate prevailing on the date on which the Indemnified Party first receives actual payment of such amount in such currency other than that due under this Agreement. 13 Intentionally Omitted. 14 Successors and Assigns 14.1 The Borrower may not assign or transfer all or any part of its rights or obligations under this Agreement. However, this Agreement shall be binding on the Borrower and its successors as from time to time constituted. 14.2 Where the Borrower is a partnership, this Agreement is being executed on behalf of the Borrower by one of its general partners and, by such execution, such general partner agrees and warrants that the partnership of which he or it is a general partner is and will be fully bound by this Agreement as the Borrower. 14.3 MLI may at any time assign or transfer all or part of its rights and/or obligations under this Agreement to any other member of the Merrill Lynch Group or, with the prior written consent of the Borrower (such -19- consent not to be unreasonably withheld), to any other person. MLI shall after any such assignment or transfer and to the extent (if at all) appropriate or required hold the security created by or pursuant to this Agreement for itself and each assignee or transferee. Any reference in this Agreement to MLI shall be construed accordingly and shall also include its successors. Any such assignee or transferee shall be entitled to the full benefit of this Agreement to the same extent as if it were an original party in respect of the rights or obligations assigned or transferred to it. 14.4 MLI may disclose to any other member of the Merrill Lynch Group or, subject to prior notice to the Borrower, any other potential assignee or transferee or person who has entered or proposes to enter into contractual arrangements with it in relation to or concerning this Agreement such information about the Borrower and this Agreement as it may think fit. 15 Information During the continuance of the Facilities and until the Secured Liabilities (other than the Contingent Liabilities) have been duly and properly paid in full, the Borrower shall furnish to MLI within 90 days after the end of each of its financial years its annual audited accounts and promptly such other financial and other information as MLI may reasonably request from time to time. 16 Remedies and Waivers No failure by MLI to exercise, and no delay by MLI in exercising, any right or remedy will operate as a waiver thereof, nor will any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. The authority to debit, charge and pledge and the right of set-off and other rights and remedies provided in this Agreement are separate, independent and cumulative and not exclusive of any rights or remedies (including any other security, right of set-off, lien, right to combine or consolidate accounts or similar right) to which MLI is at any time entitled anywhere, whether by operation of law or otherwise. 17 Partial Invalidity If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions of this Agreement, nor the legality, validity or enforceability of such provisions under the law of any other jurisdiction shall in any way be affected or impaired thereby. If and to -20- the extent that the security expressed to be created by or pursuant to this Agreement is at any time and for any reason not effective as a fixed charge, it shall instead take effect as a floating charge. 18 Miscellaneous 18.1 All interest shall accrue from day to day and shall be calculated on the basis of a 360-day year (365 days where that is market practice, as determined by MLI) and the number of days elapsed. 18.2 The certificate of an officer or employee of MLI as to the calculation of any sum payable to MLI under the terms of this Agreement shall be final, conclusive and binding on the Borrower save in the case of manifest error. 18.3 Except to the extent otherwise specifically provided in any other agreement between MLI and the Borrower, if there is any conflict or inconsistency between this Agreement and any other such agreement, the terms of this Agreement shall prevail. 19 Notices 19.1 The Borrower and MLI may from time to time issue instructions, notices, demands or requests either orally or in writing (but in writing only where so provided under this Agreement) and MLI shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken in good faith pursuant to instructions, notices, demands or requests (believed by it to be genuine and to be given or made by the appropriate person(s)). The Borrower shall indemnify MLI against all costs, expenses and liabilities arising from MLI's relying on any such instructions, notices, demands or requests. 19.2 Each oral communication under this Agreement shall be directed, if to MLI, to such of its officer(s) as may be notified by MLI to the Borrower from time to time, and if to the Borrower, to such of its representative(s) as may be notified to MLI from time to time. Each written communication under this Agreement shall be addressed as follows: MLI: 20 Farringdon Road P.O. Box 293 London EC1M 3NH Attention: International Prime Brokerage Fax No: 4471 892 4985 The Borrower: As set out in the Letter -21- or to such other address, telex or facsimile number or marked for the attention of such other person as may be notified by the relevant addressee from time to time to the other party. Notices shall be deemed to have been received two days after being deposited for overnight delivery with any reputable overnight courier service and immediately in the case of a telex, fax or oral communication. 20 Governing law This Agreement (except as set forth below) shall be governed by and construed in accordance with English law and, in relation to any legal action or proceedings arising out of or in connection with this Agreement ("Proceedings"), the Borrower hereby and for the benefit of MLI irrevocably submits to the jurisdiction of the courts of England and any New York State or United States Federal court sitting in New York City, and waives any objection to Proceedings in such courts on the grounds of venue or on the grounds that the Proceedings have been brought in an inconvenient forum. Section 6 of this Agreement and the provisions regarding the creation, perfection, priority and enforcement of the lien of this Agreement, and the determination of deficiency judgments, shall be governed by the laws of New York State. Those submissions shall not affect MLI's right to take Proceedings in any other court of competent jurisdiction, nor shall the taking of Proceedings in any court of competent jurisdiction preclude MLI from taking Proceedings in any other court of competent jurisdiction (whether concurrently or not). -22- EX-3 4 FIRST AMENDMENT TO FACILITY LETTER AS OF NOVEMBER 17, 1999 BETWEEN MERRILL LYNCH INTERNATIONAL ("LENDER") AND COMMONWEALTH ATLANTIC PROPERTIES INVESTORS TRUST, PROMETHEUS INVESTMENT HOLDING CORP. AND PROMETHEUS WESTERN RETAIL, LLC, ACTING JOINTLY AND SEVERALLY Borrowers Commonwealth Atlantic Properties Investors Trust, Prometheus Investment Holding Corp. and Prometheus Western Retail, LLC, jointly and severally as co- borrowers. Guarantors LF Strategic Realty Investors L.P. ("LFSRI") and Prometheus AAPT Holdings, L.L.C., jointly and severally, for payment of all amounts due to Lender in connection with the Loan, including interest, principal, late payment fees and collection expenses. Closing Date November 17, 1999 Maturity Date May 15, 2001 Total Amount Available $44.0 million, being the total amount which Merrill Lynch may, in its discretion, make available to the Borrowers for drawdown, in minimum $5.0 million increments or additional $1.0 million increments thereof. Initial Margin Not less than 75% as of the Closing Date. Maintenance Margin Initially 75%, increasing to 80% on May 15, 2000 and 85% on November 15, 2000; however in no event shall the principal amount of the loan outstanding exceed the Total Amount Available. Interest Rate Base Rate plus 2.625%, payable monthly in arrears Loan Fee 2.0% of the Total Amount Available shall be due at closing. Amortization of Total The Total Amount Available shall be reduced by $8.0 Amount Available million (the "Scheduled Payment") on the fifteenth day of each February, May, August and November, commencing on February 15, 2000 (each, a "Payment Date"). Dividends On the date that dividend payments are received by Lender from CTA, UDR or BDN (each a "Dividend Payment Date"), Lender shall apply such dividend payments in reduction of the Total Amount Available (and such amounts shall be credited to the Scheduled Payment coming due on the next Payment Date), and once the Scheduled Payment that is coming due on the next Payment Date has been fully paid, any such dividends received on or prior to such next Payment Date shall be applied to accrued and unpaid interest then due and owing to Lender; provided, however, that if the aggregate dividends received by Lender on the Dividend Payment Dates immediately preceding the next Payment Date are in an amount which is less than the