-----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, A82chkMu5JCVcVywgr0OoE5i3QX0pcfQepM2adkXs5BAkg+RFnVCTzYzGXR0f/sk pFUxR+RfjQ9+LcdcfG2fiA== 0000898430-96-001995.txt : 19960517 0000898430-96-001995.hdr.sgml : 19960517 ACCESSION NUMBER: 0000898430-96-001995 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SANTA ANITA OPERATING CO CENTRAL INDEX KEY: 0000313749 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 953419438 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08132 FILM NUMBER: 96567070 BUSINESS ADDRESS: STREET 1: 285 W HUNTINGTON DR STREET 2: PO BOX 808 CITY: ARCADIA STATE: CA ZIP: 91066-0808 BUSINESS PHONE: 8185747223 MAIL ADDRESS: STREET 1: 285 W HUNTINGTON DRIVE STREET 2: P O BOX 808 CITY: ARCADIA STATE: CA ZIP: 91066-0808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SANTA ANITA REALTY ENTERPRISES INC CENTRAL INDEX KEY: 0000314661 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 953520818 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08131 FILM NUMBER: 96565960 BUSINESS ADDRESS: STREET 1: 301 W HUNTINGTON DR STREET 2: STE 405 CITY: ARCADIA STATE: CA ZIP: 91007 BUSINESS PHONE: 8185745550 MAIL ADDRESS: STREET 1: 301 W HUNTINGTON DR STREET 2: STE 405 CITY: ARCADIA STATE: CA ZIP: 91007 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ---------- Commission file number 0-9109 Commission file number 0-9110 SANTA ANITA REALTY SANTA ANITA OPERATING ENTERPRISES, INC. COMPANY - ----------------------------- ------------------------------- (Exact name of registrant as (Exact name of registrant specified in its charter) as specified in its charter) Delaware Delaware - ----------------------------- ------------------------------- (State or other jurisdiction (State or other jurisdiction of of incorporation or organization) incorporation or organization) 95-3520818 95-3419438 - ----------------------------- ------------------------------- (I.R.S. Employer (I.R.S. Employer Identification No.) Identification No.) 301 West Huntington Drive, Suite 405 285 West Huntington Drive Arcadia, California 91007 Arcadia, California 91007 - ----------------------------- ------------------------------- (Address of principal executive (Address of principal executive offices including zip code) offices including zip code) (818) 574-5550 (818) 574-7223 - ----------------------------- ------------------------------- (Registrant's telephone (Registrant's telephone number, including area code) number, including area code) Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No ---- ---- The number of shares outstanding of each of the issuers' classes of common stock, as of the close of business on May 3, 1996 were: Santa Anita Realty Enterprises, Inc. 11,383,000 Santa Anita Operating Company 11,270,500 SANTA ANITA REALTY ENTERPRISES, INC. AND SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES FORM 10-Q INDEX
Page No. PART I. FINANCIAL INFORMATION 3 THE SANTA ANITA COMPANIES Combined Balance Sheets as of March 31, 1996 and December 31, 1995 4 Combined Statements of Operations for the three months ended March 31, 1996 and 1995 5 Combined Statements of Cash Flows for the three months ended March 31, 1996 and 1995 6 SANTA ANITA REALTY ENTERPRISES, INC. Consolidated Balance Sheets as of March 31, 1996 and December 31, 1995 7 Consolidated Statements of Operations for the three months ended March 31, 1996 and 1995 8 Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 9 SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets as of March 31, 1996 and December 31, 1995 10 Consolidated Statements of Operations for the three months ended March 31, 1996 and 1995 11 Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 12 NOTES TO FINANCIAL STATEMENTS 13 MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 16 PART II. OTHER INFORMATION 20 SIGNATURES 21
2 SANTA ANITA REALTY ENTERPRISES, INC. AND SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1996 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying balance sheets as of March 31, 1996 and December 31, 1995 of The Santa Anita Companies ("the Companies"), Santa Anita Realty Enterprises, Inc. ("Realty") and Santa Anita Operating Company and Subsidiaries ("Operating Company"), the statements of operations for the three months ended March 31, 1996 and 1995, and the related statements of cash flows for the three months ended March 31, 1996 and 1995, were prepared by management and, except for the balance sheet as of December 31, 1995, are unaudited. In the opinion of management, the accompanying financial statements include all adjustments, including normal recurring items, considered necessary for a fair presentation. The following financial statements should be read in conjunction with the accompanying notes and the Joint Annual Report on Form 10-K of Realty and Operating Company for the year ended December 31, 1995. 3 THE SANTA ANITA COMPANIES COMBINED BALANCE SHEETS
MARCH 31, DECEMBER 31, 1996 1995 ------------- ------------- (Unaudited) ASSETS Real estate assets Santa Anita Racetrack, less accumulated depreciation of $20,723,000 and $20,216,000 $ 8,523,000 $ 9,030,000 Commercial properties, less accumulated depreciation of $3,809,000 and $3,631,000 10,181,000 10,342,000 Commercial properties to be sold, less accumulated depreciation of $16,737,000 27,669,000 27,337,000 Investments in and advances to unconsolidated joint ventures 2,854,000 3,166,000 Real estate loans receivable 10,877,000 10,954,000 ------------ ------------ 60,104,000 60,829,000 Cash 7,131,000 11,355,000 Short-term investments, at cost (approximates market) 16,147,000 2,522,000 Accounts receivable 6,169,000 3,771,000 Prepaid expenses and other assets 7,006,000 6,494,000 Investment in Pacific Gulf Properties Inc. 14,512,000 12,967,000 Property, plant and equipment, less accumulated depreciation of $26,725,000 and $24,968,000 17,915,000 19,233,000 ------------ ------------ $ 128,984,000 $ 117,171,000 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Real estate loans payable $ 28,263,000 $ 28,389,000 Bank loans payable 17,525,000 22,685,000 Accounts payable 22,516,000 11,208,000 Other liabilities 17,948,000 16,967,000 Income taxes - 326,000 Dividends payable - 2,277,000 Deferred revenues 2,174,000 2,379,000 Deferred income taxes 1,317,000 1,239,000 ------------- ------------- 89,743,000 85,470,000 ------------- ------------- Shareholders' equity Preferred stock, $.10 par value; authorized 6,000,000 shares; none issued - - Common stock, $.10 par value; authorized 19,000,000 shares; issued and outstanding 11,270,500 shares 2,253,000 2,253,000 Additional paid-in capital 136,552,000 136,552,000 Unrealized investment holding gain 1,544,000 - Unearned compensation expense (1,032,000) (1,209,000) Retained earnings (deficit) (100,076,000) (105,895,000) ------------- ------------- 39,241,000 31,701,000 ------------- ------------- $ 128,984,000 $ 117,171,000 ============= =============
See accompanying notes. 4 THE SANTA ANITA COMPANIES COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
1996 1995 ----------- ----------- (Restated) Revenues Horse racing $38,081,000 $36,841,000 Rental property 2,016,000 2,130,000 Interest and other 689,000 598,000 ----------- ----------- 40,786,000 39,569,000 ----------- ----------- Costs and expenses Horse racing operating costs 24,890,000 23,664,000 Rental property operating expenses 690,000 592,000 Depreciation and amortization 2,475,000 3,261,000 General and administrative 3,367,000 3,459,000 Interest and other 951,000 1,211,000 Losses from unconsolidated joint ventures 339,000 602,000 ----------- ----------- 32,712,000 32,789,000 ----------- ----------- Net income $ 8,074,000 $ 6,780,000 =========== =========== Weighted average number of common shares outstanding 11,270,500 11,143,853 =========== =========== Net income per common share $ .72 $ .61 =========== =========== Dividends declared per common share $ .20 $ .20 =========== ===========
See accompanying notes. 5 THE SANTA ANITA COMPANIES COMBINED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
1996 1995 ----------- ----------- (Restated) Cash flows from operating activities: Net income $ 8,074,000 $ 6,780,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,475,000 3,261,000 Amortization of unearned compensation expense 177,000 - Equity in losses of unconsolidated joint ventures 339,000 602,000 Equity in earnings from investment in Pacific Gulf Properties Inc. - (186,000) Deferred income taxes (316,000) 68,000 Net decrease in certain other assets (2,019,000) (19,000) Net decrease in certain other liabilities 12,127,000 9,175,000 ----------- ----------- Net cash provided by operating activities 20,857,000 19,681,000 ----------- ----------- Cash flows from investing activities: Payments received on loans receivable 77,000 51,000 Additions and improvements to real estate assets (349,000) (544,000) Additions to property, plant and equipment (438,000) (842,000) Additions to certain other assets (924,000) (2,335,000) Dividends received from Pacific Gulf Properties Inc. in 1995 - 306,000 Investments in and advances to unconsolidated joint ventures (369,000) (740,000) Capital distributions from unconsolidated joint ventures 341,000 577,000 ----------- ----------- Net cash used in investing activities (1,662,000) (3,527,000) ----------- ----------- Cash flows from financing activities: Proceeds from bank loans payable - 4,300,000 Repayment of real estate loans payable (126,000) (145,000) Repayment of bank loans payable (5,160,000) (192,000) Dividends paid (4,508,000) (4,458,000) ----------- ----------- Net cash used in financing activities (9,794,000) (495,000) ----------- ----------- Net decrease in cash and cash equivalents 9,401,000 15,659,000 Cash and cash equivalents at beginning of year 13,877,000 15,094,000 ----------- ----------- Cash and cash equivalents at March 31, $23,278,000 $30,753,000 =========== ===========
See accompanying notes. 6 SANTA ANITA REALTY ENTERPRISES, INC. CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, 1996 1995 ------------ ------------ (Unaudited) ASSETS Real estate assets Santa Anita Racetrack, less accumulated depreciation of $20,723,000 and $20,216,000 $ 8,523,000 $ 9,030,000 Commercial properties, less accumulated depreciation of $4,261,000 and $4,068,000 12,871,000 13,047,000 Commercial properties to be sold, less accumulated depreciation of $18,085,000 27,984,000 27,652,000 Investments in and advances to unconsolidated joint ventures 2,854,000 3,166,000 Real estate loans receivable 10,877,000 10,954,000 ------------ ------------ 63,109,000 63,849,000 Cash 591,000 167,000 Accounts receivable 768,000 658,000 Prepaid expenses and other assets 6,568,000 5,726,000 Investment in Pacific Gulf Properties Inc. 14,512,000 12,967,000 ------------ ------------ $ 85,548,000 $ 83,367,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Real estate loans payable $ 28,263,000 $ 28,389,000 Bank loans payable 16,000,000 20,950,000 Accounts payable 966,000 420,000 Other liabilities 4,974,000 5,274,000 Dividends payable - 2,277,000 Due to Operating Company 4,713,000 415,000 ------------ ------------ 54,916,000 57,725,000 ------------ ------------ Shareholders' equity Preferred stock, $.10 par value; authorized 6,000,000 shares; none issued - - Common stock, $.10 par value; authorized 19,000,000 shares; issued and outstanding 11,383,000 shares 1,138,000 1,138,000 Additional paid-in capital 118,881,000 118,881,000 Unrealized investment holding gain 1,544,000 - Retained earnings (deficit) (90,931,000) (94,377,000) ------------ ------------ 30,632,000 25,642,000 ------------ ------------ $ 85,548,000 $ 83,367,000 ============ ============
See accompanying notes. 7 SANTA ANITA REALTY ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
1996 1995 ----------- ----------- (Restated) Revenues Rent from Racetrack $ 6,715,000 $ 6,478,000 Shopping Centers 1,013,000 1,112,000 Office Buildings 1,003,000 1,018,000 Interest and other 591,000 458,000 ----------- ----------- 9,322,000 9,066,000 ----------- ----------- Costs and expenses Shopping centers 277,000 241,000 Office buildings 413,000 351,000 Depreciation and amortization 733,000 1,202,000 General and administrative 893,000 759,000 Interest and other 944,000 1,120,000 Losses from unconsolidated joint ventures 339,000 602,000 ----------- ----------- 3,599,000 4,275,000 ----------- ----------- Net income $ 5,723,000 $ 4,791,000 =========== =========== Weighted average number of common shares outstanding 11,383,000 11,256,353 =========== =========== Net income (loss) per common share $ .50 $ .43 =========== =========== Dividends declared per common share $ .20 $ .20 =========== ===========
See accompanying notes. 8 SANTA ANITA REALTY ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
1996 1995 ------------ ----------- (Restated) Cash flows from operating activities: Net income $ 5,723,000 $ 4,791,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 733,000 1,202,000 Equity in losses of unconsolidated joint ventures 339,000 602,000 Equity in earnings from investment in Pacific Gulf Properties Inc. - (186,000) Net increase in certain other assets (61,000) (239,000) Net increase (decrease) in certain other liabilities 245,000 (530,000) ----------- ----------- Net cash provided by operating activities 6,979,000 5,640,000 ----------- ----------- Cash flows from investing activities: Payments received on loans receivable 77,000 51,000 Additions and improvements to real estate assets (349,000) (544,000) Additions to certain other assets (924,000) (2,335,000) Investments in and advances to unconsolidated joint ventures (369,000) (740,000) Capital distributions from unconsolidated joint ventures 341,000 577,000 Dividends received from Pacific Gulf Properties Inc. in 1995 - 306,000 ----------- ----------- Net cash used in investing activities (1,224,000) (2,685,000) ----------- ----------- Cash flows from financing activities: Proceeds from bank loans payable - 4,300,000 Repayment of real estate loans payable (126,000) (145,000) Repayment of bank loans payable (4,950,000) - Increase (decrease) in due to Operating Company 4,298,000 (2,254,000) Dividends paid (4,553,000) (4,503,000) ----------- ----------- Net cash used in financing activities (5,331,000) (2,602,000) ----------- ----------- Net increase in cash and cash equivalents 424,000 353,000 Cash at beginning of year 167,000 2,251,000 ----------- ----------- Cash and cash equivalents at March 31, $ 591,000 $ 2,604,000 =========== ===========
