Exhibit 2.1
PURCHASE AGREEMENT
Xxxxx 00, 0000
XXXX 2002 Realty Corp.
c/o Goldman, Xxxxx & Co.
One Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx
Re: 8.95% Series B Cumulative Redeemable Preferred Units of GGPLP L.L.C.
(the "Units")
Ladies & Gentlemen:
This Agreement provides for the purchase by GSEP 2002 Realty Corp., a
Delaware corporation ("Subscriber"), of $50,000,000 aggregate amount of Units
issued by GGPLP L.L.C., a Delaware limited liability company (the "Company").
The sole shareholder of the Subscriber is Xxxxxxx Xxxxx 0000 Xxxxxxxx Xxxxx
Fund, L.P. ("Subscriber's Parent"). The managing member of the Company is GGP
Limited Partnership, a Delaware limited partnership ("GGP"). The general partner
of GGP is General Growth Properties, Inc., a Delaware corporation ("Parent";
Parent, GGP and the Company are referred to herein individually as a "GGP
Company" and collectively as the "GGP Companies"). The partnerships and limited
liability companies owned wholly or in part, directly or indirectly, by the
Company hereafter are referred to as the "Company Subsidiaries"; the real
properties owned by the Company or by any Company Subsidiary hereafter are
referred to as the "Properties."
1. Sale of Units
a. The Company hereby agrees to sell to the Subscriber, and the
Subscriber hereby agrees to purchase from the Company, 200,000 Units.
The purchase price of each Unit is $250.00, for an aggregate purchase
price of $50,000,000 in the aggregate (the "Purchase Price").
b. The sale and purchase of the 200,000 Units (the "Closing") shall take
place at the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx
Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx on April 17, 2002 (the "Closing
Date").
c. On the Closing Date, Subscriber shall, if the other conditions set
forth in Section 2 are satisfied on or prior to the Closing Date, pay
to the Company by wire transfer of immediately available funds the
Purchase Price of the Units purchased by the Subscriber.
2. Conditions of Closing
The Subscriber's obligation to purchase the Units on the Closing Date and
the Company's obligation to sell the Units to the Subscriber are subject to
the fulfillment to the satisfaction of the Subscriber and the Company on
the Closing Date of the following conditions precedent (provided that no
party shall be excused by the failure to perform any of its own
obligations):
a. Delivery to the Subscriber of fully executed copies of each of the
Transaction Documents listed on Exhibit A (the "Transaction
Documents").
b. Delivery to the Subscriber of an opinion from counsel to the Company,
dated the Closing Date addressed to the Subscriber substantially in
the form of Exhibit B.
c. The representations and warranties set forth in Sections 3 and 4 shall
be true and accurate as of the Closing Date.
d. Delivery to the Company of the Purchase Price in accordance with
Section 1.c. above.
3. Representations and Warranties of the GGP Companies
Each of the Company, GGP and the Parent hereby represents and warrants to
the Subscriber and Subscriber's Parent as follows as of the date hereof and
as of the Closing Date:
a. The Parent has made with the Securities and Exchange Commission
("SEC") all filings required to be made by it since January 1, 2000
(the "SEC Reports"). The Company is not required to file any reports
with the SEC. The SEC Reports were prepared and filed in compliance
with the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the Securities Act of 1933, as amended (the "Securities
Act"), as applicable, and the rules and regulations promulgated by the
SEC thereunder, and did not, as of their respective dates, contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. The
financial statements and the interim financial statements of the
Parent included in the SEC Reports were prepared in accordance with
U.S. Generally Accepted Accounting Principles applied on a consistent
basis ("GAAP") (except in the case of the interim financial statements
for the absence of footnotes and as may be otherwise noted therein)
and fairly presented the financial condition and results of operations
of the Parent and its subsidiaries as at the dates thereof and for the
periods then ended, subject, in the case of the interim financial
statements, to normal year-end adjustments and any other adjustments
described in the SEC Reports.
b. There has been no material adverse change in the business, assets,
condition (financial or otherwise) or prospects of the Parent since
the most recently filed SEC Report.
c. (i) The Company is a validly existing limited liability company formed
under the laws of the State of Delaware. GGP is a validly existing
limited partnership formed under the laws of the State of Delaware.