Scheduled Payment due on such Payment Date, such shortfall between the aggregate amount of dividend payments received by Lender on such Dividend Payment Dates and the Scheduled Payment due on such next Payment Date shall be paid by Borrowers on such Payment Date. In the event that immediately following a Payment Date there are funds remaining on deposit with Lender after application of the dividend payments received by Lender on or prior to such Payment Date to the Scheduled Amount due on such Payment Date and to all accrued and unpaid interest due and payable on or before such Payment Date, Lender shall pay the remaining balance to the Borrowers pursuant to wiring instructions delivered to Lender by the Borrowers. Collateral Securities (i) 13,166,667 common shares of Center Trust Inc. ("CTA") carrying an annual dividend of $1.44 per share (the "CTA Collateral Securities"). (ii) $136.5 million of perpetual Series D Convertible Preferred Stock of United Dominion Realty Trust, Inc. ("UDR"), carrying an annual coupon of 7.50% (the "UDR Collateral Securities"). The UDR Collateral Securities are convertible into 8.4 million common shares at $16.25 per share. (iii) $37.5 million of perpetual Convertible Preferred Stock in Brandywine Realty Trust ("BDN"), carrying an annual coupon of 7.25% (the "BDN Collateral Securities"). The BDN Collateral Securities are convertible into 1.3 million common shares at $28.00 per share. Prepayment Penalty None, except for any LIBOR breakage costs incurred in connection with a prepayment. 2 Release of BDN Provided there has been no Event of Default, the BDN Collateral Securities Collateral Securities may be released upon a reduction of the Total Amount Available by $25.0 million. Upon release of the BDN Collateral Securities, the Maintenance Margin shall be reset to 85%. Release or Sale of CTA The CTA Collateral Securities and the UDR Collateral or UDR Collateral Securities may not be released, and the Loan will Securities become due upon the sale of either the CTA Collateral Securities or the UDR Collateral Securities. Conversion of UDR or Upon the conversion of either the UDR Collateral BDN Collateral Securities or the BDN Collateral Securities either Securities to Common by the Borrower or mandatorily by the issuer(s), the Stock Maintenance Margin will increase to 85%. Events of Default In addition to all Events of Default in the Facility Letter, the following shall also be Events of Default: (i) Failure to pay interest when due; (ii) Failure to pay scheduled principal amortization when due; (iii) Failure of CTA to pay a quarterly dividend on common stock of not less than $0.36 per share, and the sooner to occur of (i) the closing share price of CTA declines by 50% or more from the closing share price as of the day prior to the Closing Date, or (ii) the closing share price of CTA fails to exceed $5.00 per share (in each case for 3 consecutive trading days); (iv) Failure of UDR to pay stated dividend on Series D Convertible Preferred Stock; (v) Failure of BDN to pay stated dividend on Convertible Preferred Stock; (vi) Bankruptcy of, or any event as described in clause 10.10 of the Facility Letter with respect to CTA, UDR, or BDN; (vii) The net assets represented by partner's capital of the Guarantor is less than the sum of (i) $400 million, plus (ii) the market value of the collateral; (viii) Failure to meet margin calls promptly; 3 (ix) Cross-default to any event of Default (howsoever described) related to the recourse indebtedness of CTA, UDR or BDN in excess of $25 million; (x) A decline in the market value of the Collateral in excess of 35% from the market value as of the Closing Date. Expenses Borrower shall pay all expenses in connection with the Facilities, including, but not limited to, all fees and disbursements of Lender's counsel whether with respect to retained firms, the reimbursement for the expenses of in- house staff or otherwise, and brokerage fees and commissions. To the extent incurred, the foregoing expenses shall be paid by Borrower whether or not the Facilities shall close or be funded. 4 MERRILL LYNCH INTERNATIONAL By: /s/ John Piccitto Name: John Piccitto Title: Director of Equity Markets Global Equity Finance 20 Farringdon Road P.O. Box 293 London EC1M 3NH Commonwealth Atlantic Properties Investors Trust, a Maryland real estate investment trust c/o Lazard Freres Real Estate Investors L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: /s/ John A. Moore ---------------------------------- Name: John A. Moore Title: Chief Financial Officer Prometheus Investment Holding Corp., a Delaware corporation c/o Lazard Freres Real Estate Investors L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: /s/ John A. Moore ---------------------------------- Name: John A. Moore Title: Chief Financial Officer 5 Prometheus Western Retail, LLC, a Delaware limited liability company c/o Lazard Freres Real Estate Investors L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: Prometheus Western Retail Trust, a Maryland real estate investment trust, its managing member By: /s/ John A. Moore ---------------------------------- Name: John A. Moore Title: Chief Financial Officer 6 EX-4 5 COLLATERALISED GUARANTEE TO: Merrill Lynch International ("MLI") For the Attention of: John Piccitto 20 Farringdon Road P.O. Box 293 London, EC1M 3NH 1 Guarantee In consideration of MLI entering into a facilities agreement (as amended and supplemented from time to time, the "Facilities Agreement", which shall include each transaction entered into and each document issued or given pursuant to the Facilities Agreement) constituted by a Terms Sheet and a letter dated 17 November 1999 from MLI to Commonwealth Atlantic Properties Investors Trust, Prometheus Investment Holding Corp. and Prometheus Western Retail, LLC (collectively the "Customer") c/o Lazard Freres Real Estate Investors L.L.C., 30 Rockefeller Plaza, 50th Floor, New York, NY, 10020, USA, as amended by First Amendment to Facility Letter dated 17 November 1999, and of MLI entering into a custodian agreement with Prometheus Investment Holding Corp., LF Strategic Realty Investors L.P. and Prometheus AAPT Holdings, L.L.C. (as amended and supplemented from time to time, the "Custodian Agreement" and, together with the Facilities Agreement, the "Agreements") dated 17 November 1999, and of MLI making available to the Customer the facilities and services provided for in the Agreements, we, LF Strategic Realty Investors L.P., a Delaware limited partnership and Prometheus AAPT Holdings, L.L.C., a Delaware limited liability company (collectively, the "Guarantor"), having our principal place of business c/o Lazard Freres Real Estate Investors L.L.C., 30 Rockefeller Plaza, 50th Floor, New York, NY 10020, USA hereby unconditionally and irrevocably: 1.1 guarantee that, if for any reason the Customer does not pay any sum payable by it under the Agreements by the time, on the date and otherwise in the manner required by the Agreements, whether on the normal due date, on acceleration or otherwise (together the "Guaranteed Liabilities"), the Guarantor will pay that Guaranteed Liability on demand by MLI and 1.2 as separate, independent and alternative stipulations, agree: 1.2.1 that any Guaranteed Liability which, although expressed to be payable by the Customer under the Agreements, is for any reason (whether or not now existing and whether or not now known or becoming known to MLI) not recoverable from the Guarantor on the basis of a guarantee shall nevertheless be recoverable from it as if it were the sole principal debtor and shall be paid by it to MLI on demand and 1.2.2 as a primary obligation to indemnify MLI against any loss suffered by it as a result of any Guaranteed Liability expressed to be payable by the Customer under the Agreements not being paid by the time, on the date and otherwise in the manner required by the Agreements or any Guaranteed Liability being or becoming void, voidable or unenforceable for any reason (whether or not now existing and whether or not now known or becoming known to MLI), the amount of that loss being the amount expressed to be payable by the Customer in respect of the relevant Guaranteed Liability. 2 Security Provisions 2.1 The Guarantor, as continuing security for the due payment of the Guaranteed Liabilities and with full title guarantee, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby irrevocably pledges, grants and creates a first priority lien on, and security interest in favour of MLI all the Guarantor's right, title and interest in and to all Securities, and all related documents, from time to time held by or for the account or to the order of MLI (whether in its capacity as Custodian or otherwise) or in or credited to the Guarantor Collateral Account and the claims represented thereby (together, the "Guarantor Pledged Securities"). The security created by or pursuant to this Guarantee shall affect and include all dividends, distributions and interest on and other proceeds of the Guarantor Pledged Securities or other property hereby pledged or charged, whether capital or income, and all property distributed, paid, accruing or offered at any time on, to, in respect of or in substitution for, any of the Guarantor Pledged Securities or other property hereby pledged or charged, in each case only to the extent that any of the foregoing are paid or delivered to MLI for credit to the Guarantor Collateral Account. 