See accompanying notes. 9 SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1996 1995 ------------- ------------ (Unaudited) ASSETS Current assets Cash $ 6,540,000 $11,188,000 Short-term investments, at cost (approximates market) 16,147,000 2,522,000 Accounts receivable 5,401,000 3,113,000 Prepaid expenses and other assets 447,000 777,000 Due from Realty 4,713,000 415,000 ----------- ----------- Total current assets 33,248,000 18,015,000 Investment in common stock of Realty 2,122,000 2,122,000 Property, plant and equipment, less accumulated depreciation of $26,725,000 and $24,968,000 17,915,000 19,233,000 ----------- ----------- $53,285,000 $39,370,000 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $21,550,000 $10,788,000 Other liabilities 12,974,000 11,693,000 Bank loans payable 888,000 868,000 Income taxes - 326,000 ----------- ----------- Total current liabilities 35,412,000 23,675,000 Bank loans payable 637,000 867,000 Deferred revenues 2,174,000 2,379,000 Deferred income taxes 1,317,000 1,239,000 ----------- ----------- 39,540,000 28,160,000 ----------- ----------- Shareholders' equity Preferred stock, $.10 par value; authorized 6,000,000 shares; none issued - - Common stock, $.10 par value; authorized 19,000,000 shares; issued and outstanding 11,270,500 shares 1,127,000 1,127,000 Additional paid-in capital 20,736,000 20,736,000 Unearned compensation expense (1,032,000) (1,209,000) Retained earnings (deficit) (7,086,000) (9,444,000) ----------- ----------- 13,745,000 11,210,000 ----------- ----------- $53,285,000 $39,370,000 =========== ===========
See accompanying notes. 10 SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
1996 1995 ------------ ------------ Revenues Wagering commissions $27,354,000 $26,384,000 Admission related 10,727,000 10,457,000 Interest and other 186,000 162,000 ----------- ----------- 38,267,000 37,003,000 ----------- ----------- Costs and expenses Horse racing operating costs 24,890,000 23,664,000 Depreciation and amortization 1,757,000 2,102,000 General and administrative 2,474,000 2,700,000 Interest 73,000 91,000 Rental expense to Realty 6,715,000 6,478,000 ----------- ----------- 35,909,000 35,035,000 ----------- ----------- Net income $ 2,358,000 $ 1,968,000 =========== =========== Weighted average number of common shares outstanding 11,270,500 11,143,853 =========== =========== Net income (loss) per common share $ .21 $ .18 =========== ===========
See accompanying notes. 11 SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
1996 1995 ------------- ------------- Cash flows from operating activities: Net income $ 2,358,000 $ 1,968,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,757,000 2,102,000 Amortization of unearned compensation expense 177,000 - Deferred income taxes (316,000) 68,000 Net decrease in certain other assets (1,958,000) 220,000 Net decrease in certain other liabilities 11,905,000 9,728,000 ----------- ----------- Net cash provided by operating activities 13,923,000 14,086,000 ----------- ----------- Cash flows from investing activities: Additions to property, plant and equipment (438,000) (842,000) ----------- ----------- Cash flows from financing activities: Repayment of bank loans payable (210,000) (192,000) (Increase) decrease in due from Realty (4,298,000) 2,254,000 ----------- ----------- Net cash (used in) provided by financing activities (4,508,000) 2,062,000 ----------- ----------- Net decrease in cash and cash equivalents 8,977,000 15,306,000 Cash and cash equivalents at beginning of year 13,710,000 12,843,000 ----------- ----------- Cash and cash equivalents at March 31, $22,687,000 $28,149,000 =========== ===========
See accompanying notes. 12 SANTA ANITA REALTY ENTERPRISES, INC. AND SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1 - INTERIM PERIOD ACCOUNTING POLICY Operating Company records operating revenues associated with thoroughbred horse racing at Santa Anita Racetrack on a daily basis, except for season admissions which are recorded ratably over the racing season. Costs and expenses associated with thoroughbred horse racing revenues are charged against income in those interim periods in which the thoroughbred horse racing revenues are recognized. Other costs and expenses are recognized as they actually occur throughout the year. The rental fee paid by Operating Company to Realty is recognized by both Realty and Operating Company as it is earned. Certain prior period amounts have been reclassified to conform to current period presentation. In the opinion of management, all adjustments (including normal recurring items) considered necessary for the fair presentation of financial position, results of operations and cash flows have been included. NOTE 2 - DISPOSITION OF NON-CORE REAL ESTATE ASSETS Effective January 1, 1996, Realty adopted Financial Accounting Standard ("FAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". FAS No. 121 requires that impairment losses be recorded on long-lived assets used in operations when events or changes in circumstances indicate that the undiscounted cash flows to be generated by these assets are less than their carrying amount. FAS No. 121 also requires that long-lived assets to be disposed of be reported at the lower of their carrying amount or fair value, less cost to sell. During 1995, Realty adopted a plan to dispose of its non-core real estate assets and, accordingly, reduced the book value of these assets to their estimated realizable values, resulting in a nonrecurring charge of $38,500,000. In accordance with FAS No. 121, no depreciation was recorded in the three months ended March 31, 1996 relating to the non-core real estate assets. The three months ended March 31, 1996, includes income of $340,000 relating to the non- core real estate assets. NOTE 3 - INVESTMENT IN PACIFIC GULF PROPERTIES INC. As of March 31, 1996 and December 31, 1995, Realty owned 784,419 shares of Pacific Gulf Properties Inc. ("Pacific") common stock and, effective January 1, 1996, accounted for its investment under the cost method of accounting. Previously, Realty accounted for its investment under the equity method of accounting. Realty changed its method of accounting since it determined it did not have the ability to exercise significant influence. The closing price of Pacific's common stock, on the American Stock Exchange, on the last trading day in March 1996 was $18.50 per share, resulting in an unrealized holding gain of $1,544,000, which has been excluded from earnings and reported as a separate component of shareholders' equity. On February 2, 1996, Realty notified Pacific of Realty's intent to sell the Pacific shares in an orderly manner pursuant to privately negotiated or open market transactions. Realty also exercised its right to have Pacific register such shares pursuant to a Registration Rights Agreement dated as of February 1, 1994. On March 28, 1996, Pacific filed a shelf registration statement with the Securities and Exchange Commission covering the proposed offering of up to $125 million of common and preferred shares including the 784,419 shares owned by Realty. The registration statement has not yet become effective. 13 NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 4 - INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES Realty's investments in unconsolidated joint ventures include investments in the following commercial real estate ventures at March 31, 1996:
NAME OWNERSHIP PROJECT ---- ---------- ------- Anita Associates 50% Regional mall H-T Associates 50% Regional mall Joppa Associates 33-1/3% Retail
Realty owns a 50% interest in H-T Associates, whose only asset is a 65% ownership interest in a regional mall, effectively giving Realty a 32.5% ownership interest. During the 1995 fourth quarter, Realty reevaluated its consolidation policy with respect to 50% owned joint ventures that had been previously consolidated. Realty determined that it did not have sufficient involvement in these joint ventures to warrant consolidation and reported these joint ventures on the equity method at December 31, 1995. All prior period financial statements and disclosures have been restated to conform to this presentation. The restatement had no effect on reported net income for the three months ended March 31, 1995 or shareholder' equity as of March 31, 1995, but did have the effect of reducing Realty's assets and liabilities by $60,982,000 at March 31, 1995, and of reducing Realty's revenues and expenses by $2,851,000 for the three months ended March 31, 1995. Combined condensed financial statement information for unconsolidated joint ventures as of March 31, 1996 and December 31, 1995, and for the three months ended March 31, 1996 and 1995, is as follows (unaudited except for financial statement information as of December 31, 1995):
MARCH 31, DECEMBER 31, 1996 1995 ------------ ------------- Real estate assets $262,947,000 $ 258,952,000 ============ ============= Liabilities Secured real estate loans $242,135,000 $242,332,000 Other 5,881,000 5,515,000 ------------ ------------- $248,016,000 $ 247,847,000 ============ ============= Partners' equity Realty $ 7,673,000 $ 6,157,000 Others 7,258,000 4,948,000 ------------ ------------- $14,931,000 $ 11,105,000 ============ ============= THREE MONTHS ENDED MARCH 31, 1996 1995 ------------ ----------- (Restated) Revenues $ 9,022,000 $ 8,350,000 ============ ============= Net Loss Realty $ (339,000) $ (602,000) Others (847,000) (1,261,000) ------------ ------------- $ (1,186,000) $ (1,863,000) ============ =============
14 NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 5 - RECENT DEVELOPMENTS On April 29, 1996, Realty withdrew its Specific Plan for the development of an Entertainment Center on underutilized land at the Santa Anita Racetrack, due to the unfavorable conditions that were likely to be imposed on the Specific Plan by the City of Arcadia. Realty is continuing to evaluate alternative initiatives with respect to development of the property. At March 31, 1996, "Prepaid Expenses and Other Assets" in the Realty Balance Sheet includes $4,254,000 of Entertainment Center development costs associated with entitlement, planning and leasing activities. 15 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. SANTA ANITA REALTY ENTERPRISES, INC. The following narrative discusses Realty's results of operations for the three months ended March 31, 1996 and 1995, together with liquidity and capital resources as of March 31, 1996. RESULTS OF OPERATIONS - FIRST QUARTER 1996 COMPARED WITH FIRST QUARTER 1995 Realty's revenues are derived principally from the rental of real property. Total revenues for the three months ended March 31, 1996 were $9,322,000 compared with $9,066,000 for the three months ended March 31, 1995 an increase of 2.8%. The higher 1996 revenues were due primarily to an increase in Santa Anita Racetrack rental revenues. The most significant source of rental revenue is the lease of Santa Anita Racetrack. Racetrack rental revenues for 1996 were $6,715,000, an increase of 3.7% from revenues of $6,478,000 in 1995 The increase in rental revenues resulted primarily from an increase in the number of race days. Costs and expenses for 1996 were $3,599,000, a decrease of 15.8% from costs and expenses of $4,275,000 in 1995. The decrease resulted primarily from decreases in depreciation and amortization expense of $469,000, interest and other expense of $176,000 and loss from unconsolidated joint ventures of $263,000. The decrease in depreciation and amortization expense was due to no depreciation expense being taken on the assets held for sale, which treatment is in accordance with FAS No. 121. The decrease in interest expense is due to the payoff of the mortgage loan on the Santa Ana office building in November 1995. The decrease in loss from unconsolidated joint ventures was due primarily to increased tenant rental income and decreased interest expense. LIQUIDITY AND CAPITAL RESOURCES Realty has funds available from a combination of short- and long-term sources. Short-term sources included cash of $591,000 at March 31, 1996. The increase in cash for the three months ended March 31, 1996 was $424,000, compared with an increase in cash of $353,000 for the three months ended March 31, 1995. The comparative increase in cash of $71,000 was attributable to an increase of $1,339,000 in cash provided by operating activities and a decrease of $1,461,000 in cash used in investing activities, partially offset by an increase of $2,729,000 in cash used in financing activities. The increase in cash provided by operating activities of $1,025,000 was due primarily to an increase in Santa Anita Racetrack rental revenues of $237,000, due to an increase in the number of race days and to an increase in other liabilities, primarily accounts payable and accrued liabilities, of $245,000 in 1996 compared with a decrease in other liabilities, primarily accounts payable and accrued liabilities, of $775,000 in 1995. The decrease in cash used in investing activities of $1,775,000 in 1996 was due primarily to a decrease of $1,411,000 in additions to certain other assets, primarily the purchase of the option on the Bell casino in 1995, partially offset by an increase in expenditures associated with development of the Santa Anita Entertainment Center, to a decrease of $195,000 in capital expenditures on real estate assets, and to a decrease of $135,000 in investments in unconsolidated joint ventures net of distributions to unconsolidated joint ventures. 