The Parent is a validly existing corporation organized under the
-2-
laws of the State of Delaware. Each of the Company Subsidiaries is
listed on Schedule 3j and is a validly existing general partnership,
limited partnership or limited liability company.
(ii) The Parent, GGP and the Company have all requisite corporate,
limited partnership, or limited liability company authority and power
to execute and deliver this Agreement and the Transaction Documents
and to consummate the transactions contemplated thereby. The execution
and delivery of this Agreement and the Transaction Documents by the
GGP Companies and the consummation by them of the transactions
contemplated thereby have been duly and validly authorized by all
requisite corporate, limited partnership or limited liability company
action on the part of the Parent, GGP and the Company, and no other
proceedings on the part of the Parent, GGP or the Company are
necessary to authorize this Agreement and the Transaction Documents or
to consummate the transactions contemplated thereby. As of the
Closing, this Agreement and the Transaction Documents will have been
fully and validly executed and delivered by the Company, GGP and the
Parent. As of the Closing, this Agreement and the Transaction
Documents will constitute legal, valid and binding obligations of the
Company, GGP and the Parent, enforceable against them in accordance
with their terms.
d. None of the execution, delivery or performance of this Agreement and
the Transaction Documents by any GGP Company will conflict with,
result in a default, right to accelerate or loss of rights under, or
result in the creation of any Encumbrance (as defined below) pursuant
to, any provision of any organizational documents of such GGP Company
or any franchise, mortgage, deed of trust, lease, license, agreement,
understanding, law, rule or regulation or any order, judgment or
decree to which any GGP Company or any Company Subsidiary is a party
or by which it or its properties may be bound or affected that would
have a material adverse effect on the business, assets, condition
(financial or otherwise) or prospects of any GGP Company ("Material
Adverse Effect").
e. There is no action, suit, litigation, hearing or administrative
proceeding pending against any GGP Company or any of its properties or
assets or, to the Company's Knowledge (as defined below), currently
threatened in or before any court or before or by any federal, state,
county or municipal department, commission or agency (i) against any
GGP Company or any Company Subsidiary that questions the validity of
the Transaction Documents or the issuance of the Units or the right of
any GGP Company to enter into any Transaction Documents or to
consummate the transactions contemplated thereby or that could
reasonably be expected to interfere with the ability of any GGP
Company to perform its obligations or could reasonably be expected to
have a Material Adverse Effect or (ii) against any GGP Company (or any
of the Company Subsidiaries) or all or any portion of its properties
including but not limited to alleged building code or zoning
violations which are not covered by insurance which, if adversely
determined, could reasonably be expected to have a Material Adverse
Effect. There are no insolvency or bankruptcy proceedings, pending or,
to the Company's Knowledge, contemplated to which any GGP Company (or
any of the Company Subsidiaries) is a party that could reasonably be
expected to have a Material Adverse Effect.
-3-
f. The Units when issued, sold and delivered by the Company, upon receipt
of the Purchase Price and performance by Subscriber of its obligations
hereunder, shall be duly and validly issued and outstanding, fully
paid, and non-assessable and will be free of any liens, claims,
security interests or encumbrances of third parties of any kind
(collectively, "Encumbrances"), other than those created by, through
or under Subscriber. On or prior to the Closing Date, the 8.95% Series
G Cumulative Redeemable Preferred Shares, $100 par value per share, of
the Parent (the "Preferred Shares") issuable upon exchange of the
Units shall have been duly and validly reserved for issuance in
accordance with this Agreement and the Parent's Certificate of
Incorporation and when issued in exchange for Units, shall be duly and
validly issued and authorized, delivered, fully paid, and
non-assessable and will be free of any Encumbrances, other than those
created by, through or under Subscriber. The shares of Common Stock,
$.10 par value per share, of the Parent (the "Common Shares") issuable
upon exchange of the Units, when issued in exchange for Units, shall
be duly and validly issued and authorized, fully paid, and
non-assessable and will be free of any Encumbrances, other than those
created by, through or under Subscriber.