2.2 The Guarantor, as continuing security for the due payment of the Guaranteed Liabilities and with full title guarantee, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby irrevocably pledges, grants and creates a first priority lien on, and security 2 interest in favour of MLI all monies and investment property (and all the Guarantor's right, title and interest in and to such monies and the debt represented thereby and investment property) from time to time standing to the credit of the Guarantor Collateral Account, in whatever currency, and including any interest accrued or accruing thereon. 2.3 None of the monies from time to time standing to the credit of the Guarantor Collateral Account (nor the Guarantor's right, title and interest in and to such monies) shall, during the continuance of the Facilities and until the Secured Liabilities (other than the Contingent Liabilities) have been duly and properly paid in full, be capable of being withdrawn, assigned or otherwise disposed of or encumbered except with MLI's prior written consent or as otherwise specifically provided in this Guarantee. Any such consent of MLI (and any payment whether with or without such consent) shall operate as a release of the relevant monies and the provisions of this Guarantee shall continue to apply to the Guarantor Collateral Account and the monies from time to time standing to the credit thereof. 2.4 The Guarantor hereby undertakes to MLI for itself that, at all times during the continuance of the Facilities and until the Secured Liabilities (other than the Contingent Liabilities) have been properly and duly paid in full: 2.4.1 it will on demand duly pay any calls, subscription monies and/or other monies payable on or in respect of any of the Guarantor Pledged Securities. If it does not do so, MLI may (but shall not be obliged to) do so and, if MLI does so, the Guarantor shall on demand indemnify MLI against such payment and 2.4.2 it will not (nor will it agree, conditionally or unconditionally, to) create or have outstanding any call option, pledge, assignment, transfer, hypothecation, mortgage, charge, claim or similar encumbrance, security interest or lien on or affecting any of the Guarantor Pledged Securities (except as contemplated by this Guarantee or with MLI's prior written consent). MLI acknowledges that the Guarantor may request consent to options, assignments and transfers (including agreements therefor) on or of Guarantor Pledged Securities in the normal course of its trading operations and MLI will consider any such request in good faith. 3 2.5 Without prejudice to Clause 2.3 or 4.2, MLI is authorised to debit the Guaranteed Liabilities to any account of the Guarantor with MLI and MLI is authorised to combine or consolidate such account with the Guarantor Collateral Account and/or set off, transfer or apply any monies standing to the credit of the Guarantor Collateral Account in or towards satisfaction of any of the Guaranteed Liabilities. 2.6 The security created by or pursuant to this Guarantee shall be a continuing security notwithstanding any intermediate payment or settlement of account and, without prejudice to the generality of the foregoing, shall continue in full force and effect until MLI reassigns or executes a formal release with respect to such security, which it may do in whole or from time to time in part, and any withdrawal or other disposal of any of the property subject to the security created by or pursuant to this Guarantee shall operate as a release of such property, and the provisions of this Guarantee shall continue to apply to the remainder thereof. The security created by or pursuant to this Guarantee shall be in addition to and shall not prejudice any other security, guarantee, indemnity, right or remedy of whatever nature which MLI may now or at any time have in respect of any of the Guaranteed Liabilities. Upon receipt from the Guarantor of a request made after termination of the Facilities and payment in full of all the Secured Liabilities (other than the Contingent Liabilities), MLI shall at the expense of the Guarantor reassign to the Guarantor so much (if any) of the Guarantor Pledged Securities as then remains and/or execute a formal release with respect thereto. 2.7 In this Guarantee: "Custodian" means MLI in its capacity as such under the Custodian Agreement. "Guarantor Collateral" means all Securities, including any certificates and documents of or evidencing title to the same (and the claim represented thereby), and cash balances (and the debt represented thereby) in or credited to the Guarantor Collateral Account all right, title and interest in and to which are, to the satisfaction of MLI, subject to the security created by or pursuant to this Guarantee. "Guarantor Collateral Account" means the one or more accounts, having such designations as MLI may determine, opened or to be opened by MLI pursuant to, or used for the purposes of, this Guarantee for the Guarantor with the Custodian or any other person (including MLIB or any 4 other member of the Merrill Lynch Group) chosen by MLI in respect of Guarantor Collateral, all such Guarantor Collateral Accounts to be maintained under the complete discretion of MLI or such other person in each case pursuant to the Custodian Agreement. Headings shall be ignored in construing this Guarantee. 2.8 MLI shall have all rights and remedies as a secured party at law or in equity including, without limitation, the rights of a secured party under the Uniform Commercial Code. 3 Guarantor Collateral 3.1 The Guarantor, at its own expense, will execute or cause to be executed all such documents, and will do or cause to be done all such things, which are reasonably requested by MLI (1) to enable MLI to enjoy, exercise or enforce its rights as a secured party under this Guarantee and (2) to evidence, and to establish and maintain the perfection and first priority of, MLI's security interest in the Guarantor Pledged Securities and the Guarantor Collateral Account (and the monies for the time being standing to the credit thereof and the debt represented thereby) and the perfection of MLI's security interest in the other property hereby pledged or charged. Without limiting the generality of the foregoing, the Guarantor, at its own expense, will execute and give or file, or both, all notices and documents (including, but not limited to, notice of the security created by or pursuant to this Guarantee) in such manner, to such persons and at such places as may be reasonably requested by MLI to establish and maintain the perfection and, as appropriate, first priority of MLI's said security interest. The Guarantor irrevocably and by way of security authorises MLI, if the Guarantor does not do so, to take any step contemplated by this Clause 3.1 (but MLI shall have no obligation to do so). 3.2 Except as otherwise agreed by the Guarantor and MLI, MLI shall at all times while any Guarantor Collateral remains credited to the Guarantor Collateral Account use reasonable care in connection therewith but shall not thereby be responsible for the value of the Guarantor Collateral or the other property hereby pledged or charged or, except to the extent otherwise specifically agreed, for the collection or payment of any dividends, distributions, interest or other receipts in respect of Guarantor Pledged Securities or other property hereby pledged or charged nor to ensure the taking up of any securities, rights, monies or other property distributed, 5 paid, accruing or offered at any time on, to, in respect of or in substitution for any of the Guarantor Collateral or other property hereby pledged or charged. 3.3 [Intentionally omitted.] 3.4 Until such time as an Event of Default as set out in Clause 10 of the Facility Agreement (each an "Event of Default") occurs, and without prejudice to any other requirements of MLI, the Guarantor may at any time request MLI to release and reconvey to the Guarantor (or as it may direct) the BDN Collateral Securities (as defined in the Letter) upon a reduction of the Total Amount Available (as defined in the Letter) by $25,000,000, and MLI will give effect to such request. Upon release of the BDN Collateral Securities, the Maintenance Margin (as defined in the Letter) shall be reset to 85%. 