16 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) The increase in cash used in financing activities of $2,729,000 in 1996 was due primarily to repayment of borrowings under the revolving credit agreement of $4,950,000 in 1996, compared with additional borrowings under the revolving credit agreement of $4,300,000 in 1995 and to an increase in intercompany payable of $4,298,000 in 1996, compared with a decrease of $2,254,000 in 1995. Realty's investment in Pacific common stock was carried at $14,512,000 at March 31, 1996. Pacific currently pays an annual dividend of $1.60 per share which would result in annual dividend payments to Realty of $1,255,000. In January 1996, Realty's revolving credit agreement with a commercial bank was extended to June 30, 1996 and available borrowings were reduced to $20,000,000. At March 31, 1996, Realty had borrowed $16,000,000 under this facility. Borrowings bear interest, at Realty's option, at the prime rate, at LIBOR plus 1%, or at the six-month certificate of deposit rate plus 1%. Realty is in discussions with the commercial bank and expects the credit agreement to be extended through December 31, 1996. Realty's Racetrack rental revenues have been pledged as collateral under the credit agreement. The revolving credit agreement contains a restriction on the payment of dividends to the lesser of $.80 per share or $9,200,000 in any twelve-month period. Realty's current dividend policy is in compliance with this dividend restriction. Additionally, at March 31, 1996, Realty was in compliance with the other financial ratio and maintenance restrictions. SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES The following narrative discusses Operating Company's results of operations for the three months ended March 31, 1996 and 1995 together with liquidity and capital resources as of March 31, 1996. RESULTS OF OPERATIONS - FIRST QUARTER 1996 COMPARED WITH FIRST QUARTER 1995 Operating Company derives its revenues from thoroughbred horse racing activities. Horse racing revenues in the first quarter of 1996 were $38,081,000, up 3.4% from $36,841,000 in 1995, primarily due to an increase in the number of race days. In the first quarter of 1996, live thoroughbred horse racing at Santa Anita Racetrack totaled 66 days compared with 64 days in the same period last year. Total and average daily on-track attendance at the live racing events in the first quarter of 1996 were down 2.2% and 5.1% from the comparable year ago period. Total and average daily wagering in the first quarter of 1996 were up 8.5% and 5.1% compared with the same period last year. In the first quarter of 1996 compared with the same period last year: total on-track wagering increased by 0.1% while average daily wagering decreased 3.0%; total wagering at Southern California satellite locations increased 0.2% while average daily wagering decreased 2.8%; total and average daily wagering at out-of-state locations increased 36.8% and 32.7%; and total and average daily wagering at Northern California locations decreased 2.4% and 5.4%. Management anticipates that the movement from on-track attendance and wagering to off-site is likely to continue. The growth rate in off-site wagering is dependent primarily upon such factors as Operating Company's ability to access new markets and the removal of various legal barriers which inhibit entry into such markets. 17 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS - FIRST QUARTER 1996 COMPARED WITH FIRST QUARTER 1995 (CONTINUED) Horse racing operating costs in the first quarter of 1996 were $24,890,000 (or 65.4% of horse racing revenues) compared with $23,664,000 (or 64.2% of horse racing revenues) in the same period last year. The operating margin decline in the first quarter of 1996 compared with the same period last year was primarily due to a refinement of Operating Company's method of determining annual fixed costs and charging those costs and expenses against income when thoroughbred horse racing revenues are recognized. Depreciation expense in the first quarter of 1996 was $1,757,000, $345,000 lower than the $2,102,000 in the comparable period last year. The 1995 depreciation expense includes an accelerated depreciation charge of $432,000 on the Santa Anita Racetrack turf course, which was replaced in April 1995. General and administrative expenses were $2,474,000 in the first quarter of 1996, a decrease of 8.4% from the $2,700,000 in the comparable period last year due to lower administrative expenses associated with thoroughbred horse racing in 1996. Interest expense decreased to $73,000 in the first quarter of 1996 from $91,000 in the first quarter of 1995. Rental expense to Realty was $6,715,000 in the first quarter of 1996 compared with $6,478,000 in the same period last year. The increase in rental expense of 3.7% was due to the increase in total wagering. Under the lease terms between LATC and Realty, LATC pays to Realty 1.5% of the on-track wagering on live races at Santa Anita Racetrack and 26.5% of its wagering commissions from all satellite wagering. Due to the revenue and expense items previously discussed, Operating Company reported net income in the first quarter of 1996 of $2,358,000 or $.21 per share, compared with net income of $1,968,000 or $.18 per share for the same period in 1995. SEASONALITY Operating Company's operations are subject to seasonal fluctuations. Operating Company recognizes the majority of its revenues in the first quarter due to live racing activity at Santa Anita. Therefore, the results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1996, Operating Company's sources of liquidity included cash and short-term investments of $22,687,000, together with a verbal commitment of Realty to provide up to $10,000,000 in short-term borrowings. In addition, Realty has guaranteed an Operating Company capital lease of $1,525,000. Operating Company's ability to utilize Realty's line of credit is dependent upon Realty's liquidity and capital resources. (See Item 2. "Managements' Discussion and Analysis of Financial Condition and Results of Operations - Santa Anita Realty Enterprises, Inc. - Liquidity and Capital Resources"). For the three months ended March 31, 1996, short-term investments earned interest income of $162,000. The cash balances and related interest income from short-term investments reflect seasonal variations associated with the Santa Anita meet. During the meet, large cash balances and short-term investments are maintained by LATC, including amounts to be disbursed for payment of license fees payable to the state, purses payable to horse owners and un-cashed winning pari-mutuel tickets payable to the public. Operating Company generated $163,000 less cash from operations in the first quarter of 1996 compared with the same period last year. Net cash provided by operating activities was $13,923,000 in 1996 compared with $14,086,000 in 1995. The decrease in cash from operations was primarily due to the payment of California Franchise Taxes and the non cash charge resulting from the amortization of unearned compensation expenses partially offset by the increase in net income. 18 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) Net cash used in investment activities was $438,000 in the first quarter of 1996 compared with $842,000 in the same period last year. The $404,000 decrease in cash used in investment activities was attributable to a lower level of capital improvements at Santa Anita Racetrack. Net cash used in financing activities was $4,508,000 in the first quarter of 1996 compared with net cash provided by financing activities of $2,062,000 in the same period last year. In the first quarter of 1996, Operating Company prepaid its rental payments due to Realty. 19 SANTA ANITA REALTY ENTERPRISES, INC. AND SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) The following documents are filed as part of this report:
Exhibit Number ------- 10-1 Letter dated March 28, 1996 amending Employment Agreement of Stephen F. Keller 10-2 Letter dated March 29, 1996 amending Employment Agreement of Sherwood C. Chillingworth 10-3 Employment Agreement between Santa Anita Realty Enterprises, Inc. and William C. Baker dated as of April 1, 1996 10-4 Nonstatutory Stock Option Agreement between Santa Anita Realty Enterprises, Inc. and William C. Baker dated as of April 1, 1996 (incorporated by reference to the appendix to the revised definitive Joint Proxy Statement of Santa Anita Operating Company and Santa Anita Realty Enterprises, Inc., dated April 8, 1996) 10-5 Nonstatutory Stock Option Agreement between Santa Anita Realty Enterprises, Inc. and William C. Baker dated as of April 1, 1996 (incorporated by reference to the appendix to the revised definitive Joint Proxy Statement of Santa Anita Operating Company and Santa Anita Realty Enterprises, Inc., dated April 8, 1996) 10-6 Resignation and General Release Agreement between Santa Anita Realty Enterprises, Inc. and Frederick B. Cordova, III dated April 30, 1996 27(a) Financial Data Schedule for Santa Anita Realty Enterprises, Inc. 27(b) Financial Data Schedule for Santa Anita Operating Company
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1996. 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Realty and Operating Company have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized. SANTA ANITA REALTY ENTERPRISES, INC. SANTA ANITA OPERATING COMPANY By: /s/ WILLIAM C. BAKER By: /s/ STEPHEN F. KELLER ------------------------------- ------------------------------- William C. Baker Stephen F. Keller Chairman of the Board and Chairman of the Board, President Chief Executive Officer and Chief Executive Officer (Principal Executive Officer) (Principal Executive Officer) Date: May 10, 1996 Date: May 10, 1996 By: /s/ BRIAN L. FLEMING By: /s/ RICHARD D. BRUMBAUGH ------------------------------- ------------------------------- Brian L. Fleming Richard D. Brumbaugh Executive Vice President and Vice President-Finance and Chief Financial Officer Chief Financial Officer (Principal Financial and (Principal Financial and Accounting Officer) Accounting Officer) Date: May 10, 1996 Date: May 10, 1996 21 EX-10.1 2 EMPLOYMENT AGREEMENT - STEPHEN F. KELLER EXHIBIT 10.1 [LOGO OF SANTA ANITA] SANTA ANITA OPERATING COMPANY SANTA ANITA REALTY ENTERPRISES, INC. 285 West Huntington Drive P.O. Box 60014 Arcadia, California 91066-6014 Telephone: (818) 574-7223 FAX: (818) 446-9565 STEPHEN F. KELLER Chairman of the Boards March 28, 1996 Mr. Thomas P. Mullaney General Partner Matthews, Mullaney & Co. 9454 Wilshire Blvd., Suite 900 Beverly Hills, CA 90212 Re: My Employment Agreement Dear Tom: This letter confirms certain understandings with respect to the impact under my Employment Agreement of the reorganization that is currently taking place with respect to the compensation and duties of certain executive officers of Santa Anita Operating Company and Santa Anita Realty Enterprises, Inc. I consent to the reduction in my base compensation that is proposed as part of this reorganization. Accordingly, I agree that the reduction does not constitute "Good Reason" for termination within the meaning of Section V.E.4 of my Employment Agreement. I further agree that any actions that make up the reorganization (including the creation of two essentially co-equal chief executive officers) shall not be considered to constitute a material diminution in my position, authority, duties, or responsibilities to the Santa Anita Companies (including Operating Company), so that any such actions do not constitute "Good Reason" within the meaning of Section V.E.4 of my Employment Agreement. Notwithstanding the preceding paragraph, Operating Company will agree that, for the purpose of computing any severance payment that I may become entitled to under Section V.E.3 of my Employment Agreement, my base compensation shall be treated as $400,000. Finally, this letter confirms my understanding that the Compensation Committee will restructure the annual incentive program that is now available to me so that the maximum bonus opportunity will be 100% of base compensation, rather than 50% of base compensation. This restructuring will apply to my bonus opportunity for 1996. [LOGO OF SANTA ANITA] Mr. Thomas P. Mullaney March 28, 1996 Page Two Finally, although I will remain as a director of Realty, this letter constitutes my resignation as Chairman of the Board of Directors of Santa Anita Realty Enterprises, Inc. If this letter meets with your understanding, I suggest it be placed on the agenda for the next Compensation Committee meeting and, provided that the Compensation Committee agrees with the arrangements in this letter, they be brought before the Board of Directors for approval. If the Board then approves this letter, Operating Company would indicate its agreement by signing and retaining a copy of this letter to me. Very truly yours, /s/ Stephen F. Keller Stephen F. Keller SFK:br APPROVED: SANTA ANITA OPERATING COMPANY /s/ Thomas P. Mullaney - --------------------------------------- Title: Chairman Compensation Committee ------------------------------- EX-10.2 3 EMPLOYMENT AGREEMENT - SHERWOOD C. CHILLINGWORTH EXHIBIT 10.2 [LOGO OF SANTA ANITA] SANTA ANITA REALTY ENTERPRISES, INC. A Real Estate Investment Trust March 29, 1996 Mr. William C. Baker Chairman and Chief Executive Officer Santa Anita Realty Enterprises, Inc. 301 West Huntington Drive Suite 405 Arcadia, California 91007 RE: My Employment Agreement ----------------------- Dear Bill: This letter confirms certain understandings with respect to the impact under my Employment Agreement of the reorganization that is now taking place with respect to the duties of certain executive