g. The issuance, sale and delivery of the Units, the Preferred Shares and
the Common Shares is not subject to any preemptive right of any person
under applicable law or the LLC Agreement (as defined below), the
Partnership Agreement of GGP or the Certificate of Incorporation or
bylaws of the Parent, as applicable, or to any contractual right of
first refusal or right in favor of any person. There are no agreements
or understandings of the GGP Companies in effect (other than the
Certificate of Incorporation (including the Certificate of
Designations) and Bylaws of Parent and the LLC Agreement) concerning
the Preferred Shares or the Units or restricting the voting rights,
the distribution rights or any other rights of the holders of the
Units or the Preferred Shares.
h. A true and complete copy of the Company's Limited Liability Company
Agreement (the "LLC Agreement") is set forth as Exhibit C. Except for
the 8.95% Series A Cumulative Redeemable Preferred Units of the
Company which rank on parity with the Units, there are no interests in
the Company authorized, issued or outstanding that rank senior to, or
on a parity with, the Units with respect to liquidation, winding up,
dividends or distributions. Except for the 7.25% Preferred Income
Equity Redeemable Stock, Series A, and the 8.95% Series B Cumulative
Redeemable Preferred Shares which, rank on parity with the Preferred
Shares, there are no equity interests in the Parent issued or
outstanding nor have any such equity interests been created that rank
senior to, or on parity with, the Preferred Shares with respect to
liquidation, winding up, dividends or distributions. There are no
Preferred Shares issuable upon exchange of partnership or limited
liability company interests which are outstanding as of the date
hereof. Except for the Units, no other securities are exchangeable,
convertible or otherwise exercisable for Preferred Shares.
i. The Parent will file a registration statement with the SEC relating to
the issuance of the Preferred Shares that may be issued by the Parent
to Subscriber upon exchange of the Units into such shares or the
resale of all or a portion of the Preferred Shares, in accordance with
the Registration Rights Agreement attached hereto as Exhibit D (the
"Registration Agreement") which will be executed and delivered on the
Closing Date.
-4-
j. Attached hereto as Schedule 3j is a true, correct and complete list of
the partnership and limited liability company interests owned directly
or indirectly by the Company, and a list of properties owned by those
partnerships and limited liability companies. A Company Subsidiary has
good and marketable fee simple and/or leasehold title to each of the
Properties, free and clear of any Encumbrances or other matters
affecting title, except for mortgage liens securing the repayment of
the mortgage loans disclosed on Schedule 3j and for Encumbrances which
do not materially and adversely affect the use of the Properties. All
of the leases relating to the Properties are in full force and effect.
Neither the Company nor any Company Subsidiary has delivered a notice
of monetary default or material non-monetary default to any tenant
which remains uncured as of the date hereof except with respect to
defaults which individually or in the aggregate would not have a
Material Adverse Effect, if uncured.
k. All mortgages encumbering the Properties are in good standing unless
noncompliance would not be material to the Company (or the Company
Subsidiary which owns such Property) and all payments due thereunder
as of the date hereof have been made. Neither the Company nor any of
the Company Subsidiaries has received a notice of default or a written
notice of any matter which, if uncured beyond any grace period set
forth in such mortgage, would constitute a default thereunder unless
such default would not have a Material Adverse Effect. All consents to
the proposed transaction from each mortgagee required to give its
consent, are listed on Schedule 3k (the "Listed Consents") and all
such consents have been obtained. The GGP Companies have good
relationships with each of the lenders with respect to the Listed
Consents and such lenders have indicated a preliminary willingness to
provide the Listed Consents without any adverse conditions or
amendments to the loans. The information set forth on Schedule 3k is
true and correct in all material respects as of the dates listed
thereon.
l. There are no condemnation or eminent domain proceedings pending, or to
the Company's Knowledge, threatened, against any of the Properties
that could reasonably be expected to have a Material Adverse Effect.
m. Neither the Company nor any Company Subsidiary has received any
notice, complaint or service alleging a violation in any material
respect of the Americans with Disabilities Act at any of the
Properties that has not been cured, whether such notice, complaint or
service alleged a violation against the Company, any Company
Subsidiary or any tenant of the Properties, which violation could
reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any Company Subsidiary has received any written notices
from any insurance company or board of fire underwriters alleging any
material uncured defects or material inadequacies in any of the
Properties, which defects or inadequacies could reasonably be expected
to have a Material Adverse Effect. Neither the Company nor any Company
Subsidiary has received any notice canceling, suspending or
threatening to cancel or suspend any certificates of occupancy or
permits regulating the use of the Properties, which cancellations or
suspensions could reasonably be expected to have a Material Adverse
Effect.