4 Enforcement If the Guarantor fails or is unable to MLI's satisfaction duly to comply with any demand under Clause 1: 4.1 MLI may at any time thereafter, without notice to the Guarantor and without prejudice to any other right or remedy, dispose or procure the disposal, by sale or otherwise, of all or from time to time part of the Guarantor Pledged Securities or other property hereby pledged or charged or otherwise realise or procure the realisation of the same, in such manner and at such price or prices (whether payable or deliverable immediately, on a deferred basis or by instalments) without being responsible for any loss or diminution in price, as it may think fit, close out or liquidate any option, future, long position or short position which the Guarantor may have (by sale, purchase or otherwise howsoever), take possession of all or from time to time of part of the Guarantor Pledged Securities or other property hereby pledged or charged and proceed forthwith to sell, assign, give options to purchase, contract to sell or otherwise dispose of and deliver the Guarantor Pledged Securities or other property hereby pledged or charged or any part thereof in one or more parts at public or private sale at any exchange, broker's board or at any of MLI's offices or elsewhere at such prices and on such terms as MLI deems appropriate, all without demand for performance, advertisement or other notice of any kind, and apply the proceeds thereof and all cash balances in the Guarantor Collateral Account or otherwise hereby pledged or charged (together, the "Guarantor Proceeds") as follows: 6 4.1.1 first, in or towards payment of all amounts (including costs, expenses, commissions and taxes) arising as a result thereof 4.1.2 secondly, in or towards payment and satisfaction of the Guaranteed Liabilities in such order and manner as MLI may determine 4.1.3 thirdly, in payment of any surplus to the Guarantor or other person entitled thereto. Provided always that MLI shall not be obliged to apply any part of such proceeds in accordance with sub-clause 4.1.3 until all the Secured Liabilities (other than the Contingent Liabilities) have been discharged to the satisfaction of MLI and until after each of them has exercised all set-offs and other rights which it is expressed to be entitled to make or exercise under this Guarantee and/or the Facilities Agreement. Until such time the proceeds shall be held in or credited to the Guarantor Collateral Account or such other account with MLI as MLI may (in its absolute discretion) decide. Upon disposal of any Guarantor Pledged Securities or other property hereby pledged or charged made or purported to be made under the provisions of this Clause, a certificate of any officer or employee of MLI that a default has occurred and that the power of disposal has become exercisable shall be conclusive evidence of that fact in favour of any purchaser or other person to whom any of the Guarantor Pledged Securities or other property hereby pledged or charged may be transferred under such disposal and the Guarantor agrees to indemnify MLI (on a full indemnity basis) against any claim which may be made against it by such purchaser or person by reason of any defect in title to such Guarantor Pledged Securities or other property hereby pledged or charged unless such claim has arisen as a result of the negligence or wilful misconduct of MLI. 4.2 In addition to any general lien, right to combine or consolidate accounts, set-off or similar right to which it may be entitled at law, by contract, or otherwise, MLI may at any time, without notice to the Guarantor, debit any of the Guaranteed Liabilities to any account of the Guarantor with it (including without limitation the Guarantor Collateral Account) and combine or consolidate all or any one or more of the Guarantor's then existing accounts (including without limitation the Guarantor Collateral Account) with, and liabilities of the Guarantor to, it and/or set off, transfer or apply any sum(s) standing to the credit of any one or more of the Guarantor's accounts with it (including without 7 limitation the Guarantor Collateral Account) in or towards satisfaction of any of the liabilities of the Guarantor to MLI, whether present or future, actual or contingent. 4.3 MLI may do all such other acts and things as it may consider necessary or desirable in connection with the realisation of the security created by or pursuant to this Guarantee. MLI shall have authority to purchase one currency with another for purposes of this Clause 4. 5 Guarantor as Principal Debtor As between the Guarantor and MLI but without affecting the Customer's obligations, the Guarantor shall be liable under this Guarantee as if it were the sole principal debtor and not merely a surety. Accordingly, it shall not be discharged, nor shall its liability be affected, by anything which would not discharge it or affect its liability if it were the sole principal debtor (including (1) any time, indulgence, concession, waiver or consent at any time given to the Customer or any other person, (2) any amendment or supplement to the Agreements or to any other security or guarantee, (3) the making or absence of any demand on the Customer or any other person for payment, (4) the enforcement or absence of enforcement of the Agreements or of any other security or guarantee, (5) the taking, existence or release of any other security or guarantee, (6) the winding-up or dissolution of the Customer or any other person or (7) the illegality, invalidity or unenforceability of or any defect in any provision of the Agreements or any of the Customer's obligations under them). 6 Guarantee Continuing The Guarantor's obligations under this Guarantee are and will remain in full force and effect by way of continuing security until the Facilities have terminated and MLI has irrevocably received or recovered all sums payable under the Agreements. Furthermore, those obligations of the Guarantor are additional to, and not instead of, any other security or guarantee at any time existing in favour of MLI, whether from the Guarantor or otherwise, and may be enforced without first having recourse to the Customer, any other person or any other security or guarantee. The Guarantor irrevocably waives all notices and (except as required by Clause 1) demands of any kind. 8 7 Accounts If this Guarantee ceases for any reason to be binding on the Guarantor as a continuing security in relation to the Customer, or if MLI becomes aware of any other mortgage, charge, pledge, lien or other encumbrance or security of any kind on or over the Guarantor Collateral or any part thereof, then MLI may break any account or accounts of the Customer with it and open a new account for the Customer. If that is done, no monies then or subsequently credited to such new account shall have the effect of reducing the amount due to MLI on the original account. If that is not done, MLI shall still be treated as if it had done so at the time of such cessation or, as the case may be, of the creation of the other mortgage, charge, pledge, lien or other encumbrance or security, and as if all payments then or subsequently made by or on behalf of the Customer to it had been credited to such new account with the same result. 8 Exercise of Guarantor's Rights Until such time as the Facilities are terminated and all the Secured Liabilities (other than the Contingent Liabilities) have been paid in full: 8.1 any right of the Guarantor, by reason of the performance of any of its obligations under this Guarantee, to be indemnified by the Customer or to take the benefit of or enforce any other security or guarantee shall be exercised and enforced only in such manner and on such terms as MLI may reasonably require to ensure satisfaction of the Customer's obligation to MLI; and 8.2 any amount received or recovered by the Guarantor (a) as a result of any exercise of any such right or (b) in the winding-up or dissolution of the Customer shall be held in trust for MLI and immediately paid to MLI. 9 Avoidance of Payments The Guarantor shall on demand by MLI indemnify MLI against any funding or other cost, loss, expense or liability sustained or incurred by it as a result of its being required for any reason (including any bankruptcy, insolvency, winding-up, dissolution or similar law of any jurisdiction) to refund all or part of any amount received or recovered by it in respect of any Guaranteed Liability and shall in any event pay to it on demand by MLI the amount so refunded by it. 9 10 Suspense Accounts For the purpose of enabling MLI to maximise its recoveries in any actual or potential winding-up or dissolution, any amount received or recovered by MLI (otherwise than as a result of a payment to it by the Customer) in respect of any Guaranteed Liability may be placed by the recipient in a suspense account. That amount may be kept there unless and until MLI is satisfied that it is not obliged to pay any further sums under the Agreements and that it has irrevocably received or recovered all sums payable to it under the Agreements. 11 Certificates Conclusive The certificate of an officer or employee of MLI as to the calculation any amount payable to MLI under the terms of this Guarantee shall, save for manifest error, be final, conclusive and binding on the Guarantor. 