officers of Santa Anita Realty Enterprises, Inc. As part of this reorganization, I consent to the change in my title from Chief Executive Officer of Santa Anita Realty to Executive Vice- President of Realty. I will continue to serve as Vice Chairman of the Board. I further understand that one of your first responsibilities, as the incoming Chief Executive Officer of Realty, will be to review the division of responsibilities among the Realty officers. Accordingly, I understand that during the remaining term of my Employment Agreement (that is, until June 30, 1996) various changes in my duties or responsibilities may take place as part of this process. This letter is intended to confirm my agreement that none of the actions described in the preceding paragraph will constitute my constructive termination under the Employment Agreement. Moreover, although these events constitute "Good Reason" within the meaning of Section VI.D.4 of my Employment Agreement, I hereby waive any right, if I terminate during the term of my Employment Agreement, to treat my 301 W. Huntington Drive, Suite 405 * P.O. BOX 60025 * Arcadia, CA 91066 Telephone: (818) 574-5550 * FAX: (818) 574-5997 [LOGO OF SANTA ANITA] Mr. William C. Baker Page Two March 29, 1996 termination as one for "Good Reason" because of any change in my position, authority, duties, or responsibilities. In preparing this letter, I am aware of the fact that you and the other directors of Realty are relying upon the waivers contained in this letter as part of the process that is now taking place to restructure certain responsibilities affecting the operation of Santa Anita Realty Enterprises, Inc. Very truly yours, /s/ Sherwood C. Chillingworth Sherwood C. Chillingworth SCC:dc EX-10.3 4 EMPLOYMENT AGREEMENT EXHIBIT 10.3 Employment Agreement -------------------- This Employment Agreement (the "Agreement") is entered into by and between Santa Anita Realty Enterprises, Inc. (the "Company") and William C. Baker (the "Executive"), as of the 1st day of April 1996. I. RECITALS. -------- WHEREAS, the Executive serves on the Company's Board of Directors; and WHEREAS, the Company desires to employ the Executive as its Chief Executive Officer; and WHEREAS, the Company desires that the Company's Chief Executive Officer serve as Chairman of the Company's Board of Directors; and WHEREAS, the Board of Directors has elected the Executive Chairman of the Company's Board of Directors. NOW, THEREFORE, the Company and the Executive desire to set forth in this Agreement the terms and conditions of the Executive's employment with the Company. II. EMPLOYMENT. ---------- The Company hereby employs the Executive and the Executive hereby accepts such employment, upon the terms and conditions hereinafter set forth, from April 1, 1996, to and including March 31, 1998. This Agreement is subject to renewal as set forth in Section VI below. III. DUTIES. ------ A. The Executive shall serve during the course of his employment as Chief Executive Officer of the Company, and shall have such duties and responsibilities as are customarily required of such officer and as the Board of Directors of the Company shall determine from time to time. During his tenure as the Chief Executive Officer, the Company's headquarters shall be in Southern California and Executive shall discharge his duties through services primarily performed in the Southern California area. B. The Executive agrees to devote substantially all of his time, energy and ability to the business of the Company. Nothing herein shall prevent the Executive, upon approval of 1 the Board of Directors of the Company, from serving as a director or trustee of other corporations or businesses which are not in competition with the business of the Company or in competition with any present or future affiliate of the Company. C. Nothing herein shall prevent the Executive from investing in real estate for his own account or from becoming a partner or a stockholder in any corporation, partnership or other venture not in competition with the business of the Company or in competition with any present or future affiliate of the Company. D. For the term of this Agreement, the Executive shall report to the Board of Directors of the Company or its designee. IV. COMPENSATION. ------------ A. The Company shall pay the Executive a base salary at the rate of $300,000 per year. Such salary shall be earned semimonthly and shall be payable in periodic installments no less frequently than semimonthly in accordance with the Company's customary practices. Amounts payable shall be reduced by standard withholding and other authorized deductions. The Company will review the Executive's salary at least annually. The Company may in its discretion increase the Executive's salary but may not reduce it during the time he serves as Chief Executive Officer of the Company. B. Stock Options. The effectiveness of this Agreement is contingent upon ------------- the Executive's being granted certain stock options, effective April 1, 1996, which agreements are attached hereto as Exhibits A, B, and C. The grant of these options is, in part, contingent upon shareholder approval. The Company shall notify the Executive promptly in writing of the shareholders' approval of the options. C. Annual Bonus, Incentive, Savings and Retirement Plans. The Executive ----------------------------------------------------- shall be entitled to participate in all annual bonus, incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Company. At the end of each calendar year during the term of this Agreement, the Executive may, in the Board of Directors' sole discretion, earn an annual bonus in an amount up to 100% of the Executive's annual salary for such calendar year. For calendar year 1996, the Executive's bonus, if any, shall be prorated in proportion to the Executive's period of service with the Company. In determining bonus and incentive awards, the Board of Directors will consider the Executive's success in accomplishing goals 2 with respect to the Company which have been established by the Compensation Committee in consultation with the Executive. D. Vehicle. The Company shall lease a vehicle for the Executive's use. In ------- lieu thereof, the Company may pay the Executive a reasonable vehicle allowance or lease a vehicle from the Executive for his use (subject to any required withholding) in accordance with the Company's customary practices. E. Club Membership Dues. The Company shall reimburse the Executive -------------------- promptly for all reasonable club membership dues incurred by him in support of his role in promoting the best interests of the Company. F. Welfare Benefit Plans. The Executive and/or his family, as the case may --------------------- be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company. G. Expenses. The Executive shall be entitled to receive prompt -------- reimbursement for all reasonable employment expenses incurred by him. H. Fringe Benefits. The Executive shall be entitled to fringe benefits --------------- in accordance with the plans, practices, programs and policies as in effect generally with respect to other peer executives of the Company. I. Vacation. The Executive shall be entitled to paid vacation in -------- accordance with the plans, policies, programs and practices as in effect generally with respect to other peer executives of the Company. J. Supplemental Executive Retirement Benefits. The Executive shall be ------------------------------------------ entitled to be paid additional retirement benefits which, when added to his benefits under the Santa Anita Realty Enterprises, Inc. and Santa Anita Operating Company Retirement Income Plan (the "Retirement Plan"), will provide total benefits equal to what he would have received if the Retirement Plan were changed in the following respects: 1. All of the Executive's base salary shall be counted, including base salary in excess of the limits imposed by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the "Code"), and further including base salary deferred under the Santa Anita Realty Enterprises, Inc. and 3 Santa Anita Operating Company Thrift Plan, or any other deferred compensation plan of the Company. 2. All benefits shall immediately vest upon completion of 2 years of service. 3. All benefits shall immediately vest if the Executive's employment terminates, unless the Executive's employment is terminated by the Company for Cause or the Executive voluntarily terminates employment without Good Reason. All benefits payable pursuant to this Section IV-J shall be paid to the Executive in the same form and at the same time(s) as elected under the Retirement Plan. If Executive terminates at a time when he is entitled to benefits under this subsection but not vested under the Retirement Plan, benefits shall be paid at termination in the normal form provided under the Retirement Plan (unless, at least one year prior to termination, Executive has elected to receive the benefits in an alternative form permitted under the Retirement Plan), and such benefits shall be subject to any applicable actuarial adjustment provided in the Retirement Plan for early retirement or form of benefit. The Executive and his spouse, Beneficiaries, heirs and successors under this Section IV-J shall have solely those rights of an unsecured creditor of the Company. The Company further agrees that it shall reexamine the issue of supplemental retirement benefits during calendar year 1997. V. TERMINATION. ----------- A. Death. The Executive's employment shall terminate automatically upon ----- the Executive's death. B. Disability. If the Company determines in good faith that the ---------- Disability of the Executive has occurred (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section XVI of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the day of receipt of such notice by the Executive. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from his duties with the Company for a period of six months as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or his legal representative (such agreement as to acceptability not to be withheld unreasonably). "Incapacity" as used herein shall be limited only to such Disability which substantially prevents Company from availing itself of the services of the Executive. 4 C. Cause. The Company may terminate the Executive's employment for ----- Cause. For purposes of this Agreement, "Cause" shall mean that the Company, acting in good faith based upon the information then known to the Company, after due inquiry, determines (i) that the Executive has been convicted of a felony or (ii) that the Executive has acted or failed to act in connection with his employment in such manner as would constitute gross negligence or willful misconduct. D. Other than Death or Disability or Cause. The Company may terminate --------------------------------------- the Executive's employment for reasons other than Death, Disability or Cause upon 60 days written notice. The 60 day notice requirement of this Section V-D shall be deemed satisfied if the Company gives the Executive notice of its desire to terminate this Agreement under Section VI hereof. E. Obligations of the Company Upon Termination. ------------------------------------------- 1. Death or Disability. If the Executive's employment is terminated ------------------- by reason of the Executive's Death or Disability, this Agreement shall terminate without further obligations to the Executive or his legal representatives under this Agreement, other than for (a) payment of the sum of (i) the Executive's annual base salary through the date of termination to the extent not theretofore paid and (ii) reasonable employment expenses, vehicle expenses, and club membership dues as provided herein, through the date of termination to the extent not theretofore paid (the sum of the amounts described in clauses (i) and (ii) shall be hereinafter referred to as the "Accrued Obligations"), which amounts shall be paid to the Executive or his estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the date of termination and (b) payment to the Executive or his estate or beneficiary, as applicable, of any amounts due pursuant to the terms of any applicable welfare or pension benefit plans (including, but not limited to, any amounts due as Supplemental Executive Retirement Benefits under Section IV-J of this Agreement). 2. Cause or Voluntary Termination. If the Executive's employment is ------------------------------ terminated by the Company for Cause or the Executive voluntarily terminates employment (except for a "Good Reason" described in Section V-E-4 below), this Agreement shall terminate without further obligations to the Executive other than for the timely payment of Accrued Obligations and any amounts due pursuant to the terms of any applicable welfare or pension benefit plans. If it is subsequently determined that the Company did not have Cause for termination under this Section V-E-2, then the Company's decision to terminate shall be deemed to have been made under Section V-E-3 and the amounts payable thereunder shall be the only amounts the Executive may receive for his termination. 5 3. Other than Cause or Death or Disability. If the Company terminates --------------------------------------- the Executive's employment during the term of this Agreement (including renewals) for other than Cause or Death or Disability, this Agreement shall terminate without further obligations to the Executive other than (a) the timely payment of Accrued Obligations, (b) payment of any amounts due pursuant to the terms of any applicable welfare or pension benefit plans and (c) payment to the Executive of a lump sum equal to the product of 112% times 18 months of the Executive's base salary, calculated using the base salary rate in effect under this Agreement on the Executive's date of termination. The obligation described in Section V-E-3(c) shall be reduced, however, by any cash lump sum severance payment received by the Executive pursuant to the Severance Agreement between the Executive and the Company dated April 1, 1996. 