-5-
n. To the Company's Knowledge, (i) there are no underground storage tanks
on the Properties, (ii) there are no hazardous substances or wastes
beyond the limits permitted by law on or under the Properties and no
hazardous substances or wastes beyond the limits permitted by law have
been generated, released, discharged or disposed of from or on the
Property, and (iii) there is no asbestos, PCB's or formaldehyde based
insulation on or at any of the Properties beyond the limits permitted
by law, in each case, the presence, generation, release, discharge or
disposal of which could reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Company Subsidiary has
received notification of a release or discharge of any hazardous
substance or hazardous waste pursuant to or any notice of any
violation or non-compliance with any federal, state or local
environmental law, regulation or ordinance as to any Property, which
release, discharge, violations or non-compliance could reasonably be
expected to have a Material Adverse Effect. As used herein the terms
"hazardous substances" and "hazardous wastes" shall have the meanings
set forth in CERCLA.
o. Each insurance policy maintained by the GGP Companies or the Company
Subsidiaries with respect to the Properties is in full force and
effect and no GGP Company or Company Subsidiary has received any
notice from any insurance company which issued any of the policies of
any defects or inadequacies of such Properties which, if not corrected
would result in the termination of such policies and could reasonably
be expected to have a Material Adverse Effect.
p. Immediately following the issuance of the Units, less than 17.5% of
the value of the Company's gross assets (giving effect to the
Subscriber's investment in the Company) will consist of "stock and
securities" within the meaning of Section 351(e)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). For this purpose, if
the Company holds an interest in an unincorporated entity (other than
an unincorporated entity taxable as a corporation), the provisions of
Treasury Regulation Section 1.731-2(c)(3) apply to determine the
extent to which such interest is treated as a "stock and security".
The Company has no present plan to increase the value of its assets
constituting "stock and securities" to a percentage equal to or
greater than 17.5%.
q. Interests in neither the Company nor GGP are traded on an "established
securities market" as defined in Treas. Reg. Section 1.7704-1(b).
r. Assuming that Subscriber's representations and warranties in Sections
4a., 4b. and 4c. are true and correct, all membership interests or
other economic interests in the Company and GGP were issued in
transactions that were not required to be registered under the
Securities Act of 1933, as amended (the "Securities Act") or would not
have been required to be so registered if the interest had been
offered and sold in the United States.
s. The Company would presently satisfy, and nothing has come to the
attention of the Company or GGP to cause it to believe that the
Company will fail to satisfy, the income and asset requirements under
Sections 856(c)(2), (3) and (4) of the Code if the Company were
otherwise taxable as a real estate investment trust under the Code.
The Company currently intends, and GGP currently intends to cause the
Company, to satisfy the income and asset requirements under Sections
856(c)(2), (3) and (4) of the Code that apply to real
-6-
estate investment trusts, and the Company and GGP do not know of any
existing facts or circumstances that would cause the Company to fail
to satisfy the income and asset requirements under Sections 856(c)(2),
(3) and (4) of the Code on or before December 31, 2003, if the Company
were otherwise taxable as a real estate investment trust.
t. The Company and GGP are partnerships for U.S. federal income tax
purposes, and have not been and are not presently publicly traded
partnerships within the meaning of Section 7704(b) of the Code
("PTP"). Neither the Company nor GGP has reported or taken a position
with the Internal Revenue Service or its members or partners, as the
case may be, that the Company or GGP is a PTP.
u. The GGP Companies do not have any present plan or intention, and the
GGP Companies do not have any actual knowledge of any present plan or
intention of any member in the Company, to take any action or actions
that would or likely would result in the Company or GGP becoming a PTP
in the foreseeable future. The GGP Companies do not have any actual
knowledge of facts that reasonably would cause them to expect that the
Company would or likely would become a PTP in the foreseeable future,
and the GGP Companies do not have any actual knowledge of facts
relating to any actions that may be taken by the Company or any
partner of GGP that reasonably would cause them to expect that GGP
would or likely would become a PTP in the foreseeable future.