12 Payments, Taxes All payments by the Guarantor shall be made free and clear of any restrictions or conditions, without set-off or counterclaim, and free and clear of, and (subject as hereinafter provided) without deduction for, any taxes, deductions or withholdings of any nature. If any deduction or withholding on account of any such tax or other amount is required by law to be made from any payment, the Guarantor shall pay in the same manner and at the same time such additional amounts as will result in receipt by MLI, free from any liability in respect of any such deduction or withholding, of such amount as would have been received by it had no such deduction or withholding been required to be made. Notwithstanding the foregoing, Guarantor shall not be obligated to pay income or "doing business" taxes imposed upon MLI. 13 Currency The Guarantor shall pay all amounts hereby guaranteed to such account as MLI may notify to the Guarantor and in the same currency and funds as such amounts are payable by the Customer under the Agreements (the "Currency of Account"). Any amount received or recovered by MLI in a currency other than the appropriate Currency of Account (whether as a result of, or of the enforcement of, a judgment or order of any court of any jurisdiction, in the winding-up or dissolution of the Customer, the Guarantor, or otherwise) in respect of any sum due to it from the Guarantor under this Guarantee shall only constitute a discharge to the Guarantor to the extent of the amount in that Currency of Account which MLI is able, in accordance with its usual practice, to purchase with the 10 amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). If that amount in that Currency of Account is less than the amount expressed to be due to MLI under this Guarantee, the Guarantor shall indemnify it against any loss sustained by it as a result. In any event, the Guarantor shall indemnify it against the cost of making any such purchase. 14 Representations and Warranties The Guarantor represents and warrants to and for the benefit of MLI that: 14.1 it is a limited liability company or limited partnership duly organised or incorporated and validly existing under the laws of the jurisdiction of its establishment and has the power and authority to own its assets and to conduct the business which it conducts 14.2 its entry into and/or performance of or compliance with its obligations under this Guarantee do not and will not violate or exceed any guaranteeing, charging or other powers or restrictions granted or imposed under any law to which it is subject, its constitutional documents or any agreement to which it is a party or which is binding on it or its assets 14.3 all acts, conditions and things required to be done, fulfilled and performed in order to enable it lawfully to execute and perform its obligations under this Guarantee and to ensure that its obligations are legal, valid and binding have been done, fulfilled and performed 14.4 it has the power to enter into and perform and comply with its obligations under this Guarantee and has taken all necessary action to authorise such execution and performance 14.5 it will obtain and maintain in effect and comply with the terms of all necessary consents, registrations and the like of or with any governmental or other regulatory body or authority applicable to this Guarantee (other than any "doing business" consents, registrations and the like which MLI is required by applicable law to obtain or maintain) 14.6 its obligations under this Guarantee are binding and enforceable at law 11 14.7 it is not in default under any agreement to which it is a party or by which it or its assets is or are bound and no litigation, arbitration or administrative proceedings are current or pending, which default, litigation, arbitration or administrative proceedings are material in the context of this Guarantee 14.8 it is not necessary or advisable in order to ensure the validity, effectiveness, performance or enforceability of this Guarantee or the perfection of the security created by or pursuant to this Guarantee that any document be filed, registered or recorded in any public office or elsewhere that has not already been filed, registered or recorded 14.9 except by this Guarantee, it has not assigned, transferred or otherwise disposed of the Guarantor Collateral it owns (or its rights, title and interest to and in the Guarantor Collateral), either in whole or in part, nor agreed to do so, and will not at any time do so or agree to do so, and it will at all times be the sole beneficial owner of and fully guarantee title to all Guarantor Collateral which is now owned by it or may at any time hereafter become subject to the security created by or pursuant to this Guarantee 14.10 except for the security created by or pursuant to this Guarantee, no mortgage, charge, pledge, lien, claim or other similar encumbrance or security of any kind exists on or over the Guarantor Collateral (or its right, title and interest in and to the Guarantor Collateral), either in whole or in part, nor has it agreed to create any such other security nor will it at any time do so or agree to do so and 14.11 each of the above representations and warranties will be correct and complied with in all respects during the continuance of the Facilities and so long as any sum remains payable under the Agreements, as if repeated then by reference to the then existing circumstances. 15 Information Until such time as the Facilities have been terminated and all the Secured Liabilities (other than the Contingent Liabilities) have been paid in full, the Guarantor shall furnish to MLI such financial and other information as to its affairs and, as the case may be, its subsidiaries as MLI may reasonably request from time to time. 12 16 Intentionally Omitted. 17 Assignments MLI may at any time assign all or part of its rights under this Guarantee to any other member of the Merrill Lynch Group or, with the prior written consent of Guarantor (such consent not to be unreasonably withheld), to any other person which is the holder of the Facilities. MLI shall after any such assignment and to the extent (if at all) appropriate or required hold the security created by or pursuant to this Guarantee for itself and each assignee. Any reference in this Guarantee to MLI shall be construed accordingly and shall also include its successors. Any such assignee shall be entitled to the full benefit of this Guarantee to the same extent as if it were an original party in respect of the rights assigned to it. MLI may disclose to any other member of the Merrill Lynch Group or, subject to prior notice to Guarantor, any potential assignee or any other person who has entered or proposes to enter into contractual arrangements with it in relation to or concerning the Agreements or this Guarantee such information about the Customer, the Guarantor, the Agreements and this Guarantee as it may think fit. 18 Intentionally Omitted. 19 The Agreements 19.1 Terms defined in the Agreements (and not defined in this Guarantee) shall have the same meanings in this Guarantee. 19.2 This Guarantee is a Performance Assurance Agreement for the purposes of the Facilities Agreement. 20 Parties This Guarantee shall not be discharged nor shall the liability of the Guarantor be affected by any amalgamation or merger of MLI or the Guarantor with any other company, or any reconstruction or change in the constitution of MLI or the Guarantor, or any change in the name, style or constitution of MLI or the Guarantor or, as the case may be, in the persons who from time to time constitute the general and/or limited partners in the Guarantor, and this Guarantee shall be binding on the Guarantor and on all such persons. 13 21 Communications Any demand or other notice under this Guarantee shall be made in writing by MLI acting by one of its officers or employees and may be sent by post or hand delivered to the address of the Guarantor specified below, or sent by facsimile to the facsimile number specified below, or in each case to such other address and/or facsimile number as the Guarantor has from time to time notified to MLI in writing. Notices shall be deemed to have been received two days after being deposited for overnight delivery with any reputable overnight courier service and immediately in the case of hand delivered or facsimile communication. 22 Remedies and Waivers No failure by MLI to exercise, and no delay by MLI in exercising, any right or remedy will operate as a waiver thereof, nor will any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. The authority to debit, charge and pledge and the right of set-off and other rights and remedies provided in this Guarantee are separate, independent and cumulative and not exclusive of any rights or remedies (including any other security, right of set-off, lien, right to combine or consolidate accounts or similar right) to which MLI is at any time entitled anywhere, whether by operation of law or otherwise. 