4. Voluntary Termination for Good Reason. If the Executive voluntarily ------------------------------------- terminates his employment with the Company during the term of this Agreement (including renewals) for Good Reason, this Agreement shall terminate in the same manner as if the Company terminated the Executive's employment under Section V-E-3 for a reason other than Cause. For purposes of this Section V-E-4, "Good Reason" shall mean the occurrence of one of the following events without the Executive's consent: a. Any action by the Company which results in a material diminution in the Executive's position, authority, duties or responsibilities to the Company, including for this purpose any material change in the Executive's employment location, and excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company, as the case may be, promptly after receipt of notice thereof given by the Executive; b. Any reduction in the Executive's base compensation not agreed to by the Executive, which reduction shall be deemed to occur if there is a reduction in (1) the Executive's base salary or (2) the Executive's ability to participate in employee benefit plans, receive expense reimbursements, receive other fringe benefits, receive office and support staff, or receive paid vacation, provided that: (1) an isolated, insubstantial, and inadvertent failure not occurring in bad faith and which is promptly remedied after notice by the Executive shall not be deemed a violation of this paragraph and (2) a reduction in one element of the Executive's total compensation shall not be deemed a violation of this paragraph if a counterbalancing increase in another element of the Executive's total compensation occurs (the determination of whether the increase is counterbalancing shall be determined by the Executive in good faith). 6 5. No Mitigation. If this Agreement terminates under Section V-E-2, ------------- V-E-3 or V-E-4 hereof, the obligations of the Company to the Executive under this Agreement will not be mitigated by any other employment secured by the Executive. 6. Withholding. Amounts payable under this Section V-E shall be ----------- reduced by any standard withholdings and other authorized deductions. F. Exclusive Remedy. By signing the Agreement, the Executive agrees that ---------------- the payments to which the Executive may become entitled under this Agreement are in lieu of any other payments to which the Executive might be entitled and that the Company's discharge of its obligations under this Agreement shall constitute full satisfaction of any and all claims of any nature whatsoever that the Executive might otherwise possess against the Company and its subsidiaries, except (1) such claims as are specifically provided for in the terms of any generally applicable employee benefit or executive compensation plans evidenced by written agreements or (2) any claims for personal injuries (other than claims that are based on or relate to a contention that Company has wrongfully discharged the Executive). VI. RENEWAL. ------- Subject to the provisions of Section V-E-3, on the last day of March each calendar year, beginning on March 31, 1998, this Agreement shall be automatically renewed for one additional 12 month period unless the Executive or the Company gives notice to the other, in writing, at least 6 months prior to the expiration of this Agreement, or any renewal or extension thereof, of its desire to terminate this Agreement or modify its terms. Once this Agreement expires, this Agreement shall have no application to the terms and conditions of any employment by Executive subsequent to such expiration or the termination of such employment. VII. ARBITRATION. ----------- Any controversy or claim arising out of or relating to this Agreement, its enforcement or interpretation, or because of an alleged breach, default, or misrepresentation in connection with any of its provisions, shall be submitted to arbitration, to be held in Los Angeles County, California in accordance with California Civil Procedure Code, Title 9, SS 1280-1298.8. The arbitrator shall be selected jointly by the parties or by Judicial Arbitration & Mediation Services, Inc. ("JAMS"). Each party to the arbitration shall bear its own attorneys' fees and costs relating to such arbitration. In the event that the Executive disputes the Company's 7 determination that Cause has existed for his termination of employment, the Company shall only be considered as having terminated the Executive for Cause if the arbitrator concludes that Cause existed for Executive's termination and issues specific findings to that effect. VIII. CONFIDENTIAL INFORMATION. ------------------------ The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during his employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or his representatives in violation of this Agreement). After termination of the Executive's employment with the Company, he shall not, without the prior written consent of the Company, or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. IX. SUCCESSORS. ---------- A. This Agreement is personal to the Executive and shall not, without the prior written consent of the Company, be assignable by the Executive. B. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns and any such successor or assignee shall be deemed substituted for the Company under the terms of this Agreement for all purposes. As used herein, "successor" and "assignee" shall include any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires the stock of the Company or to which the Company assigns this Agreement by operation of law or otherwise. X. WAIVER. ------ No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement. No waiver shall be binding unless in writing and signed by the party waiving the breach. 8 XI. MODIFICATION. ------------ This Agreement may not be amended or modified other than by a written agreement executed by the Executive and the Board of Directors of the Company. XII. SAVINGS CLAUSE. -------------- If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable. XIII. COMPLETE AGREEMENT. ------------------ This instrument constitutes and contains the entire agreement and understanding concerning the Executive's employment and the other subject matters addressed herein between the parties, and supersedes and replaces all prior negotiations and all agreements proposed or otherwise, whether written or oral, concerning the subject matters hereof. This is an integrated document. XIV. GOVERNING LAW. ------------- This Agreement shall be deemed to have been executed and delivered within the State of California, and the rights and obligations of the parties hereunder shall be construed and enforced in accordance with, and governed by, by the laws of the State of California without regard to principles of conflict of laws. XV. CONSTRUCTION. ------------ Each party has cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. XVI. COMMUNICATIONS. -------------- All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered or if mailed by registered or certified mail, postage prepaid, addressed to the Executive at 9 3 Lochmoor Lane, Newport Beach, CA 92660, or addressed to the Company at 285 W. Huntington Drive, Arcadia, CA 91007. Any party may change the address at which notice shall be given by written notice given in the above manner. XVII. EXECUTION. --------- This Agreement is being executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose. XVIII. LEGAL COUNSEL. ------------- The Executive and the Company recognize that this is a legally binding contract and acknowledge and agree that they have had the opportunity to consult with legal counsel of their choice. The Company shall reimburse the Executive promptly for all reasonable attorney fees incurred by the Executive in connection with the negotiation and review of this Agreement. In witness whereof, the parties hereto have executed this Agreement as of the date first above written. SANTA ANITA REALTY ENTERPRISES, INC. By: /s/ Thomas P. Mullaney -------------------------------------- Thomas P. Mullaney Chairman of the Compensation Committee WILLIAM C. BAKER /s/ William C. Baker -------------------------------------- 10 EX-10.4 5 NONSTATUTORY STOCK OPTION AGREEMENT EXHIBIT 10.4 SANTA ANITA REALTY ENTERPRISES, INC. NONSTATUTORY STOCK OPTION AGREEMENT THIS AGREEMENT (the "Agreement") is dated as of the 1st day of April, 1996, by and between Santa Anita Realty Enterprises, Inc., a Delaware corporation (the "Company") and William C. Baker (the "Optionee") . W I T N E S S E T H: WHEREAS, on March 29, 1996, the Company's Board of Directors has granted to the Optionee, effective as of April 1, 1996, (the "Award Date") a nonstatutory option (the "Option") to purchase all or any part of an aggregate of 200,000 shares of common stock (the "Aggregate Grant"), $0.10 par value, of the Company (the "Common Stock"), upon the terms and conditions set forth herein, the grant of which options are contingent upon the Company's shareholders' approval. NOW, THEREFORE, in consideration of the mutual promises and covenants made herein and the mutual benefits to be derived herefrom, the parties hereto agree as follows: 1. Defined Terms. The Option hereunder is not being issued pursuant to ------------- the Company's 1995 Share Award Plan (the "1995 Plan"). However, for ease of reference capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Company's 1995 Share Award Plan. 2. Grant of Option. The Company has granted to the Optionee as a --------------- matter of separate inducement and agreement in connection with his or her employment, and not in lieu of any salary or other compensation for his or her services, the right and option to purchase, on the terms and conditions hereinafter set forth, all or any part of the Aggregate Grant at a price of $14.04 per share, exercisable from time to time subject to the provisions of this Agreement prior to the close of business on a date not later than the day before the tenth anniversary of the Award Date (the "Expiration Date"). Such price is at least 100% of the Fair Market Value of the Common Stock on the Award Date. 3. Exercisability of Option. ------------------------ (a) The Option may be exercised for 100% of the Aggregate Grant (1) on or after the 60th consecutive business day after the Award Date that the Fair Market Value of a Paired Share is $27.50 or more, provided such 60th day occurs before April 1, 2001; (2) immediately prior to a reorganization that is consummated before April 1, 2001 in which the Company is not the surviving entity and the shareholders of the Company are to receive consideration worth $27.50 or more per Paired Share; or (3) immediately prior to a sale by the shareholders that occurs before April 1, 2001 of substantially all of the Paired Shares at a price of $27.50 or more per share of Paired Share. Unless one of these three events occurs by April 1, 2001, the Option shall expire on April 1, 2001. (b) To the extent the Optionee does not in any year purchase all or any part of the shares to which the Employee is entitled, the Optionee has the right cumulatively thereafter to purchase any shares not so purchased and such right shall continue until the Option terminates or expires. Fractional share interests shall be disregarded, but may be cumulated. No fewer than 10 shares may be purchased at any one time, unless the number purchased is the total number at the time available for purchase under the Option. Notwithstanding anything to the contrary contained in this Agreement, if the Option becomes exercisable, in all events the Optionee or the Optionee's Beneficiary shall be entitled to a period of no less than 90 days to exercise the Option. (c) If there shall occur any extraordinary dividend or other extraordinary distribution in respect of the Paired Share (whether in the form of cash, Common Stock, Operating Stock, other securities, or other property), or any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend), reverse stock split, reorganization, merger, combination, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock, Operating Stock or other securities of the corporation, or there shall occur any similar extraordinary corporate transaction, then the Committee shall, in such manner and to such extent (if any) as it deems appropriate and equitable, proportionately adjust the performance standard of this Section 3. 4. Issuance of Santa Anita Operating Company Stock. ----------------------------------------------- (a) The Option shall not be exercisable unless the Optionee submits evidence satisfactory to the Company that a number of shares of Operating Stock equal to the number of shares of Common Stock to be received upon exercise of all or a portion of the Option will, and are able to, be purchased by or are available to the Optionee, such that upon exercise the Optionee will receive or hold an equal number of shares of Common Stock and Operating Stock. The Optionee shall purchase the unpaired shares of Operating Stock at their Fair Market Value at the time the Option is exercised, which value shall be determined pursuant to the Pairing Agreement between the Company and Santa Anita Operating Company then in effect. The Optionee shall be required to pair such unpaired shares of Operating Stock with the Optionee's shares of Common Stock. (b) In connection with the Optionee's purchase of Operating Stock in accordance with clause (a), the Company shall 2 pay to the Optionee as additional compensation an amount equal to the excess, if any of (1) the purchase price of such Operating Stock over (2) the Fair Market Value of such Operating Stock on the Award Date. Payment of such amount, less any applicable withholding, shall be made to the Optionee no later than 10 business days after the date of purchase of such Operating Stock and exercise of the Option. 