v. From the beginning of the current tax years of the Company and GGP to
the date hereof, the Company and GGP have not had at any time more
than 100 members and partners (including the Subscriber which, for the
purposes hereof, is being counted as one member) within the meaning of
Treas. Reg. Section 1.7704-1(h) on a combined basis. During the
current tax year of the Company, no interests in the Company's capital
or profits have been transferred, other than pursuant to transfers
described in any of paragraphs (e), (f) and (g) of Treasury Regulation
Section 1.7704-1 and for purposes of this paragraph and the other
provisions of this Agreement, the transfer of the 8.95% Series A
Cumulative Redeemable Preferred Units of the Company by Xxxxxxx Xxxxx
0000 Xxxxxxxx Xxxxx Fund, L.P. to GSEP 2000 Realty Corp. shall be
deemed to be a transfer described in such paragraphs, to the extent
not already so described.
w. The Company has no present plan or intention to, and each of the GGP
Companies has no present plan or intention to cause the Company to:
(i) liquidate or sell substantially all of the Company's assets; or
(ii) make distributions to members or redeem interests in the Company
in such manner as would cause the exchange right contained in the LLC
Agreement of the Company relating to an imminent and substantial risk
that Subscriber's interest in the Company represents or would exceed
the 19.95% Limit (as defined in the LLC Agreement) to be exercisable.
x. Nothing has come to the attention of the Company to cause it to
believe and the Company does not believe that (i) it will fail to have
sufficient cash flow to satisfy the payment of the return on the
Preferred Shares (and hence cause the exchange right contained in the
LLC Agreement relating to the failure to pay return in six (6) prior
quarterly distribution periods to be exercisable) or (ii) the
Company's income will fall to a level that would cause the exchange
right contained in the LLC Agreement relating to an imminent and
substantial
-7-
risk that the Subscriber's interest in the Company represents or would
exceed the 19.95% Limit to be exercisable.
y. The Net Asset FMV and the Gross Asset FMV of the Company currently
constitute less than 65% of the Net Asset FMV and the Gross Asset FMV
of GGP, respectively, and each of the GGP Companies has no present
plan or intention to cause the Net Asset FMV or the Gross Asset FMV of
the Company to constitute 65% or more of the Net Asset FMV or the
Gross Asset FMV of GGP. For purposes of this representation, Net Asset
FMV means with respect to the Company or GGP, the fair market value of
the assets of the Company or GGP, as the case may be (for this purpose
treating the fair market value of GGP's interest in the Company as
equal to its direct and indirect pro rata share of the Net Asset FMV
of the Company) over the liabilities of GGP or the Company, as the
case may be. For purposes of this representation, Gross Asset FMV
means with respect to the Company the fair market value of its assets
(including for this purpose, the Company's pro rata share of the fair
market value of assets of entities in which the Company directly or
indirectly owns a 50% interest or more, without regard to any nominal
amount of nonvoting preferred equity therein), and with respect to GGP
the fair market value of its assets (exclusive of its interest in the
Company and entities in which GGP directly or indirectly owns a 50%
interest or more) plus GGP's direct and indirect pro rata share of the
Gross Asset FMV of the Company and GGP's pro rata share of the fair
market value of the assets of any entity in which GGP directly or
indirectly owns a 50% interest or more (without regard to any nominal
amount of nonvoting preferred equity therein). In calculating the fair
market value of shopping center property in which the Company or GGP
directly or indirectly owns an interest, (a) the fair market value of
each such property which is open and operating was calculated by
dividing Net Operating Income (as defined in the LLC Agreement) for
such property for 2001 (or, if such property was acquired or opened
during 2001, the 2002 budgeted Net Operating Income for such property)
by a capitalization rate of 8.25% and (b) the fair market value of
each such property which is under construction equals the land
acquisition and construction costs for such property. The Company
believes that these methodologies for calculating the fair market
value of shopping center properties are a reasonable method of
determining the fair market value of such properties.
z. The GGP Companies expressly permit Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx, as counsel to Subscriber and Subscriber's Parent, to rely
upon the representations and warranties set forth in this Section 3
for the purpose of rendering legal opinions to Subscriber,
Subscriber's Parent and Xxxxxxx Xxxxx & Co. as if such representations
and warranties were made by the GGP Companies directly to Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx.