23 Partial Invalidity If at any time any provision of this Guarantee is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions of this Guarantee, nor the legality, validity or enforceability of such provisions under the law of any other jurisdiction shall in any way be affected or impaired thereby. If and to the extent that the security expressed to be created by or pursuant to this Guarantee is at any time and for any reason not effective as a fixed charge, it shall instead take effect as a floating charge. 24 Counterpart Execution This Guarantee may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. 14 25 Governing Law This Guarantee (except as hereinafter set forth) shall be governed by and construed in accordance with English Law. Section 2 of this Guaranty and the provisions regarding the creation, perfection, priority and enforcement of the lien of this Agreement, and the determination of deficiency judgments, shall be governed by the laws of New York State. 26 Proceedings In relation to any legal action or proceedings arising out of or in connection with this Guarantee ("Proceedings") the Guarantor, for the benefit of MLI, irrevocably submits to the jurisdiction of the courts of England and any New York State or United States Federal court sitting in New York City, and waives any objection to Proceedings in such courts on the grounds of venue or on the grounds that the Proceedings have been brought in an inconvenient forum. Those submissions shall not affect MLI's right to take Proceedings in any other court of competent jurisdiction, nor shall the taking of Proceedings in any court of competent jurisdiction preclude MLI from taking Proceedings in any other court of competent jurisdiction (whether concurrently or not). MERRILL LYNCH INTERNATIONAL By: /s/ John Piccitto Name: John Piccitto Title: Director of Equity Markets Global Equity Finance 20 Farringdon Road P.O. Box 293 London EC1M 3NH Attention: International Prime Brokerage Fax No: 44 17l 892 4860 Telephone: 44 171 892 4920 15 LF Strategic Realty Investors L.P., a Delaware limited liability company c/o Lazard Freres Real Estate Investors, L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: Lazard Freres Real Estate Investors L.L.C., a New York limited liability company, its general partner By: /s/ John A. Moore ----------------------------------- Name: John A. Moore Title: Principal & Chief Financial Officer 16 Prometheus AAPT Holdings, L.L.C. a Delaware limited liability company c/o Lazard Freres Real Estate Investors L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: LF Strategic Realty Investors L.P. a Delaware limited partnership, its managing member By: Lazard Freres Real Estate Investors L.L.C., a New York limited liability company, its general partner By: /s/ John A. Moore ----------------------------- Name: John A. Moore Title: Principal & Chief Executive Officer 17 EX-5 6 CUSTODIAN AGREEMENT This Agreement is made on 17 November 1999 between (1) MERRILL LYNCH INTERNATIONAL (the "Custodian") and (2) LF Strategic Realty Investors L.P., Prometheus AAPT Holdings, L.L.C. and Prometheus Western Retail, LLC, acting jointly and severally (collectively, the "Customer"). It is agreed as follows: 1 Definitions In this Agreement: 1.1 Collateralised Guarantee means the Collateralised Guarantee dated 17 November 1999 from LF Strategic Realty Investors L.P. and Prometheus AAPT Holdings, L.L.C., as amended and supplemented from time to time 1.2 "Customer Account" means the Collateral Account under Facility Agreement and the Guarantor Collateral Account under the Collateralised Guaranty 1.3 "Facility Agreement" means the facility letter dated 17 November 1999 between Merrill Lynch International ("MLI"), Prometheus Western Retail, LLC, Commonwealth Atlantic Properties Investors Trust and Prometheus Investment Holding Corp., as amended by First Amendment to Facility Letter dated 17 November 1999, as further amended and supplemented from time to time 1.4 "Instructions" means any instructions given by the Customer in relation to any specified transaction in writing or by facsimile or telex, signed or given by any one of the persons specified in or notified pursuant to Clause 11 1.5 "Rules" means the Rules of The Securities and Futures Authority Limited as from time to time in effect and 1.6 "Securities" means the Collateral Securities (as defined in the Facility Agreement) and the Guarantor Collateral Securities (as defined in the Collateralised Guaranty) and shall include all other investments, as defined in the Financial Services Act 1986 (as amended or re-enacted from time to time) and physical commodities (or any certificates or documents of or evidencing title to any of the same), which the Customer may at any time deposit with the Custodian to be held on the terms of this Agreement. 2 Appointment of Custodian The Customer hereby appoints the Custodian to act as custodian of the Securities in accordance with the terms and conditions of this Agreement and to provide the services described in this Agreement. 3 Warranties and Statements under the Rules 3.1 The Customer warrants to and for the benefit of the Custodian that it is duly organised and validly existing under the laws of its jurisdiction of establishment, has full capacity and authority to enter into this Agreement and to carry out all the transactions contemplated in this Agreement and has taken all necessary action (including the obtaining of all necessary consents, registrations and the like of or with any government or other regulatory body or authority) to authorise the execution, delivery and performance of this Agreement. 3.2 The Customer understands that the Custodian is regulated by of The Securities and Futures Authority Limited, that its name is as set out at the beginning of this Agreement and that at the date of this Agreement its registered office is at the address set out for the Custodian pursuant to Clause 12. 3.3 The Customer further understands that the Custodian is proposing to and will treat the Customer as a non-private customer within the meaning of the Rules for all the purposes of this Agreement and acknowledges that in accordance with the Rules it has agreed that its monies shall not be treated by the Custodian as or deemed to be Client Money for the purpose of the Financial Services (Client Money) Regulations 1991 (as amended). 3.4 As respects cash items, the first sum paid in shall be the first paid out, and a payment in shall discharge the first undischarged debit item, and no cash item shall be held for a period of a year or more. 3.5 Notwithstanding any of its rights and duties under this Agreement, nothing in this Agreement shall make the Custodian a manager or adviser in respect of any Securities and the Custodian is not required to have regard to any particular investment objectives. The Custodian will not be subject to any fiduciary duties towards the Customer and will not incur any duty of disclosure towards the Customer or be subject to any restriction in dealing for the Custodian's own or its customers' account by reason of any custodial services provided to the Customer. 4 Deposit of Securities 4.1 The Customer may tender Securities to the Custodian, which may decline to accept Securities tendered to it if it determines that it would be 2 illegal or contrary to any applicable rules of any exchange or market for the Custodian to accept such Securities or if the Custodian reasonably suspects that such Securities are tainted by fraud. 4.2 The Customer and the Custodian shall agree from time to time the normal categories of Securities, and the markets in which such Securities are to be dealt in, to be deposited under the terms of this Agreement and, if the Customer intends to tender Securities to the Custodian under this Clause falling outside such categories or to be dealt in on other market(s), it shall give 30 days' (or such lesser period as the Custodian may agree) notice to the Custodian of its intention to tender Securities of such category or to be dealt in on such market(s). At any time during such period the Custodian may notify the Customer that it will decline to accept such Securities if it determines that custodianship facilities suitable for holding Securities of that particular category or to be dealt in on such market(s) are not reasonably available to it. 4.3 The Custodian shall be entitled to treat Securities accepted by it as fungible or at any time to allocate specific Securities to the Customer, any such treatment or allocation to be binding on the Customer. 4.4 Intentionally Omitted. 4.5 The Securities held in the Customer Account shall, at all times, as between the Custodian (in its capacity as such) and the Customer be the property of the Customer, and the Custodian shall not have the power or authority to transfer, assign, hypothecate, pledge or otherwise dispose of any of the Securities to any person except as expressly permitted by the provisions of this Agreement, the Facility Agreement or the Collateralised Guarantee. 