5. Method of Exercise of Option and Payment of Purchase Price. Subject ---------------------------------------------------------- to such further limitations and rules or procedures as the Committee may from time to time establish, the exercise of all or any portion of the Option shall be by means of written notice of exercise delivered to the Company, specifying the number of whole shares with respect to which the Option is being exercised, together with any written statements required by Section 13 of this Agreement and payment of the purchase price according to the following terms: (a) in cash, electronic funds transfer or by check payable to the order of the Company; (b) by notice and third party payment in such manner as may be authorized by the Committee; (c) subject to the Committee's ability in its absolute discretion to deny such request and upon receipt of all necessary regulatory approvals, the Optionee may request that the Optionee deliver in payment of a portion or all of the purchase price, other already-owned shares of Common Stock (whether obtained through the exercise of Options or otherwise), which shares of Common Stock shall be valued at the then Fair Market Value. The Committee's consent is required prior to the Optionee's use, pursuant to this clause, of Common Stock which he has held less than six months. If the Committee permits delivery of Common Stock to pay the purchase price, the Common Stock held six months or more may be used without consent of the Committee; or (d) subject to the Committee's ability in its absolute discretion to deny such request, the Optionee may request that shares of Common Stock that would otherwise be deliverable with a Fair Market Value equal to the purchase price of the Common Stock being purchased be withheld in payment of the purchase price. (e) The Optionee shall in all cases be required to purchase the number of unpaired shares of Operating Stock such that the Optionee will receive or hold, upon exercising the Option, an equal number of shares of Common Stock as Operating Stock, which shares shall then be paired by the Optionee. 3 6. Continuance of Employment. Nothing contained in this Agreement ------------------------- shall confer upon the Optionee any right to continue in the employ of the Company or interfere in any way with the rights of the Company, which are hereby expressly reserved, to reduce the Optionee's compensation from the rate in existence at any time or to terminate the Optionee's employment for any reason. The preceding sentence is subject, however, to the terms of any employment agreement between Optionee and the Company. 7. Effect of Termination of Relationship. ------------------------------------- (a) The Option is exercisable by Optionee (or, in the event of Optionee's death, his Beneficiary) for a period ending on the later of March 31, 2001 or 90 days after the end of the period described in Section 3(a)(1). On or after the expiration of the period described in the preceding sentence, the Option shall only be exercisable if Optionee is then employed by the Company. In no event may the Option be exercised by anyone, however, unless the vesting condition in Section 3(a) is satisfied and exercise occurs before the Expiration Date. (b) If Optionee is employed by an entity which ceases to be a Subsidiary, such event shall be deemed for purposes of this Section 7 to be a termination of employment described in subsection (a) in respect of Optionee. (c) Absence from work caused by military service or authorized sick leave shall not be considered as a termination of employment for purposes of this Section. 8. Non-Assignability of Option. Subject to the provisions of Section 7 --------------------------- above, the Option and the rights and privileges conferred hereby are not transferable or assignable and may not be offered, sold, pledged, hypothecated or otherwise disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment, garnishment, levy or similar process. The Option may be exercised only by (i) the Optionee, during the Optionee's lifetime, or (ii) to the extent provided by Section 7, by his transferees by will or under the laws of descent and distribution, or (iii) by a person designated pursuant to a QDRO. In the event that the spouse of the Optionee shall have acquired a community property interest in the Option, the Optionee or such transferees may exercise it on behalf of the spouse of the Optionee or such spouse's successor in interest. 9. Adjustment and Termination of Option Under Certain Circumstances. ---------------------------------------------------------------- (a) If the outstanding shares of Common Stock or the outstanding shares of Operating Company Stock are changed into or exchanged for cash, other property or a different number or kind 4 of shares or securities of the Company or of Operating Company, as the case may be, or if additional shares or new or different securities are distributed with respect to the outstanding shares of Common Stock or the outstanding shares of Operating Company Stock, through a reorganization or merger in which the Company or Operating Company, as the case may be, is the surviving entity, or through a combination, consolidation, recapitalization, reclassification, stock split, stock dividend, reverse stock split, stock consolidation, dividend or distribution of cash or property to the shareholders of the Company or of Operating Company, or if there shall occur any other extraordinary corporate transaction or event in respect of the Common Stock or the Operating Company Stock or a sale of substantially all the assets of the Company or of Operating Company as an entirety which in the judgment of the Committee materially affects the Common Stock or the Operating Company Stock, then the Committee shall, in such manner and to such extent (if any) as it deems appropriate and equitable (1) proportionately adjust any or all of (A) the number and kind of shares of Common Stock that may be delivered under this Agreement or (B) the exercise price per share under this Agreement; or (2) in the case of an extraordinary dividend or other distribution, merger, reorganization, consolidation, combination, sale of assets, split up, exchange, or spin off, make provision for a cash payment or for the substitution or exchange of the Agreement or the cash, securities or property deliverable to the holder of the Agreement based upon the distribution or consideration payable to holders of Common Stock or to holders of Operating Company Stock upon or in respect of such event. In any of such events, the Committee may take such action sufficiently prior to such event if necessary to permit the Optionee to realize the benefits intended to be conveyed with respect to the underlying shares in the same manner as is available to shareholders generally. (b) Section 6.2(c) of the 1995 Plan is incorporated by reference. As permitted by Section 6.2(c) of the 1995 Plan, the Option shall terminate upon the occurrence of certain corporate reorganizations in which the Company is not the survivor. 10. Notices. Any notice to be given under the terms of this Agreement ------- shall be in writing and addressed to the Secretary of the Company at its principal office, and any notice to be given to the Optionee shall be addressed to him or her at the address given beneath the Optionee's signature hereto or at such other address as either party may hereafter designate in writing to the other party. Any such notice shall be deemed to have been duly given when enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. 11. Shareholder Approval. The Option and all rights of Optionee -------------------- thereunder are contingent upon and subject to 5 shareholder approval of this Agreement. The Optionee acknowledges that the Option and all rights of Optionee hereunder are contingent upon shareholder approval. 12. Option is Plan. To the extent that Common Stock is issued under this -------------- Agreement, this Agreement shall be regarded as a stock option plan adopted by the Company. To the extent that Optionee purchases Operating Stock from Santa Anita Operating Company (the "Operating Company") in connection with the issuance of Common Stock under this Agreement, the purchase of such shares of Operating Stock shall be treated as occurring pursuant to a separate stock option plan of Operating Company. 13. Compliance with Laws. The granting and vesting of the Option under this -------------------- Agreement and the offer, issuance and delivery of Paired Shares (or Common Stock) pursuant to this Option are subject to compliance with all applicable federal and state laws, rules and regulations (including, but not limited to, state and federal securities laws (including, but not limited to, registration and qualification requirements thereunder) and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under this Agreement shall be subject to such restrictions, and the Optionee shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. 6 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and the Optionee has hereunto set his or her hand as of the day and year first above written. SANTA ANITA REALTY ENTERPRISES, INC. By: /s/ Thomas P. Mullaney -------------------------------------- Thomas P. Mullaney Chairman of the Compensation Committee OPTIONEE /s/ William C. Baker ------------------------------------------- (Signature) William C. Baker ------------------------------------------- (Print Name) 3 Lochmoor Lane ------------------------------------------- (Address) Newport Beach, CA 92660 ------------------------------------------- (City, State, Zip Code) ###-##-#### ------------------------------------------- (Social Security Number) 7 CONSENT OF SPOUSE ----------------- In consideration of the execution of the foregoing Nonstatutory Stock Option Agreement by Santa Anita Realty Enterprises, Inc., I, Janice H. Baker, --------------- the spouse of the Optionee herein named, do hereby join with my spouse in executing the foregoing Nonstatutory Stock Option Agreement and do hereby agree to be bound by all of the terms and provisions thereof. Date: 4-1-96 /s/ Janice H. Baker ------------ ----------------------- Signature of Spouse 8 EX-10.5 6 NONSTATUTORY STOCK OPTION AGREEMENT EXHIBIT 10.5 SANTA ANITA REALTY ENTERPRISES, INC. NONSTATUTORY STOCK OPTION AGREEMENT THIS AGREEMENT (the "Agreement") is dated as of the 1st day of April, 1996, by and between Santa Anita Realty Enterprises, Inc., a Delaware corporation (the "Company") and William C. Baker (the "Optionee"). W I T N E S S E T H: WHEREAS, on March 29, 1996, the Company's Board of Directors has granted to the Optionee, effective as of April 1, 1996, (the "Award Date") a nonstatutory option (the "Option") to purchase all or any part of an aggregate of 135,756 shares of common stock (the "Aggregate Grant"), $0.10 par value, of the Company (the "Common Stock"), upon the terms and conditions set forth herein, the grant of which options are contingent upon the Company's shareholders' approval. NOW, THEREFORE, in consideration of the mutual promises and covenants made herein and the mutual benefits to be derived herefrom, the parties hereto agree as follows: 1. Defined Terms. The Option hereunder is not being issued pursuant to ------------- the Company's 1995 Share Award Plan (the "1995 Plan"). However, for ease of reference capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Company's 1995 Share Award Plan. 2. Grant of Option. The Company has granted to the Optionee as a --------------- matter of separate inducement and agreement in connection with his or her employment, and not in lieu of any salary or other compensation for his or her services, the right and option to purchase, on the terms and conditions hereinafter set forth, all or any part of the Aggregate Grant at a price of $14.04 per share, exercisable from time to time subject to the provisions of this Agreement prior to the close of business on a date not later than the day before the tenth anniversary of the Award Date (the "Expiration Date"). Such price is at least 100% of the Fair Market Value of the Common Stock on the Award Date. 3. Exercisability of Option. The Option may be exercised from time ------------------------ to time and for the number of shares as follows: 50% of the Aggregate Grant on the first anniversary of the Award Date and an additional 50% of the Aggregate Grant on the second anniversary of the Award Date. Notwithstanding the foregoing, if, during the term of this Agreement, the Optionee dies or incurs a Total Disability, or if the Optionee's employment is terminated without Cause, or if the Optionee voluntarily terminates employment for Good Reason, each outstanding Option granted to the Optionee shall become exercisable, and the total number of shares subject thereto shall be purchasable immediately. As used herein, the terms "Cause" and "Good Reason" shall have the meaning assigned to them in the employment agreement between Optionee and the Company. To the extent the Optionee does not in any year purchase all or any part of the shares to which the Employee is entitled, the Optionee has the right cumulatively thereafter to purchase any shares not so purchased and such right shall continue until the Option terminates or expires. Fractional share interests shall be disregarded, but may be cumulated. No fewer than 10 shares may be purchased at any one time, unless the number purchased is the total number at the time available for purchase under the Option. 