Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
GENERAL GROWTH PROPERTIES, INC.
GGP LIMITED PARTNERSHIP
GGP ACQUISITION, L.L.C.
GGP ACQUISITION II, L.L.C.
JP REALTY, INC.
AND
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
DATED AS OF MARCH 3, 2002
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGERS...................................................2
1.1 The Merger.......................................................2
1.2 The Partnership Merger...........................................2
1.3 Closing..........................................................2
1.4 Effective Time...................................................2
1.5 Effect on Acquisition Operating Agreement and Certificate
of Formation.....................................................3
1.6 Effect of Partnership Merger on Agreement of Limited
Partnership and Certificate of Limited Partnership...............3
1.7 Conversion of Equity Securities in the Merger; Creation of
New Series of GGP Preferred Stock................................3
1.8 Surrender of Certificates........................................4
1.9 Conversion of Equity Securities in the Partnership Merger........7
1.10 Procedures for Exchange of PDC Common OP Units in the
Partnership Merger...............................................8
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF JP..........................9
2.1 Organization, Standing and Power.................................9
2.2 JP Subsidiaries..................................................9
2.3 Capital Structure...............................................10
2.4 Other Interests.................................................12
2.5 Authority; Noncontravention; Consents...........................12
2.6 SEC Documents; Financial Statements; Undisclosed Liabilities....13
2.7 Absence of Certain Changes or Events............................14
2.8 Litigation......................................................14
2.9 Properties......................................................15
2.10 Environmental Matters...........................................17
2.11 Related Party Transactions......................................18
2.12 Employee Benefits...............................................18
2.13 Employees; Employee Policies....................................20
2.14 Taxes...........................................................20
2.15 No Payments to Employees, Officers or Directors.................22
2.16 Broker..........................................................22
2.17 Compliance with Laws............................................22
2.18 Contracts; Debt Instruments.....................................22
2.19 Opinion of Financial Advisor....................................24
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TABLE OF CONTENTS
(continued)
Page
2.20 State Takeover Statutes; JP Rights Plan; Ownership Limits.......24
2.21 Investment Company Act of 1940..................................24
2.22 Definition of Knowledge of JP...................................24
2.23 Required Stockholder Approvals and Partner Approvals............24
2.24 Intellectual Property...........................................25
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF GGP, GGP PARTNERSHIP
AND ACQUISITION..............................................25
3.1 Organization, Standing and Power of GGP, GGP Partnership,
Acquisition and Partnership Acquisition.........................25
3.2 Capital Stock...................................................26
3.3 Authority; Noncontravention; Consents...........................27
3.4 Litigation......................................................28
3.5 Interim Operations of Acquisition and Partnership
Acquisition.....................................................28
3.6 Capital Resources...............................................28
3.7 GGP SEC Documents; Information Supplied.........................29
3.8 Taxes...........................................................29
3.9 Definition of Knowledge of GGP..................................30
3.10 Broker..........................................................30
ARTICLE 4 COVENANTS....................................................30
4.1 Conduct of JP's and PDC LP's Business Pending Mergers...........30
4.2 No Solicitation.................................................33
4.3 Board Actions...................................................34
4.4 Conduct of GGP's and GGP Partnership's Business Pending
Mergers.........................................................34
4.5 Other Actions...................................................34
ARTICLE 5 ADDITIONAL COVENANTS.........................................35
5.1 Preparation of the Proxy Statement; Stockholders Meeting;
Partner Solicitation; Partner Approvals.........................35
5.2 Access to Information; Confidentiality..........................37
5.3 Commercially Reasonable Efforts; Notification...................37
5.4 Tax Matters.....................................................38
5.5 Public Announcements............................................38
5.6 Transfer and Gains Taxes........................................39
5.7 Benefit Plans and Other Employee Arrangements...................39
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TABLE OF CONTENTS
(continued)
Page
5.8 Indemnification; Exculpation; Insurance.........................40
5.9 Declaration of Dividends and Distributions......................42
5.10 Resignations....................................................42
5.11 Registration Rights Agreements..................................42
5.12 Information Supplied............................................43
5.13 The JP Rights Plan..............................................43
5.14 Noncompetition Agreements.......................................43
ARTICLE 6 CONDITIONS...................................................43
6.1 Conditions to Each Party's Obligation to Effect the Merger......43
6.2 Conditions to Obligations of GGP, GGP Partnership,
Acquisition and Partnership Acquisition.........................43
6.3 Conditions to Obligations of JP and PDC LP......................44
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER; BOARD ACTIONS.............45
7.1 Termination.....................................................45
7.2 Certain Fees, Expenses and Rights...............................46
7.3 Effect of Termination...........................................48
7.4 Amendment.......................................................48
7.5 Extension; Waiver...............................................48
ARTICLE 8 GENERAL PROVISIONS...........................................49
8.1 Nonsurvival of Representations and Warranties...................49
8.2 Notices.........................................................49
8.3 Interpretation..................................................49
8.4 Counterparts....................................................50
8.5 Entire Agreement; No Third-Party Beneficiaries..................50
8.6 Governing Law...................................................50
8.7 Assignment......................................................50
8.8 Enforcement.....................................................50
8.9 Severability....................................................51
8.10 Exculpation.....................................................51
8.11 Joint and Several Obligations...................................51
8.12 Waiver of Jury Trial............................................51
8.13 Knowledge of GGP................................................51
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EXHIBITS
Exhibit A -.Form of Maryland Articles of Merger
Exhibit B -.Form of Delaware Certificate of Merger
Exhibit C - Form of Maryland Articles of Partnership Merger
Exhibit D - Form of Voting Agreement
Exhibit E - Form of Amendment to GGP Partnership Agreement providing for the
creation of the GGP Series B Preferred OP Units
Exhibit F - Form of Redemption Rights Agreement relating to the GGP Series B
Preferred OP Units
Exhibit G - Form of Redemption Rights Agreement relating to the GGP Common
OP Units
Exhibit H - Form of Certificate of Designations providing for the creation of
GGP Series C Preferred Stock
Exhibit I - Tax Matters Agreement
Exhibit J - Severance Matters
Exhibit K - Form of Noncompetition and Confidentiality Agreement
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INDEX OF DEFINED TERMS
1940 Act..................................................................2.21
Acquisition...........................................................Preamble
Affiliate.................................................................2.11
Agreement.............................................................Preamble
Allocable Consideration.................................................5.4(a)
Base Amount................................................................7.2
CERCLA.................................................................2.10(a)
Certificate.........................................................1.7(c)(iv)
Closing....................................................................1.3
Closing Date...............................................................1.3
Code...................................................................2.12(a)
Commitment..............................................................4.1(j)
Competing Transaction...................................................4.2(c)
Confidentiality Agreement..............................................2.18(i)
Contributing Holders of PDC Common OP Units .........................Recital B
Controlled Group Member...................................................2.12
Delaware Certificate of Merger.......................................Recital D
Department.................................................................1.4
DGCL................................................................1.7(c)(ii)
DLLCA......................................................................1.1
Effective Time.............................................................1.4
Employee Plan.............................................................2.12
Encumbrances............................................................2.9(a)
Environmental Law......................................................2.10(a)
Environmental Permits..............................................2.10(b)(iv)
ERISA.....................................................................2.12
ERISA Affiliate........................................................2.12(d)
Excess Stock............................................................2.3(a)
Exchange Act...............................................................2.6
Exchange Fund...........................................................1.8(a)
Existing Title Policies.................................................2.9(b)
Final JP Dividend....................................................1.8(d)(i)
Final PDC LP Distribution............................................1.8(d)(i)
Form of Election....................................................5.1(c)(iv)
Former JP Properties...............................................2.10(b)(ii)
GAAP.......................................................................2.6
GGP...................................................................Preamble
GGP Break-Up Expenses......................................................7.2
GGP Break-Up Expenses Tax Opinion..........................................7.2
GGP Break-Up Fee...........................................................7.2
GGP Break-Up Fee Tax Opinion...............................................7.2
GGP By-Laws.............................................................3.1(a)
GGP Charter.............................................................3.1(a)
GGP Common OP Units.....................................................3.2(b)
GGP Common OP Units Redemption Agreement............................1.9(b)(ii)
GGP Common Stock........................................................3.2(a)
GGP Disclosure Letter..................................................Art. 3
GGP Material Adverse Effect.............................................3.1(b)
GGP OP Units............................................................3.2(b)
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GGP Partnership.......................................................Preamble
GGP Partnership Agreement...............................................3.1(b)
GGP Preferred Stock.....................................................3.2(a)
GGP SEC Documents.......................................................3.7(a)
GGP Series A Junior Preferred Stock.....................................3.2(a)
GGP Series A Preferred OP Units.........................................3.2(b)
GGP Series A Preferred Stock............................................3.2(a)
GGP Series B Preferred OP Units......................................1.9(b)(i)
GGP Series B Preferred OP Units Redemption Agreement................1.9(b)(ii)
GGP Series B Preferred Stock............................................3.2(a)
GGP Series C Preferred Stock........................................1.9(b)(ii)
GGP Series D Preferred Stock........................................1.7(c)(ii)
GGP Series E Preferred Stock........................................1.7(c)(ii)
GGP Series F Preferred Stock........................................1.7(c)(ii)
GGP Stockholders Meeting................................................5.1(b)
GGP Subsidiaries........................................................3.1(b)
Governmental Entity.....................................................2.2(a)
Ground Lease............................................................2.9(f)
Hazardous Materials....................................................2.10(a)
HSR Act.................................................................2.5(b)
Indebtedness...........................................................2.18(a)
Indemnified Parties..................................................5.8(a)(i)
Indemnifying Parties.................................................5.8(a)(i)
IRS GGP Break-Up Expenses Ruling...........................................7.2
IRS GGP Partnership Break-Up Fee Ruling....................................7.2
JP....................................................................Preamble
JP Acquisition Agreement...................................................7.2
JP Articles................................................................2.1
JP Break-Up Expenses.......................................................7.2
JP Budget...............................................................4.1(j)
JP Bylaws..................................................................2.1
JP Common Stock.........................................................2.3(a)
JP Disclosure Letter...................................................Art. 2
JP Financial Statement Date................................................2.7
JP Junior Preferred Stock...............................................2.3(a)
JP Material Adverse Effect.................................................2.1
JP Other Interests.........................................................2.4
JP Partner Approvals....................................................2.5(a)
JP Preferred Stock......................................................1.7(b)
JP Properties...........................................................2.9(a)
JP Rent Roll............................................................2.9(e)
JP Representative.......................................................4.2(a)
JP Rights.................................................................2.20
JP Rights Agreement.......................................................2.20
JP SEC Documents...........................................................2.6
JP Series A Preferred Stock.............................................2.3(a)
JP Series B Preferred Stock.............................................2.3(a)
JP Series C Preferred Stock.............................................2.3(a)
JP Space Lease..........................................................2.9(e)
JP Stock Options........................................................2.3(b)
JP Stock Rights.........................................................2.3(b)
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JP Stockholder Approval.................................................2.5(a)
JP Stockholders Meeting.................................................5.1(b)
JP Subsidiaries.........................................................2.2(a)
Knowledge of GGP...........................................................3.9
Knowledge of JP...........................................................2.22
Laws....................................................................2.5(b)
Liens...................................................................2.2(b)
Maryland Articles of Merger..........................................Recital C
Maryland Articles of Partnership Merger..............................Recital E
Material Contract......................................................2.18(a)
Maximum Amount.............................................................7.2
Merger...............................................................Recital A
Merger Consideration....................................................1.7(c)
Mergers..............................................................Recital I
MRULPA.....................................................................1.2
Partner Solicitation Materials.......................................5.1(c)(i)
Partnership Acquisition...............................................Preamble
Partnership Merger...................................................Recital B
Partnership Merger Consideration........................................1.9(b)
Paying Agent............................................................1.8(a)
PDC Common OP Units.....................................................2.3(d)
PDC LP................................................................Preamble
PDC LP Agreement...........................................................1.6
PDC LP Amendment..........................................................1.11
PDC OP Units............................................................2.3(e)
PDC Preferred OP Units..................................................2.3(d)
PDC Series A OP Units...................................................2.3(d)
PDC Series B OP Units...................................................2.3(d)
PDC Series C OP Units...................................................2.3(d)
Pension Plan..............................................................2.12
Permitted Title Exceptions..............................................2.9(a)
Person..................................................................2.2(a)
Price Group Stock.......................................................2.3(a)
Property Permits........................................................2.9(h)
Property Restrictions...................................................2.9(a)
Proxy Statement.........................................................5.1(a)
Qualified Pension Plan.................................................2.12(b)
Qualifying Income..........................................................7.2
REA.....................................................................2.9(g)
REIT...................................................................2.14(b)
REIT Requirements..........................................................7.2
Related Agreements..................................................5.1(c)(iv)
Release................................................................2.10(a)
Required Funding...........................................................3.6
SEC.....................................................................2.5(b)
Secretary of State.........................................................1.4
Securities Act..........................................................2.3(g)
Selling Holders of PDC Common OP Units...............................Recital B
Subsidiary..............................................................2.2(a)
Superior Competing Transaction..........................................4.2(d)
Surviving Company..........................................................1.1
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Surviving Partnership......................................................1.2
Takeover Statute..........................................................2.20
Taxes..................................................................2.14(a)
Tax Protection Agreement...............................................2.18(h)
Title 3....................................................................1.1
Transfer and Gains Taxes...................................................5.6
Voting Agreement.....................................................Recital J
Welfare Plan..............................................................2.12
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March 3,
2002, by and among GENERAL GROWTH PROPERTIES, INC., a Delaware corporation
("GGP"), GGP LIMITED PARTNERSHIP, a Delaware limited partnership ("GGP
Partnership"), GGP ACQUISITION, L.L.C., a Delaware limited liability company and
a wholly-owned subsidiary of GGP Partnership ("Acquisition"), GGP ACQUISITION
II, L.L.C., a Maryland limited liability company and a wholly-owned subsidiary
of GGP Partnership ("Partnership Acquisition"), JP REALTY, INC., a Maryland
corporation ("JP"), and PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP, a
Maryland limited partnership ("PDC LP").
RECITALS:
A. The Board of Directors of GGP and the Board of Directors of XX xxxx it
advisable and in the best interests of their respective stockholders, upon the
terms and subject to the conditions contained herein, that JP shall merge with
and into Acquisition (the "Merger"), with each issued and outstanding share of
JP Common Stock and Price Group Stock, each as defined herein, to be converted
into the right to receive $26.10 in cash without interest.
B. GGP Partnership, as the sole member of Partnership Acquisition, and JP,
as the sole general partner of PDC LP, deem it advisable and in the best
interests of their respective member and limited partners, upon the terms and
subject to the conditions contained herein, that, immediately prior to the
Merger, Partnership Acquisition shall merge with and into PDC LP (the
"Partnership Merger"), with the holders of PDC Common OP Units (as defined
herein) in PDC LP at the time of the Partnership Merger receiving (except as
otherwise provided herein) GGP Series B Preferred OP Units (as defined herein)
(such holders being the "Contributing Holders of PDC Common OP Units"), as set
forth herein, or $26.10 cash without interest (such holders being the "Selling
Holders of PDC Common OP Units").
C. Upon the terms and subject to the conditions set forth herein,
Acquisition and JP shall execute Articles of Merger (the "Maryland Articles of
Merger") in substantially the form attached hereto as Exhibit A and shall file
such Maryland Articles of Merger in accordance with Maryland law to effectuate
the Merger.
D. Upon the terms and subject to the conditions set forth herein,
Acquisition and JP shall execute a Certificate of Merger (the "Delaware
Certificate of Merger") in substantially the form attached hereto as Exhibit B
and, concurrently with the filing of the Maryland Articles of Merger, shall file
such Delaware Certificate of Merger in accordance with Delaware law to
effectuate the Merger.
E. Upon the terms and subject to the conditions set forth herein,
immediately prior to the Merger, PDC LP and Partnership Acquisition shall
execute Articles of Merger (the "Maryland Articles of Partnership Merger") in
substantially the form attached hereto as Exhibit C and shall file such Maryland
Articles of Partnership Merger in accordance with Maryland law to effectuate the
Partnership Merger.
F. JP has received a fairness opinion relating to the Merger contemplated
hereby as more fully described herein.
G. For federal income tax purposes, it is intended that the Merger will be
treated as a taxable sale of assets by JP in exchange for cash and the
assumption of liabilities and a distribution of such cash to the JP stockholders
in liquidation of JP.
H. For federal income tax purposes, it is intended that the Partnership
Merger, regardless of form, be treated as a tax-free contribution by the
Contributing Holders of PDC Common OP Units of their PDC Common OP Units to GGP
Partnership in exchange for GGP Series B Preferred OP Units, under Section 721
of the Code, and a sale by the Selling Holders of PDC Common OP Units of their
PDC Common OP Units to GGP Partnership in exchange for cash.
I. GGP, GGP Partnership, Acquisition, Partnership Acquisition, JP and PDC
LP desire to make certain representations, warranties and agreements in
connection with the Merger and the Partnership Merger (collectively, the
"Mergers").
J. As an inducement to GGP and GGP Partnership to enter into this
Agreement, certain stockholders of JP and certain holders of PDC Common OP Units
have entered into a voting agreement (the "Voting Agreement"), in substantially
the form attached hereto as Exhibit D, pursuant to which each such Person (as
defined herein) has agreed, among other things, to vote his or its shares of JP
Common Stock, Price Group Stock and PDC Common OP Units to approve, as
applicable, this Agreement, the Mergers, the PDC LP Amendment (as defined
herein) and any other matter which requires his or its vote in connection with
the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1.
THE MERGERS
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with Title 3 of the Corporations and
Associations Article of the Annotated Code of Maryland, as amended ("Title 3"),
and the Delaware Limited Liability Company Act, as amended (the "DLLCA"), JP
shall be merged with and into Acquisition, with Acquisition being the surviving
entity (the "Surviving Company").
1.2 The Partnership Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Title 10 of the Annotated
Code of Maryland, as amended (the "MRULPA"), immediately prior to the
consummation of the Merger, Partnership Acquisition shall be merged with and
into PDC LP, with PDC LP being the surviving limited partnership (the "Surviving
Partnership").
1.3 Closing. The closing of the Mergers (the "Closing") will take place
commencing at 9:00 a.m., local time, on the date to be specified by the parties,
which (subject to satisfaction or waiver of the conditions set forth in Article
6) shall be no later than the third business day after satisfaction or waiver of
the conditions set forth in Section 6.1 (the "Closing Date"), at the offices of
Xxxx, Xxxxxx & Xxxxxxxxx, Xxx Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX
00000, unless another date or place is agreed to in writing by the parties.
1.4 Effective Time. As soon as practicable following the satisfaction or
waiver of the conditions set forth in Article 6, (a) Acquisition and/or JP, as
applicable, shall execute and file the Maryland Articles of Merger, executed in
accordance with Title 3, with the State Department of Assessments and Taxation
of Maryland (the "Department"), and the Delaware Certificate of Merger, executed
in accordance with the DLLCA, with the Secretary of State of the State of
Delaware (the "Secretary of State"), and shall make all other filings and
recordings required, with respect to the Merger, under such statutes, and (b)
Partnership Acquisition and/or PDC LP, as applicable, shall execute and file
2
the Maryland Articles of Partnership Merger, executed in accordance with Title
10 of the MRULPA, with the Department, and shall make all other filings and
recordings required, with respect to the Partnership Merger, under such
statutes. The Mergers shall become effective (each, an "Effective Time," and
collectively, the "Effective Times") at such times as (i) Acquisition and JP
shall agree should be specified in the Maryland Articles of Merger and the
Delaware Certificate of Merger and (ii) Partnership Acquisition and PDC LP shall
agree should be specified in the Maryland Articles of Partnership Merger. Unless
otherwise agreed, the parties shall cause the Effective Times to occur on the
Closing Date with the Effective Time of the Partnership Merger occurring before
the Effective Time of the Merger.
1.5 Effect on Acquisition Operating Agreement and Certificate of Formation.
The Operating Agreement of Acquisition, as in effect immediately prior to the
Effective Time of the Merger, shall continue in full force and effect after the
Merger as the Operating Agreement of the Surviving Company, until further
amended in accordance with the terms of such Operating Agreement and Delaware
law. Except as contemplated by the Certificate of Merger, the Certificate of
Formation of Acquisition, as in effect immediately prior to the Effective Time,
shall continue in full force and effect after the Merger as the Certificate of
Formation of the Surviving Company, until further amended in accordance with
Delaware law.
1.6 Effect of Partnership Merger on Agreement of Limited Partnership and
Certificate of Limited Partnership. The Certificate of Limited Partnership of
PDC LP and the Second Amended and Restated Partnership Agreement of PDC LP, as
amended (the "PDC LP Agreement"), as in effect as of the Effective Time of the
Partnership Merger, shall continue in full force and effect after the
Partnership Merger as the Certificate of Limited Partnership and the Partnership
Agreement, respectively, of the Surviving Partnership until further amended in
accordance with applicable Maryland law.
1.7 Conversion of Equity Securities in the Merger; Creation of New Series
of GGP Preferred Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares of capital stock or
limited liability company interests of JP or Acquisition:
(a) Ownership Interests of Acquisition. The issued and outstanding
ownership interests in Acquisition immediately prior to the Effective Time shall
remain outstanding as the issued and outstanding ownership interests of the
Surviving Company.
(b) Cancellation of Treasury Stock and GGP Partnership-Owned Stock. Each
share of JP Common Stock, Price Group Stock, JP Series A Preferred Stock, JP
Series B Preferred Stock or JP Series C Preferred Stock (collectively with the
JP Series A Preferred Stock and the JP Series B Preferred Stock, the "JP
Preferred Stock") that is owned by JP, as treasury stock, or by GGP, GGP
Partnership, Acquisition or Partnership Acquisition immediately prior to the
Effective Time shall automatically be canceled and shall cease to exist and no
consideration shall be delivered or deliverable in exchange therefor.
(c) Merger Consideration. The consideration to be paid to the holders of
capital stock of JP in the Merger (collectively, the "Merger Consideration") is
as follows:
(i) Each share of JP Common Stock and Price Group Stock issued and
outstanding immediately prior to the Effective Time (other than shares to
be canceled in accordance with Section 1.7(b)), shall be converted into the
right to receive $26.10 in cash without interest.
(ii) Each share, if any, of JP Series A Preferred Stock, JP Series B
Preferred Stock and JP Series C Preferred Stock issued and outstanding
immediately prior to the Effective
3
Time (other than shares to be canceled in accordance with Section 1.7(b))
shall be converted into the right to receive 0.025 shares of GGP Series D
Preferred Stock, $100 par value per share ("GGP Series D Preferred Stock"),
GGP Series E Preferred Stock, $100 par value per share ("GGP Series E
Preferred Stock") and GGP Series F Preferred Stock, $100 par value per
share ("GGP Series F Preferred Stock"), respectively. Prior to or as of the
Effective Time, the GGP Charter shall be amended in accordance with the
Delaware General Corporation Law, as amended (the "DGCL") in order to
create the GGP Series D Preferred Stock, GGP Series E Preferred Stock and
the GGP Series F Preferred Stock, each series of which will have
substantially the same terms and rights as the JP Series A Preferred Stock,
JP Series B Preferred Stock and JP Series C Preferred Stock, respectively,
including with respect to distribution, voting rights and rights upon
liquidation, dissolution or winding-up.
(iii) Each share, if any, of Excess Stock (as defined herein) which is
not redeemed by JP prior to the Effective Time and remains issued and
outstanding immediately prior to the Effective Time shall be converted into
the right to receive $26.10 in cash without interest.
(iv) At the Effective Time all such shares shall no longer be
outstanding and shall automatically be canceled and shall cease to exist,
and each holder of a certificate that immediately prior to the Effective
Time represented any such shares (a "Certificate"), shall cease to have any
rights with respect thereto, except the right to receive the applicable
Merger Consideration described above and any dividends declared and unpaid
thereon payable to holders of record thereof as of a record date preceding
the Effective Time. Following the Effective Time, upon surrender of
Certificates representing shares of JP Common Stock, Price Group Stock or
JP Preferred Stock in accordance with Section 1.8, the Surviving Company
shall pay to the holders of such Certificates as of the Effective Time any
unpaid dividends declared in respect of the JP Common Stock, the Price
Group Stock and JP Preferred Stock with a record date prior to the
Effective Time and which remain unpaid at the Effective Time.
(d) Stock Options. Each JP Stock Option outstanding immediately prior to
the Effective Time (whether vested or unvested) shall be converted at the
Effective Time into the right to receive an amount of cash equal to (i) the
excess, if any, of $26.10 over the exercise price of such JP Stock Option,
multiplied by (ii) the number of shares of JP Common Stock subject thereto which
have not theretofore been exercised.
(e) No Appraisal Rights. The holders of JP Common Stock, Price Group Stock
and JP Preferred Stock are not entitled under applicable law to appraisal,
dissenters' or similar rights as a result of the Mergers.
(f) Adjustments to Merger Consideration. The Merger Consideration payable
upon the conversion of JP Common Stock, Price Group Stock or JP Preferred Stock,
as applicable, shall be adjusted to reflect fully the effect of any
reclassification, combination, subdivision, stock split, reverse split, stock
dividend (including any stock dividend or distribution of securities convertible
into JP Common Stock, Price Group Stock or JP Preferred Stock, as applicable),
reorganization, recapitalization or other like change with respect to JP Common
Stock, Price Group Stock or JP Preferred Stock, as applicable, occurring (or for
which a record date is established) after the date hereof and prior to the
Effective Time.
1.8 Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, GGP shall designate a bank
or trust company reasonably acceptable to JP to act as agent for the payment of
the Merger Consideration upon
4
surrender of Certificates evidencing JP Common Stock and Price Group Stock (the
"Paying Agent"). GGP shall take all steps necessary to enable, and shall cause,
the Surviving Company to provide to the Paying Agent immediately following the
Effective Time the Merger Consideration issuable in exchange for the shares of
JP Common Stock and Price Group Stock pursuant to Section 1.7(c), plus any
amounts payable in respect of unpaid dividends declared in respect of the JP
Common Stock and Price Group Stock with a record date prior to the Effective
Time and which remain unpaid at the Effective Time (such consideration being
hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates held
by such Person shall pass, only upon proper delivery of the Certificates to the
Paying Agent and shall be in customary form and have such other provisions as
GGP may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by GGP, together with such letter of
transmittal, duly completed and validly executed, and such other documents as
may reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the applicable Merger
Consideration in respect of the shares formerly represented by such Certificate
pursuant to Section 1.7(c), and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of JP Common Stock or Price
Group Stock that is not registered in the stock transfer books of JP, payment
may be paid in exchange therefor to a Person other than the Person in whose name
the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer, and the Person
requesting such payment shall pay any transfer or other Taxes required by reason
of the payment to a Person other than the registered holder of such Certificate
or establish to the satisfaction of GGP that such Tax has been paid or is not
applicable. No interest shall be paid or shall accrue on the Merger
Consideration, or unpaid dividends declared in respect of the JP Common Stock or
Price Group Stock with a record date prior to the Effective Time and which
remain unpaid at the Effective Time, payable upon surrender of any Certificate.
(c) No Further Ownership Rights. All cash and securities paid upon the
surrender of a Certificate in accordance with the terms of this Article I shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
shares of JP Common Stock or Price Group Stock formerly represented by such
Certificate. At the close of business on the day on which the Effective Time
occurs the stock transfer books of JP shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Company of the shares of JP Common Stock or Price Group Stock that were
outstanding, immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Company or the Paying Agent
for transfer or any other reason, they shall be canceled and exchanged as
provided in this Article I.
(d) Record Dates for Final Dividends; Distributions with Respect to
Unexchanged Shares.
(i) If and to the extent necessary for JP to satisfy the requirements
of Section 857(a)(1) of the Code (as defined herein) for the taxable year
of JP ending at the Effective Time of the Merger (and to avoid the payment
of any tax with respect to undistributed income or gain), JP shall declare
a dividend (the "Final JP Dividend") to holders of shares of JP Common
Stock and Price Group Stock, if and to the extent required by the terms
thereof the record date for which shall be the close of business on the
last business day prior to the Effective Time of the Merger, in an amount
equal to the minimum dividend sufficient to permit JP to satisfy such
requirements. Any dividends payable hereunder to holders of JP Common Stock
or
5
Price Group Stock shall be paid on the last business day immediately
preceding the Closing Date. In the event that JP is required to declare a
Final JP Dividend with respect to the JP Common Stock and/or Price Group
Stock, PDC LP shall simultaneously declare a distribution (the "Final PDC
LP Distribution") to holders of PDC OP Units in an amount per JP Common OP
Unit equal to the Final JP Dividend payable on each share of JP Common
Stock. The record date for the payment of the Final PDC LP Distribution
shall be the close of business on the last business day prior to the
Effective Time of the Partnership Merger. The distribution payable
hereunder to holders of PDC Common OP Units shall be paid on the last
business day immediately preceding the Closing Date.
(ii) If JP determines that it is necessary to declare the Final JP
Dividend, JP shall notify GGP at least 20 days prior to the date for the JP
Stockholders Meeting.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of JP Common Stock and Price Group Stock
for one year after the Effective Time shall be delivered to the Surviving
Company, upon demand, and any holder of JP Common Stock or Price Group Stock who
has not theretofore complied with this Article I shall thereafter look only to
the Surviving Company for payment of its claim for Merger Consideration.
(f) No Liability. None of GGP, GGP Partnership, the Surviving Company or
the Paying Agent shall be liable to any Person in respect of any cash delivered
to a public official pursuant to any applicable abandoned property, escheat, or
similar law. If any Certificates shall not have been surrendered prior to three
years after the Effective Time (or immediately prior to such earlier date on
which any Merger Consideration would otherwise escheat to or become the property
of any Governmental Entity(as defined herein)), any such Merger Consideration in
respect thereof shall, to the extent permitted by applicable law, become the
property of the Surviving Company, free and clear of all claims or interest of
any Person previously entitled thereto.
(g) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by GGP, on a daily basis; provided,
however, that such investments shall be in (i) obligations of or guaranteed by
the United States of America and backed by the full faith and credit of the
United States of America, (ii) commercial paper obligations rated A-1 or P-1 or
better by Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation,
respectively, (iii) certificates of deposit maturing not more than 180 days
after the date of purchase issued by a bank organized under the laws of the
United States or any state thereof having a combined capital and surplus of at
least $500,000,000 or (iv) a money market fund having assets of at least
$3,000,000,000. Any interest and other income resulting from such investments
shall be paid to GGP Partnership.
(h) Lost Certificates. If any Certificate shall have been lost, stolen,
defaced or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen, defaced or destroyed and, if
required by the Surviving Company, the posting by such Person of a bond in such
reasonable amount as the Surviving Company may direct as indemnity against any
claim that may be made against it with respect to such Certificate, the Paying
Agent shall pay in respect of such lost, stolen, defaced or destroyed
Certificate the Merger Consideration.
(i) Withholding Rights. GGP, GGP Partnership, the Surviving Company or the
Paying Agent, as applicable, shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of JP Common Stock, Price Group Stock and JP Preferred Stock such amounts
as it is required to withhold with respect to such payments under the Code or
any other provision of state, local or foreign tax law.
6
(j) JP Preferred Stock. In the event that any Shares of JP Preferred Stock
are outstanding prior to the Effective Time of the Merger, GGP and JP shall
mutually agree upon and establish procedures to be applicable to the exchange of
certificates evidencing JP Preferred Stock for the applicable Merger
Consideration.
1.9 Conversion of Equity Securities in the Partnership Merger. At the
Effective Time, by virtue of the Partnership Merger and without any action on
the part of any holder of partnership interests or limited liability company
interests of PDC LP or Partnership Acquisition:
(a) Ownership Interests of Partnership Acquisition. The issued and
outstanding ownership interests in Partnership Acquisition immediately prior to
the Effective Time shall be converted into the number of PDC Common OP Units
held by holders of PDC Common OP Units other than JP as of such time.
(b) Partnership Merger Consideration. The consideration to be paid to
holders of partnership interests in PDC LP in the Partnership Merger
(collectively, the "Partnership Merger Consideration") is as follows:
(i) Each JP Common OP Unit outstanding immediately prior to the
Effective Time of the Partnership Merger (other than PDC Common OP Units
held by JP) shall be exchanged for $26.10 per JP Common OP Unit in cash
without interest, provided that if the holder of a JP Common OP Unit is an
"accredited investor" (as defined in Rule 501, promulgated under the
Securities Act (as defined herein)), and submits to GGP Partnership a Form
of Election (as defined herein) in accordance with the procedures and time
periods specified in Section 5.1(c) hereof, such holder shall have the
right to receive for each JP Common OP Unit then held by it .522 8.5%
Series B Cumulative Preferred Units of limited partnership of GGP
Partnership (the "GGP Series B Preferred OP Units").
(ii) Prior to or as of the Effective Time, the GGP Partnership
Agreement shall be amended by the adoption of an amendment in substantially
the form attached hereto as Exhibit E providing for the creation of the GGP
Series B Preferred OP Units. The holders of the GGP Series B Preferred OP
Units issued in the Partnership Merger shall be entitled to the redemption
rights provided for in the redemption rights agreement, substantially in
the form attached hereto as Exhibit F (the "GGP Series B Preferred OP Units
Redemption Agreement") or, if they convert such GGP Series B Preferred OP
Units into GGP Common OP Units pursuant to the GGP Partnership Agreement
amendment described above, the redemption rights provided for in the
redemption rights agreement, substantially in the form attached hereto as
Exhibit G (the "GGP Common OP Units Redemption Agreement"). Pursuant to the
terms of the GGP Series B Preferred OP Units Redemption Agreement, each GGP
Series B Preferred OP Unit will be redeemable by the holder thereof, for,
at the option of GGP, cash or 0.025 shares of GGP Series C Preferred Stock,
$100 par value per share ("GGP Series C Preferred Stock"). Prior to or as
of the Effective Time, the GGP Charter shall be amended in accordance with
the DGCL by the adoption by the Board of Directors of GGP of a Certificate
of Designations, in substantially the form of Exhibit H hereto, providing
for the creation of the GGP Series C Preferred Stock.
(iii) Holders of PDC Common OP Units may elect to receive GGP Series B
Preferred Units in accordance with the provisions of Section 5.1(c) hereof.
If a holder of PDC Common OP Units fails to comply with the provisions of
Section 5.1(c) hereof with respect to some or all of its PDC Common OP
Units, such holder shall receive cash pursuant to this Section 1.9(b) upon
the conversion of such PDC Common OP Units into GGP Series B Preferred OP
Units in the Partnership Merger.
7
(iv) The PDC Series A OP Units (as defined herein) outstanding
immediately prior to the Effective Time of the Partnership Merger shall
remain outstanding, except that, immediately following the Effective Time,
each such Series A OP Unit, shall, in accordance with the terms of the PDC
LP Agreement, become exchangeable into the right to receive .025 shares of
GGP Series D Preferred Stock.
(v) The PDC Series B OP Units (as defined herein) outstanding
immediately prior to the Effective Time of the Partnership Merger shall
remain outstanding, except that, immediately following the Effective Time,
each such Series B OP Unit, shall, in accordance with the terms of the PDC
LP Agreement, become exchangeable into the right to receive .025 shares of
GGP Series E Preferred Stock.
(vi) The PDC Series C OP Units (as defined herein) outstanding
immediately prior to the Effective Time of the Partnership Merger shall
remain outstanding, except that, immediately following the Effective Time,
each such Series C OP Unit, shall, in accordance with the terms of the PDC
LP Agreement, become exchangeable into the right to receive .025 shares of
GGP Series F Preferred Stock.
(vii) Any PDC OP Units (as defined herein) outstanding and held by JP
immediately prior to the Effective Time of the Partnership Merger shall
remain outstanding.
(viii) At the Effective Time of the Partnership Merger, each holder of
a JP Common OP Unit outstanding immediately prior to the Effective Time
shall cease to have any rights with respect thereto except the right to
receive the applicable Partnership Merger Consideration described above and
any dividends declared and unpaid thereon payable to holders of record
thereof as of a record date preceding the Effective Time. Following the
Effective Time, upon delivery to the Paying Agent of such duly executed
documents, including a Form of Election, as may be required by the Paying
Agent or GGP Partnership, the Surviving Partnership shall pay to such
former holders any unpaid dividends declared in respect of the PDC Common
OP Units with a record date prior to the Effective Time and which remain
unpaid at the Effective Time.
(c) Appraisal Rights. The holders of PDC Common OP Units are entitled to
appraisal rights in accordance with the MRULPA as a result of the Partnership
Merger, but are not entitled to any other similar rights as a result of the
Mergers. The holders of PDC Preferred OP Units are not entitled under applicable
law to appraisal, dissenters' or similar rights as a result of the Mergers.
(d) Adjustments to Partnership Merger Consideration. The Partnership Merger
Consideration shall be adjusted to reflect fully the effect of any
reclassification, combination, subdivision, split, reverse split, distribution
of securities convertible into PDC Common OP Units, reorganization,
recapitalization or other like change with respect to PDC Common OP Units
occurring (or for which a record date is established) after the date hereof and
prior to the Effective Time.
1.10 Procedures for Exchange of PDC Common OP Units in the Partnership
Merger. Except for the provisions relating to the Certificates, all other
provisions of Section 1.8 shall apply to PDC LP, GGP Partnership and the PDC
Common OP Units with respect to the Partnership Merger, except as otherwise
provided in Section 1.9 and Section 5.1(c).
8
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF JP
Except as set forth in the JP SEC Documents (as defined herein) or in the
letter of even date herewith signed by the Chairman and Chief Executive Officer
or the President and Chief Operating Officer of JP and delivered to GGP and GGP
Partnership prior to the execution hereof (the "JP Disclosure Letter"), JP and
PDC LP jointly and severally represent and warrant to GGP, GGP Partnership,
Acquisition and Partnership Acquisition as follows:
2.1 Organization, Standing and Power. JP has been duly organized and is
validly existing and in good standing under the laws of the State of Maryland.
JP has all requisite corporate power and authority to own, operate, lease and
encumber its properties and carry on its business as now being conducted. The JP
Amended and Restated Articles of Incorporation, as amended (the "JP Articles"),
are in effect, and no dissolution, revocation or forfeiture proceedings
regarding JP have been commenced. JP is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed, individually or
in the aggregate, would not have a JP Material Adverse Effect (as herein
defined). As used in this Agreement, a "JP Material Adverse Effect" means any
circumstance, event, occurrence, change or effect that is materially adverse to
the business, properties, assets (tangible or intangible), financial condition
or results of operations of JP and PDC LP, taken as a whole, except, in each
case, as a result of (i) changes in general economic conditions nationally or
regionally, (ii) changes affecting the real estate industry generally which do
not affect JP or PDC LP, as the case may be, materially disproportionately
relative to other participants in the real estate industry similarly situated,
or (iii) in and of itself and without the occurrence of any other JP Material
Adverse Effect, changes in the trading prices of JP Common Stock. JP has
delivered to GGP and GGP Partnership true, complete and correct copies of the JP
Articles and JP's Amended and Restated Bylaws, as amended (the "JP Bylaws"), in
each case, as amended or supplemented to the date of this Agreement.
2.2 JP Subsidiaries.
(a) Schedule 2.2 to the JP Disclosure Letter sets forth (i) each Subsidiary
(as defined herein) of JP, including PDC LP (the "JP Subsidiaries"), (ii) the
ownership interest therein of JP, (iii) if not directly wholly owned by JP, the
identity and ownership interest of each of the other owners of such JP
Subsidiary, (iv) each regional mall, community center, free-standing retail
property, mixed-use commercial property and other commercial property in which
such JP Subsidiary owns a fee or leasehold interest, and (v) if not wholly owned
in fee by JP or a JP Subsidiary, the identity and ownership interest of each of
the other Persons having a fee ownership interest in such property. As used in
this Agreement, "Subsidiary" of any Person means any corporation, partnership,
limited liability company, joint venture, trust or other legal entity of which
such Person owns (either directly or through or together with another Subsidiary
of such Person) either (i) a general partner, managing member or other similar
interest or (ii) 10% or more of the voting stock or other equity securities or
value of equity interests (voting or non-voting) of such corporation,
partnership, limited liability company, joint venture, trust or other legal
entity. As used herein, "Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization, or any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), or any other
entity. Schedule 2.2 of the JP Disclosure Letter sets forth a true, complete and
correct list of the equity securities owned by JP, directly or indirectly, in
any corporation, partnership, limited liability company, joint venture, trust or
other legal entity, excluding JP Subsidiaries.
9
(b) Except as set forth in Schedule 2.2 to the JP Disclosure Letter, (i)
all of the outstanding shares of capital stock of each JP Subsidiary that is a
corporation have been duly authorized, validly issued and are (A) fully paid and
nonassessable and not subject to preemptive rights, (B) owned by JP or by
another JP Subsidiary and (C) owned free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens") and (ii) all equity interests in each JP
Subsidiary that is a partnership, joint venture, limited liability company or
trust which are owned by JP, by another JP Subsidiary or by JP and another JP
Subsidiary are owned free and clear of all Liens other than pledges, if any,
contained in organizational documents of such JP Subsidiary and given to secure
performance thereunder or Liens granted to secure outstanding indebtedness of JP
or any JP Subsidiary and which indebtedness is disclosed in the JP Disclosure
Letter. Each JP Subsidiary that is a corporation is duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to own,
operate, lease and encumber its properties and carry on its business as now
being conducted, and each JP Subsidiary that is a partnership, joint venture,
limited liability company or trust is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and has the
requisite power and authority to own, operate, lease and encumber its properties
and carry on its business as now being conducted. Except as set forth in
Schedule 2.2 to the JP Disclosure Letter, each JP Subsidiary is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually or in the
aggregate, would not reasonably be expected to have a JP Material Adverse
Effect. True, complete and correct copies of the articles or certificate of
incorporation, bylaws, other organizational documents and partnership, joint
venture and operating agreements of each JP Subsidiary, as amended to the date
of this Agreement, have been previously delivered or made available to GGP
Partnership, and all of such documents are listed in Schedule 2.2 to the JP
Disclosure Letter.