5 Transactions Requiring Instructions The Custodian shall carry out the following transactions in relation to the Securities upon receipt of specific Instructions: 5.1 Sales: The Custodian shall deliver Securities sold by the Customer and receive payment for those Securities in such manner as may be specified by the Customer in its Instructions (and, in the absence of specific Instructions to the contrary, shall make such payment available to MLI for application in accordance with the Facility Agreement). 5.2 Purchases: The Custodian shall make payment for and receive Securities purchased by the Customer (insofar as monies are made available to the Custodian by the Customer to make such payment), payment to be made by 3 the Custodian in such manner as may be specified by the Customer in its Instructions. 5.3 Exercise of rights, etc: The Custodian shall deal with rights (including rights to subscribe for securities and conversion rights), warrants and other similar securities received by it in connection with the Securities only in the manner and to the extent specified in Instructions. 5.4 Voting: The Custodian shall not exercise any voting rights attached to any of the Securities except as directed by Instructions received by the Custodian. The Customer shall on demand pay to the Custodian such transaction fees (together with value added tax, if any) as the Custodian may from time to time specify in respect of each delivery of Securities to or out of the Customer Account and such other fees (together with value added tax, if any) as may be agreed by the Customer and the Custodian from time to time. 6 Transactions not Requiring Instructions The Custodian shall be entitled to carry out the following transactions relating to the Securities without seeking Instructions from the Customer: 6.1 Signature of Certificates: The Customer hereby authorises the Custodian to sign any certificates of ownership or other certificates relating to the Securities which may be required by any regulations made by the Commissioners of Inland Revenue, the United States Internal Revenue Service or any other regulatory authority, whether governmental or otherwise, relating to income tax, any other tax levied or ownership. 6.2 Intentionally Omitted. 6.3 Intentionally Omitted. 6.4 Receipt of Securities: The Custodian shall receive and hold for the account of the Customer all Securities received as a distribution on Securities held by the Custodian as a result of a stock dividend, share sub-division or reorganisation, capitalisation of reserves or otherwise. 6.5 Exchange of Interim Receipts: The Custodian shall exchange interim receipts or temporary Securities for definitive certificates or Securities. 6.6 Expenses and Disbursements: The Custodian may make cash disbursements for expenses and stamp duties and transfer taxes in handling Securities 4 and for similar items in connection with the Custodian's duties under this Agreement. Any such disbursements, and all transaction and other agreed fees and expenses charged by the Custodian under this Agreement (together with value added tax, if any) shall be debited to the Customer Account. 6.7 Delivery of Information and Documents: The Custodian shall deliver to the Customer transaction advices and/or regular statements of account showing the Securities held and any cash balances held under the terms of this Agreement at such intervals as may be agreed with the Customer and shall notify the Customer of all notices, reports and other financial information relating to the Securities when received by it which in its opinion require action and obtain the Customer's Instructions as to the action to be taken in connection therewith. The Custodian shall check for errors all transaction advices and/or statements of account received by it from any agent appointed under Clause 7.1. Each time the Customer and the Custodian agree normal categories of Securities, and the markets in which they are to be dealt in (including acceptance by the Custodian of Securities outside such categories or to be dealt in on other market(s)) as contemplated by Clause 4.2, the Custodian shall inform the Customer of the identity of each agent (if any) appointed under Clause 7.1 which will or may have any such Securities deposited with it. The Custodian shall also keep the Customer informed about any changes (including additions and terminations) in any such agents. 6.8 Records: Records of all transactions in the Securities and any cash balances held by the Custodian under the terms of the Agreement shall be maintained by the Custodian and shall be made available for inspection and audit on the Custodian's premises at reasonable times by the Customer, any representative of the Customer and the independent accountants employed by the Customer. Wherever practicable, the Custodian shall endeavour to ensure that the Customer's independent accountants are afforded access to the records of transactions in the Securities and cash balances maintained by any agent appointed by the Custodian under Clause 7.1 and pertaining to the Customer. 6.9 Right to take Action: Notwithstanding the provisions of Clause 5 and 6.7 above, the Custodian shall be entitled in its absolute discretion to take any action in relation to the Securities, including without limitation the exercise of rights attached thereto and the satisfaction of liabilities arising therefrom or any other action on behalf of the Customer which the Custodian considers is necessary or desirable to safeguard the Securities or further the Customer's interests in the event that no Instructions to the contrary are received or that circumstances make it impracticable for the Custodian to obtain any, or any timely, Instructions. 5 7 Appointment of Agents and Advisers 7.1 General Agents: The Custodian shall be entitled to appoint agents, whether in its own name or that of the Customer, to perform any of the duties undertaken by the Custodian in this Agreement. The Custodian may delegate to any agent so appointed any of the functions to be performed by the Custodian under this Agreement including without limitation the collection of payments due on Securities. The Custodian shall forthwith notify the Customer upon any such appointment. Any such agent shall be a person whom the Custodian reasonably believes to be a person whose business includes the provision of investment custodial services, and all cash and Securities deposited with or held by any such agent will be at the risk of the Customer as regards any act, omission or insolvency of such agent and any laws, acts, decrees, regulations, edicts, orders or other mandates, and any acts of warfare, seizure, confiscation, destruction or impairment of property, promulgated and/or done by any court or by any governmental, military or civil authority, whether de jure or de facto in control of or operating at the place where such agent is located. The Custodian's sole obligation, in the event of any loss in connection with any cash and Securities held by or deposited with any such agent will be to assign to the Customer such rights (if any) as the Custodian may have against such agent. 7.2 Legal and other Advisers: If the Custodian considers it necessary it may request advice from legal or other professional advisers of its own choosing in connection with any action to be taken by the Custodian in relation to the Securities. 7.3 Remuneration for Agents and Advisers: If the Custodian appoints any agent or adviser pursuant to 7.1 or 7.2 above, it shall be entitled to pay normal remuneration to such agent or adviser and, in the case of any such agent, and any such adviser which the Custodian may appoint having determined that such appointment is necessary or advisable in connection with the Custodian's protecting or enforcing its rights under this Agreement and/or any amendment or in any other case where such adviser is appointed with the prior written approval of the Customer, such remuneration shall be for the account of the Customer. 8 Scope of Responsibility and Indemnity 8.1 Liability of the Custodian: Subject to the provisions of this Agreement the Custodian shall use all reasonable care in the performance of its duties under this Agreement. The Custodian's liability at any time in connection with any cash and Securities deposited under the terms of this Agreement shall be subject to Clause 7.1 and shall not in any 6 circumstances exceed the amount or (as appropriate) market value of such cash and Securities at the time of failure to exercise reasonable care as aforesaid whether or not then held by the Custodian. The Custodian shall have no liability or responsibility to the Customer with respect to any changes in the standard of currencies of property or with respect to any fluctuations or changes in the conversion value of property into other currencies and/or property. 8.2 Custodian's right to rely on Instructions: Subject to Clause 8.1, the Custodian may rely in the performance of its duties under this Agreement upon any Instructions believed by it to be genuine and given by any person specified in or notified pursuant to Clause 11. 