aa. Schedule 3.aa. attached hereto sets forth (i) each arrangement
pursuant to which property or assets of any member of the Consolidated
Group or any Investment Affiliate are or may be subject to Liens
collateralizing Parent Indebtedness and (ii) the amount of Parent
Indebtedness outstanding as of March 31, 2002 with respect to each
such arrangement. No borrower may elect to borrow any additional
amounts at any time in the future with respect to any such arrangement
pursuant to the terms of such arrangement. All capitalized terms used
in clauses aa and bb of this Section 3 or Schedule 3.aa. and not
otherwise defined shall
-8-
have the meanings ascribed to them in the Second Amended and Restated
Operating Agreement of the Company.
bb. Schedule 3.aa. sets forth (i) each arrangement pursuant to which any
member of the Consolidated Group or any Investment Affiliate has
Guaranteed Parent Indebtedness and (ii) the amount of Parent
Indebtedness outstanding as of March 31, 2002 with respect to each
such arrangement. No borrower may elect to borrow any additional
amounts at any time in the future with respect to any such arrangement
pursuant to the terms of such arrangement.
4. Representations & Warranties of Subscriber and Subscriber's Parent
Subscriber and Subscriber's Parent hereby represent and warrant to the GGP
Companies as of the date hereof and as of the Closing Date that:
a. Subscriber is purchasing the Units solely for investment, solely for
its own account and not with a view to or for the resale or
distribution thereof except as permitted under the Registration
Agreement or as otherwise permitted under the Securities Act.
b. Subscriber understands that it may sell or otherwise transfer the
Units or the Preferred Shares or Common Shares issuable upon exchange
of the Units only if such transaction is duly registered under the
Securities Act, or if Subscriber shall have received the favorable
opinion of counsel to Subscriber, which opinion shall be reasonably
satisfactory to counsel to the Company, to the effect that such sale
or other transfer may be made in the absence of registration under the
Securities Act, and registration or qualification in every applicable
state. Subscriber realizes that the Units are not a liquid investment
and that no market exists or will develop for the Units.
c. Subscriber is an "accredited investor" as such term is defined in Rule
501 of Regulation D promulgated pursuant to the Securities Act, and
shall be such on the date any Units are issued to Subscriber;
Subscriber acknowledges that Subscriber is able to bear the economic
risk of losing Subscriber's entire investment in the Units and
understands that an investment in the Company involves substantial
risks. Each of Subscriber and Subscriber's Parent has the power and
authority to enter into this Agreement, and the execution and delivery
of, and performance under this Agreement, does not conflict with any
organizational document, rule, regulation, judgment or agreement
applicable to Subscriber or Subscriber's Parent. Each of Subscriber
and Subscriber's Parent has had the opportunity to discuss the
Company's affairs with the Company's officers.
d. Subscriber has all requisite corporate authority and power to execute
and deliver this Agreement and the Transaction Documents and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Transaction Documents
and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all requisite
corporate action on the part of Subscriber and no other proceedings on
the part of Subscriber are necessary to authorize this Agreement and
the Transaction Documents or to consummate the transactions
-9-
contemplated hereby and thereby. This Agreement and the Transaction
Documents constitute valid and binding obligations of Subscriber
enforceable against it in accordance with their terms.
e. Subscriber's Parent has all requisite partnership authority and power
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all requisite action on the
part of Subscriber's Parent and no other proceedings on the part of
Subscriber's Parent are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement
constitutes a valid and binding obligation of Subscriber's Parent
enforceable against it in accordance with its terms.
f. Subscriber is not a "party in interest" (as defined under Section
3(14) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) or a "disqualified person" (as defined under
Section 4975(e)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")) with respect to any "employee benefit plan," as defined
under Section 3(3) of ERISA, or a "plan," as defined in Section
4975(e)(1) of the Code ("employee benefit plan" and "plan," as defined
herein, shall be referred to collectively as "Plans"). The purchase of
Units under this Agreement by Subscriber shall not cause the Company
to be a Plan that is subject to Title I of ERISA or Section 4975 of
the Code, nor will it cause the assets of the Company to constitute
"plan assets" of one or more such Plans for purposes of title I of
ERISA or Section 4975 of the Code.
g. Subscriber shall promptly notify the Company should Subscriber
reasonably anticipate becoming a party in interest or disqualified
person with respect to any Plan, and Subscriber will take such steps
as may be necessary to prevent the assets of the Company to be
considered assets of any such Plan.
h. The execution and delivery of this Agreement and the purchase of Units
hereunder will not involve any non-exempt prohibited transaction
within the meaning of Section 406(b)(3) of ERISA or Section
4975(c)(1)(F) of the Code.