2.3 Capital Structure.
(a) The authorized shares of capital stock of JP consist of: (i) 7,690,000
shares of preferred stock, of which (A) 510,000 shares have been designated
8.75% Series A Cumulative Redeemable Preferred Stock, $.0001 par value per share
(the "JP Series A Preferred Stock"), none of which are outstanding, (B)
3,800,000 shares have been designated 8.95% Series B Cumulative Redeemable
Preferred Stock, $.0001 par value per share (the "JP Series B Preferred Stock"),
none of which are outstanding, (C) 320,000 shares have been designated 8.75%
Series C Cumulative Redeemable Preferred Stock, $.0001 par value per share (the
"JP Series C Preferred Stock"), none of which are outstanding, and (D) 3,060,000
shares have been designated Series A Junior Participating Preferred Stock,
$.0001 par value per share (the "JP Junior Preferred Stock"), none of which are
outstanding, (ii) 117,110,000 shares of Common Stock, par value $.0001 per share
("JP Common Stock"), of which 16,151,769 are outstanding on the date of this
Agreement, (iii) 200,000 shares of Price Group Stock, par value $.0001 per share
("Price Group Stock"), of which 200,000 shares are issued and outstanding on the
date of this Agreement and (iv) 75,000,000 shares of Excess Stock, par value
$.0001 per share ("Excess Stock"), none of which are outstanding.
(b) Set forth in Schedule 2.3(b) to the JP Disclosure Letter is a true,
complete and correct list of the following: (i) each qualified or nonqualified
option to purchase shares of JP Common Stock granted under JP's 1993 Stock
Option Plan or any other formal or informal arrangement to purchase shares of JP
Common Stock, Price Group Stock, JP Preferred Stock or any other equity
securities of JP (collectively, the "JP Stock Options"); and (ii) all other
warrants or other rights to acquire JP Common Stock, Price Group Stock, JP
Preferred Stock or any other equity securities of JP, stock appreciation rights,
restricted stock, dividend equivalents, deferred compensation accounts,
performance awards, restricted stock unit awards and other awards which are
outstanding on the date of this
10
Agreement ("JP Stock Rights"). Schedule 2.3(b) to the JP Disclosure Letter sets
forth, as applicable, for each JP Stock Option and JP Stock Right the name of
the grantee, the date of the grant, the number of shares of JP Common Stock,
Price Group Stock or other equity securities of JP subject to each option or
other award, and the exercise price per share. On the date of this Agreement,
except as set forth in this Section 2.3 or in Schedule 2.3(b) to the JP
Disclosure Letter, no shares of JP Common Stock, Price Group Stock, preferred
stock of JP or Excess Stock were outstanding or reserved for issuance.
(c) Except as set forth in Schedule 2.3(c) to the JP Disclosure Letter, all
outstanding shares of JP Common Stock and Price Group Stock are duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive or
similar rights under law or the JP Articles or JP By-Laws or any contract or
instrument to which JP is a party or by which it is bound. There are no bonds,
debentures, notes or other indebtedness of JP or any JP Subsidiary having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of JP may vote.
(d) Other than (i) as set forth in this Section 2.3 or in Schedule 2.3(b),
2.3(c) or 2.3(d) to the JP Disclosure Letter, (ii) non-preferred units of
limited partnership in PDC LP ("PDC Common OP Units"), which may be exchanged
for cash or, at the option of JP, JP Common Stock at a rate of one share of JP
Common Stock for each JP Common OP Unit, (iii) the 8.75% Series A Cumulative
Redeemable Preferred Units of limited partnership interest (the "PDC Series A OP
Units") of PDC LP, which are exchangeable in accordance with their terms, for
shares of JP Series A Preferred Stock, (iv) the 8.95% Series B Cumulative
Preferred Units of limited partnership interest of PDC LP (the "PDC Series B OP
Units"), which are exchangeable in accordance with their terms, for shares of JP
Series B Preferred Stock, (v) the 8.75% Series C Cumulative Preferred Units of
limited partnership interest of PDC LP (the "PDC Series C OP Units," and
collectively with the PDC Series A OP Units and PDC Series B OP Units, the "PDC
Preferred OP Units"), which are exchangeable in accordance with their terms, for
shares of JP Series C Preferred Stock, (vi) the JP Rights (as defined herein),
which entitle the holders of shares of JP Common Stock to purchase units of JP
Junior Preferred Stock upon the terms and conditions specified therein or, upon
the occurrence of certain events, shares of JP Common Stock, or (vii) the Price
Group Stock, which is convertible at the option of JP into an equal number of
shares of JP Common Stock, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which JP or any JP Subsidiary is a party or by which such entity
is bound, obligating JP or any JP Subsidiary to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock, voting
securities or other ownership interests of JP or any JP Subsidiary or obligating
JP or any JP Subsidiary to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking
(other than to JP or a JP Subsidiary).
(e) As of the date of this Agreement, 510,000 PDC Series A OP Units,
3,800,000 PDC Series B OP Units, 320,000 PDC Series C OP Units and 19,990,331
PDC Common OP Units are validly issued and outstanding, fully paid and
nonassessable and not subject to preemptive or similar rights under law or the
PDC LP Agreement or any contract or instrument to which JP or PDC LP is a party
or by which either is bound, of which 16,351,769 are owned by JP. The PDC Common
OP Units and the PDC Preferred OP Units are collectively referred to as the "PDC
OP Units." The above-described PDC OP Units are the only authorized and
outstanding partnership interests in PDC LP as of the date of this Agreement.
Schedule 2.3(e) to the JP Disclosure Schedule sets forth the name of each holder
of PDC OP Units and the number and type of PDC OP Units owned by each such
holder as of the date of this Agreement. Except as provided in the PDC LP
Agreement, or as set forth on Schedule 2.3(d) to the JP Disclosure Letter, PDC
LP has not issued or granted and is not a party to any outstanding commitments
of any kind relating to, or any presently effective agreements or understandings
with respect to, the issuance
11
or sale of interests in PDC LP, whether issued or unissued, or securities
convertible or exchangeable into interests in PDC LP.
(f) All dividends on JP Common Stock and Price Group Stock and all
distributions on PDC OP Units, which have been declared prior to the date of
this Agreement, have been paid in full. Neither JP nor PDC LP is in arrears with
respect to dividends or other distributions on any of its outstanding shares of
capital stock or partnership interests.
(g) Set forth on Schedule 2.3(g) to the JP Disclosure Letter is a list of
each registration rights agreement or other agreement between JP and/or PDC LP,
on the one hand, and one or more other parties, on the other hand, which sets
forth the obligations of JP and/or PDC LP with respect to the registration of
any securities of JP, PDC LP and/or any other JP Subsidiary pursuant to the
Securities Act of 1933, as amended (the "Securities Act").
2.4 Other Interests. Except for interests in the JP Subsidiaries, interests
valued at less than $100,000 and certain other entities as set forth in Schedule
2.4 to the JP Disclosure Letter (the "JP Other Interests"), none of JP, PDC LP
or any other JP Subsidiary owns directly or indirectly any interest or
investment (whether equity or debt) in any Person (other than investments in
short-term investment securities and notes receivable from tenants). With
respect to the JP Other Interests, PDC LP owns such interests free and clear of
all Liens other than pledges, if any, contained in organizational documents of
such JP Other Interests and given to secure performance thereunder. Other than
any breach which, individually or in the aggregate, would not have a JP Material
Adverse Effect, none of JP, PDC LP or any other JP Subsidiary is in breach of
any provision of any agreement, document or contract relating to the JP Other
Interests, all of which agreements, documents and contracts are (a) listed in
Schedule 2.4 to the JP Disclosure Letter, (b) unmodified except as described
therein and (c) in full force and effect. To the Knowledge of JP, the other
parties to any such agreement, document or contract which is of a material
nature are not in material breach of any of their respective obligations under
such agreements, documents or contracts.
2.5 Authority; Noncontravention; Consents.
(a) JP has the requisite corporate power and authority to enter into this
Agreement and, subject to (i) the requisite JP stockholder approval of this
Agreement and the Merger (the "JP Stockholder Approval"), and (ii) the requisite
approval of the holders of PDC OP Units, as specified in Schedule 2.5(a) to the
JP Disclosure Letter, of this Agreement, the PDC LP Amendment described in
Schedule 2.5(a) to the JP Disclosure Letter (the "PDC LP Amendment") and the
Partnership Merger (collectively, the "JP Partner Approvals"), to consummate the
transactions contemplated by this Agreement to which JP is a party. PDC LP has
the requisite power and authority to enter into this Agreement and, subject to
the requisite JP Partner Approvals, to consummate the transactions contemplated
by this Agreement to which PDC LP is a party. The execution and delivery of this
Agreement by JP and PDC LP and the consummation by JP and PDC LP of the
transactions contemplated by this Agreement to which they are parties have been
duly authorized by all necessary action on the part of JP and PDC LP, except for
and subject to the JP Stockholder Approval and the JP Partner Approvals. This
Agreement has been duly executed and delivered by JP and PDC LP and constitutes
a valid and binding obligation of each of JP and PDC LP, enforceable against
each of them in accordance with and subject to its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
(b) Except as set forth in Schedule 2.5(b)(1) to the JP Disclosure Letter
and subject to obtaining the JP Stockholder Approval and the JP Partner
Approvals, the execution and delivery of this Agreement by JP and PDC LP do not,
and the consummation of the transactions contemplated by this
12
Agreement to which either of JP or PDC LP is a party and compliance by JP and
PDC LP with the provisions of this Agreement will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to material loss of a benefit under,
or give rise to a right of purchase under, or result in the creation of any Lien
upon any of the properties or assets of JP or any JP Subsidiary under, (i) the
JP Articles or JP Bylaws or the comparable charter or organizational documents
or partnership, operating, or similar agreement (as the case may be) of any JP
Subsidiary, each as amended or supplemented, (ii) any Material Contract (as
defined herein) applicable to JP or any JP Subsidiary or the respective
properties or assets of JP or any JP Subsidiary or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
(collectively, "Laws") applicable to JP or any JP Subsidiary, or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights, loss or Liens that,
individually or in the aggregate, would not (x) have a JP Material Adverse
Effect or (y) prevent or delay the consummation of the transactions contemplated
by this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required by
or with respect to JP or any JP Subsidiary in connection with the execution and
delivery of this Agreement by JP or the consummation by JP of the transactions
contemplated by this Agreement, except for (i) the filing with the Securities
and Exchange Commission (the "SEC") of the Proxy Statement (as defined herein),
(ii) the filing and acceptance for record of the Maryland Articles of Merger by
the Department, (iii) the filing and acceptance for record of the Delaware
Certificate of Merger with the Secretary of State, (iv) the filing and
acceptance for record of the Maryland Articles of Partnership Merger by the
Department or (v) such other consents, approvals, orders, authorizations,
registrations, declarations and filings (A) as are set forth in Schedule
2.5(b)(2) to the JP Disclosure Letter, (B) as may be required under (w) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (x) laws requiring transfer, recordation or gains tax filings, (y)
federal, state or local environmental laws or (z) the blue sky laws of various
states, to the extent applicable, or (C) which, if not obtained or made, would
not prevent or delay in any material respect the consummation of any of the
transactions contemplated by this Agreement or otherwise prevent JP or PDC LP
from performing their obligations under this Agreement in any material respect
or reasonably be expected to have, individually or in the aggregate, a JP
Material Adverse Effect.
2.6 SEC Documents; Financial Statements; Undisclosed Liabilities. Each of
JP and PDC LP has filed all required reports, schedules, forms, statements and
other documents with the SEC since January 1, 1997 through the date hereof
(collectively, the "JP SEC Documents"). Schedule 2.6(a) to the JP Disclosure
Letter contains a true, complete and correct list of all JP SEC Documents filed
by JP or PDC LP with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), between January 1, 1997 and the date of this
Agreement. All of the JP SEC Documents (other than preliminary material), as of
their respective filing dates, complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act and, in each
case, the rules and regulations promulgated thereunder applicable to such JP SEC
Documents. None of the JP SEC Documents at the time of filing contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by later JP SEC Documents filed and publicly available prior to the
date of this Agreement. The consolidated financial statements of JP and PDC LP,
respectively, included in the JP SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by the applicable rules and
regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented
in all material respects, in accordance with the applicable requirements of GAAP
and the applicable rules and
13
regulations of the SEC, the consolidated financial position of (a) in the case
of JP, JP and the consolidated JP Subsidiaries taken as a whole, and (b) in the
case of PDC LP, PDC LP and its consolidated JP Subsidiaries taken as a whole, in
each case, as of the dates thereof, and the consolidated results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in
Schedule 2.6(b) to the JP Disclosure Letter, JP has no Subsidiaries which are
not consolidated for accounting purposes. Except for liabilities and obligations
set forth in the JP SEC Documents or in Schedule 2.6(c) to the JP Disclosure
Letter or incurred by JP or any JP Subsidiary in the ordinary course of business
since December 31, 2001, none of JP or any JP Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of JP or in the
notes thereto and which, individually or in the aggregate, would have a JP
Material Adverse Effect.
2.7 Absence of Certain Changes or Events. Except as disclosed in the JP SEC
Documents or in Schedule 2.7 to the JP Disclosure Letter, since the date of the
most recent audited financial statements included in the JP SEC Documents (the
"JP Financial Statement Date"), JP and the JP Subsidiaries have conducted their
business only in the ordinary course (taking into account prior practices,
including the acquisition and disposition of properties and issuance of
securities) and there has not been (a) a JP Material Adverse Effect through the
date hereof, (b) except for regular quarterly distributions not in excess of
$0.51 per share of JP Common Stock or JP Common OP Unit, $0.408 per share of
Price Group Stock, $0.546875 per JP Series A OP Unit, $0.559375 per JP Series B
OP Unit and $0.546875 per JP Series C OP Unit (or, in each case, with respect to
the period commencing on the date hereof and ending on the Closing Date,
distributions as necessary to maintain REIT (as defined herein) status), in each
case, with customary record and payment dates (subject to Section 5.9), any
authorization, declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the JP Common
Stock, Price Group Stock or the PDC OP Units or any other equity security of JP
or PDC LP, (c) any split, combination or reclassification of the JP Common
Stock, the Price Group Stock or the PDC OP Units or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for, or giving the right to acquire by exchange or exercise,
shares of stock of JP or partnership interests in PDC LP, or any issuance of an
ownership interest in any other JP Subsidiary, (d) any damage, destruction or
loss through the date hereof, whether or not covered by insurance, that,
individually or in the aggregate, has or would have a JP Material Adverse
Effect, (e) any change in accounting methods, principles or practices by JP or
any JP Subsidiary materially affecting its assets, liabilities or business,
except insofar as may have been disclosed in JP SEC Documents or required by a
change in GAAP, or (f) except as expressly contemplated by this Agreement, any
amendment of any employment, consulting, severance, retention or any other
agreement between JP or any JP Subsidiary and any of their respective officers,
directors or managers.
2.8 Litigation. Except as disclosed in the JP SEC Documents or in Schedule
2.8 to the JP Disclosure Letter, and other than personal injury and other
routine tort litigation arising from the ordinary course of operations of JP and
the JP Subsidiaries (a) which are covered by adequate insurance subject to a
reasonable deductible or retention limit or (b) for which all material costs and
liabilities arising therefrom are reimbursable pursuant to common area
maintenance or similar agreements, there is no suit, action or proceeding
pending (in which service of process has been received by an employee of JP or a
JP Subsidiary) or, to the Knowledge of JP, threatened against or affecting JP or
any JP Subsidiary that, individually or in the aggregate, would reasonably be
expected to (i) have a JP Material Adverse Effect or (ii) prevent the
consummation of any of the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any court or
Governmental Entity or arbitrator outstanding against JP, any JP Subsidiary
having, or which, insofar as reasonably can be foreseen, in the future would
reasonably be expected to have, any such effect. Notwithstanding the foregoing,
no claim has been made under any directors' and officers' liability insurance
policy maintained at any time by JP or any of the JP Subsidiaries.
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2.9 Properties.
(a) Except as provided in Schedule 2.2 to the JP Disclosure Letter, JP or
the JP Subsidiary set forth on Schedule 2.2 to the JP Disclosure Letter owns fee
simple title to or holds a leasehold interest in each of the real properties
identified in Schedule 2.2 to the JP Disclosure Letter (the "JP Properties"),
which are all of the real estate properties owned by them, in each case (except
for the Permitted Title Exceptions (as defined herein) free and clear of Liens
or other encumbrances on title ("Encumbrances"). Schedule 2.2 to the JP
Disclosure Letter further identifies which of the JP Properties are owned in fee
simple by JP or a JP Subsidiary, and which of the JP Properties are subject to a
ground lease. Except as set forth in Schedule 2.2 to the JP Disclosure Letter,
no other Person has any ownership interest in any of the JP Properties, and any
such ownership interest so scheduled does not materially detract from the value
of the JP Subsidiary's interest in, or materially interfere with the present use
of, any of the JP Properties subject thereto or affected thereby. Except as set
forth in Schedule 2.9(a) to the JP Disclosure Letter, none of the JP Properties
is subject to any restriction on the sale or other disposition thereof
(including, without limitation, rights of first refusal) or on the financing or
release of financing thereon. The JP Properties are not subject to any rights of
way, written agreements, laws, ordinances and regulations affecting building,
development, use or occupancy, or reservations of an interest in title
(collectively, "Property Restrictions") or Encumbrances, except for the
following (collectively, the "Permitted Title Exceptions"): (i) Property
Restrictions and Encumbrances set forth in Schedule 2.9(a) to the JP Disclosure
Letter or those that will not have a JP Material Adverse Effect, (ii) Property
Restrictions imposed or promulgated by law or any Governmental Entity with
respect to real property, including zoning regulations, which, to the knowledge
of JP, are not violated by the current use of the Properties, (iii) the JP Space
Leases, the Ground Leases, other leases and the REAs, (iv) Property Restrictions
and Encumbrances disclosed on the Existing Title Policies (as defined herein),
the title reports listed in Schedule 2.9(a) to the JP Disclosure Letter or
existing surveys (true, complete and correct copies of which surveys have been
delivered to GGP and GGP Partnership) (provided, however, that ground leases and
mortgage indebtedness shall not be Permitted Title Exceptions unless
specifically noted on Schedules 2.9(f) and 2.5(b)(i) to the JP Disclosure
Letter), and (v) Liens for real estate Taxes not yet due and payable,
mechanics', carriers', workmen's, and repairmen's liens, if any, which,
individually or in the aggregate, do not materially detract from the value of or
materially interfere with the present use of any of the JP Properties subject
thereto or affected thereby. Schedule 2.9(a) to the JP Disclosure Letter lists
each of the JP Properties which are under development or substantial renovation
as of the date of this Agreement and describes generally the status of such
development or renovation as of the date hereof.
(b) Schedule 2.9(b) to the JP Disclosure Letter sets forth a list of
policies of title insurance (the "Existing Title Policies") that have been
issued insuring the applicable JP Subsidiary's fee simple title or leasehold
estate, as the case may be, to the JP Properties owned by it. True, complete and
correct copies of such policies have been provided or made available to GGP.
Such policies are, at the date hereof, in full force and effect. Except as
provided in Schedule 2.9(b) to the JP Disclosure Letter, no claim has been made
against any such policy.
(c) Except as provided in Schedule 2.9(c) to the JP Disclosure Letter, JP
has received no written notice and otherwise has no Knowledge (i) that any
certificate, permit or license from any Governmental Entity having jurisdiction
over any of the JP Properties, or any agreement, easement or other right, which
is in either case necessary, in any material respect, to permit the lawful use
and operation of the buildings and improvements on any of the JP Properties or
which is necessary, in any material respect, to permit the lawful use and
operation of all driveways, roads and other means of egress and ingress to and
from any of the JP Properties, has not been obtained or is not in full force and
effect, or of any pending threat of modification or cancellation of any of the
same which would have a material adverse effect on such JP Property, or (ii) of
any violation of any federal, state or municipal law,
15
ordinance, order, regulation or requirement affecting any of the JP Properties
issued by any Governmental Entity which would have a material adverse effect on
such JP Property.
(d) Neither JP nor any JP Subsidiary has received any written or published
notice to the effect that (i) any condemnation or rezoning proceedings are
pending or threatened with respect to any of the JP Properties or (ii) any
zoning, building or similar law, code, ordinance, order or regulation is or will
be violated by the continued maintenance, operation or use of any buildings or
other improvements on any of the JP Properties or by the continued maintenance,
operation or use of the parking areas which would have a material adverse effect
on such Property.
(e) Schedule 2.9(e) sets forth the rent rolls for each JP Property, which
rent rolls are not dated earlier than December 31, 2001 (the "JP Rent Roll"). JP
has made available to GGP and GGP Partnership true, complete and correct copies
of all JP Space Leases as defined herein, including all amendments,
modifications, supplements, renewals, extensions and guarantees related thereto,
as of the date hereof. "JP Space Lease" means each lease or other right of
occupancy affecting or relating to a property in which JP, PDC LP or any other
JP Subsidiary (or an entity in which any of the foregoing directly or indirectly
has an interest) is the landlord, either pursuant to the terms of the lease
agreement or as successor to any prior landlord, but excluding any Ground Lease
(as defined herein) and excluding any lease, license or occupancy agreement with
a term of less than 6 months and/or terminable upon not more than 30 days
notice. Except for discrepancies that, either individually or in the aggregate,
would not have a material adverse effect on the applicable JP Property, all
information set forth in the JP Rent Roll is true, complete and correct as of
the date thereof. Except as set forth in a delinquency report made available to
GGP and GGP Partnership, none of JP or any JP Subsidiary, on the one hand, nor,
to the Knowledge of JP, any other party, on the other hand, is in default
(whether monetary or non-monetary) under any JP Space Lease, except for such
defaults that individually or in the aggregate, would not have a JP Material
Adverse Effect.
(f) With regard to any JP Property where JP or any JP Subsidiary holds a
leasehold estate or is the lessor under any ground lease (a "Ground Lease"),
each such Ground Lease (and whether JP or such JP Subsidiary is lessor or lessee
with respect thereto) is identified on Schedule 2.9(f) to the JP Disclosure
Letter and JP has provided to GGP and GGP Partnership true, complete and correct
copies of all Ground Leases, including all amendments, modifications,
supplements, renewals, extensions and guaranties related thereto, as of the date
hereof. Each Ground Lease is a valid and subsisting lease and none of JP or any
JP Subsidiary, on the one hand, nor, to the Knowledge of JP, none of the other
parties under the Ground Lease, on the other hand, is in default under any terms
thereunder, except for such defaults that, individually or in the aggregate,
would not have a JP Material Adverse Effect.
(g) With regard to any JP Property where JP or any JP Subsidiary is a party
to a reciprocal easement agreement, operating agreement or similar agreement
imposing obligations on, and granting rights to, a JP Property and an adjacent
property owned by a third party (any such agreement, a "REA"), each such REA is
identified on Schedule 2.9(g) to the JP Disclosure Letter and JP has provided to
GGP and GGP Partnership true, complete and correct copies of all REAs, including
all amendments, modifications, supplements, renewals, extensions and guaranties
related thereto, as of the date hereof. Each REA is a valid agreement and none
of JP or any JP Subsidiary, on the one hand, nor, to the Knowledge of JP, any
other party to a REA, on the other hand, is in default under any terms
thereunder, except for such defaults that, individually or in the aggregate,
would not have a JP Material Adverse Effect.
(h) To the Knowledge of JP, there are no pending threats of modification or
cancellation of any Property Permits that, individually or in the aggregate,
would have a material adverse effect on the JP Property for which such Property
Permits are required, and no Property Permit for any JP
16
Property will cease to be effective as a result of the consummation of
transactions contemplated by this Agreement which would have a material adverse
effect on such JP Property.
(i) Schedule 2.9(i) to the JP Disclosure Letter contains a true, complete
and correct list, by type of insurance, carrier, coverages (including limits)
and term, of all material policies of casualty, liability and other types of
insurance (except title insurance) carried by JP or any JP Subsidiary, as
applicable, with respect to the JP Properties. All such policies are in full
force and effect and none of JP or any JP Subsidiary, as applicable, has
received from any insurance company notice of any material defects or
deficiencies affecting the insurability of JP or any JP Subsidiary, as
applicable, or any of their respective assets thereunder, including the JP
Properties.
2.10 Environmental Matters.
(a) "Environmental Law" shall mean all applicable Laws, including any
plans, other criteria, or guidelines promulgated pursuant to such Laws, relating
to the protection of human health, safety and natural resources, animal health
or welfare or the environment, including, without limitation, Laws relating to
the use, manufacturing, production, generation, installation, recycling, reuse,
sale, storage, handling, transport, treatment, release, threatened release or
disposal of any Hazardous Materials (including the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, 42 U.S.C. xx.xx. 9601 et
seq. ("CERCLA")). "Hazardous Materials" shall mean substances, wastes, radiation
or materials (whether solids, liquids or gases) (i) which are hazardous, toxic,
infectious, explosive, radioactive, carcinogenic, or mutagenic, (ii) which are
listed, regulated or defined under any Environmental Law, and shall include
"hazardous wastes," "hazardous substances," "hazardous materials," "pollutants,"
"contaminants," "toxic substances," "radioactive materials" or "solid wastes,"
(iii) which contain without limitation polychlorinated biphenyls (PCBs),
asbestos or asbestos-containing materials, lead-based paints, urea-formaldehyde
foam insulation, or petroleum or petroleum products (including, without
limitation, crude oil or any fraction thereof) or (v) which pose a hazard to
human health, safety, natural resources, industrial hygiene, or the environment.
"Release" shall have the meaning set forth in Section 101 of CERCLA, without
regard to the exclusions set forth therein.
(b) Except as disclosed in the JP SEC Documents or in Schedule 2.10(b) to
the JP Disclosure Letter or in the environmental audits or reports listed
thereon,
(i) none of JP, any of the JP Subsidiaries or, to JP's Knowledge, any
other Person has caused or permitted the presence of any Hazardous
Materials at, on or under any of the JP Properties and JP does not have any
Knowledge of the presence of any Hazardous Materials at, on or under any of
the JP Properties, such that the presence of such Hazardous Materials
(including the presence of asbestos in any buildings or improvements at the
JP Properties) would, individually or in the aggregate, reasonably be
expected to have a JP Material Adverse Effect;
(ii) except in accordance with the Environmental Permits (as defined
herein), to the Knowledge of JP, there have been no Releases of Hazardous
Materials at, on, under or from (A) the JP Properties or (B) any real
property previously owned, operated or leased by JP or the JP Subsidiaries
(the "Former JP Properties"), in the case of (B), during the period of JP's
or a JP Subsidiary's ownership, operation or tenancy, which with respect to
any such Releases as described in this clause (ii) would, individually or
in the aggregate, reasonably be expected to have a JP Material Adverse
Effect;
(iii) JP and the JP Subsidiaries have not received any written notice
that any of them has failed to comply with Environmental Laws, or has any
liability under the
17
Environmental Laws, except to the extent that such failures to comply and
liabilities, individually or in the aggregate, would not reasonably be
expected to have a JP Material Adverse Effect; and
(iv) JP and the JP Subsidiaries have been duly issued, and currently
have and will maintain through the Closing Date, all permits, licenses,
certificates and approvals required under any Environmental Law
(collectively, the "Environmental Permits") to operate their businesses as
currently operated except where the failure to obtain and maintain such
Environmental Permits would not, individually or in the aggregate,
reasonably be expected to have a JP Material Adverse Effect. JP and the JP
Subsidiaries have timely filed applications for all Environmental Permits,
except where failure to do so would not have a JP Material Adverse Effect.
(c) JP has previously delivered or made available to GGP true, complete and
correct copies of all material third party reports, including, without
limitation, environmental site assessment reports and environmental
investigations and testing or analysis that are dated within 5 years of the date
of this Agreement and are, to the Knowledge of JP, in the possession or control
of JP or any of the JP Subsidiaries and which relate to the presence or release
of Hazardous Materials, or any non-compliance with Environmental Laws by any of
them.
2.11 Related Party Transactions. Set forth in Schedule 2.11 to the JP
Disclosure Letter is a list of all material arrangements, agreements and
contracts entered into by JP or any JP Subsidiary with (a) any investment banker
or financial advisor, or (b) any Person who is an officer, director or Affiliate
(as defined herein) of JP, any JP Subsidiary, any relative of any of the
foregoing, or any entity of which any of the foregoing is an Affiliate or (c)
any Person who acquired JP Common Stock, Price Group Stock or PDC OP Units, in
each case, which remain in effect. True, complete and correct copies of all of
such documents have previously been delivered or made available to JP, and are
listed in Schedule 2.11 to the JP Disclosure Letter. As used in this Agreement,
the term "Affiliate" shall have the same meaning as such term is defined in Rule
405 promulgated under the Securities Act.
2.12 Employee Benefits. As used herein, the term "Employee Plan" includes
any pension, retirement, savings, disability, medical, dental, health, life,
death benefit, group insurance, fringe benefit, profit sharing, deferred
compensation, stock option or grant, bonus, incentive, vacation pay, tuition
reimbursement, severance pay, or other employee benefit plan, trust, agreement,
contract, policy or commitment (including, without limitation, any pension plan,
as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder ("ERISA")
("Pension Plan"), and any welfare plan as defined in Section 3(1) of ERISA
("Welfare Plan")), whether any of the foregoing is funded, insured or
self-funded, written or oral, (i) sponsored or maintained by JP, any JP
Subsidiary or any entity that presently would be deemed to be a single employer
with JP or any JP Subsidiary under Section 414(b), (c), (m) or (o) of the Code
(each, a "Controlled Group Member") and covering any Controlled Group Member's
active or former employees (or their beneficiaries), (ii) to which any
Controlled Group Member is a party or by which any Controlled Group Member (or
any of the rights, properties or assets thereof) is bound or (iii) with respect
to which any Controlled Group Member may otherwise have any material liability
(whether or not such Controlled Group Member still maintains such Employee
Plan). Each Employee Plan is listed on Schedule 2.12 to the JP Disclosure
Letter. Except as disclosed in Schedule 2.12 to the JP Disclosure Letter, with
respect to the Employee Plans:
(a) No Controlled Group Member has any liability under any Welfare Plan or
otherwise for continuing benefits or coverage for any participant or any spouse
or beneficiary of a participant after such participant's termination of
employment, except as may be required by Section
18
4980B of the Internal Revenue Code of 1986, as amended (the "Code"), or Section
601 (et seq.) of ERISA, or under any applicable state law.
(b) Each Employee Plan complies in all material respects with the
applicable requirements of ERISA and any other applicable law governing such
Employee Plan, and each Employee Plan has at all times been properly
administered in all material respects in accordance with all such requirements
of law, and in accordance with its terms and the terms of any applicable
collective bargaining agreement to the extent consistent with all such
requirements of law. Each Pension Plan which is intended to be qualified under
Section 401(a) of the Code ("Qualified Pension Plan") has received a favorable
determination letter from the IRS stating that such Plan meets the requirements
of Section 401(a) of the Code and that the trust associated with such Plan, if
any, is tax-exempt under Section 501(a) of the Code and no event has occurred
which would reasonably be expected to jeopardize the qualified status of any
such plan or the tax exempt status of any such trust under Sections 401(a) and
Section 501(a) of the Code, respectively. Each Qualified Pension Plan has been
or will be timely amended for the requirements of the tax legislation commonly
known as "GUST" and will be submitted to the Internal Revenue Service for a
favorable determination letter within the remedial amendment period prescribed
by "GUST." None of the Employee Plans is a multiple employer plan subject to
Section 413(c) of the Code or a multiple employer welfare arrangement as defined
in Section 3(40) of ERISA. None of the Employee Plans is currently subject to an
audit, investigation or review by a Governmental Entity pursuant to a voluntary
compliance program or otherwise. No lawsuits, claims (other than routine claims
for benefits) or complaints to, or by, any Person or Governmental Entity have
been filed, are pending or, to the Knowledge of JP, are threatened with respect
to any Employee Plan and, to the Knowledge of JP, there is no fact or
contemplated event which would reasonably be expected to give rise to any such
lawsuit, claim (other than routine claims for benefits) or complaint with
respect to any Employee Plan. Without limiting the foregoing, the following are
true with respect to each Employee Plan:
(i) all Controlled Group Members have complied in all material
respects with the reporting and disclosure requirements of ERISA, the Code,
or both, with respect to each Employee Plan and no Controlled Group Member
has incurred any material liability in connection with such reporting or
disclosure;
(ii) all contributions and payments with respect to Employee Plans
that are required to be made by a Controlled Group Member with respect to
periods ending on or before the Closing Date (including periods from the
first day of the current plan or policy year to the Closing Date) have
been, or will be, made or accrued before the Closing Date in accordance
with the appropriate plan document, actuarial report, collective bargaining
agreements or insurance contracts or arrangements or as otherwise required
by ERISA or the Code; and
(iii) to the extent applicable, JP has delivered to GGP and GGP
Partnership true, complete and correct copies of (A) plan documents, or any
and all other documents that establish the existence of the plan, trust,
arrangement, contract, policy or commitment and all amendments thereto, (B)
the most recent determination letter, if any, received from the Internal
Revenue Service, (C) the three most recent Form 5500 Annual Reports (and
all schedules and reports relating thereto) and actuarial reports and (D)
all related trust agreements, insurance contracts or other funding
agreements that implement each such Employee Plan.
(c) With respect to each Employee Plan there has not occurred, and no
Person is contractually bound to enter into, any prohibited transaction within
the meaning of Section 4975(c) of the Code or Section 406 of ERISA, which
transaction is not exempt under Section 4975(d) of the Code or Section 408 of
ERISA and which could subject JP or any Controlled Group Member to material
liability.
19
(d) No Controlled Group Member has ever maintained, participated in or been
obligated to contribute to any Pension Plan subject to Code Section 412 or Title
IV of ERISA, including without limitation, to a multiemployer plan as defined in
Section 3(37) of ERISA. No Controlled Group Member or any trade or business
which is or has been for the last six years under common control with a
Controlled Group Member under Section 414 of the Code or Section 4001(b) of
ERISA ("ERISA Affiliate") has (while under common control) incurred any
liability under Title IV of ERISA or Section 412 of the Code and no event or
condition exists with respect to a Pension Plan, including, without limitation,
a multiemployer plan as defined in Section 3(37) of ERISA which could give rise
to a lien on any of the assets of a Controlled Group Member or an ERISA
Affiliate.
(e) With respect to each Welfare Plan maintained by any Controlled Group
Member, such Plan provides the Plan Sponsor the authority to amend or terminate
such Welfare Plan at any time, without liability after such amendment or
termination for continuation of benefits provided prior to such amendment or
termination.
(f) Except as provided in Section 5.7(c), Section 5.7(e) or as disclosed in
Schedule 2.12 of the JP Disclosure Letter, no employee of a Controlled Group
Member will become entitled to any retirement, severance or similar benefit or
enhanced or accelerated benefit solely as a result of the transactions
contemplated hereby. Except as disclosed in Schedule 2.12 of the JP Disclosure
Letter, without limiting the generality of the foregoing, no amount required to
be paid or payable to or with respect to any employee of a Controlled Group
Member in connection with the transactions contemplated hereby (either solely as
a result thereof or as a result of such transactions in conjunction with any
other event) will be an "excess parachute payment" within the meaning of Section
280G of the Code.
2.13 Employees; Employee Policies. A true, complete and correct list of (a)
the names, job titles, annual salaries and all bonuses of all salaried employees
of JP and the JP Subsidiaries, and (b) the wage rates for all non-salaried
employees of JP and the JP Subsidiaries as of the date hereof, and true,
complete and correct copies of all employee handbooks of JP and the JP
Subsidiaries currently in effect, have been provided to GGP and GGP Partnership
separately. None of JP or any of the JP Subsidiaries is subject to a union
organizing effort or a party to a union contract or collective bargaining
agreement. None of JP or any of the JP Subsidiaries is a party to any pending,
or to the Knowledge of JP, threatened labor dispute. JP and the JP Subsidiaries
are in material compliance with employment and labor laws. There are no claims
pending, or to the Knowledge of JP, threatened to be brought, in any court or
administrative agency or before any arbitrator by any former or current
employees of JP or the JP Subsidiaries (i) for compensation, severance benefits,
vacation pay or pension benefits or (ii) arising out of the status of JP or any
of the JP Subsidiaries as an employer, whether in the form of claims for
employment discrimination, harassment, unfair labor practices, grievances,
wrongful discharge or otherwise.
2.14 Taxes.
(a) Each of JP and the JP Subsidiaries (i) has filed all Tax returns and
reports required to be filed by it (after giving effect to any filing extension
properly granted by a Governmental Entity having authority to do so) and all
such returns and reports are accurate and complete in all material respects,
(ii) has paid (or JP has paid on its behalf) all Taxes (as defined herein) shown
on such returns and reports as required to be paid by it, and (iii) has complied
in all material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes (including, without limitation,
withholding of Taxes pursuant to Sections 1441, 1442, 1445, 3121, and 3402 of
the Code or similar provisions under any foreign laws) and has, within the time
period prescribed by law, withheld and paid over to the proper Governmental
Entities all amounts required to be so withheld and paid over under applicable
laws and regulations, except, with respect to all of the foregoing clauses
(a)(i), (a)(ii) and
20
(a)(iii), where the failure to file such Tax returns and reports or failure to
pay such Taxes or failure to comply with such withholding requirements would
not, individually or in the aggregate, reasonably be expected to have a JP
Material Adverse Effect. The most recent audited financial statements contained
in the JP SEC Documents reflect an adequate reserve for all material Taxes
payable by JP and the JP Subsidiaries for all taxable periods and portions
thereof through the JP Financial Statement Date. Since the JP Financial
Statement Date, JP has incurred no liability for material Taxes under Sections
857(b), 860(c) or 4981 of the Code, including without limitation, any Tax
arising from a prohibited transaction described in Section 857(b)(6) of the
Code, and none of JP or any JP Subsidiary has incurred any material liability
for Taxes other than in the ordinary course of its trade or business and other
than transfer or similar Taxes arising in connection with the sales of property.
No event has occurred, and no condition or circumstance exists, which could
reasonably be expected to result in any Tax described in the preceding sentence
being imposed upon JP or any JP Subsidiary. None of JP or any JP Subsidiary is
the subject of any audit, examination, or other proceeding in respect of federal
income Taxes, and to JP's Knowledge, no audit, examination or other proceeding
in respect of federal income Taxes involving any of JP or any JP Subsidiary is
being considered by any Tax authority. To the Knowledge of JP, no deficiencies
for any Taxes have been proposed, asserted or assessed against JP or any JP
Subsidiary, and no requests for waivers of the time to assess any such Taxes are
pending. Except as set forth in Schedule 2.14 of the JP Disclosure Letter, none
of JP or any JP Subsidiary has made any payments, is obligated to make any
payments, or is a party to any agreement that could obligate it to make any
payments that are not fully deductible under Sections 162(m) or 280G of the
Code. None of the assets of JP or any JP Subsidiary is subject to any Lien
arising in connection with any failure or alleged failure to pay any Tax. As
used in this Agreement, "Taxes" shall include all taxes, charges, fees, levies
and other assessments, including, without limitation, income, gross receipts,
excise, property, sales, withholding (including, without limitation, dividend
withholding and withholding required pursuant to Sections 1445 and 1446 of the
Code), social security, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, including estimated taxes,
imposed by the United States or any taxing authority (domestic or foreign),
whether computed on a separate, consolidated, unitary, combined or any other
basis, and any interest, fines, penalties or additional amounts attributable to,
or imposed upon, or with respect to any such taxes, charges, fees, levies or
other assessments.
(b) JP (i) for all taxable years for which the Internal Revenue Service
could assert a tax liability, has been subject to taxation as a real estate
investment trust (a "REIT") within the meaning of Section 856 of the Code and
has satisfied all requirements to qualify as a REIT for all such years, (ii) has
operated since December 31, 2001 to the date of this representation, and will
continue to operate, in such a manner as to qualify as a REIT for the taxable
year ending on the earlier of December 31, 2002 or the Closing Date and, if
later, for the taxable year of JP ending on the Closing Date (provided that, for
purposes of applying Section 857 of the Code for the taxable year of JP ending
on the Closing Date, the earnings and profits of JP for such taxable year shall
be computed assuming that (A) Section 562(e) of the Code applies to the deemed
sale of JP's assets pursuant to the Merger and (B) that the Merger will be
treated for federal income tax purposes in the manner described in paragraph G
of the Recitals hereof), and (iii) has not taken or omitted to take any action
which would reasonably be expected to result in a challenge to its status as a
REIT and, to JP's Knowledge, no such challenge has been proposed, is pending or
threatened. Each JP Subsidiary which is a partnership, joint venture or limited
liability company has been since its formation and continues to be treated for
federal income tax purposes as a partnership or disregarded entity and not as a
corporation or an association taxable as a corporation. PDC LP is not a
publicly-traded partnership within the meaning of Section 7704(b) of the Code
that is taxable as a corporation pursuant to Section 7704(a) of the Code. Each
JP Subsidiary which is a corporation has been since its formation a qualified
REIT subsidiary under Section 856(i) of the Code. Neither JP nor any JP
Subsidiary holds any asset (x) the disposition of which would be subject to
rules similar to Section 1374 of the Code as a result of an election under IRS
Notice 88-19 or Temporary Treas. Reg. Sec. 1.337(d)-5T or (y) which is subject
to a consent filed pursuant to Section 341(f) of the Code and the regulations
21
thereunder. JP does not own, directly or indirectly, any interest in any
"taxable REIT subsidiary," as that term is defined by Section 856(l) of the
Code.
2.15 No Payments to Employees, Officers or Directors. Schedule 2.15 to the
JP Disclosure Letter contains a true, complete and correct list of all
arrangements, agreements or plans pursuant to which cash and non-cash payments
will become payable, and the maximum aggregate amount which may be payable
thereunder to each employee, officer or director of JP or any JP Subsidiary as a
result of the Mergers or a termination of service subsequent to the consummation
of the Mergers. Except as described in Schedule 2.15 to the JP Disclosure
Letter, or as otherwise provided for in this Agreement, there is no employment
or severance contract, or other agreement requiring payments, cancellation of
indebtedness or other obligation to be made on a change of control or otherwise
as a result of the consummation of any of the transactions contemplated by this
Agreement or as a result of a termination of service subsequent to the
consummation of any of the transactions contemplated by this Agreement, with
respect to any employee, officer or director of JP or any JP Subsidiary. There
is no agreement or arrangement with any employee, officer or other service
provider under which JP or any JP Subsidiary has agreed to pay any Tax that
might be owed under Section 4999 of the Code with respect to payments to such
individuals. Schedule 2.15 to the JP Disclosure Letter contains a true, complete
and correct list of each indemnification or similar agreement under which JP or
any JP Subsidiary has agreed to indemnify any current or former director,
officer, manager, trustee or employee of any such entity.