8.3 Responsibility for Insurance: Without prejudice to the liability of the Custodian from time to time pursuant to any other provision of this Agreement, the Custodian shall not be responsible for insuring any Securities. 8.4 Customer's Responsibility to examine documents: Upon receipt of each and every transaction advice and/or statement of account supplied to it by the Custodian pursuant to Clause 6.7, the Customer shall examine the same and notify the Custodian within 4 Business Days of the date of receipt of any such advice or statement of any discrepancy between Instructions given and the situation shown therein and/or of any other errors therein. In the absence of such notification by the Customer the Custodian shall not (in the absence of gross negligence or wilful default on its own behalf) be liable for the consequences of any such discrepancy or error which was made or existed during the period covered by such statement or transaction indicated by such advice. 8.5 Indemnity: The Customer agrees to indemnify the Custodian, and to hold the Custodian harmless, against all costs, liabilities and expenses including (without limitation) legal fees and disbursements, arising directly or indirectly: 8.5.1 from the fact that Securities are registered in the name of or deposited with the Custodian or 8.5.2 (without limiting the generality of 8.5.1 above), from any act or thing which the Custodian takes or does or omits to take or do in relation to the Securities, provided that the Custodian shall not be indemnified against any liability arising out of the Custodian's own gross negligence or wilful default or 8.5.3 from the Custodian's relying on any Instructions as referred to in Clause 8.2 provided that the Custodian shall not be 7 indemnified against any liability arising out of the Custodian's own gross negligence or wilful default. 8.6 Right to Deduct: The Custodian shall be entitled to deduct or withhold from any amount which is received by it for the account of the Customer or which is payable by it to the Customer or, at its option, to debit to the Customer Account any amount payable to the Custodian under this Agreement. 8.7 The Rules: Nothing in this Agreement shall exclude or restrict any obligation which the Custodian has under the Rules in relation to the Customer, whether as regards its activities as custodian of Safe Custody Investments or otherwise, or any liability which the Custodian may incur under the Financial Services Act 1986 or the Rules in respect of a breach of any such obligation. It is further agreed that the Custodian will hold all Securities (whether or not Safe Custody Investments as defined in the Rules) as though Chapter 4 of the Rules regulated the Custodian's custodianship thereof, except in so far as any of the Rules regulate the Custodian's activities under this Agreement in priority to the said Chapter 4. This Agreement shall be construed accordingly. 9 Lien The Custodian shall have a general lien on all monies and Securities from time to time held by it under this Agreement as security for all obligations of the Customer under this Agreement for amounts becoming due or owing for safekeeping and administration. In the event of failure by the Customer to discharge any of such obligations when due, the Custodian shall be entitled to apply in or towards discharge thereof such monies as aforesaid held by it and shall be entitled without notice to the Customer to sell or otherwise realise any of the Securities so held by it and apply the proceeds of such realisation in or towards discharge of the said obligations. 10 Termination Either party hereto may terminate this Agreement on giving not less than thirty days' written notice to the other party. This Agreement shall automatically terminate as to the applicable Customer upon release by MLI of all of the Securities deposited by such Customer hereunder with the Custodian. Upon such termination the Custodian shall, subject to Clause 9, account to any such successor custodian as the Customer shall, within 14 days of such termination, designate in writing to the Custodian (and, failing any such designation, to the Customer) for all monies and Securities then held by it pursuant to this Agreement. 8 11 Instructions The Customer hereby authorises the Custodian to act in relation to the Securities and cash on Instructions received from persons whose names and signatures are set out in a list which shall be provided by the Customer for such purpose, shall specify the number of such persons who must give such Instructions for them to be effective and shall be signed by any two of the persons whose names and signatures are set out below. NAME SIGNATURES John Moore -------------------------- Henry Herms -------------------------- Any such list shall be superseded by any later list, signed by any two of the above persons, which the Customer may from time to time provide. The Customer may also notify the Custodian by Instructions signed by any two of the above persons of additional person(s) who may sign any such list and upon whose signature of such list the Custodian is authorised to rely, any such Instructions to contain specimen signature(s) of such additional person(s). 12 Notices 12.1 The Customer and the Custodian may from time to time issue Instructions, notices or other communications either orally or in writing (but in writing only where so provided under this Agreement) and the Custodian shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken in good faith pursuant to Instructions, notices or other communications so given or made, subject to Clause 8.1. 12.2 Each oral communication under this Agreement shall be directed, if to the Custodian, to such officer(s) of the Custodian as may be notified by the Custodian to the Customer from time to time, and if to the Customer, to such representative(s) of the Customer as may be notified to the Custodian from time to time. Each written communication under this Agreement shall be addressed as set out under the relevant party's name at the end of this Agreement, or to such other address, telex or facsimile number or marked for the attention of such other person as may be notified by the relevant addressee from time to time to the other party. Notices to the Customer shall be deemed to have been received two days after being deposited for overnight delivery with any reputable overnight delivery service and immediately in the case of a telex, fax or oral communication. 9 13 Governing Law This Agreement and all contemporaneous and subsequent mandates, Instructions and agreements between the parties pursuant to this Agreement shall be governed by and construed in accordance with English law and, in relation to any legal action or proceedings arising out of or in connection with this Agreement ("Proceedings"), the Customer hereby and for the benefit of the Custodian submits to the jurisdiction of the courts of England and any New York State or United States Federal court sitting in New York City, and waives any objection to Proceedings in such courts on the grounds of venue or on the grounds that the Proceedings have been brought in an inconvenient forum. Those submissions shall not affect the Custodian's right to take Proceedings in any other court of competent jurisdiction, nor shall the taking of Proceedings in any court of competent jurisdiction preclude the Custodian from taking Proceedings in any other court of competent jurisdiction (whether concurrently or not). This Agreement has been entered into in London on the date stated at the beginning. 10 MERRILL LYNCH INTERNATIONAL By: /S/ John Piccitto Name: John Piccitto Title: Director of Equity Markets Global Equity Finance 20 Farringdon Road P.O. Box 293 London EC1M 3NH Attention: International Prime Brokerage Fax No: 44 17l 892 4860 Telephone: 44 171 892 4920 LF Strategic Realty Investors L.P., a Delaware limited partnership c/o Lazard Freres Real Estate Investors L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: Lazard Freres Real Estate Investors L.L.C., a New York limited liability company, its general partner By: /s/ John A. Moore --------------------------------- Name: John A. Moore Title: Principal & Chief Financial Officer 11 Prometheus AAPT Holdings, L.L.C., a Delaware limited liability company c/o Lazard Freres Real Estate Investors L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: LF Strategic Realty Investors L.P., a Delaware limited partnership, its managing member By: Lazard Freres Real Estate Investors L.L.C., a New York limited liability company, its general partner By: /s/ John A. Moore --------------------------------- Name: John A. Moore Title: Chief Financial Officer Prometheus Western Retail, LLC, a Delaware limited liability company c/o Lazard Freres Real Estate Investors L.L.C. 30 Rockefeller Plaza, 50th Floor New York, NY 10020 By: Prometheus Western Retail Trust, a Maryland real estate investment trust, its managing member By: /s/ John A. Moore --------------------------------- Name: John A. Moore Title: Vice President and Chief Financial Officer 12 -----END PRIVACY-ENHANCED MESSAGE-----