4. Change in Control Event. ----------------------- (a) Notwithstanding any provisions in this Agreement to the contrary, each outstanding Option granted to the Optionee shall become exercisable, and the total number of shares subject thereto shall be purchasable immediately, upon a "Change in Control Event" (as that term is defined in the Company's 1995 Share Award Plan). (b) Notwithstanding subsection (a), the exercise date of Options granted hereunder shall not be accelerated to the extent that the Committee determines that such acceleration would cause the deduction limitations of Section 280G of the Code to come into effect. In the event that all of an Optionee's Options are not accelerated, the Optionee may request independent verification of the Committee's calculations with respect to the application of Section 280G. In such case, the Committee will provide to the Optionee within 15 business days after such a request an opinion from a nationally recognized accounting firm selected by Optionee (the "Accounting Firm"). The opinion shall state the Accounting Firm's opinion that any decrease in the acceleration of Options hereunder is necessary to avoid the limits of Section 280G and shall contain supporting calculations. The cost of such opinion shall be paid for by the Company. (c) This Section 4 shall be effective from April 1, 1996 through September 30, 1997 and may not be amended or terminated during such period except pursuant to an instrument in writings executed by all of the parties hereto. Notwithstanding the preceding sentence, the Board of Directors of the Company may, in its sole discretion and for any reason, provide written notice of termination or amendment (effective as of the then applicable expiration date, but not with respect to a Change in Control Event occurring on or before such expiration date) to Optionee no later than six months before the expiration date of this Section 4. If written notice is not so provided, this Section 4 shall be automatically extended for a period of 60 2 months past the expiration date. This Section 4 shall continue to be automatically extended for an additional 60 months at the end of such 60-month period and each succeeding 60-month period unless notice is given in the manner described in this Section 4. 5. Issuance of Santa Anita Operating Company Stock. ----------------------------------------------- (a) The Option shall not be exercisable unless the Optionee submits evidence satisfactory to the Company that a number of shares of the common stock of Santa Anita Operating Company ("Operating Stock") equal to the number of shares of Common Stock to be received upon exercise of all or a portion of the Option will, and are able to, be purchased by or are available to the Optionee, such that upon exercise the Optionee will receive or hold an equal number of shares of Common Stock and Operating Stock. The Optionee shall purchase the unpaired shares of Operating Stock at their Fair Market Value at the time the Option is exercised, which value shall be determined pursuant to the Pairing Agreement between the Company and Santa Anita Operating Company then in effect. The Optionee shall be required to pair such unpaired shares of Operating Stock with the Optionee's shares of Common Stock. (b) In connection with the Optionee's purchase of Operating Stock in accordance with clause (a), the Company shall pay to the Optionee as additional compensation an amount equal to the excess, if any of (1) the purchase price of such Operating Stock over (2) the Fair Market Value of such Operating Stock on the Award Date. Payment of such amount, less any applicable withholding, shall be made to the Optionee no later than 10 business days after the date of purchase of such Operating Stock and exercise of the Option. 6. Method of Exercise of Option and Payment of Purchase Price. Subject ---------------------------------------------------------- to such further limitations and rules or procedures as the Committee may from time to time establish, the exercise of all or any portion of the Option shall be by means of written notice of exercise delivered to the Company, specifying the number of whole shares with respect to which the Option is being exercised, together with any written statements required by Section 14 of this Agreement and payment of the purchase price according to the following terms: (a) in cash, electronic funds transfer or by check payable to the order of the Company; (b) by notice and third party payment in such manner as may be authorized by the Committee; (c) subject to the Committee's ability in its absolute discretion to deny such request and upon receipt of all necessary regulatory approvals, the Optionee may request that the Optionee deliver in payment of a portion or all of the purchase 3 price, other already-owned shares of Common Stock (whether obtained through the exercise of Options or otherwise), which shares of Common Stock shall be valued at the then Fair Market Value. The Committee's consent is required prior to the Optionee's use, pursuant to this clause, of Common Stock which he has held less than six months. If the Committee permits delivery of Common Stock to pay the purchase price, the Common Stock held six months or more may be used without consent of the Committee; or (d) subject to the Committee's ability in its absolute discretion to deny such request, the Optionee may request that shares of Common Stock that would otherwise be deliverable with a Fair Market Value equal to the purchase price of the Common Stock being purchased be withheld in payment of the purchase price. (e) The Optionee shall in all cases be required to purchase the number of unpaired shares of Operating Stock such that the Optionee will receive or hold, upon exercising the Option, an equal number of shares of Common Stock as Operating Stock, which shares shall then be paired by the Optionee. 7. Continuance of Employment. Nothing contained in this Agreement ------------------------- shall confer upon the Optionee any right to continue in the employ of the Company or interfere in any way with the rights of the Company, which are hereby expressly reserved, to reduce the Optionee's compensation from the rate in existence at any time or to terminate the Optionee's employment for any reason. The preceding sentence is subject, however, to the terms of any employment agreement between the Optionee and the Company. 8. Effect of Termination of Relationship. ------------------------------------- (a) To the extent the Option is exercisable on the date the Optionee ceases to be employed by the Company, the Option shall be exercisable by Optionee (or, in the event of Optionee's death, his Beneficiary) for a period ending March 31, 2001. On or after April 1, 2001, the Option shall only be exercisable if Optionee is then employed by the Company. In no event, however, may the Option be exercised after the Expiration Date. (b) If Optionee is employed by an entity which ceases to be a Subsidiary, such event shall be deemed for purposes of this Section 8 to be a termination of employment described in subsection (a) in respect of Optionee. (c) Absence from work caused by military service or authorized sick leave shall not be considered as a termination of employment for purposes of this Section. 4 9. Non-Assignability of Option. Subject to the provisions of Section 8 --------------------------- above, the Option and the rights and privileges conferred hereby are not transferable or assignable and may not be offered, sold, pledged, hypothecated or otherwise disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment, garnishment, levy or similar process. Except as provided by this Agreement, the Option may be exercised only by (i) the Optionee, during the Optionee's lifetime, or (ii) to the extent provided by Section 8, by his transferees by will or under the laws of descent and distribution, or (iii) by a person designated pursuant to a QDRO. In the event that the spouse of the Optionee shall have acquired a community property interest in the Option, the Optionee or such transferees may exercise it on behalf of the spouse of the Optionee or such spouse's successor in interest. 10. Adjustment and Termination of Option Under Certain Circumstances. ---------------------------------------------------------------- (a) If the outstanding shares of Common Stock or the outstanding shares of Operating Company Stock are changed into or exchanged for cash, other property or a different number or kind of shares or securities of the Company or of Operating Company, as the case may be, or if additional shares or new or different securities are distributed with respect to the outstanding shares of Common Stock or the outstanding shares of Operating Company Stock, through a reorganization or merger in which the Company or Operating Company, as the case may be, is the surviving entity, or through a combination, consolidation, recapitalization, reclassification, stock split, stock dividend, reverse stock split, stock consolidation, dividend or distribution of cash or property to the shareholders of the Company or of Operating Company, or if there shall occur any other extraordinary corporate transaction or event in respect of the Common Stock or the Operating Company Stock or a sale of substantially all the assets of the Company or of Operating Company as an entirety which in the judgment of the Committee materially affects the Common Stock or the Operating Company Stock, then the Committee shall, in such manner and to such extent (if any) as it deems appropriate and equitable (1) proportionately adjust any or all of (A) the number and kind of shares of Common Stock that may be delivered under this Agreement or (B) the exercise price per share under this Agreement; or (2) in the case of an extraordinary dividend or other distribution, merger, reorganization, consolidation, combination, sale of assets, split up, exchange, or spin off, make provision for a cash payment or for the substitution or exchange of the Agreement or the cash, securities or property deliverable to the holder of the Agreement based upon the distribution or consideration payable to holders of Common Stock or to holders of Operating Company Stock upon or in respect of such event. In any of such events, the Committee may take such action sufficiently prior to such event if necessary to permit the Optionee to realize the 5 benefits intended to be conveyed with respect to the underlying shares in the same manner as is available to shareholders generally. (b) Section 6.2(c) of the 1995 Plan is incorporated by reference. As permitted by Section 6.2(c) of the 1995 Plan, the Option shall terminate upon the occurrence of certain corporate reorganizations in which the Company is not the survivor. 11. Notices. Any notice to be given under the terms of this Agreement ------- shall be in writing and addressed to the Secretary of the Company at its principal office, and any notice to be given to the Optionee shall be addressed to him or her at the address given beneath the Optionee's signature hereto or at such other address as either party may hereafter designate in writing to the other party. Any such notice shall be deemed to have been duly given when enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. 12. Shareholder Approval. The Option and all rights of Optionee -------------------- thereunder are contingent upon and subject to shareholder approval of this Agreement. The Optionee acknowledges that the Option and all rights of the Optionee hereunder are contingent upon shareholder approval. 13. Option is Plan. To the extent that Common Stock is issued under this -------------- Agreement, this Agreement shall be regarded as a stock option plan adopted by the Company. To the extent that Optionee purchases Operating Stock from Santa Anita Operating Company ("Operating Company") in connection with the issuance of Common Stock under this Agreement, the purchase of such shares of 6 Operating Stock shall be treated as occurring pursuant to a separate stock option plan of Operating Company. 