2.16 Broker. Except as set forth in Schedule 2.16 to the JP Disclosure
Letter, no broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of JP or any JP Subsidiary.
2.17 Compliance with Laws. Except as set forth on Schedule 2.17 to the JP
Disclosure Letter, none of JP or any JP Subsidiary has violated or failed to
comply with any Laws applicable to its business, properties or operations,
except to the extent that such violations and failures would not, individually
or in the aggregate, reasonably be expected to have a JP Material Adverse
Effect.
2.18 Contracts; Debt Instruments.
(a) None of JP or any JP Subsidiary has received a written notice that it
is in violation of or in default under any Material Contract, as defined herein,
to which it is a party or by which it or any of its properties or assets is
bound, nor to the Knowledge of JP does such a violation or default exist, except
to the extent that such violation or default, individually or in the aggregate,
would not reasonably be expected to have a JP Material Adverse Effect. For
purposes of this Agreement, "Material Contract" shall mean (i) any loan
agreement, indenture, note, bond, debenture or any other document or agreement
evidencing a capitalized lease obligation or other Indebtedness (as defined
herein) to any Person, (ii) each material instrument, contract or agreement
(exclusive of any JP Space Lease) entered into by JP or any JP Subsidiary which
may result in total payments by or liability of JP or any JP Subsidiary in
excess of $500,000, and (iii) any other agreements filed or required to be filed
as exhibits to the JP SEC Documents pursuant to Item 601(b)(10) of Regulation
S-K under the Securities Act and the Exchange Act. For purposes of this Section
2.18, "Indebtedness" shall mean (A) indebtedness for borrowed money, whether
secured or unsecured, (B) obligations under conditional sale or other title
retention agreements relating to property purchased by such Person, (C)
capitalized lease obligations, (D) obligations under interest rate cap, swap,
collar or similar transaction or currency hedging transactions (valued at the
termination value thereof) and (E) guarantees of any such indebtedness of any
other Person. Schedule 2.18(a) to the JP Disclosure Schedule sets forth a list
of each such Material Contract, which is not listed in any other subpart to the
JP Disclosure Schedule, and the outstanding principal balance of each component
of Indebtedness of JP, PDC LP and each other JP Subsidiary as of the date
specified in
22
the schedule. JP and PDC LP, have not received any notice and otherwise do not
have Knowledge that any other party to any Material Contract is in default
(whether monetary or non-monetary) thereunder, other than such defaults that
individually or in the aggregate would not result in a JP Material Adverse
Effect.
(b) To the extent not set forth in response to the requirements of Section
2.18(a), Schedule 2.18(b) to the JP Disclosure Letter sets forth each interest
rate cap, interest rate collar, interest rate swap, currency hedging
transaction, and any other agreement relating to a similar transaction to which
JP or any JP Subsidiary is a party or an obligor with respect thereto, true,
complete and correct copies of which have been previously delivered or made
available to GGP and GGP Partnership. There are no loans by JP or a JP
Subsidiary to any non wholly-owned JP Subsidiary except as set forth on Schedule
2.18(b) to the JP Disclosure Letter (which Schedule indicates the outstanding
amount of Indebtedness as of the date hereof).
(c) Except as set forth in Schedule 2.18(c) to the JP Disclosure Letter,
none of JP or any JP Subsidiary is a party to any agreement relating to the
management of any JP Property by any Person other than JP or a JP Subsidiary.
(d) None of JP or any JP Subsidiary is a party to any agreement pursuant to
which JP or any JP Subsidiary manages or provides services with respect to any
real properties other than JP Properties, except for the agreements described in
Schedule 2.18(d) to the JP Disclosure Letter, true, complete and correct copies
of which have been delivered to GGP.
(e) JP has delivered to GGP and GGP Partnership prior to the date of this
Agreement a true, complete and correct capital budget for the year 2002 relating
to budgeted capital improvements and development. Schedule 2.18(e) to the JP
Disclosure Letter lists all material agreements entered into by JP or each of
the JP Subsidiaries relating to the development or construction of, or additions
or expansions to, any JP Properties (or any properties with respect to which JP
has executed as of the date of this Agreement a purchase agreement or other
similar agreement) which are currently in effect and under which JP or any of
the JP Subsidiaries currently has, or expects to incur, an obligation in excess
of $250,000 in the aggregate. True, complete and correct copies of such
agreements have previously been delivered or made available to GGP and GGP
Partnership.
(f) Schedule 2.18(f) to the JP Disclosure Letter lists all agreements
entered into by JP or any JP Subsidiary providing for the sale of, or option to
sell, any JP Properties or the purchase of, or option to purchase, by JP or any
JP Subsidiary, on the one hand, or the other party thereto, on the other hand,
any real estate which are currently in effect.
(g) Except as set forth in Schedule 2.18(g) to the JP Disclosure Letter,
none of JP or any JP Subsidiary has any material continuing contractual
liability (A) for indemnification or otherwise under any agreement relating to
the sale of real estate previously owned, whether directly or indirectly, by JP
or any JP Subsidiary or (B) to pay any additional purchase price for any of the
JP Properties.
(h) Except as set forth in Schedule 2.18(h) to the JP Disclosure Letter,
none of JP or any JP Subsidiary has entered into or is subject, directly or
indirectly, to any Tax Protection Agreements. As used herein, a "Tax Protection
Agreement" is an agreement, oral or written, (i) that has as one of its purposes
to permit a Person to take the position that such Person could defer federal
taxable income that otherwise might have been recognized upon a transfer of
property to PDC LP or any other JP Subsidiary that is treated as a partnership
for federal income tax purposes, and that (A) prohibits or restricts in any
manner the disposition of any assets of JP or any JP Subsidiary, (B) requires
that JP or any JP Subsidiary maintain, or put in place, or replace,
indebtedness, whether or not secured by one or more of the JP
23
Properties, or (C) requires that JP or any JP Subsidiary offer to any Person at
any time the opportunity to guarantee or otherwise assume, directly or
indirectly (including, without limitation, through a deficit restoration
obligation, indemnification agreement or other similar arrangement), the risk of
loss for federal income tax purposes for indebtedness or other liabilities of JP
or any JP Subsidiary, (ii) that specifies or relates to a method of taking into
account book-tax disparities under Section 704(c) of the Code with respect to
one or more assets of JP or a JP Subsidiary, or (iii) that requires a particular
method for allocating one or more liabilities of JP or a JP Subsidiary under
Section 752 of the Code. None of JP or any JP Subsidiary is in violation of or
in default under any Tax Protection Agreement.
(i) Except as set forth in Schedule 2.18(i) to the JP Disclosure Letter and
except for the Nondisclosure Agreement, dated January 31, 2002, between JP and
GGP (the "Confidentiality Agreement"), and other confidentiality agreements
entered into in the ordinary course of business, neither JP nor any JP
Subsidiary is a party to any confidentiality, standstill, lock-up or voting
agreement.
(j) Other than any breach which, individually or in the aggregate, would
not have a JP Material Adverse Effect, none of JP, PDC LP or any other JP
Subsidiary is in breach of any provision of any agreement, document or contract
relating to the capital stock or other equity interests of a non-wholly-owned JP
Subsidiary, all of which agreements, documents and contracts are (a) listed in
Schedule 2.18(j) to the JP Disclosure Letter, (b) unmodified except as described
therein and (c) in full force and effect. To the Knowledge of JP, the other
parties to any such agreement, document or contract which is of a material
nature are not in material breach of any of their respective obligations under
such agreements, documents or contracts.
2.19 Opinion of Financial Advisor. JP has received the written opinion of
UBS Warburg LLC, JP's financial advisor, to the effect that the proposed
consideration to be received by the holders of JP Common Stock is fair to such
holders from a financial point of view.
2.20 State Takeover Statutes; JP Rights Plan; Ownership Limits. JP has
taken all action necessary to exempt the transactions contemplated by this
Agreement (including the actions and transactions contemplated by the Voting
Agreement) from the operation of any "fair price," "moratorium," "control share
acquisition" or any other anti-takeover statute or similar statute enacted under
the laws of the State of Maryland, the State of Delaware or federal laws of the
United States or similar statute or regulation (a "Takeover Statute") and the
limitations imposed by Article IX of the JP Articles. The Board of Directors of
JP has resolved to, and prior to the Closing, JP shall, take all action
necessary to render the rights (the "JP Rights") issued and/or outstanding under
or pursuant to the terms of the Amended and Restated Rights Agreement, dated as
of January 13, 2001, as amended, between JP and Mellon Investor Services LLC, as
rights agent (the "JP Rights Agreement"), inapplicable to the Mergers, this
Agreement and the other transactions contemplated hereby (including the actions
and transactions contemplated by the Voting Agreement).
2.21 Investment Company Act of 1940. None of JP or any JP Subsidiary is, or
at the Effective Time will be, required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
2.22 Definition of Knowledge of JP. As used in this Agreement, the phrase
"Knowledge of JP" (or words of similar import) means the actual (and not
constructive or imputed) knowledge of those individuals identified in Schedule
2.22 to the JP Disclosure Letter.
2.23 Required Stockholder Approvals and Partner Approvals. The affirmative
vote of the holders of at least a majority of the outstanding shares of JP
Common Stock and Price Group Stock, voting together as a single class with
respect to the Merger, is the only vote or consent of the holders of
24
any class or series of JP capital stock necessary or required under this
Agreement, the JP Articles, JP Bylaws or applicable law to approve the Mergers,
this Agreement and the transactions contemplated hereby. The affirmative vote or
consent of JP, in its capacity as the general partner of PDC LP, and the holders
of PDC OP Units as described on Schedule 2.5 to the JP Disclosure Letter are the
only votes or consents of the holders of any class or series of PDC LP's
partnership interests necessary or required under this Agreement, the PDC LP
Agreement, any other agreement or applicable law to approve the Mergers, this
Agreement, the PDC LP Amendment and the transactions contemplated hereby. By
virtue of executing this Agreement, JP, in its capacity as general partner,
shall be deemed to have approved the matters described in the second sentence of
this Section 2.23.
2.24 Intellectual Property. JP and each JP Subsidiary, as applicable own,
or are licensees of or otherwise possess legally enforceable rights to use, all
material patents, trademarks, trade names, domain names, service marks and
copyrights, any applications for and registrations of such patents, trademarks,
trade names, domain names, service marks and copyrights, and all processes,
formulae, methods, schematics, technology, know-how, computer software programs
or applications and tangible or intangible proprietary information or material
that are used or necessary to conduct their business as currently conducted,
except where the failure to own, be so licensed or otherwise possess,
individually or in the aggregate, would not have a JP Material Adverse Effect.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF GGP,
GGP PARTNERSHIP AND ACQUISITION
Except as set forth in the GGP SEC Documents (as defined herein) or in the
letter of even date herewith signed by a duly authorized representative of GGP
and delivered to JP prior to the execution hereof (the "GGP Disclosure Letter"),
GGP, GGP Partnership and Acquisition jointly and severally represent and warrant
to JP as follows:
3.1 Organization, Standing and Power of GGP, GGP Partnership, Acquisition
and Partnership Acquisition.
(a) GGP is a Delaware corporation duly organized, validly existing and in
good standing under the laws of Delaware and has the requisite power and
authority to own, operate, lease and encumber its properties and carry on its
business as now being conducted. GGP is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed, individually or
in the aggregate, would not reasonably be expected to have an GGP Material
Adverse Effect, as defined herein. GGP has made available to JP complete and
correct copies of the charter and by-laws of GGP, in each case, as amended or
supplemented to the date of this Agreement (respectively, the "GGP Charter" and
"GGP Bylaws").
(b) GGP Partnership is a limited partnership duly organized, validly
existing and in good standing under the laws of Delaware and has the requisite
power and authority to own, operate, lease and encumber its properties and carry
on its business as now being conducted. GGP Partnership is duly qualified or
licensed to do business as a foreign limited partnership and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not reasonably be expected to have a GGP
Material Adverse Effect, as defined herein. As used in this Agreement, a "GGP
Material Adverse Effect" means
25
any circumstance, event, occurrence, change or effect that is materially adverse
to the business, properties, assets (tangible or intangible), financial
condition or results of operations of GGP, GGP Partnership and any Subsidiary of
GGP or GGP Partnership (collectively, "GGP Subsidiaries"), taken as a whole,
except, in each case, as a result of (i) changes in general economic conditions
nationally or regionally, (ii) changes affecting the real estate industry
generally which do not affect GGP or GGP Partnership, as the case may be,
materially disproportionately relative to other participants in the real estate
industry similarly situated, or (iii) in and of itself and without the
occurrence of any other GGP Material Adverse Effect, changes in the trading
prices of GGP Common Stock or GGP Preferred Stock (as defined herein). All
partnership interests in GGP Partnership have been duly authorized and are
validly issued and outstanding. GGP Partnership has made available to JP
complete and correct copies of its Second Amended and Restated Agreement of
Limited Partnership of GGP Partnership, as amended to the date of this Agreement
(the "GGP Partnership Agreement"), which is the partnership agreement of GGP
Partnership in effect as of the date hereof.
(c) Acquisition is a Delaware limited liability company duly organized,
validly existing and in good standing under the laws of Delaware and has the
requisite power and authority to own, operate, lease and encumber its properties
and carry on its business as now being conducted. Acquisition is duly qualified
or licensed to do business as a foreign limited liability company and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, would not reasonably be expected
to have a GGP Material Adverse Effect. GGP and GGP Partnership have made
available to JP complete and correct copies of the organizational documents of
Acquisition.
(d) Partnership Acquisition is a Maryland limited liability company duly
organized, validly existing and in good standing under the laws of Maryland and
has the requisite power and authority to own, operate, lease and encumber its
properties and carry on its business as now being conducted. Partnership
Acquisition is duly qualified or licensed to do business as a foreign limited
liability company and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed, individually or in the aggregate, would
not reasonably be expected to have an GGP Material Adverse Effect. GGP and GGP
Partnership have made available to JP complete and correct copies of the
organizational documents of Partnership Acquisition.
3.2 Capital Stock.
(a) As of February 22, 2002, the authorized shares of capital stock of GGP
consist of: (i) 5,000,000 shares of preferred stock, $100 par value per share,
of which (A) 345,000 shares have been designated 7.25% Preferred Income Equity
Redeemable Stock (the "GGP Series A Preferred Stock"), 337,500 of which are
outstanding, (B) 175,000 shares have been designated 8.95% Cumulative Redeemable
Preferred Stock, Series B (the "GGP Series B Preferred Stock"), none of which
are outstanding, and (C) 100,000 shares have been designated Series A Junior
Participating Preferred Stock (the "GGP Series A Junior Preferred Stock"), none
of which are outstanding, and (ii) 210,000,000 shares of Common Stock, par value
$.10 per share ("GGP Common Stock"), of which 61,989,803 are outstanding. The
GGP Series A Preferred Stock, the GGP Series B Preferred Stock and GGP Series A
Junior Preferred Stock are referred to herein collectively as the "GGP Preferred
Stock").
(b) As of December 31, 2001, 81,327,739.0515 non-preferred units of limited
partnership in GGP Partnership (the "GGP Common OP Units") and 337,500 7.25%
Series A Cumulative Redeemable Preferred Units in GGP Partnership (the "GGP
Series A Preferred OP Units" and, together with the GGP Common OP Units and the
GGP Series B Preferred OP Units described in clause (c), the
26
"GGP OP Units") are issued and outstanding, fully paid and non-assessable and
not subject to preemptive or similar rights under law or the GGP Partnership
Agreement or any contract or instrument to which GGP or GGP Partnership is a
party or by which either is bound, of which 61,755,246.1942 GGP Partnership
Common OP Units and all of the GGP Partnership Series A Preferred Units are
owned by GGP.
(c) As of the date of this Agreement, except as set forth above in Section
3.2(a) and 3.2(b) or in the GGP SEC Documents, no GGP OP Units, GGP Common
Stock, shares of any series of GGP Preferred Stock or other voting securities of
GGP Partnership or GGP were issued, reserved for issuance or outstanding. All
outstanding GGP Partnership OP Units, shares of GGP Common Stock, and shares of
GGP Preferred Stock are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. The GGP Series B Preferred
OP Units to be issued in the Partnership Merger and the securities to be issued
upon conversion or exchange of such units have been or will be, as the case may
be, when issued, duly authorized by all necessary corporate or partnership
action and upon issuance of such GGP Series B Preferred OP Units or such
securities to be issued upon conversion or exchange of such GGP Series B
Preferred OP Units, the relevant security will be duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights, and
the holders will be entitled to the full rights associated with such securities
as holders under the applicable organizational documents.
3.3 Authority; Noncontravention; Consents.
(a) Each of GGP, GGP Partnership, Acquisition and Partnership Acquisition
has the requisite power and authority to enter into this Agreement and the
Related Agreements (as herein defined) and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Related Agreements by GGP, GGP Partnership, Acquisition and Partnership
Acquisition and the consummation by GGP, GGP Partnership, Acquisition and
Partnership Acquisition of the transactions contemplated by this Agreement and
the Related Agreements to which any of GGP, GGP Partnership, Acquisition or
Partnership Acquisition is a party have been (or, in the case of the
Certificates of Designation relating to the GGP Series C Preferred Stock, GGP
Series D Preferred Stock, GGP Series E Preferred Stock, GGP Series F Preferred
Stock and GGP Series G Preferred Stock and the Amendment to the GGP Partnership
Agreement creating the GGP Series B Preferred Units, will be, prior to the
Closing) duly authorized by all necessary action on the part of GGP, GGP
Partnership, Acquisition and Partnership Acquisition. This Agreement has been,
and at the Effective Time each Related Agreement will be, duly executed and
delivered by each of the foregoing which is a party thereto and constitute or
will constitute valid and binding obligations of GGP, GGP Partnership,
Acquisition and Partnership Acquisition, as applicable, enforceable against GGP,
GGP Partnership, Acquisition and Partnership Acquisition, as applicable, in
accordance with and subject to their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity. GGP Partnership will obtain prior to
the Closing the requisite approval of the holders of GGP OP Units to the
amendment of the GGP Partnership Agreement for the purpose of creating the new
GGP Series B Preferred OP Units to the extent such approval is required. No
other consent of any holder of capital stock of GGP or partner interest in GGP
Partnership is required in connection with the Mergers or any of the
transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement and/or the Related
Agreements by GGP, GGP Partnership, Acquisition and Partnership Acquisition do
not, and the consummation of the transactions contemplated by this Agreement
and/or the Related Agreements to which any of GGP, GGP Partnership, Acquisition
or Partnership Acquisition is a party and compliance by GGP, GGP Partnership,
Acquisition or Partnership Acquisition with the provisions of this Agreement
and/or the Related Agreements will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material
27
obligation or to loss of a material benefit under, or give rise to a right of
purchase under, or result in the creation of any Lien upon any of the properties
or assets of GGP, GGP Partnership or any GGP Subsidiary under, require the
consent or approval of any third party lender or otherwise result in a material
detriment to GGP, GGP Partnership, Acquisition, Partnership Acquisition or any
other GGP Subsidiary under, any provision of (i) the GGP Charter or Bylaws, the
GGP Partnership Agreement or the comparable charter or organizational documents
or partnership, operating or similar agreement (as the case may be) of GGP or
any GGP Subsidiary, each as amended or supplemented to the date of this
Agreement, (ii) any Material Contract applicable to GGP, GGP Partnership,
Acquisition, Partnership Acquisition or any other GGP Subsidiary, the respective
properties or assets of GGP Partnership, or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any Laws
applicable to GGP, GGP Partnership or any GGP Subsidiary or their respective
properties or assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights, losses or Liens that, individually or
in the aggregate, would not (x) reasonably be expected to have a GGP Material
Adverse Effect or (y) prevent or delay the consummation of the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity is required
by or with respect to GGP, GGP Partnership or any GGP Subsidiary in connection
with the execution and delivery of this Agreement or the consummation by GGP or
GGP Partnership of any of the transactions contemplated by this Agreement,
except for (i) the filing and acceptance for record of the Maryland Articles of
Merger by the Department, (ii) the filing and acceptance for record of the
Delaware Certificate of Merger with the Secretary of State, (iii) the filing and
acceptance for record of the Maryland Articles of Partnership Merger by the
Department, (iv) such filings as may be required in connection with the payment
of any Transfer and Gains Taxes, (v) such filings as may be required pursuant to
the Exchange Act with respect to the Voting Agreement, (vi) the filing of the
Form D relating to the private placement of the GGP Series B Preferred OP Units
with the SEC, (vii) the filing and acceptance for record of the Certificates of
Designation contemplated by Exhibits I, J, K and L with the Secretary of State,
and (viii) such other consents, approvals, orders, authorizations,
registrations, declarations and filings (A) as are set forth in Schedule 3.3(b)
to the GGP Disclosure Letter or (B) as may be required under (x) federal, state
or local environmental laws or (y) the blue sky laws of various states, to the
extent applicable, or (C) which, if not obtained or made, individually or in the
aggregate, would not prevent or delay in any material respect the consummation
of any of the transactions contemplated by this Agreement or otherwise prevent
GGP and GGP Partnership from performing their obligations under this Agreement
in any material respect or reasonably be expected to have, individually or in
the aggregate, a GGP Material Adverse Effect.
3.4 Litigation. There is no suit, action or proceeding pending (in which
service of process has been received by an employee of GGP or an GGP
Subsidiary), or, to the Knowledge of GGP, GGP Partnership, Acquisition or
Partnership Acquisition, threatened against or affecting GGP, GGP Partnership,
Acquisition, Partnership Acquisition or any other GGP Subsidiary that would be
reasonably likely to prevent the consummation of the transactions contemplated
by this Agreement.
3.5 Interim Operations of Acquisition and Partnership Acquisition. Each of
Acquisition and Partnership Acquisition was formed solely for the purpose of
engaging in the transactions contemplated hereby and, as of the Closing Date and
as of the Effective Time, except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions,
agreements and arrangements contemplated by this Agreement, has engaged in no
business or activities, has incurred no other obligations or liabilities, and
has no assets other than in connection with the transactions, agreements and
arrangements contemplated by this Agreement.
3.6 Capital Resources. GGP and GGP Partnership will have prior to the
Closing amounts available under credit facilities, which, together with
available cash and marketable securities, will be
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sufficient to fully fund the cash consideration requirement for the Merger, the
Partnership Merger, and the other transactions contemplated by this Agreement
(the "Required Funding").
3.7 GGP SEC Documents; Information Supplied.
(a) GGP has filed all required reports, schedules, forms, statements and
other documents with the SEC since January 1, 1997 through the date hereof
(collectively, the "GGP SEC Documents"). All of the GGP SEC Documents (other
than preliminary material), as of their respective filing dates, complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act and, in each case, the rules and regulations promulgated thereunder
applicable to such GGP SEC Documents. None of the GGP SEC Documents at the time
of filing contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent such statements have been modified or
superseded by later GGP SEC Documents filed and publicly available prior to the
date of this Agreement. The consolidated financial statements of GGP included in
the GGP SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by the applicable
rules and regulations of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
presented in all material respects, in accordance with the applicable
requirements of GAAP and the applicable rules and regulations of the SEC, the
consolidated financial position of GGP and the consolidated GGP Subsidiaries
taken as a whole as of the dates thereof, and the consolidated results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except for
liabilities and obligations set forth in the GGP SEC Documents or in Schedule
3.7(a) to the GGP Disclosure Letter or incurred by GGP, GGP Partnership or any
GGP Subsidiary in the ordinary course of business since December 31, 2001, none
of GGP, GGP Partnership, or any GGP Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of GGP or in
the notes thereto and which, individually or in the aggregate, would have a GGP
Material Adverse Effect.
(b) None of the information supplied or to be supplied by GGP, GGP
Partnership, Acquisition or Partnership Acquisition specifically for inclusion
in the Proxy Statement or the Partner Solicitation Materials (as herein defined)
will, at the date the Proxy Statement is filed with the SEC or mailed to JP's
stockholders or at the time of the JP Stockholders Meeting, or at the time of
any amendment or supplement thereof, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
3.8 Taxes. GGP (i) for all taxable years for which the Internal Revenue
Service could assert a tax liability, has been subject to taxation as a REIT
within the meaning of Section 856 of the Code and has satisfied all requirements
to qualify as a REIT for all such years, (ii) has operated since December 31,
2001 to the date of this representation, and intends to continue to operate, in
such a manner as to qualify as a REIT for the taxable year ending on December
31, 2002 and thereafter, and (iii) has not taken or omitted to take any action
which would reasonably be expected to result in a challenge to its status as a
REIT and, to the Knowledge of GGP (as defined below), no such challenge has been
proposed, is pending or threatened. Each Subsidiary of GGP which is a
partnership, joint venture or limited liability company has been since its
formation and continues to be treated for federal income tax purposes as a
partnership or a disregarded entity and not as a corporation or an association
taxable as a corporation. GGP Partnership is not a publicly-traded partnership
within the meaning of Section 7704(b) of the Code that is taxable as a
corporation pursuant to Section 7704(a) of the Code. Each Subsidiary of GGP
which is a
29
corporation has been since its formation (i) a corporation subject to taxation
as a REIT within the meaning of Section 856 of the Code and has for all such
years satisfied all requirements for qualification and taxation as a REIT within
the meaning of Section 856 of the Code and intends to continue to operate in
such a manner as to qualify as a REIT, (ii) a qualified REIT subsidiary under
Section 856(i) of the Code or (iii) a "taxable REIT subsidiary," as that term is
defined by Section 856(i) of the Code. Neither GGP nor any of its Subsidiaries
holds any asset (x) the disposition of which would be subject to rules similar
to Section 1374 of the Code as a result of an election under IRS Notice 88-19 or
Temporary Treas. Reg. Sec. 1.337(d)-5T or (y) which is subject to a consent
filed pursuant to Section 341(f) of the Code and the regulations thereunder.
Except as set forth in Schedule 3.8 to the GGP Disclosure Letter, GGP does not
own, directly or indirectly, any interest in any "taxable REIT subsidiary," as
that term is defined by Section 856(l) of the Code.
3.9 Definition of Knowledge of GGP. As used in this Agreement, the phrase
"Knowledge of GGP" (or words of similar import) means the actual (and not
constructive or imputed) knowledge of those individuals identified in Schedule
3.9 to the GGP Disclosure Letter.
3.10 Broker. Except as set forth in Schedule 3.10 to the GGP Disclosure
Letter, no broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of GGP, GGP Partnership or any GGP Subsidiary.
ARTICLE 4
COVENANTS
4.1 Conduct of JP's and PDC LP's Business Pending Mergers. During the
period from the date of this Agreement to the Effective Times, except as
consented to in writing by GGP and GGP Partnership or as expressly provided for
in this Agreement, each of JP and PDC LP shall, and shall cause (or, in the case
of JP Subsidiaries that JP or PDC LP do not control, shall use commercially
reasonable efforts to cause) each of the JP Subsidiaries to:
(a) conduct its business only in the usual, regular and ordinary course and
in substantially the same manner as heretofore conducted;
(b) use commercially reasonable efforts to preserve intact its business
organizations and goodwill and keep available the services of its officers and
employees;
(c) report on a regular basis to one or more representatives of GGP with
respect to operational matters of materiality;
(d) promptly notify GGP and GGP Partnership of any change in the condition
(financial or otherwise), business, properties, assets, liabilities or the
normal course of its businesses or in the operation of its properties, or of any
material governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) that, individually or in the
aggregate, has had or would reasonably be expected to have a JP Material Adverse
Effect;
(e) promptly deliver to GGP and GGP Partnership true and correct copies of
any report, statement or schedule filed with the SEC subsequent to the date of
this Agreement;
(f) preserve JP's qualification as a REIT within the meaning of Section 856
of the Code;
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(g) maintain its books and records in accordance with GAAP consistently
applied and not change in any material manner any of its methods, principles or
practices of accounting in effect at the JP Financial Statement Date, except as
may be required by the SEC, applicable law or GAAP;
(h) duly and timely file all reports, tax returns and other documents
required to be filed with federal, state, local and other authorities, subject
to extensions permitted by law, provided JP notifies GGP and GGP Partnership
that it is availing itself of any such extensions and provided such extensions
do not adversely affect JP's status as a qualified REIT under the Code;
(i) not make or rescind any election relating to Taxes (unless required by
law or necessary to preserve JP's status as a REIT or the status of any JP
Subsidiary as a partnership or disregarded entity for federal income tax
purposes or as a qualified REIT subsidiary under Section 856(i) of the Code, as
the case may be) provided, that nothing in this Agreement shall preclude JP from
designating dividends paid by it as "capital gain dividends" within the meaning
of Section 857 of the Code, subject to the reasonable consent of GGP;
(j) not (i) acquire, enter into any option to acquire, or exercise an
option or other right or election or enter into any other commitment or
contractual obligation (each, a "Commitment") for the acquisition of any real
property other than the acquisition of the real properties described on Schedule
4.1(j) of the JP Disclosure Letter in accordance with the terms thereof, (ii)
enter into any Commitment to develop or construct other real estate projects,
except in accordance with the 2002 JP Operating Budget, a copy of which
previously was delivered to GGP (the "JP Budget"), (iii) incur or enter into any
Commitment to incur additional Indebtedness (secured or unsecured) except under
its existing revolving line(s) of credit and Commitments for Indebtedness
described in Schedule 4.1(j) to the JP Disclosure Letter or in furtherance of
the completion of the transactions contemplated by this Agreement or (iv)
modify, amend or terminate, or enter into any Commitment to modify, amend or
terminate, any Indebtedness (secured or unsecured) in existence as of the date
hereof;
(k) not amend the JP Articles or the JP Bylaws, or the articles or
certificate of incorporation, bylaws, code of regulations, partnership agreement
(including, without limitation, the PDC LP Agreement), operating agreement or
joint venture agreement or other charter or organizational document of any JP
Subsidiary;
(l) make no change in the number of issued and outstanding shares of
capital stock, units of limited partnership interest, or other equity interests
in JP, PDC LP or any other JP Subsidiary (including by way of redemption or
repurchase), other than pursuant to (i) the exercise of options disclosed in
Schedule 2.3 to the JP Disclosure Letter, (ii) the exchange of PDC OP Units by
the holders thereof or the issuance of other securities in exchange for
convertible or exchangeable stock described in Schedule 2.3 to the JP Disclosure
Letter, (iii) the exercise of any other convertible securities described in
Schedule 2.3 to the JP Disclosure Letter or (iv) the exchange of JP Common Stock
for Excess Stock or Excess Stock for Common Stock, or repurchase of Excess Stock
in accordance with Article Ninth of the JP Articles;
(m) grant no option or other right or commitment relating to its shares of
capital stock, units of limited partnership interest or other equity interests
or any security convertible into its shares of capital stock, units of limited
partnership interest or other equity interests, or any security the value of
which is measured by shares of stock, or any security subordinated to the claim
of its general creditors and, other than pursuant to Section 5.7(c) of this
Agreement, not amend or waive any rights under any of the JP Stock Options or JP
Stock Rights;
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(n) not sell, lease, mortgage, subject to Lien or otherwise dispose of any
of the JP Properties, except that JP may lease the JP Properties in accordance
with the 2002 JP leasing plan, a copy of which previously was delivered to GGP;
(o) not sell, lease, mortgage, subject to Lien or otherwise dispose of any
of its personal property or intangible property, except for any such transaction
which is in the ordinary course of business consistent with past practice and is
not material, individually or in the aggregate;
(p) not make any loans, advances or capital contributions to, or
investments in, any other Person, other than loans, advances and capital
contributions to JP Subsidiaries in existence on the date hereof and expense
advances to employees which, in each case, are made in the ordinary course of
business consistent with past practice and except in connection with a
transaction permitted by Section 4.1(j);
(q) not incur, pay, discharge or satisfy (i) any of the Indebtedness
described on Schedule 2.18(a) other than the payment of regularly scheduled
principal and interest payments or (ii) any other claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities prudently incurred or otherwise reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) furnished to GGP and GGP Partnership or
incurred in the ordinary course of business consistent with past practice or in
furthermore of the transactions contemplated by this Agreement;
(r) not enter into any guarantee relating to the Indebtedness of another
Person, enter into any keep well or other agreement to maintain any financial
statement condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing;
(s) except as disclosed in Schedule 4.1(s) to the JP Disclosure Letter, not
enter into or modify or amend any Commitment with any officer, director or
Affiliate of JP or any of the JP Subsidiaries;
(t) except as disclosed in Schedule 4.1(t) to the JP Disclosure Letter, not
increase any compensation of, or enter into or amend any employment agreement
with, any of its officers, directors or employees earning more than $50,000 per
annum, other than as required by any contract or Plan or in accordance with
waivers by employees of benefits under such agreements;
(u) other than as permitted by Section 5.7(e), not adopt any new employee
benefit plan or amend any existing plans or rights;
(v) not settle any stockholder derivative or class action claims arising
out of or in connection with any of the transactions contemplated by this
Agreement;
(w) not change the ownership of any of the JP Subsidiaries, except changes
which arise as a result of the acquisition of PDC OP Units pursuant to the PDC
LP Agreement;
(x) not accept a promissory note in payment of the exercise price payable
under any option to purchase shares of JP Common Stock;
(y) not enter into any Tax Protection Agreement;
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(z) not settle or compromise any material federal, state, local or foreign
Tax liability; and
(aa) not authorize, recommend, propose or announce an intention to do any
of the foregoing prohibited actions, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing prohibited actions.
4.2 No Solicitation.
(a) Subject to Section 4.3, JP for itself and in its capacity as the sole
general partner of PDC LP (i) shall not, and shall not authorize or permit,
directly or indirectly, any officer, director, employee, Affiliate, agent,
investment banker, financial advisor, attorney, accountant, broker, finder,
consultant or other representative of JP, PDC LP or any other JP Subsidiary
(each, a "JP Representative") to invite, initiate, solicit, encourage or
facilitate (including by way of furnishing nonpublic information or assistance
or by amending or granting any waiver under the JP Rights Agreement), directly
or indirectly, any inquiries or the making of any proposal (including, without
limitation, any proposal or offer to its stockholders, the partners of PDC LP or
other holders of equity securities of JP, PDC LP or any other JP Subsidiary) or
other action that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as herein defined), or enter into, maintain, or continue
discussions or negotiate with any Person in furtherance of such inquiries or in
order to obtain a Competing Transaction or publicly propose to do any of the
foregoing and (ii) will take the reasonable steps necessary to inform JP
Representatives of the obligations undertaken in this Section 4.2 and to cause
them to comply with all such obligations.
(b) JP shall notify GGP and GGP Partnership orally and in writing (as
promptly as practicable but in any event within 48 hours) of its receipt of any
inquiries and proposals (including the identity of the parties, price and all
other material terms thereof) and shall provide GGP a copy of all written
inquiries, proposals or requests which it, PDC LP, any other JP Subsidiary, or
any JP Representative may receive relating to any of such matters and shall
promptly (but in any event within 48 hours) inform GGP and GGP Partnership
orally and in writing with respect to any such inquiry or proposal that becomes
reasonably likely to lead to a Superior Competing Transaction (as defined
herein).
(c) For purposes of this Agreement, a "Competing Transaction" shall mean
any of the following, whether occurring directly or indirectly (other than the
transactions expressly provided for in this Agreement): (i) any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving JP (or any of the JP
Subsidiaries, including PDC LP); (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of 20% or more of the assets or equity
securities of JP, PDC LP or any other JP Subsidiary in a single transaction or
series of related transactions, excluding any bona fide financing transactions
which do not, individually or in the aggregate, have as a purpose or effect the
sale or transfer of control of such assets; (iii) any tender offer or exchange
offer for 20% or more of the outstanding equity securities of JP, PDC LP or any
other JP Subsidiary or any transaction resulting in the issuance of such amount
of securities; or (iv) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the foregoing.
(d) For purposes of this Agreement, a "Superior Competing Transaction"
means a bona fide written proposal that was not invited, initiated, solicited or
encouraged, directly or indirectly, by JP, PDC LP, any other JP Subsidiary or
any JP Representative for a Competing Transaction made by a third party which a
majority of the entire Board of Directors of JP determines after consultation
with its financial advisor, in good faith, taking into account financial
considerations and other relevant factors, including relevant legal, financial,
tax, regulatory and other aspects of such proposal, and the conditions,
33
prospects and time required for completion of such proposal, to be more
favorable than the Mergers to the JP stockholders and the holders of PDC Common
OP Units.
4.3 Board Actions. Notwithstanding Section 4.2 or any other provision of
this Agreement to the contrary, to the extent required by the fiduciary
obligations of the Board of Directors of JP as determined by a majority of such
board in good faith after consultation with outside counsel, JP may:
(a) disclose to its stockholders or holders of PDC OP Units any information
required to be disclosed under applicable Law;
(b) to the extent applicable, comply with Rule 14e-2(a) promulgated under
the Exchange Act with respect to a Competing Transaction; provided, however,
that neither JP nor its Board of Directors shall be permitted to approve or
recommend a Competing Transaction which is not a Superior Competing Transaction;
(c) if it receives a proposal for a Competing Transaction that was
unsolicited and its Board of Directors determines in good faith (after
consulting with its outside counsel and its financial advisor) that such
proposal is reasonably likely to lead to a Superior Competing Transaction and
provided further that JP provides prompt oral and written notice to GGP and GGP
Partnership to the effect that it is furnishing information to such Person, (x)
furnish non-public information with respect to JP, PDC LP or any JP Subsidiary
to the Person who made such proposal (provided that JP shall furnish such
information pursuant to a confidentiality agreement which is no more favorable
to such Person than the Confidentiality Agreement) and (y) participate in
negotiations regarding such proposal, provided that JP provides prompt oral and
written notice to GGP and GGP Partnership to the effect that it is entering into
discussions with such Person; and
(d) approve or recommend (and in connection therewith withdraw or modify
its approval or recommendation of this Agreement and the Mergers) a Superior
Competing Transaction or enter into an agreement with respect to such Superior
Competing Transaction.
4.4 Conduct of GGP's and GGP Partnership's Business Pending Mergers. During
the period from the date of this Agreement to the Effective Times, except as
consented to in writing by JP or as expressly contemplated in this Agreement,
GGP, GGP Partnership, Acquisition and Partnership Acquisition shall, and shall
cause each of the GGP Subsidiaries to:
(a) take no action that would prevent or materially delay the consummation
of the transactions contemplated by this Agreement;
(b) promptly deliver to JP true and correct copies of any report,
statement, schedule or other document filed with the SEC by GGP subsequent to
the date of this Agreement; and
(c) not amend the articles or certificate of incorporation, bylaws,
partnership agreement, operating agreement or other charter or organizational
document of GGP or GGP Partnership, in a manner which would require the consent
of the Contributing Holders of PDC Common OP Units if such amendment were
effected following the Closing;
4.5 Other Actions. Each of JP and PDC LP, on the one hand, and GGP, GGP
Partnership, Acquisition and Partnership Acquisition, on the other hand, shall
not take, and shall cause their respective Subsidiaries not to take, any action
that would result in (a) any of the representations and warranties of such party
(without giving effect to any knowledge qualification) set forth in this
Agreement that are qualified as to materiality becoming untrue, (b) any of such
representations and warranties (without
34
giving effect to any knowledge qualification) that are not so qualified becoming
untrue in any material respect or (c) except as contemplated by Section 4.2 or
4.3, any of the conditions to the Mergers set forth in Article 6 not being
satisfied.
ARTICLE 5
ADDITIONAL COVENANTS
5.1 Preparation of the Proxy Statement; Stockholders Meeting; Partner
Solicitation; Partner Approvals.
(a) As promptly as reasonably practicable following the date of this
Agreement, JP shall prepare and file with the SEC under the Exchange Act a proxy
statement and form of proxy (such proxy statement and proxy together with any
amendments and supplements thereto, the "Proxy Statement") and JP shall use its
commercially reasonable efforts to respond as promptly as practicable to any
comments of the SEC with respect thereto and to cause the Proxy Statement to be
mailed to JP's stockholders as promptly as practicable following the date of
this Agreement. JP shall promptly notify GGP and GGP Partnership upon the
receipt of any comments from the SEC or its staff or any request from the SEC or
its staff for amendments or supplements to the Proxy Statement and shall provide
GGP and GGP Partnership with copies of all correspondence between JP and its
representatives, on the one hand, and the SEC and its staff, on the other hand.
GGP and GGP Partnership shall promptly provide any information or responses to
comments, or other assistance, reasonably requested in connection with any of
the foregoing. Prior to filing or mailing the Proxy Statement or responding to
any comments of the SEC with respect thereto, JP (i) shall provide GGP and GGP
Partnership an opportunity to review and comment on such document or response
and (ii) shall give reasonable consideration to all comments proposed by GGP and
GGP Partnership. Each of JP, PDC LP, GGP and GGP Partnership shall promptly
correct any information provided by it for use in the Proxy Statement if and to
the extent that such information shall have become false or misleading in any
material respect, and JP shall cause such corrected information to be included
in the Proxy Statement.
(b) JP shall, as promptly as reasonably practicable following the date of
this Agreement, establish a record date for, duly call, give notice of, convene
and hold a meeting of its stockholders (the "JP Stockholders Meeting") for the
purpose of obtaining the JP Stockholder Approval. Subject to Section 4.3, JP
shall, through its Board of Directors, recommend to its stockholders approval of
this Agreement, the Merger and the transactions contemplated by this Agreement,
and shall include such recommendation in the Proxy Statement.
(c) The Holders of PDC Common OP Units.
(i) As promptly as reasonably practicable following the date of this
Agreement, JP, PDC LP, GGP and GGP Partnership shall prepare certain
solicitation materials (the "Partner Solicitation Materials"), which will
be used by GGP Partnership as a private placement memorandum to offer the
GGP Series B Preferred OP Units to the holders of the PDC Common OP Units
and by JP and PDC LP to solicit the JP Partner Approvals. Such Partner
Solicitation Materials shall include or incorporate by reference
information about GGP and GGP Partnership, a description of the
transaction, the position of JP as the general partner of PDC LP with
respect to such transaction, available appraisal rights for holders of PDC
Common OP Units, the impact of the Voting Agreement and other matters that
the parties reasonably determine are to be specified therein. The parties
shall reasonably cooperate with each other in the preparation of the
Partner Solicitation Materials.
