Exhibit 10.3
Xxxxxxxxx Xxxxxxx Holdings, L.L.C.
Xxxxxxxxx Xxxxxxx Co-Holdings, L.L.C.
Blackacre SMC Master Holdings, LLC
Xxxxxxx Pacific Properties, Inc.
000 Xxxx X Xxxxxx
Xxx Xxxxx, XX 00000
September 11, 2000
Re: EXCHANGE AGREEMENT
Ladies and Gentlemen:
Pursuant to the Exchange Agreement (the "Exchange Agreement"),
dated August 31, 2000, entered into among Xxxxxxx Pacific Properties, Inc. (the
"Company"), Xxxxxxx Pacific Operating Partnership, L.P. (the "Operating
Partnership"), and each of Xxxxxxxxx Xxxxxxx Holdings, L.L.C., Xxxxxxxxx Xxxxxxx
Co-Holdings, L.L.C., and Blackacre SMC Master Holdings, LLC (collectively, the
"Preferred Stockholders"), the Company may not engage in certain activities
without the prior written consent of the Preferred Stockholders. Terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Exchange Agreement.
1. The Preferred Stockholders, by their execution of this agreement
(the "Agreement"), hereby consent to and approve the execution, delivery and
performance of the agreement by and among the Company and Xxx X. Xxxxxxxxxxxxx
("JLS"), Schottenstein Stores Corporation ("SSC"), Jublilee Limited partnership
("JLP"), Jubilee Limited Partnership III ("JLPIII"), Schottenstein Professional
Asset Management Corp. ("SPAMC"), Xxxxxxx X. Xxxxxx ("MLA") and Xxxxx Xxxxxx
("SA" and, together with JLS, SSC, JLP, JLPIII, SPAMC and MLA, the "SA Group")
in the form attached hereto as Exhibit A (the "Schottenstein Agreement") and to
the following actions which may be taken by the Company pursuant to and in
accordance with the terms of the Schottenstein Agreement: (i) an amendment to
the Company's Bylaws to increase the maximum number of members of the Board to
nine (excluding any directors to be elected solely by the holders of the
Company's Series 0000-X Xxxxxxxxxxx Preferred Stock) in accordance with Section
4(f) of the Exchange Agreement; (ii) the election of JLS and MLA to the
Company's Board of Directors on or about the day hereof; (iii) an amendment to
the slate of nominees to be proposed for election at the 2000 Annual Meeting of
Stockholders, as set forth in the Exchange Agreement, to include JLS and MLA on
that slate of nominees with the result that they will become part of the Slate
and that the Company's proposal of such a slate of nominees for
election at the 2000 Annual Meeting of Stockholders shall not violate any
provisions of the Exchange Agreement, including but not limited to Section 3(e)
thereof; and (B) the execution, delivery and performance by the Company of the
Liquidation and Property Management Services Agreement (the "Liquidation
Agreement") in the form attached as Exhibit B hereto; PROVIDED that the
Preferred Stockholders shall retain any approval or consent rights granted to
them pursuant to the Schottenstein Agreement or the Liquidation Agreement. The
Preferred Stockholders, by their execution of this agreement, hereby consent to
and approve the payment on September 29, 2000 of a dividend of ten cents per
share on each outstanding share of the Company's common stock and of a
distribution of ten cents per share on each outstanding common unit of Xxxxxxx
Pacific Operating Partnership, L.P; PROVIDED that all Accrued Dividends (as such
term is defined in the Articles Supplementary) owing to the Preferred
Stockholders as of such date are paid to the Preferred Stockholders prior to or
concurrently with such dividends and distributions to the Company's common
stockholders and the Operating Partnership's common unitholders. Without the
written consent of the Preferred Stockholders, the Company and the Operating
Partnership hereby agree that each shall not agree to any amendment to or waiver
of the Schottenstein Agreement or any material amendment or waiver of the
Liquidation Agreement, it being understood that any such consent relating to the
Liquidation Agreement shall be given pursuant to the standard set forth in
Section 12.8 of the Liquidation Agreement.
The Preferred Stockholders waive any rights such Preferred
Stockholders may have to a Change of Control Preference or Liquidation
Preference or other benefit as a result of any of the events described in this
Section 1.
2. The Preferred Stockholders and the Company hereby agree that
every reference in the Exchange Agreement to "November 14, 2000" shall be deemed
to be a reference to "December 15, 2000".
3. The Company, by its execution of this Agreement, hereby agrees
that (a) on and after the date on which no Series 2000 Shares are outstanding,
the Board shall (i) amend the Company's Bylaws to increase the maximum number of
Directors elected by the common shareholders of the Company by one, (ii) elect
Xxxxx Xxxxxx Xxxxx XX to fill the vacancy created by increasing the size of the
Board pursuant to clause (i) above and (iii) nominate the individual elected to
the Board pursuant to clause (ii) above for election to the Board at any
subsequent meeting of the stockholders of the Company at which such vote will be
held, (b) in the event that the Board shall delegate the authority to make
decisions or take actions with respect to the liquidation of the Company and its
assets to a committee or sub-
committee of the Board, then the number of directors nominated by the SA
Group (as such term is defined in the Schottenstein Agreement) that serve on
any such committee or sub-committee shall not be proportionally greater than
the proportion of all directors nominated by the SA Group (as such term is
defined in the Schottenstein Agreement) to the entire Board (including any
members of the Board elected by the holders of the Series 2000 Shares) and
(c) the Company shall not amend the Rights Agreement without the consent of
the Preferred Stockholders, except (i) in accordance with clause (a) of
paragraph 4 below, or (ii) in connection with any offer to acquire greater
than 50% of the common stock of the Company by means of a tender offer,
merger or similar transaction.