14. Compliance with Laws. The granting and vesting of the Option under -------------------- this Agreement and the offer, issuance and delivery of Paired Shares (or Common Stock) pursuant to this Option are subject to compliance with all applicable federal and state laws, rules and regulations (including, but not limited to, state and federal securities laws (including, but not limited to, registration and qualification requirements thereunder) and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under this Agreement shall be subject to such restrictions, and the Optionee shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and the Optionee has hereunto set his or her hand as of the day and year first above written. SANTA ANITA REALTY ENTERPRISES, INC. By: /s/ Thomas P. Mullaney ------------------------------------- Thomas P. Mullaney Chairman of the Compensation Committee OPTIONEE /s/ William C. Baker ------------------------------------------ (Signature) William C. Baker ------------------------------------------- (Print Name) 3 Lochmoor Lane ------------------------------------------- (Address) Newport Beach, CA 92660 ------------------------------------------- (City, State, Zip Code) ###-##-#### ------------------------------------------- (Social Security Number) 7 CONSENT OF SPOUSE ----------------- In consideration of the execution of the foregoing Nonstatutory Stock Option Agreement by Santa Anita Realty Enterprises, Inc., I, Janice H. Baker, --------------- the spouse of the Optionee herein named, do hereby join with my spouse in executing the foregoing Nonstatutory Stock Option Agreement and do hereby agree to be bound by all of the terms and provisions thereof. Date: 4-1-96 /s/ Janice H. Baker ------------ ------------------------ Signature of Spouse 8 EX-10.6 7 RESIGNATION AND GENERAL RELEASE AGREEMENT EXHIBIT 10.6 RESIGNATION AND GENERAL RELEASE AGREEMENT ----------------------------------------- In consideration of the covenants undertaken and releases contained in this Resignation and General Release Agreement (the "Agreement"), Frederick B. Cordova, III ("Employee") and Santa Anita Realty Enterprises, Inc. ("SARE"), agree as follows: Employee hereby resigns, effective April 30, 1996, from his position as Vice President of SARE. Employee shall cease to accrue any vacation or other employee payments or benefits beyond April 30, 1996. SARE shall pay to Employee on or before April 30, 1996, his accrued but unpaid salary through April 30, 1996, his accrued and unused vacation to April 30, 1996 (which SARE and Employee agree is two weeks) and $5,000 as severance and reimbursement of costs associated with Employee's resignation. Employee shall have the option to convert and continue his health insurance after April 30, 1996, as may be required or authorized by law under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). In addition, as additional severance, SARE shall pay or provide the following to Employee: (1) for each of the calendar months of May 1996, June 1996 and July 1996, SARE shall pay to Employee $8,666.67, payable semimonthly in accordance with SARE's customary practices for payment of payroll to employees; (2) for each of the months of August 1996, September 1996 and October 1996, SARE shall pay to Employee $8,666.67, payable semimonthly in accordance with SARE's customary practices for payment of payroll to employees, provided, however, that such payments pursuant to this subclause (2) shall cease in the event Employee has accepted employment with another entity in which case the obligations under this subclause (2) shall terminate effective with such acceptance of employment; (3) for each of the calendar months during which a payment is due to Employee by SARE pursuant to subclause (1) or (2) above, SARE shall pay to Employee an expense allowance of $1,200; (4) for each of the calendar months during which a payment is due to Employee by SARE pursuant to subclause (1) or (2) above, SARE shall pay no more than $830 to SARE's insurance provider for Employee's costs for medical and dental insurance premiums pursuant to Employee's election for coverage under COBRA; (5) for each of the calendar months during which a payment is due to Employee by SARE pursuant to subclause (1) or (2) above, SARE shall provide for Employee's use, a laptop computer, a compatible printer and a pager; and (6) for each of the calendar months during which a payment is due to Employee by SARE pursuant to subclause (1) or (2) above, SARE shall arrange for a SARE employee to answer Employee's telephone extension and direct personal callers to a dedicated voice mail line, which dedicated voice mail line Employee will be able to access from outside of SARE 1 premises. All amounts payable to Employee shall be subject to standard withholding and Employee authorized deductions. In the event the obligations arising under subclause (2) above are terminated prior to the last day of a payment period, compensation and reimbursement due to Employee shall be prorated for the portion of the payment period in which the obligations under subclause (2) were in effect. In addition, Employee may maintain funds in his account in the SARE Thrift Plan in accordance with the terms of the Thrift Plan which provide for a period of retention for up to one year from Employee's date of termination of employment with SARE. Notwithstanding that Employee's resignation is effective April 30, 1996, SARE and Employee have agreed that Employee shall remove his personal items from SARE's offices by April 26, 1996 and shall have no further obligation to, and shall not, be present in such offices after April 26, 1996. Employee agrees to return the equipment provided pursuant to subclause (5) within ten days of the termination of SARE's obligations to provide such equipment. Each of SARE and Employee agrees and acknowledges that the payments made by SARE pursuant to subclause (4) above are made in the good faith belief that such payments are excluded from income for federal and/or state tax purposes and, consequently, are not taxable income; in the event that any taxation authority rules otherwise with respect to the payments made by SARE, Employee hereby agrees to indemnify and hold harmless SARE and its successors and employees from and against any taxes, penalties and interest required to be paid by such taxation authority. Except for those obligations created by or arising out of this Agreement, Employee hereby acknowledges full and complete satisfaction of, and releases and discharges and covenants not to sue SARE, its divisions, subsidiaries, parent, affiliated corporations, past and present, and each of them, as well as their directors, officers, shareholders, representatives, assignees, successors, agents and employees, past and present, and each of them, (individually and collectively, "SARE Releasees") from and with respect to any and all claims, wages, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with his employment relationship with, or his separation or resignation from, SARE, including, without limiting the generality of the foregoing, any claim for severance pay, bonus or similar benefit, sick leave, pension, retirement, vacation pay, life insurance, health or medical insurance or any other fringe benefit, workers' compensation or disability, or any other occurrences, acts or omissions whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of SARE Releasees committed or omitted prior to the date of this Agreement, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the 2 Americans with Disabilities Act, the California Fair Employment and Housing Act or any other federal, state or local law, regulation or ordinance, provided, however, this release does not affect any rights Employee may have in any 401 (k) plan or any other retirement benefit accruing from Employee's employment with SARE. Except for those obligations created by or arising out of this Agreement, SARE hereby acknowledges full and complete satisfaction of, and releases and discharges and covenants not to sue Employee and his representatives, assignees, successors, and agents, past and present, and each of them, (individually and collectively, "Employee Releasees") from and with respect to any and all claims, wages, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with his employment relationship with, or his separation or resignation from, SARE, including, without limiting the generality of the foregoing, any claim for severance pay, bonus or similar benefit, sick leave, pension, retirement, vacation pay, life insurance, health or medical insurance or any other fringe benefit, workers' compensation or disability, or any other occurrences, acts or omissions whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of Employee Releasees committed or omitted prior to the date of this Agreement, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the California Fair Employment and Housing Act or any other federal, state or local law, regulation or ordinance, provided, however, this release does not affect any rights SARE may have with respect to (a) criminal actions by Employee, (b) actions taken by Employee which were not taken in good faith and in a manner he reasonably believed to be in the best interests of SARE or its shareholders or (c) claims which are based upon facts which give rise to a recovery by SARE under any applicable policies of insurance solely as a result of acts or omissions by Employee and as to which the insurer has a right to subrogation against Employee. SARE acknowledges that it currently has no actual knowledge of any claims described in subclause (c) above or of any facts which may give rise to such claims. Employee acknowledges that, by reason of his position with SARE, he has been given access to lists of customers, vendors, prices, business plans and similar confidential or proprietary materials, or information respecting SARE's business affairs. Employee represents that he will hold all such information confidential and will continue to do so, and that he will not use such information and relationships for any business (which term herein includes a partnership, firm, corporation or any other entity) without the prior 3 written consent of SARE. Employee shall return to SARE and shall not make or copy in any form or manner lists of customers, prices, business plans and similar confidential and proprietary materials or information. Employee additionally agrees to cooperate fully and to take all such additional actions as may be necessary to retrieve such information from all files and/or computer hard drives or floppy disks. Notwithstanding the foregoing, Employee shall be entitled to keep, use and/or disclose all information contained in his "Rolodex" which he used while employed by SARE as well as those certain documents listed on Exhibit A attached hereto and made a part hereof for purposes of securing any future employment. This Agreement is intended to be effective as a bar to every claim, demand and cause of action stated above. Employee and SARE each acknowledges that he or it may hereafter discover claims or facts in addition to or different from those which he or it now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have materially affected the terms of this Agreement. Nevertheless, Employee and SARE each hereby expressly waives any rights and benefits conferred by Section 1542 of the California Civil Code, ------------ --------------------- which provides that, "A GENERAL RELEASE DOES NOT EXTEND TO A CLAIM WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." Employee and SARE each agrees that the terms and conditions of this Agreement shall remain confidential as between the parties and he or it, as the case may be, shall not disclose them to any other person except as is required by law or pursuant to a valid court order. In addition, Employee and SARE may disclose the terms and conditions of this Agreement to his or its respective legal, accounting and tax advisers and SARE may disclose such to any employee on a "need to know basis". Without limiting the generality of the foregoing, each of Employee and SARE agrees not to respond to or in any way participate in or contribute to any public discussion, notice or other publicity concerning, or in any way relating to, execution of this Agreement or the events (including any negotiations) which led to its execution. Without limiting the generality of the foregoing and except as permitted by the foregoing, each of Employee and SARE specifically agrees that he or it shall not disclose information regarding this Agreement to any current or former employee of SARE Releasees. Employee and SARE each hereby agrees that disclosure by him or it of any of the terms and conditions of the Agreement in violation of the foregoing shall constitute and be treated as a material breach of this Agreement. Notwithstanding the foregoing or any other provision of 4 this Agreement, SARE agrees to furnish promptly upon request by Employee, from time to time, letters of reference in the form attached hereto as Exhibit B addressed to such prospective employers as Employee may designate and personally signed by an officer of SARE with the title of Executive Vice President or higher. Notwithstanding any other provision of this Agreement, SARE agrees that following April 30, 1996, Employee shall continue to have all rights to indemnification to the maximum extent permitted by Article VIII of SARE's By- laws. This instrument constitutes and contains the entire agreement and understanding concerning Employee's employment, voluntary resignation from the same and the other subject matters addressed herein between the parties, and supersedes and replaces all prior negotiations and all agreements proposed or otherwise, whether written or oral, concerning the subject matters hereof. This is an integrated document. If any provision of this Agreement or its application is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or application and, therefore, the provisions of this Agreement are declared to be severable. The undersigned have read and understand the consequences of this Agreement and voluntarily sign it. The undersigned declare under penalty of perjury that the foregoing is true and correct. EXECUTED as of the dates set forth below in Los Angeles County, California. SANTA ANITA REALTY ENTERPRISES, INC. EMPLOYEE By /s/ Brian L. Fleming /s/ Frederick B. Cordova, III ------------------------------------ ------------------------------ Brian L. Fleming Frederick B. Cordova, III Executive Vice President 301 W. Huntington Drive, Suite 405 1960 Lombardy Drive Arcadia, Calif. 91007 La Canada, Calif. 91011 Date: 4/30, 1996 Date: April 30, 1996 ---- -------- 5 EX-27.A 8 FINANCIAL DATA SCHEDULE SANTA ANITA REALTY ENTERPRISES
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SANTA ANITA REALTY ENTERPRISES, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000314661 SANTA ANITA REALTY ENTERPRISES 3-MOS DEC-31-1996 MAR-31-1996 591,000 0 843,000 (388,000) 0 0 92,447,000 (43,069,000) 85,548,000 0 28,263,000 0 0 1,138,000 29,494,000 85,548,000 0 9,322,000 0 690,000 1,965,000 0 944,000 5,723,000 0 5,723,000 0 0 0 5,723,000 0.50 0.00
EX-27.B 9 FINANCIAL DATA SCHEDULE SANTA ANITA OPERATING COMPANY
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SANTA ANITA OPERATING COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000313749 SANTA ANITA OPERATING COMPANY 3-MOS DEC-31-1996 MAR-31-1996 6,540,000 16,147,000 5,401,000 0 0 33,248,000 44,640,000 (26,725,000) 53,825,000 35,412,000 1,525,000 0 0 1,127,000 12,618,000 53,825,000 0 38,267,000 0 31,605,000 4,231,000 0 73,000 2,358,000 0 2,358,000 0 0 0 2,358,000 0.21 0.00
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