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(ii) JP and PDC LP, on the one hand, and GGP and GGP Partnership, on
the other hand, agree that none of the information supplied or to be
supplied by them for inclusion or incorporation by reference in the Partner
Solicitation Materials will contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading. Each party agrees that if it
shall become aware prior to the Partnership Merger Effective Time of any
information that would cause any of the statements in the Partner
Solicitation Materials to be false or misleading with respect to any
material fact, or to omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they are
made, not false or misleading, it shall promptly inform the other parties
thereof and shall take the necessary steps, in cooperation with the other
parties, to correct such information and to disseminate updated
information.
(iii) Subject to the fiduciary duties of JP, as the general partner of
PDC LP, JP (A) agrees to seek the written consents and approvals of the
holders of PDC Common OP Units on each of the matters specified in the
definition of JP Partner Approvals and recommend to the holders of PDC
Common OP Units approval of such matters, and include such recommendation
in the Partnership Solicitation Materials and (B) hereby approves and
consents to each of the matters specified in the definition of JP Partner
Approvals and agrees to vote all of its PDC OP Units in favor of such
matters (or to provide its consent with respect thereto).
(iv) As promptly as reasonably practicable following the date of this
Agreement, GGP and GGP Partnership shall prepare a form of election in form
and substance reasonably acceptable to JP and PDC LP (the "Form of
Election"), pursuant to which each holder of PDC Common OP Units will
specify (A) the number of PDC Common OP Units which it desires to have
converted into the right to receive GGP Series B Preferred OP Units and (B)
the number of PDC Common OP Units which it desires to have converted into
the right to receive cash in the Partnership Merger. Any holder electing
option (A) must also agree to become a party to the GGP Partnership
Agreement, the GGP Series B OP Units Redemption Agreement, the GGP Common
OP Units Redemption Agreement and the Tax Matters Agreement in
substantially the form of Exhibit I attached hereto (together, the "Related
Agreements"). In order to be eligible to elect to receive GGP Series B
Preferred OP Units in the Partnership Merger, a holder of PDC Common OP
Units must qualify as an "accredited investor" under the Securities Act.
(v) Concurrently with the mailing of the Proxy Statement to JP
Shareholders, GGP Partnership shall mail Forms of Election to holders of
record of PDC Common OP Units, together with the Partner Solicitation
Materials. An election to subscribe for the GGP Series B Preferred Units
shall be effective only if a properly executed Form of Election is received
by GGP Partnership prior to 5:00 p.m., Eastern Standard Time, on the second
business day preceding the JP Stockholders Meeting. If a holder of PDC
Common OP Units fails to return a duly completed Form of Election within
the time period specified above and does not duly perfect its appraisal
rights pursuant to the MRULPA, such holder shall be deemed to have elected
to receive cash upon the conversion of its PDC Common OP Units in the
Partnership Merger. GGP Partnership and PDC LP by mutual agreement shall
have the right to make rules, not inconsistent with the terms of this
Agreement, governing the validity of Forms of Election and the issuance and
delivery of GGP Series B Preferred OP Units in the Partnership Merger.
(vi) JP shall not exercise any appraisal, dissenters' or other similar
rights with respect to any of its PDC OP Units, including, without
limitation, any rights under Section 10-208(f) of the MRULPA.
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(vii) The parties shall reasonable cooperate with each other with
respect to the matters set forth in this Section 5.1(c), and intend that
the offer of the GGP Series B Preferred Units shall be conducted as a
private placement, exempt from the registration requirements of the
Securities Act.
(d) GGP and GGP Partnership covenant and agree that, concurrently with the
Closing, they will each enter into, with each holder of PDC Common OP Units who
validly elects to receive GGP Series B Preferred OP Units in the Partnership
Merger, the Related Agreements to which they are parties, and will reasonably
cooperate with such holders so that such holders become limited partners of GGP
Partnership and enjoy the full rights and benefits of the GGP Series B Preferred
OP Units.
5.2 Access to Information; Confidentiality. Subject to the requirements of
confidentiality agreements with third parties in existence on the date hereof,
JP and PDC LP shall, and shall cause each of the JP Subsidiaries to, afford to
GGP and GGP Partnership and to the officers, employees, accountants, counsel,
financial advisors and other representatives of GGP and GGP Partnership,
reasonable access during normal business hours prior to the Effective Times to
all their respective properties, books, contracts, commitments, personnel and
records and, during such period, JP and PDC LP shall, and shall cause each of
the JP Subsidiaries to, furnish promptly to GGP and GGP Partnership (a) a copy
of each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws and (b) all other information concerning its business, properties and
personnel as GGP and GGP Partnership may reasonably request.
5.3 Commercially Reasonable Efforts; Notification.
(a) Subject to the terms and conditions herein provided, (i) each of the
parties shall use commercially reasonable efforts to cooperate with one another
in (A) determining which filings are required to be made prior to the Effective
Times with, and which consents, approvals, permits or authorizations are
required to be obtained prior to the Effective Times from, Governmental Entities
and any third parties in connection with the execution and delivery of this
Agreement, and the consummation of the transactions contemplated hereby, and (B)
timely making all such filings and timely seeking all such consents, approvals,
permits and authorizations; (ii) JP and PDC LP shall use commercially reasonable
efforts to obtain in writing any consents required from third parties to
effectuate the Mergers and the other transactions contemplated hereby, such
consents to be in form reasonably satisfactory to GGP and GGP Partnership; and
(iii) each of the parties shall use commercially reasonable efforts to take, or
cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If at any time after the Effective
Times any further action is necessary or desirable to carry out the purpose of
this Agreement, each party shall take all such necessary action.
(b) JP and PDC LP shall use commercially reasonable efforts to obtain from
PricewaterhouseCoopers LLP access to all work papers relating to audits of JP
and PDC LP performed by PricewaterhouseCoopers LLP, and the continued
cooperation of PricewaterhouseCoopers LLP with regard to the preparation of
consolidated financial statements for the Surviving Company.
(c) JP and PDC LP shall give prompt notice to GGP and GGP Partnership, and
GGP and GGP Partnership shall give prompt notice to JP, (i) if any
representation or warranty made by it or them contained in this Agreement that
is qualified as to materiality becomes untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becomes untrue or
inaccurate in any material respect or (ii) of the failure by it or them to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement; provided,
37
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
5.4 Tax Matters.
(a) Purchase Price Allocation. On or prior to the Closing Date, GGP, GGP
Partnership, JP and PDC LP shall reach agreement as to the manner in which the
consideration to be paid pursuant to this Agreement, together with any assumed
liabilities (the "Allocable Consideration"), shall be allocated among the assets
of JP and, to the extent applicable, the JP Subsidiaries. Such allocation shall
be made in the manner required by Section 1060 of the Code and the regulations
promulgated thereunder. In making such allocation, the fair market values as
reasonably determined by the parties shall apply. GGP, GGP Partnership, JP and
PDC LP hereby agree that IRS Form 8594 will be timely filed based on such fair
market values.
(b) Tax Treatment of Merger. The parties shall treat the Merger for all
income tax purposes as a taxable purchase of assets by GGP Partnership in
exchange for the Allocable Consideration and a liquidating distribution of the
Merger Consideration by JP to the JP shareholders within the meaning of Section
562(b)(1) of the Code including, without limitation, filing JP final Tax returns
consistent with such treatment, and no party shall take any position
inconsistent with such treatment.
(c) Tax Treatment of Partnership Merger. The parties shall treat the
Partnership Merger, for all tax purposes, as a tax-free contribution by the
Contributing Holders of PDC Common OP Units of their limited partnership
interests in PDC LP to GGP Partnership in exchange for GGP Series B Preferred OP
Units under Section 721 of the Code and a sale by the Selling Holders of PDC
Common OP Units of their limited partnership interests in PDC LP to GGP
Partnership in exchange for cash, including without limitation, filing PDC LP
and GGP Partnership Tax returns consistent with such treatment, and no party
shall take any position inconsistent with such treatment.
(d) Payroll Records. GGP, GGP Partnership and JP agree that, for federal
income tax purposes, GGP Partnership will have purchased substantially all of
the property used in the business of JP as a result of the transactions
contemplated by this Agreement, and that, in connection therewith, GGP and/or
GGP Partnership will employ individuals who immediately before the Closing Date
were employed in such business by JP. Accordingly, pursuant to Rev. Proc. 96-60,
1996-2 X.X. 000, XX shall make available to GGP and GGP Partnership all
necessary payroll records for the calendar year that includes the Closing Date,
with the result that GGP or GGP Partnership will furnish a Form W-2 to each
employee employed by GGP or GGP Partnership who had been employed by JP,
disclosing all wages and other compensation paid for such calendar year and
Taxes withheld therefrom, and JP will be relieved of the responsibility to do
so.
5.5 Public Announcements. Each party will consult with each other party
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other written public statements, including, without
limitation, any press release or other written public statement which addresses
in any manner the transactions contemplated by this Agreement, and shall not
issue any such press release or make any such written public statement prior to
such consultation, except as may be required by applicable Law, court process or
by obligations pursuant to any listing agreement with any national securities
exchange, in which case the disclosing party will use its reasonable efforts to
advise the other parties prior to making the relevant disclosure. The parties
agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement will be in the form agreed to by the
parties prior to the execution of this Agreement.
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5.6 Transfer and Gains Taxes. Each party shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees and any similar Taxes which become payable in
connection with the transactions contemplated by this Agreement (together with
any related interest, penalties or additions to Tax, "Transfer and Gains
Taxes"). On, from and after the Effective Time, GGP and GGP Partnership shall
pay or cause to be paid all Transfer and Gains Taxes (which term shall include
any transfer taxes resulting from or relating to the Mergers, but shall not in
any event be construed to include for these purposes any Tax imposed under the
Code or state income taxes) without deduction or withholding from any amounts
payable to the holders of JP shares or limited partnership interests of PDC LP.
5.7 Benefit Plans and Other Employee Arrangements.
(a) Benefit Plans. After the Effective Time, all employees of JP who are
employed by the Surviving Company shall, at the option of the Surviving Company,
either continue to be eligible to participate in an employee benefit plan, as
defined in Section 3(3) of ERISA, of JP which is, at the option of the Surviving
Company, continued by the Surviving Company, or alternatively shall be eligible
to participate in the same manner as other similarly situated employees of GGP
Partnership in any employee benefit plan, as defined in Section 3(3) of ERISA,
sponsored or maintained by GGP and GGP Partnership after the Effective Time.
With respect to each such employee benefit plan, service with JP or any JP
Subsidiary (as applicable) and the predecessor of any of them shall be included
for purposes of determining eligibility to participate and vesting (if
applicable) under such employee benefit plan. GGP and GGP Partnership shall, or
shall cause the Surviving Company and its Subsidiaries to, (i) waive all
limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to all employees
of JP who are employed by the Surviving Company under any Welfare Plan that such
employees may be eligible to participate in after the Effective Time, other than
limitations or waiting periods that are already in effect with respect to such
employees and that have not been satisfied as of the Effective Time under any
Welfare Plan maintained for such employees immediately prior to the Effective
Time, and (ii) provide each such employee of JP who is employed by the Surviving
Company with credit for any co-payments and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any Welfare Plans that such employees are eligible to
participate in after the Effective Time.
(b) Stock Option and Restricted Stock Plans. At the Effective Time, the
stock option plans or programs of JP and the restricted stock plans or programs
of JP shall be discontinued.
(c) JP Stock Options. As soon as practicable following the date of this
Agreement, JP shall ensure that the Board of Directors of JP (or, if
appropriate, any committee administering the JP Stock Option plans) shall adopt
such resolutions or take such other actions (if any) to provide that each JP
Stock Option outstanding immediately prior to the Effective Time (whether vested
or unvested) shall be converted at the Effective Time in the manner contemplated
by Section 1.7(d). All amounts payable pursuant to this Section 5.7(c) shall be
subject to any required withholding of Taxes and shall be paid as soon as
practicable following the Effective Time, without interest. JP shall take all
actions determined to be necessary to effectuate the provisions of this Section
5.7(c) as mutually agreed by GGP and GGP Partnership and JP. Prior to the
Effective Time, JP shall ensure that the Board of Directors of JP (or, if
appropriate, any committee administering the JP Stock Option plans) shall take
or cause to be taken such actions as are required to cause the JP Stock Option
plans to terminate as of the Effective Time.
(d) Withholding. To the extent required by applicable law, JP shall require
each employee who exercises a JP Stock Option or who receives JP Common Stock or
Price Group Stock pursuant to any existing commitment to pay to JP in cash or JP
Common Stock an amount sufficient to
39
satisfy in full JP's obligation to withhold Taxes incurred by reason of such
exercise or issuance (unless and to the extent such withholding is satisfied
pursuant to the provision regarding withholding in Section 1.8(i)).
(e) XX Xxxxxxxxx Agreements. No later than the Closing Date, GGP or GGP
Partnership shall negotiate and enter into severance agreements, which shall not
be subject to amendment or modification for the one-year period beginning on the
Closing Date without the mutual consent of the parties, with the JP and PDC LP
employees identified on Exhibit J attached hereto upon substantially the
economic terms set forth on such Exhibit J.
5.8 Indemnification; Exculpation; Insurance.
(a) (i) In the event of any threatened or actual claim, action, suit,
demand, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action,
suit, demand, proceeding or investigation in which any person who is now,
or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, a director or officer of JP, PDC LP or any other JP
Subsidiary (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of,
or pertaining to (i) the fact that he is or was a director or officer of
JP, PDC LP or any other JP Subsidiary, or is or was serving at the request
of JP, PDC LP or any other JP Subsidiary as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
or (ii) the negotiation, execution or performance of this Agreement or any
of the transactions contemplated hereby, whether in any case asserted or
arising before or after the Effective Time, the parties hereto agree to
cooperate and use their commercially reasonable efforts to defend against
and respond thereto. It is understood and agreed that JP shall indemnify,
and hold harmless, and after the Effective Time GGP and GGP Partnership
(JP, or GGP and GGP Partnership, as applicable, being the "Indemnifying
Parties") shall jointly and severally indemnify, and hold harmless, as and
to the full extent permitted by applicable law, each Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorneys' fees and expenses (to the extent permitted
below)), judgments, fines and amounts paid in settlement in connection with
any such threatened or actual claim, action, suit, demand, proceeding or
investigation, and in the event of any such threatened or actual claim,
action, suit, demand, proceeding or investigation (whether asserted or
arising before or after the Effective Time), JP, and GGP and GGP
Partnership after the Effective Time, shall promptly pay reasonable
expenses in advance of the final disposition of any claim, suit, proceeding
or investigation to each Indemnified Party upon the submission of
appropriate invoices and to the full extent permitted by law, and subject
to the limitations described below and the provision by such Indemnified
Party of an undertaking to reimburse the amounts so advanced in the event
of a final non-appealable determination by a court of competent
jurisdiction that such Indemnified Party is not entitled to such amounts.
Notwithstanding the foregoing, the Indemnifying Parties shall have no
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and non-appealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law.
(ii) Any Indemnified Party wishing to claim indemnification under this
Section 5.8, upon learning of any such claim, action, suit, demand,
proceeding or investigation, shall promptly notify JP and, after the
Effective Time, GGP and GGP Partnership, thereof; provided that the failure
to so notify shall not affect the obligations of JP, GGP and GGP
Partnership except to the extent such failure to notify
40
materially prejudices such party. If any such action is brought against any
of the Indemnified Parties and such Indemnified Parties notify the
Indemnifying Parties of its commencement, the Indemnifying Parties will be
entitled to participate in and, to the extent that they elect by delivering
written notice to such Indemnified Parties promptly after receiving notice
of the commencement of the action from the Indemnified Parties, to assume
and control the defense of the action and after notice from the
Indemnifying Parties to the Indemnified Parties of their election to assume
the defense, the Indemnifying Parties will not be liable to the Indemnified
Parties for any legal or other expenses except as provided below and except
for the reasonable costs of investigation subsequently incurred by the
Indemnified Parties in connection with the defense. If the Indemnifying
Parties assume the defense, the Indemnifying Parties shall have the right
to settle such action without the consent of the Indemnified Parties;
provided, however, that the Indemnifying Parties shall be required to
obtain such consent (which consent shall not be unreasonably withheld) if
the settlement includes any admission of wrongdoing on the part of the
Indemnified Parties or any decree or restriction on the Indemnified
Parties; provided, further, that no Indemnifying Party, in the defense of
any such action shall, except with the consent of the Indemnified Parties
(which consent shall not be unreasonably withheld), consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Parties of a release from all liability with respect to such
action. The Indemnified Parties will have the right to employ their own
counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such Indemnified Parties unless (i)
the employment of counsel by the Indemnified Parties has been authorized in
writing by the Indemnifying Parties, (ii) a conflict or potential conflict
exists (based on advice of counsel to the Indemnified Parties) between the
Indemnified Parties and the Indemnifying Parties (in which event counsel
for the Indemnified Partner may participate in the defense of such action)
or (iii) the Indemnifying Parties have not in fact employed counsel to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the Indemnifying Parties.
(iii) It is understood that the Indemnifying Parties shall not, in
connection with any proceeding or related proceedings, be liable for the
reasonable fees, disbursements and other charges of more than one separate
firm at any one time for all such Indemnified Parties.
(iv) The Indemnifying Parties will not be liable for any settlement of
any action or claim effected without their written consent (which consent
shall not be unreasonably withheld).
(b) For six years after the Effective Time, GGP and GGP Partnership shall
maintain in effect JP's current directors' and officers' liability insurance
covering each person currently covered by JP's directors' and officers'
liability insurance policy for acts or omissions occurring prior to the
Effective Time on terms with respect to such coverage and amounts no less
favorable in the aggregate to such directors and officers than those of such
policy as in effect on the date of this Agreement; provided that GGP and GGP
Partnership may substitute therefor policies of a reputable insurance company
the terms of which, including coverage and amount, are no less favorable in the
aggregate to such directors and officers than the insurance coverage otherwise
required under this Section 5.8(b); provided, however, that in no event shall
GGP or GGP Partnership be required to pay aggregate annual premiums for
insurance under this Section 5.8(b) in excess of $200,000.00, provided that GGP
and GGP Partnership shall nevertheless be obligated to provide such a policy
with the best coverage reasonably available as may be obtained for such amount.
(c) In the event that GGP, GGP Partnership or any of their successors or
assigns (i) consolidates with or merges into any other Person and is not the
continuing or surviving entity of such
41
consolidation or merger or (ii) transfers or conveys all or substantially all
its properties and assets to any Person, then, and in each such case, GGP and
GGP Partnership shall cause proper provision to be made so that the successors
and assigns of GGP and GGP Partnership assume the obligations set forth in this
Section 5.8.
(d) To the fullest extent permitted by law, from and after the Effective
Time, all rights to indemnification as of the date hereof in favor of the
directors and officers of JP and the JP Subsidiaries with respect to their
activities as such prior to the Effective Time, as provided in, with respect to
JP, the JP Articles and the JP Bylaws, or, with respect to the JP Subsidiaries,
their respective certificates of incorporation and by-laws (or similar
organizational documents) in effect on the date hereof, or otherwise in effect
on the date hereof, shall survive the Mergers and shall continue in full force
indefinitely.
(e) The provisions of this Section 5.8 are intended to be for the
irrevocable benefit of, and will be enforceable by, each Indemnified Party, his
or her heirs and his or her representatives. Each Indemnified Party shall be
entitled to enforce the covenants under this Section 5.8(e).
5.9 Declaration of Dividends and Distributions. From and after the date of
this Agreement, JP shall not make any dividend or distribution to its
stockholders without the prior written consent of GGP and GGP Partnership;
provided, however, the written consent of GGP and GGP Partnership shall not be
required for the authorization and payment of (a) quarterly distributions with
respect to the JP Common Stock of up to $0.51 per share for the quarter ending
March 31, 2002 and, if the Closing occurs after March 31, 2002, up to $0.51 per
share for each full quarter thereafter, with the dividend for the quarter in
which the Closing occurs to be prorated for the number of days in such quarter
elapsed prior to the Closing and (b) quarterly distributions with respect to the
Price Group Stock of up to $0.408 per share for the quarter ending March 31,
2002 and, if the Closing occurs after March 31, 2002, up to $0.408 per share for
each full quarter thereafter, with the dividend for the quarter in which the
Closing occurs to be prorated for the number of days in such quarter elapsed
prior to the Closing (each such per share amount in (b) being 80% of the
corresponding per share amount in (a)), provided that JP shall notify GGP and
GGP Partnership of the proposed record date for any such distribution prior to
such date. From and after the date of this Agreement, PDC LP shall not make any
distribution to the holders of PDC OP Units except (a) a distribution per JP
Common OP Unit in the same amount as a dividend per share of JP Common Stock
permitted pursuant to this Section 5.9, with the same record and payment dates
as such dividend on JP Common Stock and (b) quarterly dividends with respect to
the PDC Preferred OP Units which are required by the terms of the PDC LP
Agreement. The foregoing restrictions shall not apply, however, to the extent a
distribution (or an increase in a distribution) by JP is permitted under Section
1.8(d), or is necessary for JP to maintain REIT status, avoid the incurrence of
any Taxes under Section 857 of the Code, avoid the imposition of any excise
Taxes under Section 4981 of the Code, or avoid the need to make one or more
extraordinary or disproportionately larger distributions to meet any of the
three preceding objectives.
5.10 Resignations. On the Closing Date, JP shall cause the directors and
officers of JP and of each of the JP Subsidiaries to submit their resignations
from such positions, effective as of the Effective Time.
5.11 Registration Rights Agreements. At the Closing, JP shall assign and
GGP shall assume by appropriate instrument the Registration Rights Agreements
described in Schedule 5.11 to the JP Disclosure Letter relating to the
registration rights granted to the holders of PDC Series A OP Units, PDC Series
B OP Units and PDC Series C OP Units.
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5.12 Information Supplied. None of JP, PDC LP, GGP or GGP Partnership shall
supply information for inclusion or incorporation by reference in the Proxy
Statement or in the Partner Solicitation Materials that will, at the date mailed
to JP stockholders, at the time of the JP Stockholders Meeting or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading.
5.13 The JP Rights Plan. JP shall either (i) redeem, effective immediately,
prior to the Effective Time, all of the then outstanding Rights (as defined in
the Rights Agreement) for cash pursuant to and in compliance with Section 23 of
the Rights Agreement or (ii) take such other action to terminate the Rights
Agreement as of that time, as JP and GGP may mutually agree. JP shall not redeem
the Rights issued under the Rights Agreement, or terminate the Rights Agreement,
prior to the Effective Time of the Merger (other than in accordance with the
preceding sentence) unless required to do so by a court of competent
jurisdiction; provided, however, that JP may take any of the foregoing actions
if the Board of Directors of JP shall have accepted a proposal for a Superior
Competing Transaction in accordance with the terms of Section 4.2.
5.14 Noncompetition Agreements. At or prior to Closing, JP shall cause Xxxx
Xxxxx and the individuals identified in Schedule 5.14 to the JP Disclosure
Schedule to enter into noncompetition and confidentiality agreements
substantially in the form attached hereto as Exhibit K.
ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
obligations of each party to effect the Mergers and to consummate the other
transactions contemplated by this Agreement to occur on the Closing Date shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) JP Stockholder and Partner Approvals. The JP Stockholder Approval and
JP Partner Approvals shall have been obtained.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Mergers or any of the other transactions contemplated hereby
shall be in effect.
6.2 Conditions to Obligations of GGP, GGP Partnership, Acquisition and
Partnership Acquisition. The obligations of GGP, GGP Partnership, Acquisition
and Acquisition Partnership Acquisition to effect the Mergers and to consummate
the other transactions contemplated by this Agreement to occur on the Closing
Date are further subject to the following conditions, any one or more of which
may be waived by GGP and GGP Partnership:
(a) Representations and Warranties. Each of the representations and
warranties of JP and PDC LP set forth in this Agreement which is qualified by
materiality shall be true and correct, and each of the representations and
warranties of JP and PDC LP set forth in this Agreement which is not so
qualified shall be true and correct in all material respects, in each case, as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (except to the extent that such representations and
warranties are expressly limited by their terms to another date, in which case
such representations and warranties shall be true and correct as of such other
date). This condition shall be
43
deemed to have been satisfied unless all breaches of the representations and
warranties of JP and PDC LP in this Agreement (without giving effect to any
materiality, any JP Material Adverse Effect or any similar qualification or
limitation) would, in the aggregate, reasonably be expected to have a JP
Material Adverse Effect. GGP and GGP Partnership shall have received a
certificate (which certificate may be qualified by knowledge to the same extent
as such representations and warranties are so qualified) signed on behalf of JP
by the chief executive officer and the chief financial officer of JP, in such
capacities, to such effect.
(b) Performance of Obligations of JP and PDC LP. JP and PDC LP shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Effective Time, and GGP and GGP
Partnership shall have received a certificate signed on behalf of JP by the
chief executive officer and the chief financial officer of JP, in such
capacities, to such effect.
(c) Material Adverse Change. Since the date of this Agreement, there shall
have been no JP Material Adverse Effect, and GGP shall have received a
certificate of the chief executive officer and chief financial officer of JP, in
such capacities, certifying to such effect.
(d) Tax Opinions Relating to REIT Status and Partnership Status. GGP and
GGP Partnership shall have received an opinion of Xxxxxxxx Chance Xxxxxx & Xxxxx
LLP or other counsel to JP reasonably satisfactory to GGP and GGP Partnership,
dated as of the Closing Date, to the effect that, (i) for all taxable years for
which the Internal Revenue Service could assert a Tax liability with respect to
JP, JP was organized and has operated in conformity with the requirements for
qualification and taxation as a REIT under the Code, and (ii) for all taxable
years for which the Internal Revenue Service could assert a Tax liability with
respect to PDC LP, PDC LP has been, and continues to be, treated for federal
income tax purposes as a partnership and not as a corporation or association
taxable as a corporation (with customary exceptions, assumptions and
qualifications and based upon customary representations). For purposes of such
opinion, Xxxxxxxx Chance Xxxxxx & Xxxxx LLP may rely on (in addition to
customary assumptions and representations for opinions of this type) assumptions
to the effect that (A) Code Section 562(e) applies to the deemed sale of assets
by JP pursuant to the Merger in computing the earnings and profits of JP for the
taxable year ending on the Closing Date, (B) that the Merger will be treated for
federal income tax purposes in the manner described in paragraph G of the
Recitals hereof, and (C) no action will be taken following the Mergers that is
inconsistent with JP's status as a REIT for any period prior to the Mergers.
(e) Consents. The consents (or waivers of such consents) from third
parties, specified in Schedule 6.2(e) of the JP Disclosure Letter shall have
been obtained and remain in full force and effect.
6.3 Conditions to Obligations of JP and PDC LP. The obligations of JP and
PDC LP to effect the Mergers and to consummate the other transactions
contemplated to occur on the Closing Date is further subject to the following
conditions, any one or more of which may be waived by JP and PDC LP:
(a) Representations and Warranties. Each of the representations and
warranties of GGP, GGP Partnership, Acquisition and Partnership Acquisition set
forth in this Agreement which is qualified by materiality shall be true and
correct, and each of the representations and warranties of GGP, GGP Partnership,
Acquisition and Partnership Acquisition set forth in this Agreement which is not
so qualified shall be true and correct in all material respects, in each case,
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except to the extent that such representations and
warranties are expressly limited by their terms to another date, in which case
such representations and warranties shall be true and correct as of such other
date). This condition shall be deemed to have been satisfied unless all breaches
of the representations and warranties of GGP and GGP
44
Partnership in this Agreement (without giving effect to any materiality, JP
Material Adverse Effect or any similar qualification or limitation) would, in
the aggregate, reasonably be expected to have a GGP Material Adverse Effect. JP
shall have received a certificate (which certificate may be qualified by
knowledge to the same extent as such representations and warranties are so
qualified) signed on behalf of GGP by a duly authorized representative of GGP,
in such capacity, to such effect.
(b) Performance of Obligations of GGP, GGP Partnership, Acquisition and
Partnership Acquisition. GGP, GGP Partnership, Acquisition and Partnership
Acquisition shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Effective Time, and JP shall have received a certificate signed on behalf of GGP
by a duly authorized representative of GGP, in such capacity, to such effect.
(c) Tax Opinions Relating to REIT Status and Partnership Status.
Contributing Holders of PDC Common OP Units shall have received an opinion of
Xxxx, Gerber & Xxxxxxxxx or other counsel to GGP reasonably satisfactory to
Contributing Holders of PDC Common OP Units, dated as of the Closing Date, to
the effect that, (i) for all taxable years for which the Internal Revenue
Service could assert a Tax liability with respect to GGP, GGP was organized and
operated in conformity with the requirements for qualification and taxation as a
REIT under the Code, and (ii) for all taxable years for which the Internal
Revenue Service could assert a Tax liability with respect to GGP Partnership,
GGP Partnership has been, and continues to be, treated for federal income tax
purposes as a partnership and not as a corporation or association taxable as a
corporation (with customary exceptions, assumptions and qualifications and based
upon customary representations).
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER; BOARD ACTIONS
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time of the Partnership Merger, whether such action occurs before or
after any of the JP Stockholder Approval or JP Partner Approvals are obtained:
(a) by mutual written consent duly authorized by the Board of Directors of
JP and GGP;
(b) by GGP and GGP Partnership, or upon a breach of or failure to perform
any representation, warranty, covenant, obligation or agreement on the part of
JP or PDC LP set forth in this Agreement, or if any representation or warranty
of JP or PDC LP shall become untrue, in either case such that the conditions set
forth in Section 6.2(a) or Section 6.2(b), as the case may be, would be
incapable of being satisfied by July 31, 2002 (or as otherwise extended by
mutual agreement of the parties hereto);
(c) by JP upon a breach of any representation, warranty, covenant,
obligation or agreement on the part of GGP, GGP Partnership, Acquisition or
Partnership Acquisition set forth in this Agreement, or if any representation or
warranty of GGP, GGP Partnership, Acquisition or Partnership Acquisition shall
become untrue, in either case such that the conditions set forth in Section
6.3(a) or Section 6.3(b), as the case may be, would be incapable of being
satisfied by July 31, 2002 (or as otherwise extended by mutual agreement of the
parties hereto);
(d) by either GGP, GGP Partnership or JP, if any judgment, injunction,
order, decree or action by any Governmental Entity of competent authority
preventing the consummation of the Mergers shall have become final and
non-appealable; provided, however, that a party may not terminate
45
pursuant to this clause (d) if the terminating party shall have materially
breached its obligations under this Agreement;
(e) by either GGP, GGP Partnership or JP, if the Mergers shall not have
been consummated before July 31, 2002; provided, however, that a party may not
terminate pursuant to this clause (e) if the terminating party shall have
materially breached its obligations under this Agreement;
(f) by either GGP, GGP Partnership or JP, if, upon a vote at a duly held JP
Stockholders Meeting or any adjournment thereof, the JP Stockholder Approval
shall not have been obtained as contemplated by Section 5.1 or the JP Partner
Approvals shall not have been obtained as contemplated by Section 5.1;
(g) by JP, if the Board of Directors of JP shall have withdrawn, modified,
amended or qualified in any manner adverse to GGP or GGP Partnership its
approval or recommendation of either of the Mergers or this Agreement in
connection with, or approved or recommended, any Superior Competing Transaction
in compliance with the provisions of Sections 4.2 and 4.3; and
(h) by GGP or GGP Partnership, if (i) prior to the JP Stockholder Meeting,
the Board of Directors of JP or any committee thereof shall have failed to
recommend or withdrawn, modified, amended or qualified in any manner adverse to
GGP or GGP Partnership its approval or recommendation of the Mergers or this
Agreement, or approved or recommended any Superior Competing Transaction, (ii)
JP or PDC LP shall have entered into any agreement with respect to any Competing
Transaction or (iii) the Board of Directors of JP or any committee thereof shall
have resolved or publicly disclosed its intent to do any of the foregoing.
7.2 Certain Fees, Expenses and Rights. If this Agreement is terminated
pursuant to Section 7.1(b), then JP and PDC LP shall be jointly liable to pay to
GGP Partnership an amount equal to the GGP Break-Up Expenses (as defined
herein). If this Agreement shall be (i) terminated pursuant to Section 7.1(b),
7.1(e) (if JP shall have exercised such termination right) or 7.1(f), and (A) on
or after January 31, 2002 and prior to such termination a Person has made a
proposal relating to a Competing Transaction and (B) within one year of any such
termination JP shall consummate a Competing Transaction or execute a definitive
agreement providing for a transaction or series of transactions which would
otherwise constitute a Competing Transaction (a "JP Acquisition Agreement") with
such Person or its Affiliates or associates or Persons acting in concert with
such Person (whether or not any JP Acquisition Agreement relates to the same
Competing Transaction which had been received at the time of the termination of
this Agreement) or (ii) terminated pursuant to Section 7.1(g) or 7.1(h), then JP
and PDC LP shall be jointly liable to pay to GGP Partnership an amount equal to
the GGP Break-Up Fee (as defined below) less any GGP Break-Up Expenses otherwise
to be paid hereunder.
The payment of the GGP Break-Up Fee or GGP Break-Up Expenses shall be
compensation for the loss suffered by GGP, GGP Partnership and their Affiliates
as a result of the failure of the Mergers to be consummated (including, without
limitation, opportunity costs and out-of-pocket costs and expenses) and to avoid
the difficulty of determining damages under the circumstances. The GGP Break-Up
Fee shall be paid by JP to GGP Partnership, or the GGP Break-Up Expenses shall
be paid by JP to GGP Partnership, in immediately available funds within two (2)
business days after the date the event giving rise to the obligation to make
such payment occurred. JP and PDC LP acknowledge that the agreements contained
in this Section 7.2 are integral parts of this Agreement; accordingly, if JP
fails to promptly pay the GGP Break-Up Fee or GGP Break-Up Expenses due pursuant
to this Section 7.2 and, in order to obtain payment, GGP or GGP Partnership
commences a suit which results in a judgment against JP or PDC LP for any
amounts owed pursuant to this Section 7.2, JP and PDC LP shall pay to GGP
Partnership its costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit.
46
As used in this Agreement, "GGP Break-Up Fee" shall be an amount equal to the
lesser of (i) $19,000,000 (the "Base Amount") and (ii) the sum of (A) the
maximum amount that can be paid to GGP Partnership without causing GGP to fail
to meet the requirements of Sections 856(c)(2) and (3) of the Code determined as
if the payment of such amount did not constitute income described in Sections
856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code ("Qualifying Income"), as
determined by independent accountants to GGP, and (B) in the event GGP or GGP
Partnership receives a letter from its outside counsel (the "GGP Break-Up Fee
Tax Opinion") or a private letter ruling from the Internal Revenue Service ("IRS
GGP Break-Up Fee Ruling") stating that GGP Partnership's receipt of the Base
Amount would either constitute Qualifying Income or would be excluded from gross
income of GGP within the meaning of Sections 856(c)(2) and (3) of the Code (the
"REIT Requirements") or that the receipt by GGP Partnership of the remaining
balance of the Base Amount following the receipt of and pursuant to such GGP
Break-Up Fee Tax Opinion or IRS GGP Break-Up Fee Ruling would not cause GGP to
be deemed to have constructively received such remaining balance prior thereto,
the Base Amount less the amount payable under clause (A) above. In the event
that GGP Partnership is not able to receive the full Base Amount, JP shall place
the unpaid amount in escrow and shall not release any portion thereof to GGP
Partnership unless and until JP receives one of the following: (i) a letter from
GGP's or GGP Partnership's independent accountants indicating the maximum amount
that can be paid at that time to GGP Partnership without causing GGP to fail to
meet the REIT Requirements, (ii) a GGP Break-Up Fee Tax Opinion or (iii) a copy
of the IRS GGP Break-Up Fee Ruling, in any of which events JP shall pay to GGP
Partnership the lesser of the unpaid Base Amount or the maximum amount stated in
the letter referred to in (i) above. JP's obligation to pay any unpaid portion
of the GGP Break-Up Fee shall terminate three years from the date of this
Agreement (and any amounts still held in escrow shall be released to JP).
Subject to satisfaction of the conditions set forth in the penultimate sentence
of this paragraph, there is no limitation on the number of distributions that
can be made from the escrow prior to the third anniversary of this Agreement.
The "GGP Break-Up Expenses" payable to GGP Partnership shall be an amount
equal to the lesser of (i) $2,000,000 and (ii) GGP's and GGP Partnership's
out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including, without limitation, all attorneys',
accountants' and investment bankers' fees and expenses). If the GGP Break-Up
Expenses payable to GGP Partnership exceed the maximum amount that can be paid
to GGP Partnership without causing GGP to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code determined as if the payment of such
amount did not constitute Qualifying Income, as determined by independent
accountants to GGP (the "Maximum Amount"), the amount initially payable to GGP
Partnership shall be limited to the Maximum Amount. If, however, within the
three-year period commencing on the date of this Agreement, GGP or GGP
Partnership receives a letter from its outside counsel ("GGP Break-Up Expenses
Tax Opinion") or a private letter ruling from the Internal Revenue Service ("IRS
GGP Break-Up Expenses Ruling") stating that GGP Partnership's receipt of the GGP
Break-Up Expenses would either constitute Qualifying Income or would be excluded
from GGP's gross income within the meaning of the REIT Requirements or that
receipt by GGP Partnership of the remaining balance of the GGP Break-Up Expenses
above the Maximum Amount following the receipt of and pursuant to such GGP
Break-Up Expenses Tax Opinion or IRS GGP Break-Up Expenses Ruling would not
cause GGP to be deemed to have constructively received such remaining balance
prior thereto, GGP Partnership shall be entitled to have payable to it the full
amount of the GGP Break-Up Expenses. In the event that GGP Partnership is not
able to receive the full GGP Break-Up Expenses, JP shall place the unpaid amount
in escrow and shall not release any portion thereof to GGP Partnership unless
and until JP receives one of the following: (i) a letter from the independent
accountants of GGP or GGP Partnership indicating the maximum amount that can be
paid at that time to GGP Partnership without causing GGP to fail to meet the
REIT Requirements, (ii) a GGP Break-Up Expenses Tax Opinion or (iii) a copy of
the IRS GGP Break-Up Expenses Ruling, in any of which events JP shall pay to GGP
Partnership the lesser of the unpaid GGP Break-Up Expenses or the maximum amount
stated in the letter referred to in (i) above. The
47
obligation of JP to pay any unpaid portion of the GGP Break-Up Expenses shall
terminate three years from the date of this Agreement. Subject to satisfaction
of the conditions set forth in the penultimate sentence of this paragraph, there
is no limitation on the number of distributions that can be made from the escrow
prior to the third anniversary of this Agreement.
If this Agreement shall be terminated pursuant to Section 7.1(c), then GGP
and GGP Partnership thereupon shall be jointly liable to pay to JP an amount
equal to the lesser of (i) $2,000,000 and (ii) JP's out-of-pocket expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, all attorneys', accountants' and
investment bankers' fees and expenses) (the "JP Break-Up Expenses"). GGP
acknowledges that if JP commences a suit which results in a judgment against GGP
or GGP Partnership for any amounts owed pursuant to this Section 7.2, GGP and
GGP Partnership shall be jointly and severally liable to JP for JP's costs and
expenses (including reasonable attorneys' fees and expenses) in connection with
such suit.
The foregoing provisions of this Section 7.2 have been agreed to by each of
the parties hereto in order to induce the other parties to enter into this
Agreement and to consummate the Mergers and the other transactions contemplated
by this Agreement, it being agreed and acknowledged by each of them that the
execution of this Agreement by them constitutes full and reasonable
consideration for such provisions.
7.3 Effect of Termination. In the event of termination of this Agreement by
either JP, GGP or GGP Partnership as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of JP, PDC LP, GGP, GGP Partnership, Acquisition or
Partnership Acquisition, other than Section 7.2, this Section 7.3 and Article 8,
and except to the extent that such termination results from a willful breach by
any party of any of its representations, warranties, covenants or agreements set
forth in this Agreement or a failure or refusal by such party to consummate the
transactions contemplated hereby when such party was obligated to do so in
accordance with the terms hereof.
7.4 Amendment. This Agreement may be amended by the parties in writing by
the Board of Directors of JP (on behalf of itself and PDC LP) or GGP (on behalf
of itself, GGP Partnership, Acquisition and Partnership Acquisition) at any time
before or after any JP Partners Approvals or JP Stockholder Approval are
obtained and prior to the filing of the Maryland Articles of Merger and/or the
Maryland Articles of Partnership Merger with the Department and/or the Delaware
Certificate of Merger with the Secretary of State; provided, however, that,
after the JP Partner Approvals and JP Stockholder Approval are obtained, no such
amendment, modification or supplement shall be made which by law requires the
further approval of stockholders or partners without obtaining such further
approval. The parties agree to amend this Agreement in the manner provided in
the immediately preceding sentence to the extent required to continue the status
of each of JP and GGP as a REIT. Acquisition and Partnership Acquisition hereby
agree that any consent or waiver of compliance given by GGP and GGP Partnership
hereunder shall be conclusively binding on each of them, whether given expressly
or on its behalf.
7.5 Extension; Waiver. At any time prior to the Effective Time, the parties
may (a) extend the time for the performance of any of the obligations or other
acts of the other party or parties, (b) waive any inaccuracies in the
representations and warranties of the other party or parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 7.4, waive compliance with any of the agreements or
conditions of the other party or parties contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
48
ARTICLE 8
GENERAL PROVISIONS
8.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement confirming the representations and warranties in this
Agreement shall survive the Effective Time. This Section 8.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
8.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, sent by overnight courier (providing proof of
delivery) or sent by telecopy (providing confirmation of transmission) to the
parties at the following addresses or telecopy numbers (or at such other address
or telecopy number for a party as shall be specified by like notice):
(a) if to GGP, GGP Partnership, Acquisition or Partnership Acquisition, to:
General Growth Properties, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Fax No.: (000) 000-0000
with a copy to:
Xxxx, Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
(b) if to JP or PDC LP, to:
JP Realty, Inc.