5. General Covenants of the Parties
a. So long as the Units remain outstanding, without the affirmative vote
of the Majority Holders (defined below), each GGP Company hereby
covenants that it will not create, authorize or issue any Preferred
Shares or securities exchangeable, convertible or otherwise
exercisable for Preferred Shares, if as a result of such creation,
authorization or issuance, holders of Units (upon exchange thereof
into Preferred Shares) would not have the right to vote a majority of
all Preferred Shares issued or issuable upon exchange, conversion or
exercise of any security.
b. So long as the Units remain outstanding, without the affirmative vote
of the Majority Holders, each of the GGP Companies hereby covenants
that it will not effect amendments or modifications to the terms of
the Preferred Shares which would materially and adversely affect any
right, preference, privilege or voting power of the Preferred Shares
or the holders
-10-
thereof and which would require the vote or approval of the holders
thereof under the terms thereof. The term "Majority Holders" means the
holders of at least 51% of the aggregate base liquidation preferences
of the issued and outstanding Units and issued and outstanding
Preferred Shares obtained upon exchange of the Units.
6. Tax Covenants
a. From and after the Closing Date through December 31, 2002, the Company
shall not issue, or enter into binding agreements to issue, any
interests in the Company (i) to the extent such issuance would cause
the Company to have more than 100 members immediately after such
issuance or (ii) in a transaction (or transactions) that is required
to be registered under the Securities Act or that would be required to
be registered if the interests had been offered and sold in the United
States. The Company and GGP shall ensure that the sum of the
percentage interests in the Company's capital or profits transferred
during the current tax year of the Company (other than transfers
described in any of paragraphs (e), (f) and (g) of Treasury Regulation
Section 1.7704-1) shall not exceed 2 percent of the total interests in
the Company's capital or profits. The Company shall, through the end
of the current tax year of the Company, take all actions reasonably
available to it under the Company's LLC Agreement in effect on the
date hereof to avoid treatment of the Company as a PTP. For purposes
of this covenant, the number of members of the Company shall be
determined in accordance with the method of determining the number of
partners in Treasury Regulations Section 1.7704-1(h) and the
percentage interest in the Company's capital and profits shall be
determined in accordance with Treasury Regulation Section 1.7704-1(k).
b. From and after the date hereof, the Company shall notify holders of
the Units promptly in the event that any GGP Company (i) takes the
position that the Company is, or upon consummation of an identified
event in the immediate future, will be a PTP or (ii) becomes aware of
any facts that will or likely will cause the Company to become a PTP.
c. The Company shall notify holders of Units promptly in the event that
any GGP Company anticipates or realizes that the value of the
Company's assets constituting "stock and securities" within the
meaning of Section 351(e)(1) of the Code will equal 17.5% or more of
the value of the Company's total assets.
d. The Company shall notify holders of Units promptly in the event that
any GGP Company anticipates or realizes that, if the Company were
taxable as a real estate investment trust, the Company would fail to
satisfy the income and asset requirements under Sections 856(c)(2),
(3) and (4) of the Code.
e. The Company shall notify a holder of Units promptly in the event that
any GGP Company anticipates or realizes that the holder's interest in
the Company would exceed the 19.95% Limit (as defined in the LLC
Agreement).
f. The Company shall notify a holder of Units promptly in the event that
any GGP Company anticipates or realizes that the holder's interest in
the Company will represent 10% or more of the total capital interests
in the Company. The Company shall permit such a holder to make a
taxable REIT subsidiary election with respect to any corporation
(other than a
-11-
corporation taxable as a real estate investment trust) for which the
holder would be deemed to own (for purposes of Section 856(c)(4) of
the Code) securities of such corporation (i) possessing more than 10%
of the total voting power of or (ii) having a value of more than 10%
of the total value of, the outstanding securities of such corporation,
but only if such ownership arose solely as a result of the holder's
interest in the Company. The Company shall cause each corporation
referred to in the preceding sentence to jointly make a taxable REIT
subsidiary election with such holder.