4. (a) Within three business days after the date hereof, (i) the
Company shall amend the Rights Agreement, or take such other action with respect
thereto, such amendment or other action to be in form and substance reasonably
acceptable to the Preferred Stockholders and its legal counsel, in order to
permit each of Xxxxxxxxx, Blackacre and Xxxxxx Xxxxxxx, Xxxx Xxxxxx & Co. and
its affiliates (collectively, the "Exempted Holders") to beneficially own 19.9%
of the outstanding common stock (which may include, without limitation, shares
convertible into common stock) of the Company (without attributing to either
Xxxxxxxxx or Blackacre for purposes of determining its ownership of such shares
any such shares beneficially owned by the other) (the "Permitted Ownership")
without triggering any adverse consequences to any Exempted Holder under the
provisions of the Rights Agreement and (ii) the Company shall take such action
as is necessary to exempt the Permitted Ownership from the provisions of Article
VII, Section 7.2 of the Company's Articles of Amendment and Restatement (the
"Charter"), and the Preferred Stockholders shall cooperate with the Company and
take such action as may be reasonably requested by the Company in connection
therewith, PROVIDED, HOWEVER, that purchases of shares of common stock of the
Company by the Exempted Holders may be prohibited if such purchases would result
in the Company becoming "closely held" within the meaning of Section 856(h) of
the Internal Revenue Code of 1986, as amended (the "Code"), or otherwise would
cause the Company to fail to qualify as a Real Estate Investment Trust under the
Code and the rules relating thereto. If Xxxxxxxxx or Blackacre acquires
beneficial ownership of any securities of the Company (other than the Series
2000 Shares) they shall vote (or cause to be voted) all such securities in favor
of (i) the Board's plan of liquidation, (ii) the election of all directors
nominated by the Board for election at any and all annual or special meetings of
shareholders and (iii) the adoption of such amendments to the Rights Agreement
and the Charter or the taking of such other action with respect thereto as the
Independent Directors (as such term is defined in the Schottenstein Agreement)
may determine to be necessary or
appropriate to permit any other shareholder to acquire levels of Permitted
Ownership (as such term is defined in the Schottenstein Agreement) that the SA
Group (as such term is defined in the Schottenstein Agreement) is permitted to
acquire.
(b) The Company represents and warrants to the Preferred Stockholders
that, (i) except for any actions to be taken by the Company pursuant to this
Section 4, no acts are required to be taken by the Company in order to cause the
Permitted Ownership to be exempt from any restriction or limitation under the
Rights Agreement, the Charter, the Company's By-laws or any other agreement or
instrument to which the Company is a party or by which it is bound and (ii) the
execution, delivery and performance of this Agreement by the Company will not:
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any governmental authority
or court to which the Company is subject or any provision of the Charter or
By-laws of the Company; or (B) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, result in the creation of any
encumbrance upon or require any notice under any agreement to which the Company
is a party or by which it is bound.
(c) The Company hereby confirms and acknowledges that the Company has
adopted appropriate resolutions to exempt itself from the provisions of Section
3-602 of the Maryland General Corporation Law with respect to the acquisition by
any person of the capital stock of the Company, and the Company further confirms
and acknowledges that such resolutions exempt the Permitted Ownership from such
provisions.
5. The Company and the Operating Partnership, by their execution of
this Agreement, hereby agree that if any of the Company, the Operating
Partnership or the Board takes any action or fails to take any action that would
result in a breach of the agreements and undertakings set forth in Sections 3 or
4 above, then, after written notice to the Company by the Preferred Stockholders
of any such breach, and if subject to cure, such breach has not been cured
within ten Business Days after receipt of such notice, a Redemption Event shall
be deemed to have occurred, notwithstanding anything to the contrary in the
Exchange Agreement or the Articles Supplementary. The foregoing right shall be
in addition to any remedy the Preferred Stockholders shall otherwise be entitled
to at law or in equity.
6. Except with respect to the agreements set forth in Section 3(a)
and the last sentence of Section 4(a) above, on the date that no Series 2000
Shares remain outstanding, this Agreement shall terminate and have no further
force and effect.
7. This Agreement and the Exchange Agreement shall be construed in
accordance with and governed by the internal laws of the State of Maryland and
this Agreement hereby incorporates herein by reference, MUTATIS MUTANDIS,
Sections 7, 8, 10, 13, 14 and 17 of the Exchange Agreement. Except for the
letter agreement among the parties hereto dated as of August 31, 2000, this
Agreement, together with the Exchange Agreement, constitutes the entire contract
among the parties hereto relating to the subject matter hereof. This Agreement
may be executed in counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first written above.
Xxxxxxxxx Xxxxxxx Holdings,
L.L.C.
By: /s/ Xxxxx Xxxxxx Xxxxx, XX
------------------------------
Name:
Title:
Xxxxxxxxx Xxxxxxx Co-Holdings,
L.L.C.
By: /s/ Xxxxx Xxxxxx Xxxxx, XX
------------------------------
Name:
Title:
Blackacre SMC Master Holdings,
LLC
by Blackacre SMC Holdings,
L.P., its managing member
by Blackacre Capital
Group, LP, its
general partner
by Blackacre Capital
Management Corp.,
its general partner
/s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Authorized signatory
Xxxxxxx Pacific Properties, Inc.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