00 Xxxxxxx Xxxx-Xxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
8.3 Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings
49
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
8.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement, the JP
Disclosure Letter, the GGP Disclosure Letter, the Schedules, the Confidentiality
Agreement, the Voting Agreement, and the other agreements entered into in
connection with the Merger and the Partnership Merger (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this Agreement
and (b) except as provided in Sections 5.7 and 5.8, are not intended to confer
upon any Person other than the parties hereto any rights or remedies.
8.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND (AND SOLELY WITH RESPECT TO
THE CONSUMMATION OF THE MERGER, THE APPLICABLE LAWS OF THE STATE OF DELAWARE AND
THE STATE OF MARYLAND), REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
8.7 Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned or delegated, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Notwithstanding the foregoing, each of
Acquisition and Partnership Acquisition may assign, in its sole discretion, any
of or all its respective rights, interests and obligations under this Agreement
to any direct or indirect wholly owned subsidiary of GGP and GGP Partnership
with written notice to JP, but no such assignment shall relieve GGP or GGP
Partnership of any of their obligations hereunder. Subject to the preceding
sentences, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and permitted
assigns.
8.8 Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions (without any requirement for posting bond) to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any federal court located in Maryland or, to the extent such courts
do not have subject matter jurisdiction, in any state court located in Maryland,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (a) consents to submit itself
(without making such submission exclusive) to the personal jurisdiction of any
federal court located in Maryland or to the extent such courts do not have
subject matter jurisdiction, or any state court located in Maryland in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement and (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court.
50
8.9 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.10 Exculpation. This Agreement shall not impose any personal liability on
any stockholder, trustee, trust manager, manager, director, officer, employee or
agent of JP, PDC LP, GGP, GGP Partnership, Acquisition or Partnership
Acquisition, and all Persons shall look solely to the property of JP, PDC LP,
GGP or GGP Partnership for the payment of any claim hereunder or for the
performance of this Agreement.
8.11 Joint and Several Obligations. GGP, GGP Partnership, Acquisition and
Partnership Acquisition shall be jointly and severally liable hereunder. JP and
PDC LP shall be jointly and severally liable hereunder.
8.12 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, FOR ITSELF AND FOR THE THIRD
PARTY BENEFICIARIES HEREUNDER, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
8.13 Knowledge of GGP. If, to the Knowledge of GGP on the date hereof,
there is a matter which should be set forth on any JP Disclosure Schedule, such
matter shall be deemed to be set forth thereon to the extent of such Knowledge.
51
IN WITNESS WHEREOF, GGP, GGP Partnership, Acquisition, Partnership
Acquisition, JP and PDC LP have caused this Agreement to be signed by their
respective officers, general partners or members thereunto duly authorized all
as of the date first written above.
GENERAL GROWTH PROPERTIES, INC.
By: ________________________________
Name:
Title
GGP LIMITED PARTNERSHIP
By: General Growth Properties, Inc.,
General Partner
By:_____________________________
Name:
Title:
GGP ACQUISITION, L.L.C.
By: GGP Limited Partnership, Member
By: General Growth Properties,
Inc., General Partner
By:_____________________________
Name:
Title:
GGP ACQUISITION II, L.L.C.
By: GGP Limited Partnership, Member
By: General Growth Properties,
Inc., General Partner
By:_____________________________
Name:
Title:
52
JP REALTY, INC.
By: ________________________________
Name:
Title:
PRICE DEVELOPMENT COMPANY, LIMITED
PARTNERSHIP
By: JP Realty, Inc., General
Partner
By:_____________________________
Name:
Title:
53
Exhibit E
FOURTH AMENDMENT
TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GGP LIMITED PARTNERSHIP
THIS FOURTH AMENDMENT (the "Fourth Amendment") is made and entered into on
the _____ day of _____________, 2002, by and among the undersigned parties.
W I T N E S S E T H:
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership
(the "Partnership") exists pursuant to that certain Second Amended and Restated
Agreement of Limited Partnership of GGP Limited Partnership dated as of April 1,
1998, as amended by that certain First Amendment thereto dated as of June 10,
1998, that certain Second Amendment thereto dated as of June 29, 1998 and that
certain Third Amendment thereto dated as of ______________ (such Second Amended
and Restated Agreement of Limited Partnership, as so amended, the "Second
Restated Partnership Agreement"), and the Delaware Revised Uniform Limited
Partnership Act;
WHEREAS, General Growth Properties, Inc., a Delaware corporation, is the
general partner of the Partnership (the "General Partner");
WHEREAS, upon the closing of the transactions contemplated pursuant to that
certain Agreement and Plan of Merger dated as of __________, 2002, among the
Partnership, the General Partner and the other parties thereto (the "Merger
Agreement"), the parties whose names are set forth under the caption "New
Limited Partners" on the signature pages hereto (collectively, the "New Limited
Partners") are to receive Series B Preferred Units (as defined below); and
WHEREAS, the parties hereto, being the sole general partner of the
Partnership, the holders of a Majority-in-Interest of the Common Units (as
defined in the Second Restated Partnership Agreement) and the New Limited
Partners, desire to amend the Second Restated Partnership Agreement to effect
the creation and issuance of the Series B Preferred Units and to reflect certain
other understandings among them as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. Capitalized Terms. Capitalized terms used but not defined herein
(including without limitation in attached Schedule A) shall have the definitions
assigned to such terms in the Second Restated Partnership Agreement, as amended
hereby.
2. Additional Definitions. Section 1.1 of the Second Restated Partnership
Agreement is hereby amended by inserting the following new definitions:
"Aggregate Protected Amount" shall mean, with respect to the
Obligated Partners, as a group, the aggregate amount of the Protected
Amounts, if any, of the Obligated Partners, as determined on the date in
question.
"Indirect Owner" means, in the case of an Obligated Partner that is
an entity that is classified as a partnership or disregarded entity for
federal income tax purposes, any person owning an equity interest in such
Obligated Partner, and, in the case of any Indirect Owner that itself is
an entity that is classified as a partnership or disregarded entity for
federal income tax purposes, any person owning an equity interest in such
entity.
"Obligated Partner" shall mean that or those Limited Partners listed
as Obligated Partners on Exhibit D attached hereto and made a part hereof,
as such Exhibit may be amended from time to time by the General Partner,
whether by express amendment to this Agreement or by execution of a
written instrument by and between any additional Obligated Partner being
directly affected thereby and the General Partner acting on behalf of the
Partnership and without the prior consent of the Limited Partners (other
than the Obligated Partners being affected thereby).
"Partner Nonrecourse Debt" shall mean a liability as defined in
Regulations Section 1.704-2(b)(4).
"Protected Amount" shall mean, with respect to any Obligated
Partner, the amount set forth opposite the name of such Obligated Partner
on Exhibit D hereto and made a part hereof, as such Exhibit may be amended
from time to time by an amendment to the Partnership Agreement or by
execution of a written instrument by and between any Obligated Partners
being affected thereby and the General Partner, acting on behalf of the
Partnership and without the prior consent of the Limited Partners (other
than the Obligated Partners being affected thereby); provided, however,
that, in the case of an Obligated Partner that is an entity that is
classified as a partnership or disregarded entity for federal income tax
purposes, upon the date nine months after the death of any Indirect Owner
in such Obligated Partner, or upon a fully taxable sale or exchange of all
of an Indirect Owner's equity interest in such Obligated Partner (i.e., a
sale or exchange in which the transferee's basis in the Indirect Owner's
equity interest in the Obligated Partner is not determined, in whole or in
part, by reference to the Indirect Owner's basis in the Obligated
Partner), the Protected Amount of such Obligated Partner shall be reduced
to the extent of the Indirect Owner's allocable share of the Obligated
Partner's Protected Amount. The principles of the preceding sentence shall
apply in the same manner in the case of any Indirect Owner that itself is
an entity that is classified as a partnership or disregarded entity for
federal income tax purposes..
"Recourse Liabilities" shall mean, as of the date of determination,
the amount of indebtedness of the Partnership on that date other than
Nonrecourse Liabilities and Partner Nonrecourse Debt.
3. Establishment and Issuance of Series B Preferred Units. A new series of
Preferred Units designated as the "8.5% Series B Cumulative Convertible
Preferred Units" (the "Series B Preferred Units") is hereby established and
shall have such rights, preferences,
-2-
limitations and qualifications as are described on Schedule A, attached hereto
and by this reference made a part hereof (in addition to the rights,
preferences, limitations and qualifications contained in the Second Restated
Partnership Agreement to the extent applicable). Pursuant to the Merger
Agreement, the Partnership hereby issues to each New Limited Partner the number
of Series B Preferred Units set forth opposite its name on Exhibit A, attached
hereto and by this reference made a part hereof. Each New Limited Partner is
hereby admitted as a Limited Partner in respect of the Series B Preferred Units
issued to it, and such New Limited Partner hereby agrees to be bound by the
provisions of the Second Restated Partnership Agreement, as the same is amended
hereby and as the same may be amended from time to time, with respect to such
Series B Preferred Units (including without limitation the provisions of
Sections 8.2, 8.4, 9.1, 9.2 and 9.3 thereof).
4. Negative Capital Accounts. The following new Section 7.8 is hereby added
to the Second Restated Partnership Agreement:
"7.8 Negative Capital Accounts.
(a) Except as provided in the next sentence and Section 7.8(b), no
Partner shall be liable to the Partnership or to any other partner for any
deficit or negative balance which may exist in its Capital Account. Upon
liquidation of any Obligated Partner's interest in the Partnership, whether
pursuant to a liquidation of the Partnership or by means of a distribution
to the Obligated Partner by the Partnership, if such Obligated Partner has
a deficit balance in its Capital Account, after giving effect to all
contributions, distributions, allocations and adjustments to Capital
Accounts for all periods, each such Obligated Partner shall contribute to
the capital of the Partnership an amount equal to its respective deficit
balance. Each Obligated Partner having such an obligation to restore a
deficit Capital Account shall satisfy such obligation by the end of the
fiscal year of liquidation (or, if later, within ninety (90) days following
the liquidation and dissolution of the Partnership). Any such contribution
by an Obligated Partner shall be used to make payments to creditors of the
Partnership and such Obligated Partners (i) shall not be subrogated to the
rights of any such creditor against the General Partner, the Partnership,
another Partner, or any Person related thereto, and (ii) hereby waive any
right to reimbursement, contribution or similar right to which such
Obligated Partners might otherwise be entitled as a result of the
performance of their obligations under this Agreement.
(b) Notwithstanding any other provision of this Agreement, an
Obligated Partner shall cease to be an Obligated Partner upon the earlier
of (i) nine months after the death of such Obligated Partner or (ii) six
months after (A) any date after the third anniversary date of the date
hereof which is selected by the Obligated Partner as the date upon which
such Obligated Partner's obligation hereunder shall terminate (and for
which notice of such date shall be given at least 60 days prior to such
selected date) or (B) an exchange of all of such Obligated Partner's
remaining Units for shares of Common Stock or Preferred Stock (pursuant to
a Rights Agreement) or in an otherwise taxable sale or exchange of all of
such Obligated Partner's Units provided that at the time of, or during such
six-month period following such event set forth in (ii)(A) or (B), there
has not been: (X) an entry of a decree or order for relief in respect of
the Partnership by a court having
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jurisdiction over a substantial part of the Partnership's assets, or the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Partnership or of any
substantial part of its property, or ordering the winding up or liquidation
of the Partnership's affairs, in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law; or (Y) the
commencement against the Partnership of an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law; or
(Z) the commencement by the Partnership of a voluntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
the consent by it to the entry of an order for relief in an involuntary
case under any such law or the consent by it to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Partnership or of any
substantial part of its property, or the making by it of a general
assignment for the benefit of creditors, or the failure of the Partnership
generally to pay its debts as such debts become due or the taking of any
action in furtherance of any of the foregoing. Following the passage of the
six-month period after the event set forth in clause (ii)(A) or (B) of this
paragraph, an Obligated Partner shall cease to be an Obligated Partner at
the first time, if any, that all of the conditions set forth in (X) through
(Z) above are no longer in existence."
5. New Exhibit A. Exhibit A to the Second Restated Partnership Agreement,
identifying the Partners, the number of Units owned by them and their respective
Percentage Interests, if any, is hereby deleted in its entirety and the Exhibit
A in the form attached hereto is hereby inserted in its place and stead.
6. Allocations. Exhibit C of the Second Restated Partnership Agreement,
describing the allocations of the Net Income, Net Loss and/or other Partnership
items, is hereby deleted in its entirety and the Exhibit C in the form attached
hereto is hereby inserted in its place and stead.
7. Other Provisions Unaffected. Except as expressly amended hereby, the
Second Restated Partnership Agreement shall remain in full force and effect in
accordance with its terms.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Fourth Amendment on
the day and year first above written.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By:
---------------------------
Its:
-----------------------
LIMITED PARTNERS:
NEW LIMITED PARTNERS:
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EXHIBIT C
Allocations
[TO COME]
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SCHEDULE A
1. Definitions. As used herein, the following terms shall have the meanings
set forth below, unless the context otherwise requires:
"Distribution Period" shall mean the quarterly period that is then the
dividend period with respect to the Common Stock or, if no such dividend period
is established, the calendar quarter shall be the Dividend Period; provided that
(a) the initial distribution period shall commence on _____________, 2002 and
end on and include _____________, 2002 and (b) the distribution period in which
the final liquidation payment is made pursuant to Section 7.2 of the Second
Restated Partnership Agreement shall commence on the first day following the
immediately preceding Distribution Period and end on the date of such final
liquidation payment.
"Distribution Payment Date" shall mean, with respect to any Distribution
Period, the payment date for the distribution declared by the General Partner on
its shares of Common Stock for such Distribution Period or, if no such
distribution payment date is established, the last business day of such
Distribution Period.
"Fair Market Value" shall mean the average of the daily Closing Price
during the five consecutive Trading Days selected by the General Partner
commencing not more than 20 Trading Days before, and ending not later than, the
day in question with respect to the issuance or distribution requiring such
computation.
"Fifteenth Anniversary Date" shall mean ________________, 2017(1).
2. Designation and Number; Etc. The Series B Preferred Units have been
established and shall have such rights, preferences, limitations and
qualifications as are described herein (in addition to the rights, preferences,
limitations and qualifications contained in the Second Restated Partnership
Agreement to the extent applicable). The authorized number of Series B Preferred
Units shall be __________. Notwithstanding anything to the contrary contained
herein, in the event of a conflict between the provisions of this Schedule A and
any other provision of the Second Restated Partnership Agreement, the provisions
of this Schedule A shall control . For purposes of this Amendment, the rights of
the Series B Preferred Units shall be construed to include their rights under
the Redemption Rights Agreement (Common Units) and Redemption Rights Agreement
(Preferred Units).
3. Rank. The Series B Preferred Units shall, with respect to the payment of
distributions and the distribution of amounts upon voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, rank as follows:
(a) senior to all classes or series of Common Units and to all Units the
terms of which provide that such Units shall rank junior to such Series B
Preferred Units;
----------
(1) This date will be the fifteenth anniversary of the closing.
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(b) on a parity with the Series A Preferred Units and each other series of
Preferred Units issued by the Partnership which does not provide by its express
terms that it ranks junior in right of payment to the Series B Preferred Units
with respect to payment of distributions or amounts upon liquidation,
dissolution or winding-up; and
(c) junior to any class or series of Preferred Units issued by the
Partnership that ranks senior to the Series B Preferred Units in accordance with
Section 4 of this Schedule A.
4. Voting.
(a) Holders of Series B Preferred Units shall not have any voting rights,
except as provided by applicable law and as described below in this Section 4.
(b) So long as any Series B Preferred Units remain outstanding, the
Partnership shall not, without the affirmative vote or consent of the holders of
at least a majority of the Series B Preferred Units outstanding at the time,
given in person or by proxy, either in writing or at a meeting (such series
voting separately as a class), (i) authorize, create, issue or increase the
authorized or issued amount of, any class or series of partnership interests in
the Partnership ranking prior to the Series B Preferred Units with respect to
the payment of distributions or the distribution of assets upon voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership or
reclassify any Common Units into such partnership interests, or create,
authorize or issue any obligation or security convertible or exchangeable into
or evidencing the right to purchase any such partnership interests; or (ii)
amend, alter or repeal the provisions of the Partnership Agreement, whether by
merger or consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of the Series
B Preferred Units or the holders thereof. Notwithstanding anything to the
contrary contained herein, none of the following shall be deemed to materially
and adversely affect any such right, preference, privilege or voting power or
otherwise require the vote or consent of the holders of the Series B Preferred
Units: (X) the occurrence of any Event so long as either (1) the Partnership is
the surviving entity, such entity is the principal direct subsidiary of a
publicly traded REIT whose common equity is traded on the New York Stock
Exchange and the Series B Preferred Units remain outstanding with the terms
thereof materially unchanged or (2) interests in an entity having substantially
the same rights and terms as the Series B Preferred Units are substituted for
the Series B Preferred Units and such entity is the principal direct subsidiary
of a publicly traded REIT whose common equity is traded on the New York Stock
Exchange, (Y) any increase in the amount of the authorized Preferred Units or
the creation or issuance of any other series or class of Preferred Units or any
increase in the amount of any other series of Preferred Units, in each case
ranking on a parity with or junior to the Series B Preferred Units with respect
to payment of distributions and the distribution of assets upon voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership and (Z)
the dissolution, liquidation and/or winding up of the Partnership.
The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding Series B Preferred Units shall have been converted
or redeemed.
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For purposes of the foregoing provisions of this Section 4, each Series B
Preferred Unit shall have one (1) vote. Except as otherwise required by
applicable law or as set forth herein, the Series B Preferred Units shall not
have any voting rights or powers and the consent of the holders thereof shall
not be required for the taking of any action.
5. Distributions.
(a) With respect to each Distribution Period and subject to the rights of
the holders of Preferred Units ranking senior to or on parity with the Series B
Preferred Units, the holders of Series B Preferred Units shall be entitled to
receive, when, as and if declared by the General Partner, out of assets of the
Partnership legally available for the payment of distributions, quarterly
cumulative cash distributions in an amount per Series B Preferred Unit equal to
the greater of (i) $1.0625 and (ii) the amount of the regular quarterly cash
distribution for such Distribution Period upon the number of Common Units (or
portion thereof) into which such Series B Preferred Unit is then convertible in
accordance with Section 7 of this Schedule A (but, with respect to any
Distribution Period ending after the Fifteenth Anniversary Date, no amount shall
be paid in respect of clause (ii) of this paragraph in respect of the portion of
such Distribution Period occurring after the Fifteenth Anniversary Date).
Notwithstanding anything to the contrary contained herein, the amount of
distributions described under either clause (i) or (ii) of this paragraph for
the initial Distribution Period, or any other period shorter than a full
Distribution Period, shall be prorated and computed on the basis of twelve
30-day months and a 360-day year. The distributions upon the Series B Preferred
Units for each Distribution Period shall, if and to the extent declared or
authorized by the General Partner on behalf of the Partnership, be paid in
arrears (without interest or other amount) on the Distribution Payment Date with
respect thereto, and, if not paid on such date, shall accumulate, whether or not
there are funds legally available for the payment thereof and whether or not
such distributions are declared or authorized. The record date for distributions
upon the Series B Preferred Units for any Distribution Period shall be the same
as the record date for the distributions upon the Common Units for such
Distribution Period (or, if no such record is set for the Common Units, the
fifteenth day of the calendar month in which the applicable Distribution Payment
Date falls). Accumulated and unpaid distributions for any past Distribution
Periods may be declared and paid at any time, without reference to any
Distribution Payment Date, to holders of record on such date, not exceeding 45
days preceding the payment date thereof, as may be fixed by the General Partner.
Any distribution payment made upon the Series B Preferred Units shall first be
credited against the earliest accumulated but unpaid distributions due with
respect to such Units which remains payable. No interest, or sum of money in
lieu of interest, shall be owing or payable in respect of any distribution
payment or payments on the Series B Preferred Units, whether or not in arrears.
(b) No distribution on the Series B Preferred Units shall be declared by
the General Partner or paid or set apart for payment by the Partnership at such
time as the terms and provisions of any agreement of the Partnership, including
any agreement relating to its indebtedness, prohibits such declaration, payment
or setting apart for payment or provides that such declaration, payment or
setting apart for payment would constitute a breach thereof, or a default
thereunder, or if such declaration or payment shall be restricted or prohibited
by law. Notwithstanding the foregoing, distributions on the Series B Preferred
Units shall accumulate whether or not any of the foregoing restrictions exist.
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(c) Except as provided in Section 5(d) of this Schedule A, so long as any
Series B Preferred Units are outstanding, (i) no distributions (other than in
Common Units or other Units ranking junior to the Series B Preferred Units as to
payment of distributions and amounts upon liquidation, dissolution or winding-up
of the Partnership) shall be declared or paid or set apart for payment upon the
Common Units or any other class or series of partnership interests in the
Partnership or Units ranking, as to payment of distributions or amounts
distributable upon liquidation, dissolution or winding-up of the Partnership, on
a parity with or junior to the Series B Preferred Units, for any period and (ii)
no Common Units or other Units ranking junior to or on a parity with the Series
B Preferred Units as to payment of distributions or amounts upon liquidation,
dissolution or winding-up of the Partnership, shall be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such Units) by the
Partnership (except by conversion into or exchange for other Units ranking
junior to the Series B Preferred Units as to payment of distributions and
amounts upon liquidation, dissolution or winding-up of the Partnership or by
redemptions pursuant to Rights Agreements) unless, in the case of either clause
(i) or (ii), full cumulative distributions have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series B Preferred Units for all Distribution
Periods ending on or prior to the distribution payment date for the Common Units
or such other class or series of Unit or the date of such redemption, purchase
or other acquisition.
(d) When distributions are not paid in full (or a sum sufficient for such
full payment is not set apart for such payment) upon the Series B Preferred
Units and any other partnership interests in the Partnership or Units ranking on
a parity as to payment of distributions with the Series B Preferred Units, all
distributions declared upon the Series B Preferred Units and any other
partnership interests in the Partnership or Units ranking on a parity as to
payment of distributions with the Series B Preferred Units shall be declared pro
rata so that the amount of distributions declared per Unit of Series B Preferred
Units and such other partnership interests in the Partnership or Units shall in
all cases bear to each other the same ratio that accrued distributions per Unit
on the Series B Preferred Units and such other partnership interests in the
Partnership or Units (which shall not include any accumulation in respect of
unpaid distributions for prior distribution periods if such Units do not have
cumulative distributions) bear to each other.
(e) Holders of Series B Preferred Units shall not be entitled to any
distributions, whether payable in cash, property or Units, in excess of the
cumulative distributions described in Section 5(a) above.
(f) Distributions with respect to the Series B Preferred Units are intended
to qualify as permitted distributions of cash that are not treated as a
disguised sale within the meaning of Treasury Regulation ss.1.707-4 and the
provisions of this Schedule A shall be construed and applied consistently with
such Treasury Regulations.
(g) Notwithstanding anything to the contrary contained herein (but subject
to the last sentence of Section 5(a) hereof), if the distributions with respect
to the Series B Preferred Units made on or prior to the second anniversary of
the issuance of the Series B Preferred Units would result in any holder of
Series B Preferred Units receiving an annual return on such holder's
A-4
"unreturned capital" (as defined for purposes of Treasury Regulation Section
1.707-4(a)) for a fiscal year (treating the fiscal year in which such second
anniversary occurs as ending on such date) in excess of the Safe Harbor Rate (as
defined below), then the distributions to such holder in excess of such Safe
Harbor Rate will be deferred, will cumulate and will be paid, if and to the
extent declared or authorized by the General Partner on behalf of the
Partnership and subject to the provisions of Section 5(b) hereof, on the earlier
to occur of (i) the disposition of the Series B Preferred Units to which such
deferred distributions relate in a transaction in which the disposing holder
recognizes taxable gain thereon or (ii) the first distribution payment date with
respect to the Series B Preferred Units following the second anniversary of the
issuance of the Series B Preferred Units. For purposes of the foregoing, the
"Safe Harbor Rate" shall equal 150% of the highest applicable federal rate,
based on quarterly compounding, in effect for purposes of Section 1274(d) of the
Code at any time between the date of the issuance of the Series B Preferred
Units and the date on which the relevant distribution payment is made.
Notwithstanding anything to the contrary contained herein, any distributions
that are deferred under this section shall be deemed to have been paid in full
for purposes of Sections 5(c) and (d) of this Schedule A until the end of the
Dividend Period during which they are to be paid as provided above.
(h) For any quarterly period, any amounts paid with respect to the Series B
Preferred Units in excess of the amount that would have been paid with respect
to such Units for such period had they been converted into Common Units in
accordance with the terms of Section 7 of this Schedule A are intended to
constitute guaranteed payments within the meaning of Section 707(c) of the Code
and shall not be treated as distributions for purposes of allocating Net Income
and Net Loss or otherwise maintaining Capital Accounts.
6. Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership, before any payment or distribution of the
assets of the Partnership (whether capital or surplus) shall be made to or set
apart for the holders of Common Units or any other partnership interests in the
Partnership or Units ranking junior to the Series B Preferred Units as to the
distribution of assets upon the liquidation, dissolution or winding-up of the
Partnership, the holders of the Series B Preferred Units shall, with respect to
each such Unit, be entitled to receive, out of the assets of the Partnership
available for distribution to Partners after payment or provision for payment of
all debts and other liabilities of the Partnership, an amount equal to the
greater of (i) $50.00, plus an amount equal to all distributions (whether or not
earned or declared) accrued and unpaid thereon to the date of final distribution
and (ii) the amount that a holder of such Series B Preferred Unit would have
received upon final distribution in respect of the number of Common Units into
which such Series B Preferred Unit was convertible immediately prior to such
date of final distribution (but no amount shall be paid in respect of the
foregoing clause (ii) after the Fifteenth Anniversary Date). If, upon any such
voluntary or involuntary liquidation, dissolution or winding-up of the
Partnership, the assets of the Partnership, or proceeds thereof, distributable
among the holders of the Series B Preferred Units are insufficient to pay in
full the preferential amount aforesaid on the Series B Preferred Units and
liquidating payments on any other Units or partnership interests in the
Partnership of any class or series ranking, as to payment of distributions and
amounts upon the liquidation, dissolution or winding-up of the Partnership, on a
parity with the Series B Preferred Units, then such assets, or the proceeds
thereof,
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shall be distributed among the holders of Series B Preferred Units and any such
other Units or partnership interests in the Partnership ratably in accordance
with the respective amounts that would be payable on such Series B Preferred
Units and such other Units or partnership interests in the Partnership if all
amounts payable thereon were paid in full. For the purposes of this Section 6,
none of (i) a consolidation or merger of the Partnership with or into another
entity, (ii) a merger of another entity with or into the Partnership or (iii) a
sale, lease or conveyance of all or substantially all of the Partnership's
assets, properties or business shall be deemed to be a liquidation, dissolution
or winding-up of the Partnership.
(b) Written notice of such liquidation, dissolution or winding-up of the
Partnership, stating the payment date or dates when, and the place or places
where, the amounts distributable in such circumstances shall be payable, shall
be given by first class mail, postage pre-paid, not less than 30 nor more than
60 days prior to the payment date stated therein, to each record holder of the
Series B Preferred Units at the respective addresses of such holders as the same
shall appear on the transfer records of the Partnership.
(c) After payment of the full amount of liquidating distributions to which
they are entitled as provided in Section 6(a) of this Schedule A, the holders of
Series B Preferred Units shall have no right or claim to any of the remaining
assets of the Partnership.
7. Conversion. Holders of Series B Preferred Units shall have the right to
convert all or a portion of such Units into Common Units, as follows:
(a) A holder of Series B Preferred Units shall have the right, at such
holder's option, at any time, to convert any whole number of Series B Preferred
Units, in whole or in part, into Common Units. Each Series B Preferred Unit
shall be convertible into the number of Common Units determined by dividing (i)
the $50 face amount per Share, plus an amount equal to all distributions
(whether or not earned or declared) accrued and unpaid thereon to the end of the
last Distribution Period ending prior to the conversion, by (ii) a conversion
price of $50.00 per Common Unit (equivalent to an initial conversion rate of one
Common Unit for each Series B Preferred Unit), subject to adjustment as
described in Section 7(c) hereof (the "Conversion Price"); provided, however,
that the right to convert Series B Preferred Units may not be exercised after
the Fifteenth Anniversary Date. No fractional Common Units will be issued upon
any conversion of Series B Preferred Units. Instead, the number of Common Units
to be issued upon each conversion shall be rounded to the nearest whole number
of Common Units.
(b) To exercise the conversion right, the holder of each Preferred Unit to
be converted shall execute and deliver to the General Partner, at the principal
office of the Partnership, a written notice (the "Conversion Notice") indicating
that the holder thereof elects to convert such Series B Preferred Unit. Unless
the Units issuable on conversion are to be issued in the same name as the name
in which such Series B Preferred Unit is registered, each Series B Preferred
Unit surrendered for conversion shall be accompanied by instruments of transfer,
in form reasonably satisfactory to the Partnership, duly executed by the holder
or such holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the Partnership
demonstrating that such taxes have been paid).
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As promptly as practicable after delivery of the Conversion Notice as
aforesaid, the Partnership shall amend the Partnership Agreement to reflect the
conversion and the issuance of Common Units issuable upon the conversion of such
Series B Preferred Units in accordance with the provisions of this Section 7. In
addition, the Partnership shall deliver to the holder at its address as
reflected on the records of the Partnership, a copy of such amendment.
A holder of Series B Preferred Units at the close of business on the record
date for any Distribution Period shall be entitled to receive the distribution
payable on such Units on the corresponding Distribution Payment Date
notwithstanding the conversion of such Series B Preferred Units following such
record date and prior to such Distribution Payment Date and shall have no right
to receive any distribution for such Distribution Period in respect of the
Common Units into which such Series B Preferred Units were converted. Except as
provided herein, the Partnership shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on converted Series B Preferred Units
or for distributions on the Common Units that are issued upon such conversion.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the Conversion Notice is received by
the Partnership as aforesaid, and the person or persons in whose name or names
any Common Units shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of such Units at such time on such date,
and such conversion shall be at the Conversion Price in effect at such time and
on such date unless the transfer books of the Partnership shall be closed on
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date on which such Units have been surrendered
and such notice received by the Partnership.
(c) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Partnership shall, after the date on which the Series B
Preferred Units are first issued (the "Issue Date"), (A) pay or make a
distribution to holders of its partnership interests or Units in Common
Units, (B) subdivide its outstanding Common Units into a greater number of
Units or distribute Common Units to the holders thereof, (C) combine its
outstanding Common Units into a smaller number of Units or (D) issue any
partnership interests or Units by reclassification of its Common Units, the
Conversion Price in effect at the opening of business on the day following
the date fixed for the determination of holders entitled to receive such
distribution or at the opening of business on the day next following the
day on which such subdivision, combination or reclassification becomes
effective, as the case may be, shall be adjusted so that the holder of any
Series B Preferred Unit thereafter surrendered for conversion shall be
entitled to receive the number of Common Units or other partnership
interests or securities that such holder would have owned or have been
entitled to receive after the happening of any of the events described
above had such Series B Preferred Unit been converted immediately prior to
the record date in the case of a distribution or the effective date in the
case of a subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (i) shall become effective immediately after
the opening of business on the day next following the record date (except
as provided in subsection (g) below) in the
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case of a distribution and shall become effective immediately after the
opening of business on the day next following the effective date in the
case of a subdivision, combination or reclassification.
(ii) If the Partnership shall issue after the Issue Date rights,
options or warrants to all holders of Common Units entitling them to
subscribe for or purchase Common Units (or securities convertible into or
exchangeable for Common Units) at a price per Unit less than the Fair
Market Value per Common Unit on the record date for the determination of
holders of Common Units entitled to receive such rights, options or
warrants, then the Conversion Price in effect at the opening of business on
the day next following such record date shall be adjusted to equal the
price determined by multiplying (I) the Conversion Price in effect
immediately prior to the opening of business on the day following the date
fixed for such determination by (II) a fraction, the numerator of which
shall be the sum of (A) the number of Common Units outstanding at the close
of business on the date fixed for such determination and (B) the number of
Common Units that the aggregate proceeds to the Partnership from the
exercise of such rights, options or warrants for Common Units would
purchase at such Fair Market Value, and the denominator of which shall be
the sum of (A) the number of Common Units outstanding at the close of
business on the date fixed for such determination and (B) the number of
additional Common Units offered for subscription or purchase pursuant to
such rights, options or warrants. Such adjustment shall become effective
immediately after the opening of business on the day next following such
record date (except as provided in subsection (g) below). In determining
whether any rights, options or warrants entitle the holders of Common Units
to subscribe for or purchase Common Units at less than the Fair Market
Value, there shall be taken into account any consideration received by the
Partnership upon issuance and upon exercise of such rights, options or
warrants, the value of such consideration, if other than cash, to be
determined in good faith by the Board of the General Partner.
(iii) If the Partnership shall distribute to all holders of Common
Units any other securities or evidences of its indebtedness or assets
(excluding those rights, options and warrants referred to in and treated
under subsection (ii) above, and excluding distributions paid exclusively
in cash) (any of the foregoing being hereinafter in this subsection (iii)
called the "Securities"), then in each case the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying (I) the
Conversion Price in effect immediately prior to the close of business on
the date fixed for the determination of holders of Common Units entitled to
receive such distribution by (II) a fraction, the numerator of which shall
be the Fair Market Value per Common Unit on the record date mentioned below
less the then fair market value (as determined in good faith by the Board
of the General Partner) of the portion of the securities so distributed
applicable to one Common Unit, and the denominator of which shall be the
Fair Market Value per Common Unit on the record date mentioned below. Such
adjustment shall become effective immediately at the opening of business on
the business day next following (except as provided in subsection (g)
below) the record date for the determination of holders of Common Units
entitled to receive such distribution. For the purposes of this subsection
(iii), a distribution in the form of a Security, which is distributed not
only to the holders of the Common Units on the date fixed for the
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determination of holders of Common Units entitled to such distribution of
such Security, but also is distributed with each Common Unit delivered to a
person converting a Series B Preferred Unit after such determination date,
shall not require an adjustment of the Conversion Price pursuant to this
subsection (iii); provided that on the date, if any, on which a person
converting a Series B Preferred Unit would no longer be entitled to receive
such Security with a Common Unit, a distribution of such Securities shall
be deemed to have occurred, and the Conversion Price shall be adjusted as
provided in this subsection (iii) (and such day shall be deemed to be "the
date fixed for the determination of the holders of Common Units entitled to
receive such distribution" and "the record date" within the meaning of the
two preceding sentences).
(iv) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least
1% in such price; provided, however, that any adjustments that by reason of
this subsection (iv) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment until made; and
provided, further, that any adjustment shall be required and made in
accordance with the provisions of this Section 7 (other than this
subsection (iv)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of Common
Units. Notwithstanding any other provisions of this Section 7, the
Partnership shall not be required to make any adjustment to the Conversion
Price for the issuance of any Common Units pursuant to any plan providing
for the reinvestment of distributions or interest payable on securities of
the Partnership and the investment of additional optional amounts in Common
Units under such plan. All calculations under this Section 7 shall be made
to the nearest cent (with $.005 being rounded upward) or to the nearest
one-tenth of a Unit (with .05 of a Unit being rounded upward), as the case
may be. Anything in this subsection (c) to the contrary notwithstanding,
the Partnership shall be entitled, to the extent permitted by law, to make
such reductions in the Conversion Price, in addition to those required by
this subsection (c), as it in its discretion shall determine to be
advisable in order that any Unit distributions, subdivision of Units,
reclassification or combination of Units, distribution of rights, options
or warrants to purchase Units or securities, or a distribution consisting
of other assets (other than cash distributions) hereafter made by the
Partnership to its holders of Units shall not be taxable but any such
adjustment shall not adversely affect the value of the Series B Preferred
Units.
(d) If the Partnership shall be a party to any transaction (including,
without limitation, a merger, consolidation, self tender offer for all or
substantially all of the Common Units, sale of all or substantially all of the
Partnership's assets or recapitalization of the Common Units and excluding any
transaction as to which subsection (c)(i) of this Section 7 applies) (each of
the foregoing being referred to herein as a "Transaction"), in each case as a
result of which Common Units shall be converted into the right to receive other
partnership interests, shares, stock, securities or other property (including
cash or any combination thereof), each Series B Preferred Unit which is not
converted into the right to receive other partnership interests, shares, stock,
securities or other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of shares, stock, securities
and other property (including cash or any combination thereof) receivable upon
the consummation of such Transaction by a holder of that number of Common Units
into which one Series B Preferred Unit was convertible immediately
A-9
prior to such Transaction, assuming such holder of Common Units is not a Person
with which the Partnership consolidated or into which the Partnership merged or
which merged into the Partnership or to which such sale or transfer was made, as
the case may be (a "Constituent Person"), or an affiliate of a Constituent
Person. The Partnership shall not be a party to any Transaction unless the terms
of such Transaction are consistent with the provisions of this subsection (d),
and it shall not consent or agree to the occurrence of any Transaction until the
Partnership has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series B
Preferred Units that will contain provisions enabling the holders of Series B
Preferred Units that remain outstanding after such Transaction to convert into
the consideration received by holders of Common Units at the Conversion Price in
effect immediately prior to such Transaction (with the holder having the option
to elect the type of consideration if a choice was offered in the Transaction).
The provisions of this subsection (d) shall similarly apply to successive
Transactions.
(e) If:
(i) the Partnership shall declare a distribution on the Common Units
(other than a cash distribution) or there shall be a reclassification,
subdivision or combination of Common Units; or
(ii) the Partnership shall authorize the granting to the holders of
the Common Units of rights, options or warrants to subscribe for or
purchase any Units of any class or any other rights, options or warrants;
or
(iii) there shall be any reclassification of the Common Units or any
consolidation or merger to which the Partnership is a party and for which
approval of any partners of the Partnership is required, involving the
conversion or exchange of Common Units into securities or other property,
or a self tender offer by the Partnership for all or substantially all of
the Common Units, or the sale or transfer of all or substantially all of
the assets of the Partnership as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership,
then the Partnership shall cause to be mailed to the holders of the Series B
Preferred Units at their addresses as shown on the records of the Partnership,
as promptly as possible a notice stating (A) the date on which a record is to be
taken for the purpose of such distribution of rights, options or warrants, or,
if a record is not to be taken, the date as of which the holders of Common Units
of record to be entitled to such distribution of rights, options or warrants are
to be determined or (B) the date on which such reclassification, subdivision,
combination, consolidation, merger, sale, transfer, liquidation, dissolution or
winding-up is expected to become effective, and the date as of which it is
expected that holders of Common Units of record shall be entitled to exchange
their Common Units for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding-up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings described
in this Section 7.
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(f) Whenever the Conversion Price is adjusted as herein provided, the
Partnership shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to the holder of each Series B Preferred Unit at such
holder's last address as shown on the records of the Partnership.
(g) In any case in which subsection (c) of this Section 7 provides that an
adjustment shall become effective on the date next following the record date for
an event, the Partnership may defer until the occurrence of such event issuing
to the holder of any Series B Preferred Unit converted after such record date
and before the occurrence of such event the additional Common Units issuable
upon such conversion by reason of the adjustment required by such event over and
above the Common Units issuable upon such conversion before giving effect to
such adjustment.
(h) For purposes of this Section 7, the number of Common Units at any time
outstanding shall not include any Common Units then owned or held by or for the
account of the Partnership. The Partnership shall not make any distribution on
Common Units held in the treasury of the Partnership.
(i) If any action or transaction would require adjustment of the Conversion
Price pursuant to more than one subsection of this Section 7, only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Partnership shall take any action affecting the Common Units,
other than action described in this Section 7, that in the reasonable judgment
of the General Partner would materially and adversely affect the conversion
rights of the holders of the Series B Preferred Units, the Conversion Price for
the Series B Preferred Units may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the General Partner determines to be
equitable in the circumstances.
(k) The Partnership covenants that Common Units issued upon conversion of
the Series B Preferred Units shall be validly issued, fully paid and
nonassessable and the holder thereof shall be entitled to rights of a holder of
Common Units specified in the Partnership Agreement. Prior to the delivery of
any securities that the Partnership shall be obligated to deliver upon
conversion of the Series B Preferred Units, the Partnership shall endeavor to
comply with all federal and state laws and regulations thereunder requiring the
registration of such securities with, or any approval of or consent to the
delivery thereof, by any governmental authority.
(l) The Partnership will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of Common Units or
other securities or property on conversion of the Series B Preferred Units
pursuant hereto; provided, however, that the Company shall not be required to
pay any tax that may be payable in respect of any transfer involved in the issue
or delivery of Common Units or other securities or property in a name other than
that of the holder of the Series B Preferred Units to be converted, and no such
issue or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Partnership the amount of any such tax or
established, to the reasonable satisfaction of the Partnership, that such tax
has been paid.
A-11
Exhibit F
REDEMPTION RIGHTS AGREEMENT (SERIES B PREFERRED UNITS)
Redemption Rights Agreement, dated __________, 2002, among GGP Limited
Partnership, a Delaware limited partnership (the "Partnership"), General Growth
Properties, Inc., a Delaware corporation (the "General Partner"), and the
parties whose names are set forth under the caption "Contributing Parties" on
the signature pages hereof (the "Contributing Parties").
R E C I T A L S
WHEREAS, the General Partner is the general partner of the Partnership;
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of
March ___, 2002 (as the same has been amended and may be further amended from
time to time, the "Merger Agreement"), among the Partnership, the General
Partner and the other parties thereto, the Contributing Parties are being
admitted as limited partners of the Partnership and the Partnership is issuing
to them 8.5% Series B preferred units of limited partnership in the Partnership
(such units that are being issued pursuant to the Merger Agreement or any other
securities issued in substitution therefor pursuant to the Series A Preferred
Unit Designation (as defined below), the "Series B Preferred Units"); and
WHEREAS, the parties desire to set forth herein the terms and conditions
upon which the Contributing Parties may cause the Partnership to redeem their
Series B Preferred Units.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Acts" shall mean the Securities Act and the Exchange Act, collectively.
"Affiliates" shall mean "affiliates" as defined pursuant to the Securities
Act and the regulations promulgated thereunder.