g. At any time and from time to time after the Closing and prior to July
17, 2002, upon request of the Subscriber, each of the GGP Companies
agrees to deliver an additional certificate to the Subscriber and
Subscriber's Parent bringing down the representations and warranties
made by the GGP Companies in Section 3 hereof to a date prior to July
17, 2002 reasonably requested by the Subscriber (if and to the extent,
after due inquiry, such representations and warranties are true and
correct as of such date), provided that such certificate is reasonably
requested by the Subscriber in connection with the contribution of
additional capital to the Subscriber's Parent and this paragraph shall
not preclude the GGP Companies from taking actions which would render
such representations or warranties untrue or incorrect. The Subscriber
shall provide at least three (3) business days written notice of any
request for a certification hereunder.
h. The Company, GGP and Parent will not take any position inconsistent
with the form of the transaction set forth in the Transaction
Documents, including without limitation, any position that the Company
is not a partnership for federal income tax purposes or that the
Subscriber is not a partner of the Company for federal income tax
purposes.
i. Neither the Company nor any Company Subsidiaries will make an election
under Treas. Reg. Section 301.7701-3 to be classified as an
association.
7. Miscellaneous
a. The representations and warranties set forth herein shall survive the
Closing. When used herein, the "Company's Knowledge" includes the
knowledge of the Company, any other GGP Company and the Company
Subsidiaries.
b. This Agreement may not be changed or terminated except by written
agreement of all parties. It shall be binding on the parties and on
their permitted assigns. It sets forth all agreements of the parties
(except as set forth in the Transaction Documents).
c. This Agreement shall be governed by the laws of the State of New York
without regard (to the fullest extent permitted by law) to conflicts
of law principles thereof which might result in the application of the
laws of any other jurisdiction.
d. All notices, requests, service of process, consents, and other
communications under this Agreement shall be in writing and shall be
deemed to have been delivered (i) on the date personally delivered or
(ii) one day after properly sent by recognized overnight courier,
addressed to the respective parties at their address set forth in this
Agreement or (iii) on the day transmitted by facsimile so long as a
confirmation copy is simultaneously
-12-
forwarded by recognized overnight courier, in each case addressed to
the respective parties at their address set forth below. Either party
hereto may designate a different address by providing written notice
of such new address to the other party hereto as provided above.
Any GGP Company: General Growth Properties, Inc.
000 X. Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
With a copy to:
Xxxx, Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Subscriber: GSEP 2002 Realty Corp.
c/o Goldman, Xxxxx & Co.
One Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxx, Esq.
Subscriber's Parent: Xxxxxxx Xxxxx 0000 Xxxxxxxx Xxxxx Fund, L.P.
c/o Goldman, Sachs & Co.
One Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxx, Esq.
-13-
f. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which shall
constitute one and the same Agreement, and all signatures need not
appear on any one counterpart.
g. The headings and sections are inserted for convenience only. When used
in this Agreement, "including" means "including without limitation."
References to Sections and Exhibits refer to this Agreement unless
expressly provided otherwise.
-14-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Executive Vice President
GGP LIMITED PARTNERSHIP
By: General Growth Properties, Inc.,
its General Partner
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Executive Vice President
GGPLP L.L.C.
By: GGP Limited Partnership, its Managing
Member
By: General Growth Properties, Inc.,
its General Partner
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Executive Vice President
[Signature Page to Purchase Agreement]
AGREED & ACCEPTED:
GSEP 2002 REALTY CORP.
By: /s/ Xxxx Xxxx
--------------------------------------
Name: Xxxx Xxxx
Title: President and CEO
XXXXXXX XXXXX 0000 XXXXXXXX
XXXXX FUND, L.P.
By: Xxxxxxx Sachs 0000 Xxxxxxxx Xxxxx
Advisors, L.L.C., its General Partner
By: /s/ Xxxx Xxxx
----------------------------------
Name: Xxxx Xxxx
Title: Authorized Person
[Signature Page to Purchase Agreement]