"Business Day" shall mean any day upon which commercial banks are open for
business in Chicago, Illinois.
"Cash Purchase Price" shall mean, with respect to any redeemed or purchased
Series B Preferred Units, an amount of cash equal to the product of (i) the $50
face amount per Series B Preferred Unit plus an amount equal to all
distributions (whether or not earned or declared) accrued and unpaid thereon to
the closing date multiplied by (ii) the number of such redeemed or purchased
Series B Preferred Units.
"Certificate of Incorporation" shall mean the Certificate of Incorporation
of the General Partner, as the same may be amended from time to time.
"Claims" shall have the meaning set forth in Section 4.1(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor code.
"Common Units" shall mean common units of limited partnership in the
Partnership.
"Common Units Redemption Rights Agreement" shall mean that certain
Redemption Rights Agreement (Common Units) dated the date hereof, among the
parties hereto.
"Conversion Factor" shall mean .05, provided that such factor shall be
adjusted in accordance with Section 6(a).
"Contributing Party Representative" shall mean __________________.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor statute.
"Exchange Act Reporting Company" shall mean any corporation or other entity
which is subject to the reporting requirements of the Exchange Act.
"Expiration Date" shall mean the earlier of the fifteenth anniversary of
the date hereof and the date upon which all Series B Preferred Units have been
converted into Common Units or redeemed or purchased in accordance with the
terms hereof.
"Liens" shall have the meaning set forth in the Merger Agreement.
"Major Transaction Event" shall mean, with respect to the General Partner,
(a) a reclassification, capital reorganization or other similar change regarding
or affecting outstanding Shares (other than a change addressed in Section 6(a));
(b) a merger or consolidation of the General Partner with one or more other
corporations or entities, other than a merger pursuant to which the General
Partner is the surviving corporation and the outstanding Shares are not
affected, (c) a sale, lease or exchange of all or substantially all of the
General Partner's assets or (d) the liquidation, dissolution or winding up of
the General Partner.
"Merger Agreement" shall have the meaning set forth in the recitals.
"Notice" shall have the meaning set forth in Section 3.2.
"Partnership Agreement" shall mean that certain Second Amended and Restated
Agreement of Limited Partnership of the Partnership, dated as of April 1, 1998,
as amended by that certain First Amendment thereto dated as of June 10, 1998,
that certain Second Amendment thereto dated as of June 29, 1998, that certain
Third Amendment thereto dated as of February 15, 2002 and that certain Fourth
Amendment thereto dated as ________________, 2002 and as the same may be further
amended from time to time.
"Person" shall mean any natural person, corporation, partnership,
association, limited liability company, trust or other entity.
"Prospectus" shall have the meaning set forth in Section 4.1(a).
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"Preferred Stock" shall mean the 8.5% Series C Cumulative Convertible
Preferred Stock, $100 par value per share, of the General Partner.
"Purchase Price" shall mean the Cash Purchase Price or the Share Purchase
Price, or a combination thereof.
"Redemption Rights" shall have the meaning set forth in Section 2.
"Registration Statement" shall have the meaning set forth in Section
4.1(a).
"REIT" shall mean real estate investment trust as such term is defined
under the Code.
"REIT Requirements" shall have the meaning set forth in the Partnership
Agreement, as the same may change from time to time.
"Rights" shall have the meaning set forth in Section 6(b).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor statute.
"Series B Preferred Units" shall have the meaning set forth in the
recitals.
"Series B Preferred Unit Designation" shall mean Schedule A to the Fourth
Amendment referred to in the definition of "Partnership Agreement".
"Share Purchase Price" shall mean, with respect to the exercise of any
Redemption Rights and subject to the provisions of Section 6(c), a number of
Shares equal to the product of (a) the number of Series B Preferred Units being
redeemed or purchased multiplied by (b) the Conversion Factor; provided,
however, that, in the event the General Partner, after the date of this
Agreement, issues to all holders of Shares rights, options, warrants or
convertible or exchangeable securities entitling the stockholders to subscribe
for or purchase Shares (other than Rights referred to in Section 6(b)) or any
other securities or property (other than distributions paid in cash), then the
Share Purchase Price also shall include such rights, options, warrants or
convertible or exchangeable securities or other securities or property that a
holder of that number of Shares would have been entitled to receive had such
holder held such Shares immediately prior to the time holders of Shares became
entitled thereto.
"Shares" shall mean shares of the Preferred Stock.
2. Grant of Redemption Rights.
(a) Upon the terms and subject to the conditions contained herein, the
Partnership does hereby grant to each Contributing Party, and such Contributing
Party does hereby accept, the right, but without obligation on the part of such
Contributing Party, to require the Partnership to redeem from time to time part
or all of the Series B Preferred Units of such Contributing Party
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for the Cash Purchase Price with respect to such Series B Preferred Units
("Redemption Rights").
(b) Notwithstanding the provisions of Section 2(a), the General Partner
may, in its sole and absolute discretion, assume and satisfy the obligation of
the Partnership with respect to any Contributing Party's exercise of a
Redemption Right by paying to such Contributing Party, at the General Partner's
election (which may be exercised in the General Partner's sole discretion),
either the Cash Purchase Price or the Share Purchase Price (or a combination
thereof) with respect to the Series B Preferred Units for which such
Contributing Party exercised its Redemption Rights. If the General Partner
assumes such obligations with respect to the exercise by any Contributing Party
of a Redemption Right as to certain Series B Preferred Units and makes the
required payment of the Share Purchase Price, the Cash Purchase Price or any
combination thereof, then the Partnership shall have no obligation to pay any
amount to such Contributing Party with respect to the exercise of a Redemption
Right for such Series B Preferred Units, and any Series B Preferred Units
purchased shall be owned by the General Partner for all purposes.
(c) If the General Partner shall assume and satisfy the obligations of the
Partnership with respect to the exercise of a Redemption Right by any
Contributing Party, the Partnership, such Contributing Party and the General
Partner each shall treat the transaction between the General Partner and such
Contributing Party as a sale of such Contributing Party's Series B Preferred
Units (or a portion thereof) to the General Partner for federal income tax
purposes.
(d) Upon the redemption or purchase of part or all of any Contributing
Party's Series B Preferred Units and the payment of the Purchase Price with
respect thereto, such Person shall be deemed withdrawn as a Partner in the
Partnership to the extent of the Series B Preferred Units redeemed or purchased
and shall have no further rights or obligations under this Agreement with
respect to such redeemed or purchased Series B Preferred Units; provided,
however, that such Contributing Party's rights under this Agreement with regard
to any other Series B Preferred Units will continue in full force and effect.
(e) No fractional Shares shall be issued hereunder. In lieu of fractional
Shares, the General Partner shall pay cash based on the per Share liquidation
preference on the relevant closing date.
(f) Notwithstanding anything to the contrary contained herein, the General
Partner shall not issue the Share Purchase Price upon exercise of any Redemption
Right by a Contributing Partner with respect to any Series B Preferred Units
unless all of the Shares so issued are listed on the New York Stock Exchange and
the Registration Statement (as herein defined) covering such Shares shall be in
effect and available for use to effect a public distribution by the holder
thereof of such Shares immediately upon such issuance and the General Partner
only shall issue such Share Purchase Price to the extent that the issuance of
such Shares to such Contributing Party does not violate the Certificate of
Incorporation (assuming such Contributing Party owns no shares of capital stock
of the General Partner other than those issued pursuant hereto and pursuant to
the Common Units Redemption Rights Agreement).
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3. Exercise of Redemption Rights.
3.1 Time for Exercise of Redemption Rights. Each Contributing Party may
exercise its Redemption Rights in whole or in part and at any time and from time
to time on or after the date hereof but prior to the Expiration Date; provided,
however, that the Redemption Rights may not be exercised at any one time by any
Contributing Party with respect to less than 2,000 Series B Preferred Units (or
all the Series B Preferred Units then owned by such Contributing Party if such
Contributing Party owns less than 2,000 Series B Preferred Units) or in the
event that such exercise of Redemption Rights (or the assignment of Series B
Preferred Units or delivery of either the Cash Purchase Price or the Share
Purchase Price with respect thereto) violates the terms of the Partnership
Agreement, the Certificate of Incorporation or applicable law. Once given, a
Notice shall be irrevocable subject to the payment of the Purchase Price for the
Series B Preferred Units specified therein in accordance with the terms hereof.
3.2 Method of Exercise; Etc. The Redemption Rights shall be exercised by
delivery to the Partnership of (a) written notice (the "Notice") in the form of
Exhibit A specifying the number of the Series B Preferred Units to be redeemed
and the name or names (with address) in which any Shares issuable upon such
exercise shall be registered if different than the Contributing Party and (b)
the certificates, if any, representing such Series B Preferred Units.
Notwithstanding anything to the contrary contained herein, in the event that (A)
all of the Series B Preferred Units of any deceased Contributing Party or the
Series B Preferred Units of any partnership, limited liability company or
pass-through entity that are allocable to a deceased partner, member or other
Person have not been converted into Common Units on or prior to the date of
death of such Contributing Party or other Person, and (B) the exercise of the
Redemption Rights with respect to said Series B Preferred Units shall not result
in the recognition of gain for federal income tax purposes by any party, the
Partnership shall have the right to require the Contributing Party or
partnership, limited liability company or other pass-through entity or its legal
representative, to exercise the Redemption Rights as to all of such Series B
Preferred Units and to take any and all necessary action hereunder to effect
such exercise.
3.3 Closing. The closing of the redemption or purchase and sale pursuant to
an exercise of the Redemption Rights by any Contributing Party shall occur
within 30 days following the giving of the Notice; provided, however, that no
closing may occur hereunder prior to the earlier of the one hundred twentieth
day after the date hereof and the date of effectiveness of the Registration
Statement. Such Contributing Party shall execute such other documents as the
General Partner may reasonably require in connection with the closing of such
redemption or purchase and sale.
3.4 Payment of Cash or Issuance of Shares. At the closing of the redemption
or purchase and sale of Series B Preferred Units pursuant to an exercise of
Redemption Rights by a Contributing Party, the Partnership shall deliver to such
Contributing Party the Cash Purchase Price by check or, in the event that the
General Partner has assumed the obligations of the Partnership with respect to
such exercise of Redemption Rights, the General Partner shall deliver to such
Contributing Party, at the election of the General Partner (which may be
exercised in the General Partner's sole discretion) either (a) the Cash Purchase
Price by check or (b) certificates representing the Shares and any other
securities and/or other property constituting the Share Purchase Price, together
with cash in lieu of the issuance of any fraction of a Share as provided
-5-
in Section 2(e), or a combination thereof. In addition, in the event that the
General Partner has assumed the obligations of the Partnership with respect to
such exercise of Redemption Rights and delivers the Share Purchase Price, the
General Partner also shall pay to such Contributing Partner the accrued and
unpaid distributions in respect of the Series B Preferred Units that are
acquired by the General Partner.
4. Matters Relating to Shares.
4.1 Registration.
(a) As soon as practicable following the date hereof, the General Partner
shall file a Registration Statement on Form S-3 or other appropriate
registration form (the "Registration Statement") with the SEC covering the
resale by Contributing Parties of the Shares and/or the shares of common stock
of the General Partner to be issued upon their conversion (referred to in this
Section 4.1 as the "Shares") to be issued upon exercise of the Redemption Rights
as to all Series B Preferred Units and full satisfaction of the Redemption
Rights by delivery of Shares and shall use its reasonable best efforts to cause
the Registration Statement to become effective as soon as practicable
thereafter. Following the effective date of the Registration Statement and until
the Shares covered by the Registration Statement have been sold or are eligible
for resale under Rule 144(k) promulgated under the Securities Act, the General
Partner shall keep the Registration Statement current, effective and available
for the resale by Contributing Parties of the Shares delivered to them pursuant
hereto. The General Partner shall bear all expenses relating to filing such
Registration Statement and keeping such Registration Statement current,
effective and available; provided, however, that the General Partner shall not
be responsible for any brokerage fees or underwriting commissions due and
payable by any Contributing Party.
(b) During the time period when the Registration Statement is required to
be current, effective and available under Section 4.1(a), the General Partner
also shall:
(i) prepare and file with the SEC such amendments and supplements to
the Registration Statement and the prospectus constituting a part thereof,
as amended or supplemented (the "Prospectus"), as may be necessary to keep
such Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the sale of the Shares covered by such
Registration Statement whenever any Contributing Party shall desire to sell
or otherwise dispose of the same but in no event beyond the period in which
the Registration Statement is required to be kept in effect;
(ii) furnish to each Contributing Party, without charge, such number
of authorized copies of the Prospectus, and any amendments or supplements
to the Prospectus, in conformity with the requirements of the Securities
Act, and such other documents as any Contributing Party may reasonably
request in order to facilitate the public sale or other disposition of the
Shares owned by Contributing Parties.
(iii) register or qualify the securities covered by the Registration
Statement under state securities or blue sky laws of such jurisdictions as
are reasonably required to effect a sale thereof and do any and all other
acts and things which may be necessary or
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appropriate under such state securities or blue sky laws to enable
Contributing Parties to consummate the public sale or other disposition in
such jurisdictions of such securities;
(iv) before filing any amendments or supplements to the Registration
Statement or the Prospectus, furnish copies of all such documents proposed
to be filed to the Contributing Party Representative who shall be afforded
a reasonable opportunity to review and comment thereon; provided, however,
that all such documents shall be subject to the approval of the
Contributing Party Representative insofar as they relate to information
concerning Contributing Parties (including, without limitation, the
proposed method of distribution of any Contributing Party's securities);
(v) notify Contributing Parties promptly (A) when any such
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (B) of any request by
the SEC or any state securities authority for amendments and supplements to
such Registration Statement and the Prospectus or for additional
information, (C) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of any such
Registration Statement or the initiation of any proceedings for the
purpose, (D) if, between the effective date of any such Registration
Statement and the sale of the Shares to which it relates, the General
Partner receives any notification with respect to the suspension of the
qualification of the Shares or initiation of any proceeding for such
purpose, and (E) of the happening of any event during the period such
Registration Statement is effective which in the judgment of the General
Partner makes any statement made in the Registration Statement or the
Prospectus untrue in any material respect or which requires the making of
any changes in the Registration Statement or the Prospectus in order to
make the statements therein not misleading;
(vi) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest practicable time;
(vii) cooperate with each Contributing Party to facilitate the timely
preparation and delivery of certificates representing Shares being sold,
which certificates shall not bear any restrictive legends provided the
Shares evidenced thereby have been sold in a manner permitted by the
Prospectus; and
(viii) upon the occurrence of any event contemplated by Section
4.1(b)(v)(E) hereof, promptly prepare and file a supplement or
post-effective amendment to the Registration Statement or the Prospectus or
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Shares,
the Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein in
light of the circumstances under which they were made, not misleading;
provided, however, that the obligation to prepare and file any such
supplement or post-effective amendment shall be suspended if the General
Partner, relying upon advice of counsel, determines that disclosure of any
information required to be included therein would be adverse to its
interests, but such suspension shall not extend beyond 90 days with respect
to any such specified event.
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(c) The General Partner hereby agrees to indemnify and hold harmless each
Contributing Party and each person, if any, who controls such Contributing Party
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) from and against any and all losses, claims, damages, costs
and expenses (including reasonable attorneys' fees) ("Claims") to which such
Contributing Party or such controlling person may become subject, under the
Securities Act or otherwise, caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus or any amendment or supplement thereto, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
such Contributing Party and each such controlling person for any legal or other
expenses reasonably incurred by such Contributing Party in connection with
investigating or defending any such loss as such expenses are incurred;
provided, however, that the General Partner shall not be liable insofar as any
such losses, claims, damages, costs and expenses (including reasonable
attorneys' fees) are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in writing to the
General Partner by any Contributing Party expressly for use therein. Each
Contributing Party agrees to indemnify and hold harmless the General Partner and
each person, if any, who controls the General Partner (within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act) from
and against any and all Claims to which the General Partner or such controlling
person may become subject, under the Securities Act or otherwise, caused by any
untrue statement or omission or alleged untrue statement or omission based upon
such information furnished in writing to the General Partner by such
Contributing Party.
(d) Each Contributing Party agrees that, upon receipt of any notice from
the General Partner of the happening of any event of the kind described in
Section 4.1(b)(v)(E), such Contributing Party will forthwith discontinue
disposition of securities pursuant to the Registration Statement until such
Contributing Party's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4.1(b)(viii).
(e) Upon the written request to the General Partner from time to time as
below provided and subject to other contractual obligations of the General
Partner, the Contributing Parties holding Shares covered by the Registration
Statement who desire to do so may sell such Shares covered by the Registration
Statement in an underwritten offering. In such underwritten offering, the
investment banker or bankers and manager or managers that will administer the
offering will be selected by, and the underwriting arrangements with respect
thereto will be approved by, the Contributing Parties; provided that such
investment bankers and managers and underwriting arrangements must be reasonably
satisfactory to the General Partner. No Contributing Party may participate in
any underwritten offering contemplated hereby unless such Contributing Party
agrees to sell such Contributing Party's Shares covered by the Registration
Statement in accordance with any approved underwriting arrangements and
completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such approved underwriting arrangements. The General
Partner shall be responsible for the costs of preparing and filing the amendment
or supplement that is referred to below, and the selling securityholders shall
pay their attorney's fees and underwriting discounts and commissions incurred in
connection with such underwritten offerings. Notwithstanding the foregoing, upon
receipt of a request from the managing underwriter or a representative of the
Contributing Parties to prepare
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and file an amendment or supplement to the Registration Statement and Prospectus
in connection with such underwritten offering, the General Partner may delay the
filing of any such amendment or supplement or postpone taking action with
respect to an underwritten offering for a period not to exceed an aggregate of
180 days in any calendar year, if the General Partner determines in its good
faith judgment that the filing of such amendment or supplement or the taking of
such action with respect to an underwritten offering would have a material
adverse effect on the business, operations or prospects of the General Partner,
or adversely affect a material financing, acquisition, disposition of assets or
stock, merger or other comparable transaction. Notwithstanding anything to the
contrary contained in the foregoing, the Contributing Parties shall not have the
right to effect more than two underwritten offerings pursuant to this paragraph
and each such offering shall be required to include minimum gross sales proceeds
of $17,500,000.
(f) Notwithstanding anything to the contrary contained herein, the General
Partner shall have no obligation to keep any registration statement filed
pursuant to this Section 4.1 effective after the Expiration Date or if the
status of the General Partner (or its successor) as an Exchange Act Reporting
Company is terminated.
4.2 Reservation of Shares. At all times while the Redemption Rights are
outstanding, the General Partner shall reserve for issuance such number of
Shares as may be necessary to enable the General Partner to issue Shares in full
satisfaction of all Redemption Rights which are from time to time outstanding
(assuming that there are no limitations as to the ownership of such Shares under
the Certificate of Incorporation which relate to compliance with the REIT
Requirements and that the General Partner elected to pay the Share Purchase
Price with respect to all such Redemption Rights).
4.3 Fully Paid and Non-Assessable. All Shares which may be issued upon
exercise of the Redemption Rights shall be duly and validly issued and fully
paid and non-assessable.
5. Transfer and Similar Taxes. The General Partner shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock or other securities or property
pursuant hereto; provided, however, that the General Partner shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of the Common Units to be
exchanged, and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the General Partner the
amount of any such tax or established, to the reasonable satisfaction of the
General Partner, that such tax has been paid.
6. Anti-Dilution and Adjustment Provisions.
(a) The Conversion Factor shall be adjusted in the event that the General
Partner (i) declares or pays a dividend or distribution on its outstanding
Shares in Shares or makes a distribution to all holders of its outstanding
Shares in Shares, (ii) subdivides its outstanding Shares, or (iii) combines its
outstanding Shares into a smaller number of Shares. In such event, the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which shall be the number of Shares issued and
outstanding on the record date for
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such dividend, distribution, subdivision or combination (assuming for such
purposes that such dividend, distribution, subdivision or combination has
occurred as of such time) and the denominator of which shall be the actual
number of Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination. Any adjustment to the Conversion Factor shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(b) If at any time the holders of Shares are entitled to any right (a
"Right") to subscribe pro rata for additional securities of the General Partner,
whether Preferred Stock or other classifications, or for any other securities or
interests that a Contributing Party would have been entitled to subscribe for
if, immediately prior to such grant, such Contributing Party had exercised its
Redemption Rights and received the Share Purchase Price in payment thereof, in
lieu of any adjustment under any other subsection of this Section 6 or other
provision of this Agreement and except to the extent that provision otherwise
has been made for such Contributing Party to receive such Right, such
Contributing Party also shall receive from the General Partner, prior to or
concurrent with the time such Right becomes exercisable, the same Right that
such Contributing Party would have been entitled to if such Contributing Party
had exercised its Redemption Rights in full and received the Share Purchase
Price in satisfaction thereof immediately prior to the time holders of Shares
became entitled to such Right.
(c) Upon the occurrence of a Major Transaction Event, the General Partner
shall cause effective provision to be made so that, upon exercise of the
Redemption Rights by any Contributing Party and the election of the General
Partner to pay the Purchase Price at any time following such Major Transaction
Event by means of the Share Purchase Price, such Contributing Party shall have
the right to acquire, in lieu of the Shares which otherwise would have been
issued to such Contributing Party, the kind and amount of shares of stock and
other securities and property (and the provisions contained in Section 4.1 shall
apply anew to the extent that such securities are of a class of securities of
the General Partner or its successor that are registered under the Exchange Act)
and interests as would be issued or payable with respect to or in exchange for
the number of Shares constituting the Share Purchase Price as if such Redemption
Rights had been exercised and the General Partner had satisfied the Redemption
Rights by delivery of the Share Purchase Price immediately before such Major
Transaction Event.
(d) The Partnership shall give written notice to Contributing Parties of
any Major Transaction Event promptly after such Major Transaction is announced
to the public.
(e) The provisions of this Section 6 shall apply to successive events that
may occur from time to time but only shall apply to a particular event if it
occurs prior to the exercise in full of the Redemption Rights or the liquidation
of the Partnership. Nothing contained herein shall prevent or otherwise limit
the liquidation of the Partnership pursuant to the Partnership Agreement, as
amended from time to time.
(f) Whenever the Conversion Factor is adjusted as herein provided, the
General Partner shall compute the adjusted Conversion Factor in accordance with
this Section 6 and shall prepare a certificate signed by the chief financial
officer of the General Partner setting forth the adjusted
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Conversion Factor and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed at the
offices of the General Partner.
7. Miscellaneous Provisions.
7.1 Notices. All notices or other communications given pursuant to this
Agreement, including without limitation any Notice, shall be sent to the party
to whom or to which such notice is being sent, by certified or registered mail,
return receipt requested, commercial overnight delivery service, facsimile or
delivered by hand with receipt acknowledged in writing and otherwise as set
forth in this Section 7.1. All notices (a) shall be deemed given when received
or, if mailed as described above, after 5 Business Days or, if sent by
facsimile, upon receipt of confirmed answerback and (b) may be given either by a
party or by such party's attorneys. For purposes of this Section 7.1, the
addresses of the parties shall be, in the case of the Partnership and the
General Partner, 000 X. Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, facsimile number
(000) 000-0000, Attention: Xxxxxxx Xxxxxxxx (with a copy to Xxxx, Xxxxxx &
Xxxxxxxxx, Xxx Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attn:
Xxxxxxxx X. Xxxxxxxxx, facsimile number (000) 000-0000), and, in the case of
each Contributing Party, as set forth on the records of the Partnership. The
address of any party may be changed by a notice in writing given in accordance
with the provisions hereof.
7.2 Assignment. The rights of any Contributing Party hereunder (including
the Redemption Rights) shall automatically devolve upon any Person to the extent
that such Person holds Series B Preferred Units, and becomes a substituted
partner with respect to such Series B Preferred Units, in accordance with the
Partnership Agreement and delivers to the Partnership a written instrument, in
form reasonably satisfactory to the Partnership, pursuant to which such Person
agrees to be bound by the terms hereof (but the rights of such Contributing
Party hereunder are not otherwise assignable). Subject to the provisions of
Section 6, the General Partner may assign this Agreement without the consent of
any Contributing Party, provided that no such assignment shall relieve the
General Partner of its obligations under this Agreement.
7.3 Binding Effect. Except as otherwise set forth herein, this Agreement
shall be binding upon, and inure to the benefit of, the parties and their
successors and permitted assigns.
7.4 Amendments. The provisions of this Agreement may be amended only with
the written consent of the Partnership, the General Partner and the holders of
at least a majority of the issued and outstanding Series B Preferred Units.
7.5 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware (without regard to its conflicts of law principles).
7.6 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall constitute one document.
7.7 Entire Agreement. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes any prior
written or oral understandings and/or agreements among them with respect
thereto.
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7.8 Pronouns; Headings; Etc. As used herein, all pronouns shall include the
masculine, feminine and neuter, and all terms shall include the singular and
plural thereof wherever the context and facts require such construction. The
headings herein are inserted for convenience of reference only and are to be
ignored in any construction of the provisions hereof. Any references in this
Agreement to a "Section" or "Exhibit" shall refer to a Section or Exhibit of
this Agreement unless otherwise specified.
7.9 Survival. The representations, warranties and covenants contained
herein or made pursuant hereto shall survive the execution and delivery of this
Agreement and the closing of any redemption or purchase and sale pursuant to an
exercise of Redemption Rights hereunder.
7.10 Further Assurances. Each of the parties shall hereafter execute and
deliver such other instruments and documents and do such further acts and things
as may be required or useful to carry out the purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
CONTRIBUTING PARTIES:
-----------------------------
PARTNERSHIP:
GGP LIMITED PARTNERSHIP,
a Delaware limited partnership
By: General Growth Properties, Inc.
a Delaware corporation, its general partner
By:
---------------------------
Its:
---------------------------
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.
a Delaware corporation
By:
---------------------------------
Its:
---------------------------------
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EXHIBIT A
Notice of Redemption
The undersigned hereby irrevocably (i) exercises its Redemption Rights as
to ___________ Series B Preferred Units (the "Transferred Units") in GGP Limited
Partnership (the "Partnership") in accordance with the terms of that certain
Redemption Rights Agreement, dated ____________, 2002 (the "Agreement"), among
the Partnership, General Growth Properties, Inc. (the "General Partner"), and
the other parties thereto, (ii) transfers and surrenders such Transferred Units
and all right, title and interest of the undersigned therein to the party, which
shall be either the Partnership or the General Partner, that shall purchase or
redeem such Transferred Units pursuant to the Agreement, and (iii) directs that
the Cash Purchase Price or Share Purchase Price payable upon exercise of the
Redemption Right be delivered to the address specified below and, if the Share
Purchase Price is to be delivered, the Shares shall be registered or placed in
the name(s) and at the address(es) specified below. Attached hereto are the
certificates, if any, representing the Transferred Units.
The undersigned hereby represents, warrants, certifies and agrees (i) that
the undersigned has good and marketable title to the Transferred Units, free and
clear of all Liens, (ii) that the undersigned has the full right, power and
authority to transfer and surrender the Transferred Units as provided herein and
such transfer and surrender has been authorized by all necessary action, and
(iii) that the undersigned has obtained the consent or approval of all persons
or entities, if any, having the right to consent to or approve such transfer and
surrender.
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Capitalized terms used but not defined herein shall have the meanings set
forth in the Agreement.
Dated:
---------------------
[NAME OF LIMITED PARTNER]
By:
----------------------------------
Its:
------------------------------
--------------------------------------
(Street Address)
--------------------------------------
(City, State, Zip Code)
Signature Guaranteed By:
--------------------------------------
If Shares are to be issued, issue to:
Please insert social security or identifying number:
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Exhibit G
REDEMPTION RIGHTS AGREEMENT (COMMON UNITS)
Redemption Rights Agreement, dated __________, 2002, among Apollo Limited
Partnership, a Delaware limited partnership (together with its successors and
assigns, the "Partnership"), Apollo, Inc., a Delaware corporation (together with
its successors and assigns, the "General Partner"), and the parties whose names
are set forth under the caption "Contributing Parties" on the signature pages
hereof (the "Contributing Parties").
R E C I T A L S
WHEREAS, the General Partner is the general partner of the Partnership;
WHEREAS, shares of common stock, $.10 par value per share, of the General
Partner (the "Common Stock") are listed on the New York Stock Exchange;
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of
__________, 2002 (as the same has been amended and may be further amended from
time to time, the "Merger Agreement"), among the Partnership, the General
Partner and the other parties thereto, the Contributing Parties are being
admitted as limited partners of the Partnership and the Partnership is issuing
to them 8.5% Series B Cumulative Preferred units of limited partnership in the
Partnership (such units that are being issued pursuant to the Merger Agreement
or any other securities issued in substitution therefor pursuant to the Series A
Preferred Unit Designation, the "Series B Preferred Units");
WHEREAS, pursuant to the Partnership Agreement (as defined below), the
Series B Preferred Units may be converted into common units of limited
partnership in the Partnership (such units into which Series B Preferred Units
have been converted or any other securities issued in substitution therefor, the
"Common Units"); and
WHEREAS, the parties desire to set forth herein the terms and conditions
upon which the Contributing Parties may cause the Partnership to redeem their
Common Units.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Acts" shall mean the Securities Act and the Exchange Act, collectively.
"Affiliates" shall mean "affiliates" as defined pursuant to the Securities
Act and the regulations promulgated thereunder.
"Business Day" shall mean any day upon which commercial banks are open for
business in Chicago, Illinois.
"Cash Purchase Price" shall mean, with respect to any redeemed or purchased
Common Units, an amount of cash equal to the value of the Share Purchase Price
(computed as of the Computation Date and equal to the Current Per Share Market
Price on such Computation Date
multiplied by the number of Shares included in the Share Purchase Price) that
would be payable with respect to such Common Units assuming the Share Purchase
Price were paid in full satisfaction of the Purchase Price for such Common
Units. In the event that the Share Purchase Price includes securities and/or
other property other than Shares, then the value of such other securities and/or
property shall be determined by the General Partner acting in good faith on the
basis of the closing prices of securities if listed on a nationally recognized
exchange and otherwise on the basis of such quotations and other information as
the General Partner considers, in its reasonable judgment, appropriate.
"Certificate of Incorporation" shall mean the Certificate of Incorporation
of the General Partner, as the same may be amended from time to time.
"Claims" shall have the meaning set forth in Section 4.1(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor code.
"Common Stock" shall have the meaning set forth in the recitals.
"Common Units" shall have the meaning set forth in the recitals.
"Common Units Redemption Rights Agreement" shall mean that certain
Redemption Rights Agreement (Common Units) dated the date hereof, among the
parties hereto.
"Computation Date" shall mean the date on which the applicable Notice is
received by the Partnership or, if such date is not a Business Day, the first
Business Day thereafter.
"Conversion Factor" shall mean 100%, provided that such factor shall be
adjusted in accordance with Section 6(a).
"Contributing Party Representative" shall mean _______________..
"Current Per Share Market Price" shall have the meaning set forth in the
Partnership Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor statute.
"Exchange Act Reporting Company" shall mean any corporation or other entity
which is subject to the reporting requirements of the Exchange Act.
"Expiration Date" shall mean the date upon which all Series B Preferred
Units have been converted to Common Units and all Common Units have been
redeemed or purchased in accordance with the terms hereof.
"Liens" shall have the meaning set forth in the Merger Agreement.
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"Major Transaction Event" shall mean, with respect to the General Partner,
(a) a reclassification, capital reorganization or other similar change regarding
or affecting outstanding Shares (other than a change addressed in Section 6(a));
(b) a merger or consolidation of the General Partner with one or more other
corporations or entities, other than a merger pursuant to which the General
Partner is the surviving corporation and the outstanding Shares are not
affected, (c) a sale, lease or exchange of all or substantially all of the
General Partner's assets or (d) the liquidation, dissolution or winding up of
the General Partner.
"Merger Agreement" shall have the meaning set forth in the recitals.
"Notice" shall have the meaning set forth in Section 3.2.
"Other Rights Agreement" shall mean the "Rights Agreements" referred to in
the Partnership Agreement other than this Agreement and the Common Units
Redemption Rights Agreement.
"Partnership Agreement" shall mean that certain Second Amended and Restated
Agreement of Limited Partnership of the Partnership, dated as of April 1, 1998,
as amended by that certain First Amendment thereto dated as of June 10, 1998,
that certain Second Amendment thereto dated as of June 29, 1998, that certain
Third Amendment thereto dated as of February 15, 2002 and that certain Fourth
Amendment thereto dated as of _____________, 2002 and as the same may be further
amended from time to time.
"Person" shall mean any natural person, corporation, partnership,
association, limited liability company, trust or other entity.
"Prospectus" shall have the meaning set forth in Section 4.1(a).
"Purchase Price" shall mean the Cash Purchase Price or the Share Purchase
Price, or a combination thereof.
"Redemption Rights" shall have the meaning set forth in Section 2.
"Registration Statement" shall have the meaning set forth in Section
4.1(a).
"REIT" shall mean real estate investment trust as such term is defined
under the Code.
"REIT Requirements" shall have the meaning set forth in the Partnership
Agreement, as the same may change from time to time.
"Rights" shall have the meaning set forth in Section 6(b).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor statute.
"Series B Preferred Units" shall have the meaning set forth in the
recitals.
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"Series B Preferred Unit Designation" shall mean Schedule A to the Fourth
Amendment referred to in the definition of "Partnership Agreement".
"Share Purchase Price" shall mean, with respect to the exercise of any
Redemption Rights and subject to the provisions of Section 6(c), a number of
Shares equal to the product of (a) the number of Common Units being redeemed or
purchased multiplied by (b) the Conversion Factor; provided, however, that, in
the event the General Partner, after the date of this Agreement, issues to all
holders of Shares rights, options, warrants or convertible or exchangeable
securities entitling the stockholders to subscribe for or purchase Shares (other
than Rights referred to in Section 6(b) that have been issued pursuant thereto)
or any other securities or property (other than distributions paid in cash),
then the Share Purchase Price also shall include such rights, options, warrants
or convertible or exchangeable securities or other securities or property that a
holder of that number of Shares would have been entitled to receive had such
holder held such Shares immediately prior to the time holders of Shares became
entitled thereto (except to the extent that provision otherwise has been made
for such holder to receive such rights, options, warrants or convertible or
exchangeable securities or other securities or property under the Series B
Preferred Unit Designation or otherwise).
"Shares" shall mean shares of the Common Stock.
2. Grant of Redemption Rights.
(a) Upon the terms and subject to the conditions contained herein, the
Partnership does hereby grant to each Contributing Party, and such Contributing
Party does hereby accept, the right, but without obligation on the part of such
Contributing Party, to require the Partnership to redeem from time to time part
or all of the Common Units of such Contributing Party for the Cash Purchase
Price with respect to such Common Units ("Redemption Rights").
(b) Notwithstanding the provisions of Section 2(a), the General Partner
may, in its sole and absolute discretion, assume and satisfy the obligation of
the Partnership with respect to any Contributing Party's exercise of a
Redemption Right by paying to such Contributing Party, at the General Partner's
election (which may be exercised in the General Partner's sole discretion),
either the Cash Purchase Price or the Share Purchase Price (or a combination
thereof) with respect to the Common Units for which such Contributing Party
exercised its Redemption Rights. If the General Partner assumes such obligations
with respect to the exercise by any Contributing Party of a Redemption Right as
to certain Common Units and makes the required payment of the Share Purchase
Price, the Cash Purchase Price or any combination thereof, then the Partnership
shall have no obligation to pay any amount to such Contributing Party with
respect to the exercise of a Redemption Right for such Common Units, and any
Common Units purchased shall be owned by the General Partner for all purposes.
(c) If the General Partner shall assume and satisfy the obligations of the
Partnership with respect to the exercise of a Redemption Right by any
Contributing Party, the Partnership, such Contributing Party and the General
Partner each shall treat the transaction between the General Partner and such
Contributing Party as a sale of such Contributing Party's Common Units (or a
portion thereof) to the General Partner for federal income tax purposes.
-4-
(d) Upon the redemption or purchase of part or all of any Contributing
Party's Common Units and the payment of the Purchase Price with respect thereto,
such Person shall be deemed withdrawn as a Partner in the Partnership to the
extent of the Common Units redeemed or purchased and shall have no further
rights or obligations under this Agreement with respect to such redeemed or
purchased Common Units; provided, however, that such Contributing Party's rights
under this Agreement with regard to any other Common Units will continue in full
force and effect.
(e) No fractional Shares shall be issued hereunder. In lieu of fractional
Shares, the General Partner shall pay cash based on the Current Per Share Market
Price on the relevant Computation Date.
(f) Notwithstanding anything to the contrary contained herein, the General
Partner shall not issue the Share Purchase Price upon exercise of any Redemption
Right with respect to any Common Units unless all of the Shares so issued are
listed on the New York Stock Exchange and the Registration Statement (as herein
defined) covering such Shares shall be in effect and available for use to effect
a public distribution by the holder thereof of such Shares immediately upon such
issuance and the General Partner only may issue the Share Purchase Price to the
extent that the issuance of such Shares to such Contributing Party does not
violate the Certificate of Incorporation (assuming such Contributing Party owns
no shares of capital stock of the General Partner other than those issued
pursuant hereto and pursuant to the Common Units Redemption Rights Agreement).
3. Exercise of Redemption Rights.
3.1 Time for Exercise of Redemption Rights. Each Contributing Party may
exercise its Redemption Rights in whole or in part and at any time and from time
to time on or after the date hereof but prior to the Expiration Date; provided,
however, that the Redemption Rights may not be exercised at any one time by any
Contributing Party with respect to less than 1,000 Common Units (or all the
Common Units then owned by such Contributing Party if such Contributing Party
owns less than 1,000 Common Units) or in the event that such exercise of
Redemption Rights (or the assignment of Common Units or delivery of either the
Cash Purchase Price or the Share Purchase Price with respect thereto) violates
the terms of the Partnership Agreement, the Certificate of Incorporation or
applicable law. Once given, a Notice shall be irrevocable subject to the payment
of the Purchase Price for the Common Units specified therein in accordance with
the terms hereof.
3.2 Method of Exercise. The Redemption Rights shall be exercised by
delivery to the Partnership of (a) written notice (the "Notice") in the form of
Exhibit A specifying the number of the Common Units to be redeemed and the name
or names (with address) in which any Shares issuable upon such exercise shall be
registered if different than the Contributing Party and (b) the certificates, if
any, representing such Common Units. Notwithstanding anything to the contrary
contained herein, in the event that the exercise of the Redemption Rights with
respect to all of the Common Units of any deceased Contributing Party or the
Common Units of any partnership, limited liability company or pass-through
entity that are allocable to a deceased partner, member or other Person shall
not result in the recognition of gain for federal income tax purposes by any
party, the Partnership shall have the right to require the Contributing Party or
partnership, limited
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liability company or other pass-through entity or its legal representative to
exercise the Redemption Rights as to all of such Common Units and to take any
and all necessary action hereunder to effect such exercise.
3.3 Closing. The closing of the redemption or purchase and sale pursuant to
an exercise of the Redemption Rights by any Contributing Party shall occur
within 30 days following the giving of the Notice; provided, however, that no
closing may occur hereunder prior to the earlier of the one hundred twentieth
day after the date hereof and the date of effectiveness of the Registration
Statement. Such Contributing Party shall execute such other documents as the
General Partner may reasonably require in connection with the closing of such
redemption or purchase and sale.
3.4 Payment of Cash or Issuance of Shares. At the closing of the redemption
or purchase and sale of Common Units pursuant to an exercise of Redemption
Rights by a Contributing Party, the Partnership shall deliver to such
Contributing Party the Cash Purchase Price by check or, in the event that the
General Partner has assumed the obligations of the Partnership with respect to
such exercise of Redemption Rights, the General Partner shall deliver to such
Contributing Party, at the election of the General Partner (which may be
exercised in the General Partner's sole discretion) either (a) the Cash Purchase
Price by check or (b) certificates representing the Shares and any other
securities and/or other property constituting the Share Purchase Price, together
with cash in lieu of the issuance of any fraction of a Share as provided in
Section 2(e), or a combination thereof.
4. Matters Relating to Shares.
4.1 Registration.
(a) As soon as practicable following the date hereof, the General Partner
shall file a Registration Statement on Form S-3 or other appropriate
registration form (the "Registration Statement") with the SEC covering the
resale by Contributing Parties of the Shares to be issued upon exercise of the
Redemption Rights assuming full conversion of the Series B Preferred Units into
Common Units and full satisfaction of the Redemption Rights by delivery of
Shares and shall use its reasonable best efforts to cause the Registration
Statement to become effective as soon as practicable thereafter. Following the
effective date of the Registration Statement and until the Shares covered by the
Registration Statement have been sold or are eligible for resale under Rule
144(k) promulgated under the Securities Act, the General Partner shall keep the
Registration Statement current, effective and available for the resale by
Contributing Parties of the Shares delivered to them pursuant hereto. The
General Partner shall bear all expenses relating to filing such Registration
Statement and keeping such Registration Statement current, effective and
available; provided, however, that the General Partner shall not be responsible
for any brokerage fees or underwriting commissions due and payable by any
Contributing Party.
(b) During the time period when the Registration Statement is required to
be current, effective and available under Section 4.1(a), the General Partner
also shall:
(i) prepare and file with the SEC such amendments and supplements to
the Registration Statement and the prospectus constituting a part thereof,
as amended or
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supplemented (the "Prospectus"), as may be necessary to keep such
Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the sale of the Shares covered by such
Registration Statement whenever any Contributing Party shall desire to sell
or otherwise dispose of the same but in no event beyond the period in which
the Registration Statement is required to be kept in effect;
(ii) furnish to each Contributing Party, without charge, such number
of authorized copies of the Prospectus, and any amendments or supplements
to the Prospectus, in conformity with the requirements of the Securities
Act, and such other documents as any Contributing Party may reasonably
request in order to facilitate the public sale or other disposition of the
Shares owned by Contributing Parties.
(iii) register or qualify the securities covered by the Registration
Statement under state securities or blue sky laws of such jurisdictions as
are reasonably required to effect a sale thereof and do any and all other
acts and things which may be necessary or appropriate under such state
securities or blue sky laws to enable Contributing Parties to consummate
the public sale or other disposition in such jurisdictions of such
securities;
(iv) before filing any amendments or supplements to the Registration
Statement or the Prospectus, furnish copies of all such documents proposed
to be filed to the Contributing Party Representative who shall be afforded
a reasonable opportunity to review and comment thereon; provided, however,
that all such documents shall be subject to the approval of the
Contributing Party Representative insofar as they relate to information
concerning Contributing Parties (including, without limitation, the
proposed method of distribution of any Contributing Party's securities);
(v) notify Contributing Parties promptly (A) when any such
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (B) of any request by
the SEC or any state securities authority for amendments and supplements to
such Registration Statement and the Prospectus or for additional
information, (C) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of any such
Registration Statement or the initiation of any proceedings for the
purpose, (D) if, between the effective date of any such Registration
Statement and the sale of the Shares to which it relates, the General
Partner receives any notification with respect to the suspension of the
qualification of the Shares or initiation of any proceeding for such
purpose, and (E) of the happening of any event during the period such
Registration Statement is effective which in the judgment of the General
Partner makes any statement made in the Registration Statement or the
Prospectus untrue in any material respect or which requires the making of
any changes in the Registration Statement or the Prospectus in order to
make the statements therein not misleading;
(vi) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest practicable time;
(vii) cooperate with each Contributing Party to facilitate the timely
preparation and delivery of certificates representing Shares being sold,
which certificates shall not
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bear any restrictive legends provided the Shares evidenced thereby have
been sold in a manner permitted by the Prospectus; and
(viii) upon the occurrence of any event contemplated by Section
4.1(b)(v)(E) hereof, promptly prepare and file a supplement or
post-effective amendment to the Registration Statement or the Prospectus or
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Shares,
the Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein in
light of the circumstances under which they were made, not misleading;
provided, however, that the obligation to prepare and file any such
supplement or post-effective amendment shall be suspended if the General
Partner, relying upon advice of counsel, determines that disclosure of any
information required to be included therein would be adverse to its
interests, but such suspension shall not extend beyond 90 days with respect
to any such specified event.
(c) The General Partner hereby agrees to indemnify and hold harmless each
Contributing Party and each person, if any, who controls such Contributing Party
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) from and against any and all losses, claims, damages, costs
and expenses (including reasonable attorneys' fees) ("Claims") to which such
Contributing Party or such controlling person may become subject, under the
Securities Act or otherwise, caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus or any amendment or supplement thereto, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
such Contributing Party and each such controlling person for any legal or other
expenses reasonably incurred by such Contributing Party in connection with
investigating or defending any such loss as such expenses are incurred;
provided, however, that the General Partner shall not be liable insofar as any
such losses, claims, damages, costs and expenses (including reasonable
attorneys' fees) are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in writing to the
General Partner by any Contributing Party expressly for use therein. Each
Contributing Party agrees to indemnify and hold harmless the General Partner and
each person, if any, who controls the General Partner (within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act) from
and against any and all Claims to which the General Partner or such controlling
person may become subject, under the Securities Act or otherwise, caused by any
untrue statement or omission or alleged untrue statement or omission based upon
such information furnished in writing to the General Partner by such
Contributing Party.
(d) Each Contributing Party agrees that, upon receipt of any notice from
the General Partner of the happening of any event of the kind described in
Section 4.1(b)(v)(E), such Contributing Party will forthwith discontinue
disposition of securities pursuant to the Registration Statement until such
Contributing Party's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4.1(b)(viii).
(e) Upon the written request to the General Partner from time to time as
below provided and subject to other contractual obligations of the General
Partner, the Contributing
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Parties holding Shares covered by the Registration Statement who desire to do so
may sell such Shares covered by the Registration Statement in an underwritten
offering. In such underwritten offering, the investment banker or bankers and
manager or managers that will administer the offering will be selected by, and
the underwriting arrangements with respect thereto will be approved by, the
Contributing Parties; provided that such investment bankers and managers and
underwriting arrangements must be reasonably satisfactory to the General
Partner. No Contributing Party may participate in any underwritten offering
contemplated hereby unless such Contributing Party agrees to sell such
Contributing Party's Shares covered by the Registration Statement in accordance
with any approved underwriting arrangements and completes and executes all
reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
approved underwriting arrangements. The General Partner shall be responsible for
the costs of preparing and filing the amendment or supplement that is referred
to below, and the selling securityholders shall pay their attorney's fees and
underwriting discounts and commissions incurred in connection with such
underwritten offerings. Notwithstanding the foregoing, upon receipt of a request
from the managing underwriter or a representative of the Contributing Parties to
prepare and file an amendment or supplement to the Registration Statement and
Prospectus in connection with such underwritten offering, the General Partner
may delay the filing of any such amendment or supplement or postpone taking
action with respect to an underwritten offering for a period not to exceed an
aggregate of 180 days in any calendar year, if the General Partner determines in
its good faith judgment that the filing of such amendment or supplement or the
taking of such action with respect to an underwritten offering would have a
material adverse effect on the business, operations or prospects of the General
Partner, or adversely affect a material financing, acquisition, disposition of
assets or stock, merger or other comparable transaction. Notwithstanding
anything to the contrary contained in the foregoing, the Contributing Parties
shall not have the right to effect more than two underwritten offerings pursuant
to this paragraph and each such offering shall be required to include minimum
gross sales proceeds of $17,500,000.
(f) Notwithstanding anything to the contrary contained herein, the General
Partner shall have no obligation to keep any registration statement filed
pursuant to this Section 4.1 effective after the Expiration Date or if the
status of the General Partner (or its successor) as an Exchange Act Reporting
Company is terminated.
4.2 Reservation of Shares. At all times while the Redemption Rights are
outstanding, the General Partner shall reserve for issuance such number of
Shares as may be necessary to enable the General Partner to issue Shares in full
satisfaction of all Redemption Rights which are from time to time outstanding
(assuming that there are no limitations as to the ownership of such Shares under
the Certificate of Incorporation which relate to compliance with the REIT
Requirements, that all Series B Preferred Units have been converted into Common
Units and that the General Partner elected to pay the Share Purchase Price with
respect to all such Redemption Rights).
4.3 Fully Paid and Non-Assessable. All Shares which may be issued upon
exercise of the Redemption Rights shall be duly and validly issued and fully
paid and non-assessable.
-9-
5. Transfer and Similar Taxes. The General Partner shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock or other securities or property
pursuant hereto; provided, however, that the General Partner shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of the Common Units to be
exchanged, and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the General Partner the
amount of any such tax or established, to the reasonable satisfaction of the
General Partner, that such tax has been paid.
6. Anti-Dilution and Adjustment Provisions.
(a) The Conversion Factor shall be adjusted in the event that the General
Partner (i) declares or pays a dividend or distribution on its outstanding
Shares in Shares or makes a distribution to all holders of its outstanding
Shares in Shares, (ii) subdivides its outstanding Shares, or (iii) combines its
outstanding Shares into a smaller number of Shares. In such event, the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which shall be the number of Shares issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time) and the denominator of
which shall be the actual number of Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. In addition, the Conversion Factor
shall be adjusted in the event that the Partnership (i) declares or pays a
dividend or distribution on its outstanding Common Units in Common Units, (ii)
subdivides its outstanding Common Units, or (iii) combines its outstanding
Common Units into a smaller number of Common Units. In such event, the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which shall be the actual number of Shares issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination (determined without the below assumption) and the denominator of
which shall be the number of Shares issued and outstanding on such record date
(assuming for such purposes that such dividend distribution, subdivision or
combination has occurred as of such time). Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) If at any time the holders of Common Stock are entitled to any right (a
"Right") to subscribe pro rata for additional securities of the General Partner,
whether Common Stock or other classifications, or for any other securities or
interests that a Contributing Party would have been entitled to subscribe for
if, immediately prior to such grant, such Contributing Party had exercised its
Redemption Rights and received the Share Purchase Price in payment thereof, in
lieu of any adjustment under any other subsection of this Section 6 or other
provision of this Agreement and except to the extent that provision otherwise
has been made for such Contributing Party to receive such Right under the Series
B Preferred Unit Designation or otherwise, such Contributing Party also shall
receive from the General Partner, prior to or concurrent with the time such
Right becomes exercisable, the same Right that such Contributing Party would
have been entitled to if such Contributing Party had exercised its Redemption
Rights
-10-
in full and received the Share Purchase Price in satisfaction thereof
immediately prior to the time holders of Common Stock became entitled to such
Right.
(c) Upon the occurrence of a Major Transaction Event, the General Partner
shall cause effective provision to be made so that, upon full conversion of the
Series B Preferred Units of such Contributing Party into Common Units, exercise
of the Redemption Rights by such Contributing Party in respect thereof and the
election of the General Partner to pay the Purchase Price at any time following
such Major Transaction Event by means of the Share Purchase Price, such
Contributing Party shall have the right to acquire, in lieu of the Shares which
otherwise would have been issued to such Contributing Party, the kind and amount
of shares of stock and other securities and property (and the provisions
contained in Section 4.1 shall apply anew to the extent that such securities are
of a class of securities of the General Partner or its successor that are
registered under the Exchange Act) and interests as would be issued or payable
with respect to or in exchange for the number of Shares constituting the Share
Purchase Price as if all Series B Preferred Units of such Contributing Party had
been converted into Common Units, such Redemption Rights had been exercised and
the General Partner had satisfied the Redemption Rights by delivery of the Share
Purchase Price immediately before such Major Transaction Event.
(d) The Partnership shall give written notice to Contributing Parties of
any Major Transaction Event promptly after such Major Transaction is announced
to the public.
(e) Notwithstanding anything to the contrary contained herein, the
adjustment provisions contained in this Agreement and in the Series B Preferred
Unit Designation shall be applied without duplication. The provisions of this
Section 6 shall apply to successive events that may occur from time to time but
only shall apply to a particular event if it occurs prior to the exercise in
full of the Redemption Rights or the liquidation of the Partnership. Nothing
contained herein shall prevent or otherwise limit the liquidation of the
Partnership pursuant to the Partnership Agreement, as amended from time to time.
(f) Whenever the Conversion Factor is adjusted as herein provided, the
General Partner shall compute the adjusted Conversion Factor in accordance with
this Section 6 and shall prepare a certificate signed by the chief financial
officer of the General Partner setting forth the adjusted Conversion Factor and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed at the offices of the General Partner.
7. Miscellaneous Provisions.
7.1 Notices. All notices or other communications given pursuant to this
Agreement, including without limitation any Notice, shall be sent to the party
to whom or to which such notice is being sent, by certified or registered mail,
return receipt requested, commercial overnight delivery service, facsimile or
delivered by hand with receipt acknowledged in writing and otherwise as set
forth in this Section 7.1. All notices (a) shall be deemed given when received
or, if mailed as described above, after 5 Business Days or, if sent by
facsimile, upon receipt of confirmed answerback and (b) may be given either by a
party or by such party's attorneys. For purposes of this Section 7.1, the
addresses of the parties shall be, in the case of
-11-
the Partnership and the General Partner, 000 X. Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx
00000, facsimile number (000) 000-0000, Attention: Xxxxxxx Xxxxxxxx (with a copy
to Xxxx, Xxxxxx & Xxxxxxxxx, Xxx Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, Attn: Xxxxxxxx X. Xxxxxxxxx, facsimile number (000) 000-0000),
and, in the case of each Contributing Party, as set forth on the records of the
Partnership. The address of any party may be changed by a notice in writing
given in accordance with the provisions hereof.
7.2 Assignment. The rights of any Contributing Party hereunder (including
the Redemption Rights) shall automatically devolve upon any Person to the extent
that such Person holds Common Units or Series B Preferred Units, and becomes a
substituted partner with respect to such Common Units or Series B Preferred
Units, in accordance with the Partnership Agreement and delivers to the
Partnership a written instrument, in form reasonably satisfactory to the
Partnership, pursuant to which such Person agrees to be bound by the terms
hereof (but the rights of such Contributing Party hereunder are not otherwise
assignable). Subject to the provisions of Section 6, the General Partner may
assign this Agreement without the consent of any Contributing Party, provided
that no such assignment shall relieve the General Partner of its obligations
under this Agreement.
7.3 Binding Effect. Except as otherwise set forth herein, this Agreement
shall be binding upon, and inure to the benefit of, the parties and their
successors and permitted assigns.
7.4 Amendments. The provisions of this Agreement may be amended only with
the written consent of the Partnership, the General Partner and the holders of
at least a majority of the issued and outstanding Common Units held by
Contributing Parties at the time (assuming that all of the Series B Preferred
Units were converted into Common Units in accordance with the Partnership
Agreement immediately prior to the execution of such amendment).
7.5 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware (without regard to its conflicts of law principles).
7.6 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall constitute one document.
7.7 Other Holders Rights. In addition, once Common Units are acquired by a
Contributing Party, such Contributing Party shall be treated as favorably with
respect to the anti-dilution and adjustment provisions set forth herein as are
other holders of Common Units under Other Rights Agreements.
7.8 Entire Agreement. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes any prior
written or oral understandings and/or agreements among them with respect
thereto.
7.9 Pronouns; Headings; Etc. As used herein, all pronouns shall include the
masculine, feminine and neuter, and all terms shall include the singular and
plural thereof wherever the context and facts require such construction. The
headings herein are inserted for convenience of reference only and are to be
ignored in any construction of the provisions hereof. Any references in this
Agreement to a "Section" or "Exhibit" shall refer to a Section or Exhibit of
this Agreement unless otherwise specified.
-12-
7.10 Survival. The representations, warranties and covenants contained
herein or made pursuant hereto shall survive the execution and delivery of this
Agreement and the closing of any redemption or purchase and sale pursuant to an
exercise of Redemption Rights hereunder.
7.11 Further Assurances. Each of the parties shall hereafter execute and
deliver such other instruments and documents and do such further acts and things
as may be required or useful to carry out the purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-13-
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
CONTRIBUTING PARTIES:
-----------------------------
PARTNERSHIP:
APOLLO PARTNERSHIP,
a Delaware limited partnership
By: Apollo, Inc.
a Delaware corporation, its general partner
By:
--------------------------------
Its:
--------------------------------
GENERAL PARTNER:
APOLLO, INC.
a Delaware corporation
By:
-------------------------------------
Its:
-------------------------------------
-14-
EXHIBIT A
Notice of Redemption
The undersigned hereby irrevocably (i) exercises its Redemption Rights as
to ___________ Common Units (the "Transferred Units") in Apollo Limited
Partnership (the "Partnership") in accordance with the terms of that certain
Redemption Rights Agreement, dated ____________, 2002 (the "Agreement"), among
the Partnership, Apollo, Inc. (the "General Partner"), and the other parties
thereto, (ii) transfers and surrenders such Transferred Units and all right,
title and interest of the undersigned therein to the party, which shall be
either the Partnership or the General Partner, that shall purchase or redeem
such Transferred Units pursuant to the Agreement, and (iii) directs that the
Cash Purchase Price or Share Purchase Price payable upon exercise of the
Redemption Right be delivered to the address specified below and, if the Share
Purchase Price is to be delivered, the Shares shall be registered or placed in
the name(s) and at the address(es) specified below. Attached hereto are the
certificates, if any, representing the Transferred Units.
The undersigned hereby represents, warrants, certifies and agrees (i) that
the undersigned has good and marketable title to the Transferred Units, free and
clear of all Liens, (ii) that the undersigned has the full right, power and
authority to transfer and surrender the Transferred Units as provided herein and
such transfer and surrender has been authorized by all necessary action, and
(iii) that the undersigned has obtained the consent or approval of all persons
or entities, if any, having the right to consent to or approve such transfer and
surrender.
-15-
Capitalized terms used but not defined herein shall have the meanings set
forth in the Agreement.
Dated:
---------------------
[NAME OF LIMITED PARTNER]
By:
----------------------------------
Its:
------------------------------
--------------------------------------
(Street Address)
--------------------------------------
(City, State, Zip Code)
Signature Guaranteed By:
--------------------------------------
If Shares are to be issued, issue to:
Please insert social security or identifying number:
-16-
Exhibit H
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
8.5% CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES C
OF
GENERAL GROWTH PROPERTIES, INC.
Pursuant to Section 151 of the General Corporation Law of the State Of Delaware
General Growth Properties, Inc., a Delaware corporation (the "Company"),
hereby certifies that pursuant to the authority contained in Article IV of its
Second Amended and Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and in accordance with Section 151 of the
General Corporation Law of the State of Delaware (the "DGCL"), its Board of
Directors (the "Board"), on _____________, 2002, adopted the following
resolution creating a series of its preferred stock, par value $100 per share,
liquidation preference $1,000 per share, designated as the 8.5% Cumulative
Convertible Preferred Stock, Series C.
WHEREAS, the Board of Directors of the Company is authorized, within the
limitations and restrictions stated in its Certificate of Incorporation, to
provide for the issuance of preferred stock in series and to establish the
number of shares to be included in such series and to fix the designation,
powers, preferences and rights of the shares of such series and the
qualifications, limitations and restrictions thereof; and
WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the terms of the preferred stock to
be designated the "8.5% Cumulative Convertible Preferred Stock, Series C" and
the number of shares constituting such preferred stock.
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized the 8.5%
Cumulative Convertible Preferred Stock, Series C on the terms and with the
provisions herein set forth:
I. Certain Definitions
As used herein, the following terms shall have the following meanings (with
terms defined in the singular having comparable meanings when used in the plural
and vice versa), unless the context otherwise requires:
"Capital Stock" shall mean Common Stock or Preferred Stock. The term
"Capital Stock" shall not include convertible debt securities.
"Common Stock" shall mean the common stock, par value $.10 per share, of
the Company.
"Dividend Payment Date" shall mean, with respect to any Dividend Period,
the payment date for the dividend declared by the Company on its shares of
Common Stock for such Dividend Period or, if no such payment date is
established, the last business day of such Dividend Period.
"Dividend Period" shall mean the quarterly period that is then the dividend
period with respect to the Common Stock (or, if no such dividend period is
established, the calendar quarter shall be the Dividend Period, provided that
the initial dividend period with respect to any share of Series C Preferred
Stock shall commence on the date of issuance thereof and end on and include the
last day of the then current quarterly period that is then the dividend period
with respect to the Common Stock and the dividend period in which the final
liquidation payment is made shall commence on the first day following the
immediately preceding Dividend Period and end on the date of such final
liquidation payment).
"Fair Market Value" shall mean the average of the daily Closing Price
during the five consecutive Trading Days selected by the Company commencing not
more than 20 Trading Days before, and ending not later than, the day in question
with respect to the issuance or distribution requiring such computation.
"Fifteenth Anniversary Date" shall mean ___________________.
"Ownership Limitations" shall mean the restrictions on transferability and
ownership described in Article IV of the Certificate of Incorporation,
specifically, that ownership of more than 7.5% of the value of the outstanding
shares of Capital Stock of the Company, including the Series C Preferred Stock,
is restricted.
"Preferred Stock" shall mean the preferred stock, par value $100 per share,
of the Company.
"Series A Preferred Stock" shall mean the Preferred Stock designated as
7.25% Preferred Income Equity Redeemable Stock.
"Series B Preferred Stock" shall mean the Preferred Stock designated as
8.95% Cumulative Redeemable Stock.
"Series C Preferred Units" shall mean the 8.5% Series C Cumulative
Convertible Units of limited partnership in GGP Limited Partnership, a Delaware
limited partnership.
Capitalized terms used herein without definition shall have the meanings
set forth in the Certificate of Incorporation.
II. Designation and Number of Shares
A series of Preferred Stock, designated the "8.5% Cumulative Convertible
Preferred Stock, Series C" (the "Series C Preferred Stock"), is hereby
established. The par value of the Series C Preferred Stock is $100 per share,
which is not a change in the par value of the shares of Preferred Stock as set
forth in the Certificate of Incorporation. The authorized number of shares of
Series C Preferred Stock shall be [_______].
III. Rank
2
The Series C Preferred Stock, with respect to payment of dividends and
amounts upon voluntary or involuntary liquidation, dissolution or winding-up of
the Company, shall be deemed to rank:
(a) senior to all classes or series of Common Stock and to all Capital
Stock of the Company the terms of which provide that such Capital Stock shall
rank junior to the Series C Preferred Stock;
(b) on a parity with the Series A Preferred Stock, the Series B Preferred
Stock and each other series of Preferred Stock issued by the Company which does
not provide by its express terms that it ranks junior in right of payment to the
Series C Preferred Stock with respect to payment of dividends or amounts upon
liquidation, dissolution or winding-up; and
(c) junior to any class or series of Capital Stock issued by the Company
that ranks senior to the Series C Preferred Stock in accordance with Section
IV(d).
IV. Voting
(a) Holders of shares of the Series C Preferred Stock shall not have any
voting rights, except as provided by applicable law and as described below in
this Section IV.
(b) If and whenever six quarterly dividends on the Series C Preferred
Stock, whether or not earned or declared, shall be in arrears (which shall, with
respect to any such quarterly dividend, mean that any such dividend has not been
paid in full) (a "Preferred Dividend Default"), the number of directors then
constituting the Board shall be increased by two and the holders of shares of
the Series C Preferred Stock (voting separately as a single class (regardless of
series) with all other Capital Stock of the Company upon which like voting
rights have been conferred and are exercisable ("Parity Preferred Stock")) shall
be entitled to elect two additional directors (the "Preferred Stock Directors")
to serve on the Board at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Series C
Preferred Stock and the Parity Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Series C Preferred Stock and the Parity
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current Dividend Period shall have been paid or declared and set apart for
payment, then the right of the holders of the Series C Preferred Stock and the
Parity Preferred Stock to elect such additional two directors shall cease (but
subject always to the same provisions for the vesting of such voting rights in
the case of any similar future arrearages in six quarterly dividends), and the
terms of office of all persons elected as directors by the holders of the Series
C Preferred Stock and the Parity Preferred Stock shall forthwith terminate and
the number of the Board shall be reduced accordingly. At any time after such
voting power shall have been so vested in the holders of shares of Series C
Preferred Stock and Parity Preferred Stock, the secretary of the Corporation
may, and upon the written request of any holder of Series C Preferred Stock
(addressed to the secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Series C Preferred Stock and of the
Parity Preferred Stock for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that provided
in the By-Laws of the Corporation for a special meeting of the stockholders or
as required by law. If any such special meeting required to be called as above
provided shall not be called by the secretary within 20 days after receipt of
any such request, then any holder of shares of Series C Preferred Stock may call
such meeting, upon the notice above provided, and for that
3
purpose shall have access to the stock books of the Corporation. The directors
elected at any such special meeting shall hold office until the next annual
meeting of the stockholders or special meeting held in lieu thereof if such
office shall not have previously terminated as above provided.
(c) So long as a Preferred Dividend Default shall continue, any vacancy in
the office of a Preferred Stock Director may be filled by written consent of the
Preferred Stock Director remaining in office, or if there is no such remaining
director, by the holders of a majority of the votes of the outstanding Series C
Preferred Stock and the other series of Parity Preferred Stock voting as a
single class. Any Preferred Stock Director may be removed only for cause and
only by the holders of record of seventy-five percent (75%) of the votes of the
outstanding shares of Series C Preferred Stock voting separately as a class with
all other series of Parity Preferred Stock. The Preferred Stock Directors shall
each be entitled to one vote per director on any matter.
(d) So long as any shares of Series C Preferred Stock remain outstanding,
the Company shall not, without the affirmative vote or consent of the holders of
at least a majority of the shares of Series C Preferred Stock outstanding at the
time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (i) authorize, create or issue, or
increase the authorized or issued amount of, any class or series of shares of
Capital Stock ranking prior to the Series C Preferred Stock with respect to the
payment of dividends or the distribution of assets upon voluntary or involuntary
liquidation, dissolution or winding-up of the Company or reclassify any
authorized shares of Capital Stock of the Company into such Capital Stock, or
create, authorize or issue any obligation or security convertible or
exchangeable into or evidencing the right to purchase any such Capital Stock; or
(ii) amend, alter or repeal the provisions of the Certificate of Incorporation
or this Certificate of Designations, whether by merger or consolidation or
otherwise (an "Event"), so as to materially and adversely affect any right,
preference, privilege or voting power of the Series C Preferred Stock or the
holders thereof. Notwithstanding anything to the contrary contained herein, none
of the following shall be deemed to materially and adversely affect any such
right, preference, privilege or voting power or otherwise require the vote or
consent of the holders of shares of Series C Preferred Stock: (X) the occurrence
of any Event so long as either (1) the Company is the surviving entity and the
Series C Preferred Stock remains outstanding with the terms thereof materially
unchanged or (2) interests in an entity having substantially the same rights and
terms as the Series C Preferred Stock are substituted for the Series C Preferred
Stock, (Y) any increase in the amount of the authorized Preferred Stock or the
creation or issuance of any other series of Preferred Stock or any increase in
the amount of authorized or issued Series C Preferred Stock or any other series
of Preferred Stock, in each case ranking on a parity with or junior to the
Series C Preferred Stock with respect to payment of dividends and the
distribution of assets upon voluntary or involuntary liquidation, dissolution or
winding-up of the Company, and (Z) the dissolution, liquidation and/or winding
up of the Company.
(e) For purposes of the foregoing provisions of this Section IV, each share
of Series C Preferred Stock shall have one (1) vote per share, except that when
any other series of preferred stock shall have the right to vote with the Series
C Preferred Stock as a single class on any matter, then the Series C Preferred
Stock and such other series shall have with respect to such matters one (1) vote
per $25.00 of stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein, the shares of Series C Preferred Stock
shall not have any voting rights or powers and the consent of the holders
thereof shall not be required for the taking of any corporate action.
4
V. Dividends
(a) With respect to each Dividend Period and subject to the rights of the
holders of shares of Preferred Stock ranking senior to or on parity with the
Series C Preferred Stock, the holders of shares of Series C Preferred Stock
shall be entitled to receive, when, as and if declared by the Board, out of
assets of the Company legally available for the payment of dividends, quarterly
cumulative cash dividends in an amount per share of Series C Preferred Stock
equal to the greater of (i) $21.25 and (ii) the amount of the regular quarterly
cash dividends for such Dividend Period upon the number of shares of Common
Stock (or portion thereof) into which such Series C Preferred Stock is then
convertible in accordance with Section VII hereof (but, with respect to any
Dividend Period ending after the Fifteenth Anniversary Date, no amount shall be
paid in respect of clause (ii) of this paragraph in respect of the portion of
such Dividend Period occurring after the Fifteenth Anniversary Date).
Notwithstanding anything to the contrary contained herein, the amount of
dividends described under either clause (i) or (ii) of this paragraph for the
initial Dividend Period, or any other period shorter than a full Dividend
Period, shall be prorated and computed on the basis of twelve 30-day months and
a 360-day year. The dividends on the Series C Preferred Stock for each Dividend
Period shall, if and to the extent declared or authorized by the Board, be paid
in arrears (without interest or other amount) on the Dividend Payment Date with
respect thereto, and, if not paid on such date, shall accumulate, whether or not
there are funds legally available for the payment thereof and whether or not
such dividends are declared or authorized. The record date for dividends to the
holders of shares of Series C Preferred Stock for any Dividend Period shall be
the same as the record date for the dividends to the holders of shares of Common
Stock for such Dividend Period (or, if no such record is set for the Common
Stock, the fifteenth day of the calendar month in which the applicable Dividend
Payment Date falls). Accrued and unpaid dividends for any past Dividend Periods
may be declared and paid at any time, without reference to any Dividend Payment
Date, to holders of record on such date, not exceeding 45 days preceding the
payment date thereof, as may be fixed by the Board. Any dividend payment made on
the shares of Series C Preferred Stock shall first be credited against the
earliest accumulated but unpaid dividend due with respect to such shares which
remains payable. No interest, or sum of money in lieu of interest, shall be
owing or payable in respect of any dividend payment or payments on the Series C
Preferred Stock, whether or not in arrears.
(b) No dividend on the Series C Preferred Stock shall be declared by the
Board or paid or set apart for payment by the Company at such time as the terms
and provisions of any agreement of the Company, including any agreement relating
to its indebtedness, prohibits such declaration, payment or setting apart for
payment or provides that such declaration, payment or setting apart for payment
would constitute a breach thereof, or a default thereunder, or if such
declaration or payment shall be restricted or prohibited by law. Notwithstanding
the foregoing, dividends on the Series C Preferred Stock shall accumulate
whether or not any of the foregoing restrictions exist
(c) Except as provided in subsection V(d) herein, so long as any shares of
Series C Preferred Stock are outstanding, (i) no dividends (other than in Common
Stock or other Capital Stock of the Company ranking junior to the Series C
Preferred Stock as to payment of dividends and amounts upon liquidation,
dissolution or winding-up of the Company) shall be declared or paid or set apart
for payment upon the Common Stock or any other class or series of Capital Stock
of the Company ranking, as to payment of dividends or amounts distributable upon
liquidation, dissolution or winding-up of the Company, on a parity with or
junior to the Series C
5
Preferred Stock, for any period and (ii) no Common Stock or other Capital Stock
of the Company ranking junior to or on a parity with the Series C Preferred
Stock as to payment of dividends or amounts upon liquidation, dissolution or
winding-up of the Company, shall be redeemed, purchased or otherwise acquired
for any consideration (or any monies be paid to or made available for a sinking
fund for the redemption of any such Capital Stock) by the Company (except by
conversion into or exchange for other Capital Stock of the Company ranking
junior to the Series C Preferred Stock as to payment of dividends and amounts
upon liquidation, dissolution or winding-up of the Company or by redemptions for
the purpose of maintaining the Company's qualification as a real estate
investment trust ("REIT") for U.S. federal income tax purposes) unless, in the
case of either clause (i) or (ii), full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series C Preferred Stock for
all Dividend Periods ending on or prior to the dividend payment date for the
Common Stock or such other class or series of Capital Stock or the date of such
redemption, purchase or other acquisition.
(d) When dividends are not paid in full (or a sum sufficient for such full
payment is not set apart for such payment) upon the Series C Preferred Stock and
any other Capital Stock ranking on a parity as to payment of dividends with the
Series C Preferred Stock, all dividends declared upon the Series C Preferred
Stock and any other Capital Stock ranking on a parity as to payment of dividends
with the Series C Preferred Stock shall be declared pro rata so that the amount
of dividends declared per share of Series C Preferred Stock and such other
Capital Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the Series C Preferred Stock and such other Capital Stock
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such Capital Stock does not have a cumulative
dividend) bear to each other.
(e) The holders of the shares of Series C Preferred Stock shall not be
entitled to any dividends in excess of full cumulative dividends as described in
V(a) above.
VI. Liquidation Preference
(a) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Company, before any payment or distribution of the assets
of the Company (whether capital or surplus) shall be made to or set apart for
the holders of Common Stock or any other Capital Stock ranking junior to the
Series C Preferred Stock as to the distribution of assets upon the liquidation,
dissolution or winding-up of the Company, the holders of shares of the Series C
Preferred Stock shall, with respect to each such share, be entitled to receive,
out of the assets of the Company available for distribution to stockholders
after payment or provision for payment of all debts and other liabilities of the
Company, an amount equal to the greater of (i) $1,000.00, plus an amount equal
to all dividends (whether or not earned or declared) accrued and unpaid thereon
to the date of final distribution and (ii) the amount that a holder of such
share of Series C Preferred Stock would have received upon final distribution in
respect of the number of shares of Common Stock into which such share of Series
C Preferred Stock was convertible immediately prior to such date of final
distribution (but no amount shall be paid in respect of the foregoing clause
(ii) after the Fifteenth Anniversary Date). If, upon any such voluntary or
involuntary liquidation, dissolution or winding-up of the Company, the assets of
the Company, or proceeds thereof, distributable among the holders of the shares
of Series C Preferred Stock, are insufficient to pay in full the preferential
6
amount aforesaid on the shares of Series C Preferred Stock and liquidating
payments on any other shares of any class or series of Capital Stock ranking, as
to payment of dividends and amounts upon the liquidation, dissolution or
winding-up of the Company, on a parity with the Series C Preferred Stock, then
such assets, or the proceeds thereof, shall be distributed among the holders of
shares of Series C Preferred Stock and any such other parity stock ratably in
accordance with the respective amounts that would be payable on such shares of
Series C Preferred Stock and such other stock if all amounts payable thereon
were paid in full. For the purposes of this Section VI, none of (i) a
consolidation or merger of the Company with or into another entity, (ii) a
merger of another entity with or into the Company, (iii) a statutory share
exchange by the Company or (iv) a sale, lease or conveyance of all or
substantially all of the Company's assets, properties or business shall be
deemed to be a liquidation, dissolution or winding-up of the Company.
(b) Written notice of such liquidation, dissolution or winding-up of the
Company, stating the payment date or dates when, and the place or places where,
the amounts distributable in such circumstances shall be payable, shall be given
by first class mail, postage pre-paid, not less than 30 nor more than 60 days
prior to the payment date stated therein, to each record holder of the Series C
Preferred Stock at the respective addresses of such holders as the same shall
appear on the stock transfer records of the Company.
(c) After payment of the full amount of liquidating distributions to which
they are entitled, the holders of shares of Series C Preferred Stock shall have
no right or claim to any of the remaining assets of the Company.
VII. Conversion. Holders of shares of Series C Preferred Stock shall have
the right to convert all or a portion of such shares into shares of Common
Stock, as follows:
(a) A holder of shares of Series C Preferred Stock shall have the right, at
such holder's option, at any time, to convert any whole number of shares of
Series C Preferred Stock, in whole or in part, into shares of Common Stock. Each
share of Series C Preferred Stock shall be convertible into the number of shares
of Common Stock determined by dividing (i) the $1,000 face amount per each share
of Series C Preferred Stock plus an amount equal to all dividends (whether or
not earned or declared) accrued and unpaid thereon to the end of the last
Dividend Period ending prior to the conversion by (ii) the conversion price of
the Series B Preferred Units as in effect as of the date of the conversion
(equivalent to an initial anticipated conversion rate of 20 shares of Common
Stock for each share of Series C Preferred Stock), subject to adjustment as
described in Section VII(c) hereof (the "Conversion Price"); provided, however,
that the right to convert shares of Series C Preferred Stock may not be
exercised after the Fifteenth Anniversary Date. No fractional shares of Common
Stock will be issued upon any conversion of shares of Series C Preferred Stock.
Instead, the number of shares of Common Stock to be issued upon each conversion
shall be rounded to the nearest whole number of shares of Common Stock.
(b) To exercise the conversion right, the holder of each share of Preferred
Stock to be converted shall surrender the certificate representing such share,
duly endorsed or assigned to the Company or in blank, at the principal office of
the Company accompanied by a written notice to the Company (the "Conversion
Notice") indicating that the holder thereof elects to convert such share of
Series C Preferred Stock. Unless the shares issuable on conversion are to be
issued in the same name as the name in which such share of Series C Preferred
Stock is registered, each share of
7
Series C Preferred Stock surrendered for conversion shall be accompanied by
instruments of transfer, in form reasonably satisfactory to the Company, duly
executed by the holder or such holder's duly authorized attorney and an amount
sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Company demonstrating that such taxes have been paid).
As promptly as practicable after the surrender of certificates for shares
of Series C Preferred Stock and delivery of the Conversion Notice as aforesaid,
the Company shall issue and shall deliver at such office to such holder, or on
the holder's written order, a certificate or certificates for the number of
shares of Common Stock issuable upon the conversion of such shares of Series C
Preferred Stock in accordance with the provisions of this Section VII. In
addition, the Company shall issue and deliver to such holder a certificate or
certificates evidencing any shares of Series C Preferred Stock that were
evidenced by the certificate or certificates delivered to the Company in
connection with such conversion but that were not converted.
A holder of shares of Series C Preferred Stock at the close of business on
the record date for any Dividend Period shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares of Series C Preferred Stock
following such record date and prior to such Dividend Payment Date and shall
have no right to receive any dividend for such Dividend Period in respect of the
shares of Common Stock into which such shares of Series C Preferred Stock were
converted. Except as provided herein, the Company shall make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
of Series C Preferred Stock or for dividends on the shares of Common Stock that
are issued upon such conversion.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of Series
C Preferred Stock shall have been surrendered and the Conversion Notice is
received by the Company as aforesaid, and the person or persons in whose name or
names any shares of Common Stock shall be issuable upon such conversion shall be
deemed to have become the holder or holders of record of such shares at such
time on such date, and such conversion shall be at the Conversion Price in
effect at such time and on such date unless the transfer books of the Company
shall be closed on that date, in which event such person or persons shall be
deemed to have become such holder or holders of record at the close of business
on the next succeeding day on which such transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date on which such
shares have been surrendered and such notice received by the Company.
(c) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Company shall, after the date on which any shares of Series C
Preferred Stock are first issued (the "Issue Date"), (A) pay or make a dividend
to holders of its Common Stock in Common Stock, (B) subdivide its outstanding
Common Stock into a greater number of shares of Common Stock or (C) combine its
outstanding Common Stock into a smaller number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following the
date fixed for the determination of holders entitled to receive such dividend or
at the opening of business on the day next following the day on which such
subdivision, combination or reclassification becomes effective, as the case may
be, shall be adjusted so that the holder of any share of Series C Preferred
Stock thereafter surrendered for conversion shall be
8
entitled to receive the number of shares of Common Stock that such holder would
have owned or have been entitled to receive after the happening of any of the
events described above had such share of Series C Preferred Stock been converted
immediately prior to the record date in the case of a dividend or the effective
date in the case of a subdivision, combination or reclassification. An
adjustment made pursuant to this subsection (i) shall become effective
immediately after the opening of business on the day next following the record
date (except as provided in subsection (g) below) in the case of a dividend and
shall become effective immediately after the opening of business on the day next
following the effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Company shall issue after the Issue Date rights, options or
warrants to all holders of shares of Common Stock entitling them to subscribe
for or purchase shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) at a price per share less than the Fair
Market Value per share of Common Stock on the record date for the determination
of holders of shares of Common Stock entitled to receive such rights, options or
warrants, then the Conversion Price in effect at the opening of business on the
day next following such record date shall be adjusted to equal the price
determined by multiplying (I) the Conversion Price in effect immediately prior
to the opening of business on the day following the date fixed for such
determination by (II) a fraction, the numerator of which shall be the sum of (A)
the number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination and (B) the number of shares of Common Stock
that the aggregate proceeds to the Company from the exercise of such rights,
options or warrants for shares of Common Stock would purchase at such Fair
Market Value, and the denominator of which shall be the sum of (A) the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and (B) the number of additional shares of Common Stock
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall become effective immediately after the opening
of business on the day next following such record date (except as provided in
subsection (g) below). In determining whether any rights, options or warrants
entitle the holders of shares of Common Stock to subscribe for or purchase
shares of Common Stock at less than the Fair Market Value, there shall be taken
into account any consideration received by the Company upon issuance and upon
exercise of such rights, options or warrants, the value of such consideration,
if other than cash, to be determined in good faith by the Board of the Company.
(iii) If the Company shall distribute to all holders of shares of Common
Stock any other securities or evidences of its indebtedness or assets (excluding
those rights, options and warrants referred to in and treated under subsection
(ii) above, and excluding dividends paid exclusively in cash) (any of the
foregoing being hereinafter in this subsection (iii) called the "Securities"),
then in each case the Conversion Price shall be adjusted so that it shall equal
the price determined by multiplying (I) the Conversion Price in effect
immediately prior to the close of business on the date fixed for the
determination of holders of shares of Common Stock entitled to receive such
dividend by (II) a fraction, the numerator of which shall be the Fair Market
Value per share of Common Stock on the record date mentioned below less the then
fair market value (as determined in good faith by the Board of the Company) of
the portion of the securities so distributed applicable to one share of Common
Stock, and the denominator of which shall be the Fair Market Value per share of
Common Stock on the record date mentioned below. Such adjustment shall become
effective immediately at the opening of business on the business day next
following (except as provided in subsection (g) below) the record date for the
determination of
9
holders of shares of Common Stock entitled to receive such distribution. For the
purposes of this subsection (iii), a dividend in the form of a Security, which
is distributed not only to the holders of the shares of Common Stock on the date
fixed for the determination of holders of shares of Common Stock entitled to
such distribution of such Security, but also is distributed with each share of
Common Stock delivered to a person converting a share of Series C Preferred
Stock after such determination date, shall not require an adjustment of the
Conversion Price pursuant to this subsection (iii); provided that on the date,
if any, on which a person converting a share of Series C Preferred Stock would
no longer be entitled to receive such Security with a share of Common Stock, a
distribution of such Securities shall be deemed to have occurred, and the
Conversion Price shall be adjusted as provided in this subsection (iii) (and
such day shall be deemed to be "the date fixed for the determination of the
holders of shares of Common Stock entitled to receive such dividend" and "the
record date" within the meaning of the two preceding sentences).
(iv) No adjustment in the Conversion Price shall be required unless such
adjustment would require a cumulative increase or decrease of at least 1% in
such price; provided, however, that any adjustments that by reason of this
subsection (iv) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment until made; and provided, further,
that any adjustment shall be required and made in accordance with the provisions
of this Section VII (other than this subsection (iv)) not later than such time
as may be required in order to preserve the tax-free nature of a dividend to the
holders of shares of Common Stock. Notwithstanding any other provisions of this
Section VII, the Company shall not be required to make any adjustment to the
Conversion Price for the issuance of any Common Stock pursuant to any plan
providing for the reinvestment of dividends or interest payable on securities of
the Company and the investment of additional optional amounts in Common Stock
under such plan. All calculations under this Section VII shall be made to the
nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a
share (with .05 of a share being rounded upward), as the case may be. Anything
in this subsection (c) to the contrary notwithstanding, the Company shall be
entitled, to the extent permitted by law, to make such reductions in the
Conversion Price, in addition to those required by this subsection (c), as it in
its discretion shall determine to be advisable in order that any Capital Stock
dividend, subdivision of Capital Stock, reclassification or combination of
Capital Stock, distribution of rights, options or warrants to purchase Capital
Stock or securities, or a distribution consisting of other assets (other than
cash distributions) hereafter made by the Company to its holders of Capital
Stock shall not be taxable but any such adjustment shall not adversely affect
the value of the Series C Preferred Stock.
(d) If the Company shall be a party to any transaction (including, without
limitation, a merger, consolidation, statutory share exchange, self tender offer
for all or substantially all of the shares of Common Stock, sale of all or
substantially all of the Company's assets or recapitalization of the Common
Stock and excluding any transaction as to which subsection (c)(i) of this
Section VII applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which shares of Common Stock shall
be converted into the right to receive shares, stock, securities or other
property (including cash or any combination thereof), each share of Series C
Preferred Stock which is not converted into the right to receive shares, stock,
securities or other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of shares, stock, securities
and other property (including cash or any combination thereof) receivable upon
the consummation of such Transaction by a holder of that number of shares of
Common Stock into which one share of Series C Preferred Stock was convertible
immediately prior
10
to such Transaction, assuming such holder of Common Stock is not a Person with
which the Company consolidated or into which the Company merged or which merged
into the Company or to which such sale or transfer was made, as the case may be
(a "Constituent Person"), or an affiliate of a Constituent Person. The Company
shall not be a party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this subsection (d), and it shall not consent
or agree to the occurrence of any Transaction until the Company has entered into
an agreement with the successor or purchasing entity, as the case may be, for
the benefit of the holders of the shares of Series C Preferred Stock that will
contain provisions enabling the holders of shares of Series C Preferred Stock
that remain outstanding after such Transaction to convert into the consideration
received by holders of shares of Common Stock at the Conversion Price in effect
immediately prior to such Transaction (with the holder having the option to
elect the type of consideration if a choice is offered in the Transaction). The
provisions of this subsection (d) shall similarly apply to successive
Transactions.
(e) If:
(i) the Company shall declare a dividend on the shares of Common Stock
(other than a cash dividend) or there shall be a reclassification, subdivision
or combination of Common Stock; or
(ii) the Company shall authorize the granting to the holders of the shares
of Common Stock of rights, options or warrants to subscribe for or purchase any
Capital Stock of any class or any other rights, options or warrants; or
(iii) there shall be any reclassification of the shares of Common Stock or
any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or a statutory share
exchange involving the conversion or exchange of shares of Common Stock into
securities or other property, or a self tender offer by the Company for all or
substantially all of the shares of Common Stock, or the sale or transfer of all
or substantially all of the assets of the Company as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding-up of the Company,
then the Company shall cause to be mailed to the holders of the shares of Series
C Preferred Stock at their addresses as shown on the records of the Company, as
promptly as possible a notice stating (A) the date on which a record is to be
taken for the purpose of such distribution of rights, options or warrants, or,
if a record is not to be taken, the date as of which the holders of shares of
Common Stock of record to be entitled to such distribution of rights, options or
warrants are to be determined or (B) the date on which such reclassification,
subdivision, combination, consolidation, merger, sale, transfer, liquidation,
dissolution or winding-up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding-up. Failure to give or
receive such notice or any defect therein shall not affect the legality or
validity of the proceedings described in this Section VII.
11
(f) Whenever the Conversion Price is adjusted as herein provided, the
Company shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to the holder of each share of Series C Preferred Stock at
such holder's last address as shown on the records of the Company.
(g) In any case in which subsection (c) of this Section VII provides that
an adjustment shall become effective on the date next following the record date
for an event, the Company may defer until the occurrence of such event issuing
to the holder of any share of Series C Preferred Stock converted after such
record date and before the occurrence of such event the additional shares of
Common Stock issuable upon such conversion by reason of the adjustment required
by such event over and above the shares of Common Stock issuable upon such
conversion before giving effect to such adjustment.
(h) For purposes of this Section VII, the number of shares of Common Stock
at any time outstanding shall not include any shares of Common Stock then owned
or held by or for the account of the Company. The Company shall not make any
distribution on shares of Common Stock held in the treasury of the Company.
(i) If any action or transaction would require adjustment of the Conversion
Price pursuant to more than one subsection of this Section VII, only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Company shall take any action affecting the shares of Common
Stock, other than action described in this Section VII, that in the reasonable
judgment of the Company would materially and adversely affect the conversion
rights of the holders of the shares of Series C Preferred Stock, the Conversion
Price for the shares of Series C Preferred Stock may be adjusted, to the extent
permitted by law, in such manner, if any, and at such time, as the Company,
determines to be equitable in the circumstances.
(k) The Company covenants that shares of Common Stock issued upon
conversion of the shares of Series C Preferred Stock shall be validly issued,
fully paid and nonassessable. Prior to the delivery of any securities that the
Company shall be obligated to deliver upon conversion of the shares of Series C
Preferred Stock, the Company shall endeavor to comply with all federal and state
laws and regulations thereunder requiring the registration of such securities
with, or any approval of or consent to the delivery thereof, by any governmental
authority.
(l) The Company will pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of shares of Common
Stock or other securities or property on conversion of the shares of Series C
Preferred Stock pursuant hereto; provided, however, that the Company shall not
be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock or other securities
or property in a name other than that of the holder of the Series C Preferred
Stock to be converted, and no such issue or delivery shall be made unless and
until the person requesting such issue or delivery has paid to the Company the
amount of any such tax or established, to the reasonable satisfaction of the
Company, that such tax has been paid.
12
VIII. Ownership Limitations
The shares of Series C Preferred Stock are subject to the restrictions on
transferability and ownership provisions described in Article IV of the
Certificate of Incorporation. The ownership limit as described in Article IV of
the Certificate of Incorporation (the "Ownership Limit") shall mean that
ownership of more than 7.5% of the value of the outstanding shares of Capital
Stock of the Company, including the Series C Preferred Stock, is restricted in
order to preserve the Company's status as a REIT for U.S. federal income tax
purposes. Subject to certain limitations described in Article IV of the
Certificate of Incorporation, the Board may modify the Ownership Limit, though
the Ownership Limit may not be increased by the Board to more than 9.8%. In
addition, Article IV of the Certificate of Incorporation limits the ownership of
"Existing Holders" (the "Existing Holder Limit") and also limits transfers that
would cause the Company to become "closely held" within the meaning of Section
856(h) of the Code.
IN WITNESS WHEREOF, the Company has caused this Certificate of Designations
to be executed in its name and on its behalf by its __________ and attested to
by its Secretary on this ___ day of ______, 2002.
GENERAL GROWTH PROPERTIES, INC., a
Delaware corporation
By:
---------------------------------
Name:
Title:
ATTEST:
By:
---------------------------
Name:
Title:
13
Exhibit I
TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT ("Agreement"), dated as of March __, 2002, is
made by General Growth Properties, Inc., a Delaware corporation ("GGP"), GGP
Limited Partnership, a Delaware limited partnership ("GGP Partnership"), Price
Development Company, Limited Partnership, a Maryland limited partnership ("JP
Partnership"), and certain former limited partners of JP Partnership (the
"Former JP Limited Partners") who will become limited partners of GGP
Partnership as a result of the Partnership Merger (defined below).
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of March
__, 2002, among GGP, GGP Partnership, GGP Acquisition, L.L.C., a Delaware
limited liability company, GGP Acquisition II, L.L.C., a Maryland limited
liability company ("Partnership Acquisition"), JP Realty, Inc., a Maryland
corporation, and JP Partnership (the "Merger Agreement"), Partnership
Acquisition will merge with and into JP Partnership (the "Partnership Merger");
WHEREAS, for federal income tax purposes, it is intended that the
Partnership Merger, regardless of form, will be treated as a tax-free
contribution by the Contributing Holders of JP Common OP Units to GGP
Partnership of their limited partnership interests in JP Partnership in exchange
for GGP Series B Preferred OP Units, under Section 721 of the Code, and a sale
by the Selling Holders of JP Common OP Units of their limited partnership
interests in JP Partnership to GGP Partnership in exchange for cash;
WHEREAS, pursuant to the Merger Agreement, GGP Partnership has agreed to
make certain undertakings to the Former JP Limited Partners and certain of their
permitted successors and assigns as provided herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1. Definitions. All capitalized terms used and not otherwise defined in
this Agreement shall have the meaning set forth in the Merger Agreement. As used
herein, the following terms have the following meanings:
"Accounting Firm" shall have the meaning set forth in Section 3(b).
"Aggregate Protected Amount" shall have the meaning set forth in
Section 5(a).
"Amendment" shall have the meaning set forth in Section 5(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"GGP Partnership Units" shall mean any series of GGP Preferred Units
or Common Units of GGP Partnership.
"Guarantee Opportunity" shall have the meaning set forth in Section
5(c).
"Guaranty Agreement" shall mean, with respect to any guarantee entered
into with respect to a Qualifying Debt pursuant to Section 5(c) hereof, a
"bottom guarantee" to be entered into by and among GGP, GGP Partnership, or
JP Partnership (or a subsidiary of any of the foregoing that is classified
as a partnership for federal income tax purposes) as borrower, a lender and
one or more of the Obligated Partners substantially in the form of the
agreement attached as Schedule 5 to this Agreement.
"JP Tax Protection Agreements" shall mean those agreements listed on
Schedule 4 of this Agreement.
"Indirect Owner" means, in the case of a Protected Partner or
Obligated Partner that is an entity that is classified as a partnership or
disregarded entity for federal income tax purposes, any person owning an
equity interest in such Protected Partner or Obligated Partner, and, in the
case of any Indirect Owner that itself is an entity that is classified as a
partnership or disregarded entity for federal income tax purposes, any
person owning an equity interest in such entity.
"Modified Protected Amount" shall have the meaning set forth in
Section 5(c).
"Obligated Partner" shall mean a Protected Partner who has agreed to
become an Obligated Partner pursuant to Section 5(b) hereof and whose name
is set forth on Schedule 3 to this Agreement, and any person who (1) holds
Protected Units, (2) acquired such Protected Units from an Obligated
Partner in a transaction in which such transferee's adjusted basis, as
determined for federal income tax purposes, is determined, in whole or in
part, by reference to the adjusted basis of the Obligated Partner in such
Protected Units, and (3) elects to assume a portion of such transferor
Obligated Partner's Protected Amount pursuant to the provisions of Section
5(b) hereof. Notwithstanding the foregoing, a person who acquires Protected
Units as the result of the death of an Obligated Partner shall not be
considered an Obligated Partner with respect to such Protected Units.
"Protected Amount" shall mean, as to each Obligated Partner, the
amount set forth with respect to such Obligated Partner on Schedule 3 to
this Agreement; provided, however, that, upon the date nine months after
the death of any Indirect Owner in such Obligated Partner, or upon a fully
taxable sale or exchange of all of an Indirect Owner's equity interest in
such Obligated Partner (i.e., a sale or exchange in which the transferee's
basis in the Indirect Owner's equity interest in the Obligated Partner is
not determined, in whole or in part, by reference to the Indirect Owner's
basis in the Obligated Partner), the Protected Amount of such Obligated
Partner shall be reduced to the extent of the Indirect Owner's allocable
share of the Obligated Partner's Protected Amount.
"Protected Partners" shall mean the Former JP Limited Partners whose
names are set forth on Schedule 1 to this Agreement, and any person who
holds Protected Units and who acquired such Protected Units from a
Protected Partner in a transaction in which such transferee's adjusted
basis, as determined for federal income tax purposes, is determined, in
whole or in part, by reference to the adjusted basis of the Protected
Partner in such Protected Units. Notwithstanding the foregoing, a person
who acquires Protected
2
Units as the result of the death of a Protected Partner shall not be
considered a Protected Partner with respect to such Protected Units.
"Protected Period" shall mean, with respect to each Protected Partner
and the Protected Units of such Protected Partner, the period beginning on
the Closing Date and ending one hundred and eight (108) months after the
Closing Date (the "Initial Protected Period Expiration Date"); provided,
however, that (1) if, on the Initial Protected Period Expiration Date,
Protected Partners own fifty-one percent (51%) or more of such Protected
Partner's Protected Units, then the Protected Period shall be increased,
with respect to the Protected Units of such Protected Partners, by an
additional twelve (12) month period; and (2) if, with respect to any of the
first five (5) anniversaries of the Initial Protected Period Expiration
Date, Protected Partners continue to own fifty-one percent (51%) or more of
such Protected Partner's Protected Units from the Closing Date through such
anniversary, the Protected Period shall be extended with respect to the
Protected Units of such Protected Partners for the twelve (12) month period
following such anniversary. Thus, the Protected Period with respect to the
Protected Units of a Protected Partner may extend for a one hundred and
eight (108), one hundred and twenty (120), one hundred and thirty-two
(132), one hundred and forty-four (144), one hundred and fifty-six (156),
one hundred and sixty-eight (168), or one hundred and eighty (180) month
period from the Closing Date.
"Protected Properties" shall mean the limited partnership interests in
JP Partnership acquired by GGP Partnership from the Former JP Limited
Partners, those properties set forth on Schedule 2 to this Agreement, any
property acquired by GGP Partnership, JP Partnership or any entity in which
either GGP Partnership or JP Partnership holds a direct or indirect
interest in a transaction described in Section 2(b)(i) hereof, and any
other properties received by GGP Partnership, JP Partnership, or any entity
in which GGP Partnership or JP Partnership holds a direct or indirect
interest as "substituted basis property" as defined in Section 7701(a)(42)
of the Code with respect to such Protected Properties.
"Protected Property Disposition" shall have the meaning set forth in
Section 2(a).
"Protected Units" shall mean solely those GGP Partnership Units issued
in the Partnership Merger and held by Protected Partners and any GGP
Partnership Units thereafter issued by GGP Partnership in exchange for
Protected Units in a transaction in which the transferee's adjusted basis
in the issued GGP Partnership Units is determined, in whole or in part, by
reference, to the transferee's basis in Protected Units. Notwithstanding
the foregoing, a Protected Unit shall cease to constitute a Protected Unit
on the death of the Protected Partner holding such Protected Unit. In
addition, upon the death of any Indirect Owner in such Protected Partner,
or upon an Indirect Owner's sale or exchange of some or all of such
Indirect Owner's equity interest in a Protected Partner (other than any
sale or exchange transaction in which the transferee's basis is determined,
in whole or in part, by reference to the adjusted basis of the transferor
Indirect Owner), the Protected Units treated as held by such Protected
Partner shall be reduced such that the Protected Units held by such
Protected Partner shall equal the Protected Units that would have been held
by the Indirect Owners in the aggregate, following such event, had
3
the Indirect Owners directly received Protected Units in the Partnership
Merger and the Indirect Owner had either directly transferred a portion of
such Protected Units or died holding such Protected Units (taking into
account all prior transactions involving the death of an Indirect Owner in
such Protected Partner or the sale or exchange of an Indirect Owner's
equity interest in such Protected Partner (other than a sale or exchange
transaction in which the transferee's basis is determined in whole or in
part by reference to the adjusted basis of the transferor Indirect Owner)).
"Qualifying Debt" shall mean indebtedness of GGP Partnership or JP
Partnership, provided that (1) such indebtedness is treated as a
"nonrecourse liability" for purposes of Section 752 of the Code and the
Treasury Regulations thereunder and secured by property or other assets of
GGP Partnership or JP Partnership, respectively, (2) such indebtedness is
the most senior indebtedness secured by the subject properties, and (3) the
subject property or assets securing such indebtedness have a fair market
value, at the time that a Guarantee Opportunity is offered, at least equal
to (a) 300% of the aggregate amount of the guarantees provided by Protected
Partners hereunder (together with any other guarantees provided with
respect to such indebtedness), and (b) 133% of the aggregate amount of all
indebtedness secured by such property or assets.
"Recourse Debt Covenant Period" shall have the meaning set forth in
Section 5(c).
"Tax Payment Year" shall have the meaning set forth in Section 3(a).
2. Restrictions on Dispositions of Protected Properties.
(a) Subject to Section 2(b), GGP and GGP Partnership agree, for the benefit
of each Protected Partner and the Indirect Owners of such Protected Partner,
that neither GGP Partnership, JP Partnership nor any entity in which GGP
Partnership or JP Partnership holds a direct or indirect interest will directly
or indirectly sell, transfer, exchange, or otherwise dispose of any Protected
Property or any direct or indirect interest therein (a "Protected Property
Disposition") during the Protected Period. Any transaction or event (excluding
any sale or exchange of Protected Units by a Protected Partner other than any
transaction or event in which (1) GGP Partnership is merged with or into another
entity and (2) a Protected Partner is required to exchange its Protected Units
in a taxable exchange) which would cause any Protected Partner or an Indirect
Owner thereof to recognize or be allocated gain for federal income tax purposes
with respect to any Protected Property or direct or indirect interest therein
will be treated as a Protected Property Disposition.
(b) Section 2(a) shall not apply to (i) any transaction with respect to a
Protected Property, such as a transaction which qualifies as a tax-free
like-kind exchange under Code Section 1031 or a tax-free contribution under Code
Section 721, which would not result in the recognition of income or gain by or
allocation of income or gain to any Protected Partner or its Indirect Owners, or
(ii) the conveyance of any Protected Property, in whole or in part, to any
person in connection with a foreclosure proceeding or deed in lieu thereof
(provided the debt encumbering the property did not exceed seventy-five percent
(75%) of the value of such property at the time the debt was entered into,
taking into account all other debt encumbering the
4
property), or (iii) the condemnation or other taking of any Protected Property
by a governmental entity or authority in eminent domain proceedings or
otherwise.
3. Indemnity for Breach of Obligations set forth in Section 2 by GGP or GGP
Partnership.
(a) In the event that GGP or GGP Partnership breaches its obligation set
forth in Section 2(a) to any Protected Partner or an Indirect Owner thereof,
each such Protected Partner shall receive from GGP Partnership as damages an
amount equal to the aggregate federal, state and local income taxes incurred by
such Protected Partner (or Indirect Owner thereof) as a result of the gain
recognized by or allocated to such Protected Partner (or Indirect Owner thereof)
with respect to Protected Units by reason of such Protected Property Disposition
plus an additional amount so that, after the payment by such Protected Partner
(or Indirect Owner thereof) of all taxes on amounts received pursuant to this
Section 3(a), such Protected Partner (or Indirect Owner thereof) retains an
amount equal to its total tax liability incurred as a result of the Protected
Property Disposition. In the event of a breach of Section 2(a) hereof with
respect to any Protected Partner or an Indirect Owner thereof, GGP Partnership
shall promptly notify such Protected Partner in writing of such Protected
Property Disposition and of the approximate sales price or other amount realized
for income tax purposes in connection therewith. In addition, GGP Partnership
shall prepare a computation of the indemnity payment, if any, owing to such
Protected Partner under this Section 3(a), which computation shall be delivered
to such Protected Partner no later than January 15th of the year (the "Tax
Payment Year") in which the Protected Partner is required to report the gain
resulting from the Protected Property Disposition on such Protected Partner's
federal income tax return. GGP Partnership shall make any required indemnity
payment owing to a Protected Partner pursuant to this Section 3(a) no later than
April 1st of the applicable Tax Payment Year. For purposes of the preceding
sentence, (i) all income arising from a transaction or event that is treated as
ordinary income under the applicable provisions of the Code and all payments
under this Section 3(a) shall be treated as subject to federal, state and local
income tax at an effective tax rate imposed on ordinary income of individuals
residing in the city and state of residence of such Protected Partner,
determined using the maximum federal rate of tax on ordinary income and the
maximum state and local rates of tax on ordinary income then in effect in such
city and state, (ii) all other income arising from the transaction or event
shall be subject to federal, state, and local income tax at the effective tax
rate imposed on long-term capital gains of individuals residing in the city and
state of residence of such Protected Partner, determined using the maximum
federal, city and state rates on long-term capital gains then in effect, (iii)
any amounts giving rise to a payment pursuant to this Section 3(a) will be
determined assuming that the transaction or event giving rise to GGP
Partnership's obligation to make a payment was the only transaction or event
reported on the Protected Partner's tax return (i.e., without giving effect to
any loss carry forwards or other deductions attributable to such Protected
Partner) and (iv) any amounts payable with respect to state and local income
taxes shall be assumed to be deductible for federal income tax purposes. In the
case of a Protected Partner which is a partnership or disregarded entity for
federal income tax purposes, the preceding sentence shall be applied treating
each Indirect Owner of such partnership as if it were directly a Protected
Partner, and in the case of a corporate Protected Partner, the preceding
sentence shall be applied using the highest marginal rate of tax applicable to
corporations for federal income tax purposes and state corporate income or
franchise tax purposes. For purposes of computing the damages payable in the
aggregate to the Protected
5
Partners under this Section 3(a) with respect to a Protected Property
Disposition, in no event shall the gain taken into account with respect to the
Protected Property exceed the amount of gain with respect to such Protected
Property that would have been recognized by the Protected Partners and Indirect
Owners thereof with respect to the Protected Units if GGP Partnership had sold
such Protected Property in a fully taxable transaction on the day following the
closing of the Partnership Merger for a purchase price equal to the fair market
value of such Protected Property at such time, provided that for purposes of
computing such amount the aggregate amount of such gain with respect to such
Protected Property shall not exceed the Section 704(c) gain stated with respect
to such Protected Property on Schedule 2 of this Agreement (after subtracting
from such scheduled amount any gain attributable to such scheduled amount which
was previously recognized by (a) a Protected Partner on a transfer of some or
all of its Protected Units to a transferee who is treated as a Protected Partner
with respect to such Protected Units or (b) an Indirect Owner upon a sale or
exchange of some or all of such Indirect Owner's equity interest in such
Protected Partner).
(b) Notwithstanding any provision of this Agreement to the contrary, the
sole and exclusive rights and remedies of any Protected Partner (or Indirect
Owner thereof) for a breach or violation of the covenants set forth in Section
2(a) shall be a claim for damages against GGP Partnership, computed as set forth
in Section 3(a), and no Protected Partner (or Indirect Owner thereof) shall be
entitled to pursue a claim for specific performance of the covenant set forth in
Section 2(a) or bring a claim against any person that acquires a Protected
Property from GGP Partnership in violation of Section 2(a). If GGP Partnership
has breached or violated the covenant set forth in Section 2(a) (or a Protected
Partner (or Indirect Owner thereof)) asserts that GGP Partnership has breached
or violated the covenant set forth in Section 2(a)), GGP Partnership and the
Protected Partner agree to negotiate in good faith to resolve any disagreements
regarding any such breach or violation and the amount of damages, if any,
payable to such Protected Partner under Section 3(a). If any such disagreement
cannot be resolved by GGP Partnership and such Protected Partner within thirty
(30) days after such breach, GGP Partnership and the Protected Partner shall
jointly retain a nationally recognized independent public accounting firm (the
"Accounting Firm") to act as an arbitrator to resolve as expeditiously as
possible all points of any such disagreement (including, without limitation,
whether a breach of the covenant set forth in Section 2(a) has occurred and, if
so, the amount of damages to which the Protected Partner (or Indirect Owner
thereof) is entitled as a result thereof, determined as set forth in Section
3(a)). All determinations made by the Accounting Firm with respect to the
resolution of any breach or violation of the covenant set forth in Section 2(a)
and the amount of damages payable to the Protected Partner (or Indirect Owner
thereof) under Section 3(a) shall be final, conclusive and binding on GGP
Partnership and the Protected Partner. The fees and expenses of the Accounting
Firm incurred in connection with any such determination shall be shared equally
by GGP Partnership and the Protected Partner. In the event that GGP Partnership
and a Protected Partner, each having acted in good faith and with its or his
best efforts to select an Accounting Firm, are unable to retain an Accounting
Firm within sixty (60) days after the thirty (30) day period mentioned above,
then following the expiration of such sixty (60) day period, any disagreement
may be settled in any court of competent jurisdiction.
6
4. Section 704(c) Method. GGP Partnership shall use, and shall cause JP
Partnership and any other entity in which GGP Partnership or JP Partnership has
a direct or indirect interest to use (to the extent not prohibited by the
partnership or operating agreement of any entity being acquired by GGP
Partnership, directly or indirectly, as a result of the Partnership Merger), the
"traditional method" under Regulations Section 1.704-3(b) for purposes of making
allocations under Section 704(c) of the Code with respect to each Protected
Property to take into account the book-tax disparities as of the effective time
of the Partnership Merger with respect to such Protected Property and with
respect to any revaluation of such Protected Property pursuant to Regulations
Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(2)(iv)(g), and 1.704-3(a)(6) with no
"curative allocations," "remedial allocations," or adjustments to other items to
offset the effect of the "ceiling rule."
5. Election by Certain Former JP Limited Partners to Become Obligated
Partners; Obligation of GGP Partnership to Maintain Certain Recourse Debt.
(a) GGP and GGP Partnership agree to maintain, directly or indirectly, at
all times, and on a continuous basis, with respect to each Protected Partner
that becomes an Obligated Partner pursuant to Section 5(b) hereof, an amount of
"recourse" indebtedness, which shall be available to be allocated solely to such
Obligated Partner for federal income tax purposes and for which such Obligated
Partner shall solely be reported for federal income tax purposes as bearing the
"economic risk of loss" within the meaning of Regulation Section 1.752-2(a)
while such Obligated Partner remains a partner in GGP Partnership, in an amount
equal to such Obligated Partner's Protected Amount, as set forth opposite such
Obligated Partner's name on Schedule 3 to this Agreement, in accordance with the
provisions of Section 5(b). The aggregate amount of such recourse indebtedness
to be maintained by GGP and GGP Partnership shall equal the aggregate of the
amounts shown as Protected Amounts on Schedule 3 to this Agreement (the
"Aggregate Protected Amount"), as reduced pursuant to the terms hereof.
(b) GGP and GGP Partnership shall adopt, at the Closing Date, the Fourth
Amendment (the "Amendment") to the Second Amended and Restated Agreement of
Limited Partnership of GGP Limited Partnership (the "GGP Partnership Agreement")
in the form set forth as Exhibit E to the Merger Agreement and cause each of the
Obligated Partners set forth on Schedule 3 to this Agreement to become
"Obligated Partners" thereunder with a "Protected Amount" equal to the Protected
Amount shown on such Schedule 3. Upon adoption of the Amendment, all tax returns
filed by GGP Partnership shall report allocations of recourse liabilities to
each Obligated Partner in an amount equal to such Obligated Partner's Protected
Amount. In addition, any person who acquires, as a transferee, the Protected
Units of an Obligated Partner in a transaction in which the adjusted basis of
such transferee in such Protected Units is determined, in whole or in part, by
reference to the adjusted basis of the Obligated Partner in such Protected
Units, may elect to become an Obligated Partner by assuming a portion of, or the
full amount of, such transferor Obligated Partner's Protected Amount. In the
event of such a transfer and election by the transferee, the transferor
Obligated Partner and the transferee electing to become an Obligated Partner
hereunder shall notify GGP Partnership of their intention that the transferee
become an Obligated Partner in connection with such acquisition, and Schedule 3
of this Agreement and Exhibit __ of the GGP Partnership Agreement shall be
amended to include such transferee as an Obligated Partner with a Protected
Amount in the
7
amount agreed to by such transferee Obligated Partner, and the Protected Amount
of the transferor Obligated Partner shall be correspondingly reduced.
(c) After the period ending ninety (90) months after the Closing Date (the
"Recourse Debt Covenant Period"), GGP Partnership may satisfy all or any part of
its obligation to maintain recourse debt pursuant to Section 5(a) by making
available to each Obligated Partner the opportunity (a "Guarantee Opportunity")
to make a "bottom guarantee" of Qualifying Debt in the form of the Guaranty
Agreement attached as Schedule 5 hereto and in an amount, with respect to each
Obligated Partner, at least equal to the difference between such Obligated
Partner's Protected Amount and the amount of recourse debt with respect to which
such Obligated Partner will continue to "bear economic risk of loss" under
Regulation Section 1.752-2(a) due to its remaining an Obligated Partner (the
"Modified Protected Amount") and such Obligated Partner's Protected Amount shall
be reduced to equal its Modified Protected Amount. In the event that, after the
expiration of the Recourse Debt Covenant Period, GGP Partnership elects to
reduce the amount of recourse debt otherwise required by Section 5(a), GGP
Partnership will provide the Obligated Partners with notice of the type, amount
and other relevant attributes of the Qualifying Debt with respect to which the
Guarantee Opportunity is offered at least sixty (60) business days, to the
extent reasonably practicable, but in no event less than thirty (30) business
days prior to GGP Partnership's reduction of the level of such recourse debt.
Upon an Obligated Partner making a bottom guarantee of a Qualifying Debt, all
tax returns filed by GGP Partnership shall report allocations of recourse
liabilities to each Obligated Partner in an amount equal to such Obligated
Partner's debt guarantee plus its Modified Protected Amount.
(d) GGP Partnership makes no representation or warranty to any Obligated
Partner that becoming an Obligated Partner pursuant to Section 5(b) hereof or
providing a "bottom guarantee" entered into pursuant to Section 5(c) hereof
shall be respected for federal income tax purposes as causing the Protected
Partner to be considered to "bear the economic risk of loss" with respect to the
indebtedness thereby guaranteed by such Protected Partner for purposes of either
Section 752 or Section 465 of the Code; provided, however, that GGP Partnership
shall not take any tax position contrary to such position.
6. Indemnity for Breach of Obligations set forth in Sections 4 and 5 by GGP
or GGP Partnership.
(a) In the event that GGP Partnership breaches its obligations to a
Protected Partner (or an Indirect Owner thereof) set forth in Sections 4 or 5,
each such Protected Partner shall receive from GGP Partnership as damages an
amount equal to the aggregate federal, state and local income taxes incurred by
such Protected Partner (or Indirect Owner thereof) as a result of the gain
recognized by such Protected Partner (or Indirect Owner thereof) by reason of
such breach plus an additional amount so that, after the payment by such
Protected Partner (or Indirect Owner thereof) of all taxes on amounts received
pursuant to this Section 6(a), such Protected Partner (or Indirect Owner
thereof) retains an amount equal to its total tax liability incurred as a result
of such breach (but without regard to any tax liability incurred as a result of
such Protected Partner's receipt of such indemnity payment). The principles and
tax rates set forth in Section 3(a) shall also apply for purposes of determining
the timing and amount of payment to be made to a Protected Partner pursuant to
this Section 6(a). GGP Partnership shall be considered to have
8
satisfied its obligations under Section 5, and therefore shall have no liability
under this Section 6(a) for breach of such Section 5, if, after the expiration
of the Recourse Debt Covenant Period, it offers an Obligated Partner a Guarantee
Opportunity in accordance with Section 5(c) hereof, and such Obligated Partner
fails to accept such Guarantee Opportunity. In no event shall GGP Partnership's
liability under this Section 6(a) with respect to any Obligated Partner for a
breach of Section 5 exceed such Obligated Partner's Protected Amount plus any
additional amounts payable so that such Obligated Partner retains an amount
equal to the tax on any gain recognized with respect to such Protected Amount.
(b) Notwithstanding any provision of this Agreement to the contrary, the
sole and exclusive rights and remedies of any Protected Partner (or Indirect
Owner thereof) for a breach or violation of the covenants set forth in Sections
4 and 5 shall be a claim for damages against GGP Partnership, computed as set
forth in Section 6(a), and no Protected Partner (or Indirect Owner thereof)
shall be entitled to pursue a claim for specific performance of the covenants
set forth in Sections 4 and 5. If GGP Partnership has breached or violated the
covenants set forth in Sections 4 or 5 (or a Protected Partner (or Indirect
Owner thereof) asserts that GGP Partnership has breached or violated such
covenants), GGP Partnership and the Protected Partner agree to negotiate in good
faith to resolve any disagreements regarding any such breach or violation and
the amount of damages, if any, payable to such Protected Partner under Section
6(a). If any such disagreement cannot be resolved by GGP Partnership and such
Protected Partner within sixty (60) days after such breach, GGP Partnership and
the Protected Partner shall jointly retain an Accounting Firm to act as an
arbitrator to resolve as expeditiously as possible all points of any such
disagreement (including, without limitation, whether a breach of the covenants
set forth Section 4 and 5 occurred and, if so, the amount of damages to which
the Protected Partner is entitled as a result thereof, determined as set forth
in Section 6(a)). All determinations made by the Accounting Firm with respect to
the resolution of any breach or violation of the covenants set forth in Section
4 and 5 and the amount of damages payable to the Protected Partner under Section
6(a) shall be final, conclusive and binding on GGP Partnership and the Protected
Partner. The fees and expenses of any Accounting Firm incurred in connection
with any such determination shall be shared equally by GGP Partnership and the
Protected Partner. In the event that GGP Partnership and a Protected Partner,
each having acted in good faith and with its or his best efforts to select an
Accounting Firm, are unable to retain an Accounting Firm within sixty (60) days
after the thirty (30) day period mentioned above, following the expiration of
such sixty (60) day period, any disagreement may be settled in any court of
competent jurisdiction.
7. Effect of Other Agreements With Former JP Limited Partners. Schedule 4
to this Agreement sets forth certain obligations of JP Partnership made pursuant
to the JP Tax Protection Agreements.
8. Notice of Death and Sale Events. Each Protected Partner and Obligated
Partner, hereby covenants and agrees to provide, on its own behalf or through
its legal representatives, GGP Partnership with prompt written notice of any
transfer of Protected Units or the death of such Protected Partner or Obligated
Partner.
9. Allocations of Tax Items of GGP Partnership for Taxable Year of the
Partnership Merger. During the taxable year of GGP Partnership within which the
Merger and the
9
Partnership Merger (the "Mergers") are consummated, tax items shall be
apportioned between the portion of such taxable year preceding the Mergers and
the portion of such taxable year following the Mergers based on a closing of the
books and records of the relevant entity or entities as of the Closing Date
(provided that any tax item incurred by reason of transactions occurring on or
before the Closing Date, as contemplated by the Merger Agreement, shall be
treated as occurring prior to the Closing Date).
10. Section 754 Election. GGP and GGP Partnership covenant that GGP
Partnership shall cause GGP Partnership, JP Partnership, and each entity treated
as a partnership for federal income tax purposes in which GGP Partnership and JP
Partnership holds a direct or indirect interest to have in effect for the year
of transfer by a Protected Partner of Protected Units an election under Section
754 of the Code (to the extent not prohibited by the partnership or operating
agreement of any entity being acquired by GGP Partnership, directly or
indirectly, as a result of the Partnership Merger).
11. Requests for Information. GGP Partnership agrees to provide the
Protected Partners with such information as is reasonably available to GGP
Partnership regarding allocations of GGP Partnership's indebtedness under
Section 752 of the Code and the Treasury Regulations thereunder, as such
Protected Partners may reasonably request.
12. Successors and Assigns. In the event that GGP, GGP Partnership or any
of their successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, GGP and GGP Partnership
shall cause proper provision to be made so that the successors and assigns of
GGP and GGP Partnership assume the obligations to the Protected Partners (and
Indirect Partners thereof) set forth in this Agreement.
13. Preparation of Schedules 2 and 3. GGP, GGP Partnership, JP Partnership
and each of the Protected Partners shall together prepare and complete Schedule
2 (setting forth the Section 704(c) gain with respect to each of the Protected
Properties) and Schedule 3 (setting forth a Protected Amount for each Obligated
Partner) on or before the Closing Date; provided that (I) the final Schedule 2
shall reflect (i) aggregate Section 704(c) gain with respect to all of the
Protected Properties of not more than $100.5 million and (ii) Section 704(c)
gain with respect to the Community Centers of not more than $23 million and (II)
Schedule 3 shall reflect an Aggregate Protected Amount of not more than $100
million.
14. Third Party Beneficiaries. GGP and GGP Partnership acknowledge, agree
and confirm that every Protected Partner, person who becomes a Protected
Partner, and Indirect Owner or person that becomes an Indirect Owner is an
intended third party beneficiary of the provisions of this Agreement and the
provisions of this Agreement are enforceable by any one of them.
15. General Provisions.
(a) Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, sent by
10
overnight courier (providing proof of delivery) or sent by telecopy (providing
confirmation of transmission) to the parties at the following addresses or
telecopy numbers (or at such other address or telecopy number for a party as
shall be specified by like notice):
(1) if to GGP or GGP Partnership, to:
GGP Properties, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Fax No.: (000) 000-0000
with a copy to:
Xxxx, Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
(2) if to a Protected Partner or Obligated Partner, to:
Such Protected Partner or Obligated Partner
[At the Address Provided on Schedule __ hereof]
Fax No.: ______________
with a copy to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
(b) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
(c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
11
IN WITNESS WHEREOF, GGP, GGP Partnership, JP Partnership, and the Former JP
Limited Partners have caused this Agreement to be signed personally or by their
respective officers, general partners or members thereunto duly authorized all
as of the date first written above.
GENERAL GROWTH PROPERTIES, INC.
By: ________________________________
Name:
Title
GGP LIMITED PARTNERSHIP
By: General Growth Properties, Inc.,
general partner
By: ________________________________
Name:
Title:
PRICE DEVLOPMENT COMPANY, LIMITED
PARTNERSHIP
By: JP Realty, Inc., General Partner
By:_________________________________
Name:
Title:
FORMER JP LIMITED PARTNERS
12
Exhibit I
Schedule 1 to Agreement __
Protected Partners
Exhibit I
Schedule 2 to Agreement __
Protected Properties
Exhibit I
Schedule 3 to Agreement __
Protected Partners
Who Have Elected to Become Obligated Partners
Obligated Partner Protected Amount
----------------- ----------------
Exhibit I
Schedule 4 to Agreement __
JP Tax Protection Agreements
[Must be the same as those listed on Schedule 2.18(h) to the JP Disclosure
Letter.]
Exhibit I
Schedule 5 to Agreement __
Form of Guaranty Agreement For Secured Nonrecourse Indebtedness of GGP
Partnership or JP Partnership
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("Guarantee"), is dated as of _________, between
each of the undersigned Persons identified on Schedule 1 attached hereto
("Guarantors"), and [LENDER] ("Guaranteed Party").
WHEREAS, [BORROWER] ("Maker"), is indebted to the Guaranteed Party in the
sum of [LOAN], as evidenced by a certain promissory note dated [DATE] (the
"Note"), which is secured by a mortgage (the "Mortgage") on certain property of
the Maker (the "Properties" and individually, a "Property").
WHEREAS, the Guarantors desire to guarantee collection of a portion of the
principal amount of the Note not in excess of [Guaranteed Amount] (the
"Guaranteed Amount").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, Guarantors agree as follows:
1. Guarantee.
A. The Guarantors hereby irrevocably and unconditionally guarantee the
collection by the Guaranteed Party of, and hereby agree to pay to the
Guaranteed Party upon demand (following (1) foreclosure of the Mortgage,
exercise of the powers of sale thereunder and/or acceptance by the
Guaranteed Party of a deed to a Property in lieu of foreclosure, and (2)
the exhaustion of the exercise of any and all remedies available to the
Guaranteed Party against Maker, including, without limitation, realizing
upon the assets of Maker other than the Properties), an amount equal to the
excess, if any, of the Guaranteed Amount over the Maker Proceeds (as
hereinafter defined). The amounts payable by each Guarantor in respect of
the guarantee obligations hereunder shall be in the same proportion as the
amount listed next to such Guarantor's name on Schedule 2 attached hereto
bears to the Guaranteed Amount, provided that, notwithstanding anything to
the contrary contained in this Agreement, each Guarantor's obligation shall
be limited to the amount(s) set forth on Schedule 2 next to such
Guarantor's name. The Guarantors' obligations as set forth in this
Paragraph 1.A. are hereinafter referred to as the "Guaranteed Obligations."
B. For the purposes of this Guarantee, the term "Maker Proceeds" shall
mean the aggregate of the Foreclosure Proceeds (as hereinafter defined)
plus all other amounts collected from the Maker or realized from the sale
of assets of the Maker other than the Properties by the Guaranteed Party in
repayment of the Note.
C. For the purposes of this Guarantee, the term "Foreclosure Proceeds"
shall have the applicable meaning set forth below with respect to a
Property:
1. If at least one bona fide third party unrelated to the
Guaranteed Party (and including, without limitation, any of the
Guarantors) bids for such Property at a sale thereof, conducted upon
foreclosure of the related Mortgage or exercise of the power of sale
thereunder, Foreclosure Proceeds shall mean the highest amount bid for
such Property by the party that acquires title thereto (directly or
through a nominee) at or pursuant to such sale. For the purposes of
determining such highest bid, amounts bid for the Property by the
Guaranteed Party shall be taken into account notwithstanding the fact
that such bids may constitute credit bids which offset against the
amount due to the Guaranteed Party under the Note.
2. If there is no such unrelated third-party at such sale of the
Property so that the only bidder at such sale is the Guaranteed Party
or its designee, the Foreclosure Proceeds shall be deemed to be the
fair market value (the "Fair Market Value") of the Property as of the
date of the foreclosure sale, as such Fair Market Value shall be
mutually agreed upon by the Guaranteed Party and the Guarantors or
determined pursuant to Paragraph 1.D.
3. If the Guaranteed Party receives and accepts a deed to the
Property in lieu of foreclosure in partial satisfaction of Maker's
obligations under the Note, the Foreclosure Proceeds shall be deemed
to be the Fair Market Value of such Property as of the date of
delivery of the deed-in-lieu of foreclosure, as such Fair Market Value
shall be mutually agreed upon by the Guaranteed Party and the
Guarantors or determined pursuant to Paragraph 1.D.
D. Fair Market Value of a Property shall be the price at which a
willing seller not compelled to sell would sell such Property, and a
willing buyer not compelled to buy would purchase the Property, free and
clear of all mortgages but subject to all leases and reciprocal easement
and operating agreements. If the Guaranteed Party and Guarantors are unable
to agree upon the Fair Market Value of a Property in accordance with
subparagraphs 1.C.2. or 3. above, as applicable, within twenty (20) days
after the date of the foreclosure sale or the delivery of the deed-in-lieu
of foreclosure, as applicable, relating to a Property, either party may
have the Fair Market Value of a Property determined by appraisal by
appointing an appraiser having the qualifications set forth below to
determine the same and by notifying the other party of such appointment
within twenty (20) days after the expiration of such twenty (20) day
period. If the other party shall fail to notify the first party, within
twenty (20) days after its receipt of notice of the appointment by the
first party, of the appointment by the other party of an appraiser having
the qualifications set forth below, the appraiser appointed by the first
party shall alone make the determination of such Fair Market Value.
Appraisers appointed by the parties shall be members of the Appraisal
Institute (MAI) and shall have at least ten years' experience in the
valuation of properties similar to the Property being valued in the greater
metropolitan area in which such Property is located. If each party shall
appoint an appraiser having the aforesaid qualifications and such two
appraisers cannot, within thirty
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(30) days after the appointment of the second appraiser, agree upon the
determination hereinabove required, then they shall select a third
appraiser which third appraiser shall have the aforesaid qualifications,
and if they fail so to do within forty (40) days after the appointment of
the second appraiser they shall notify the parties hereto, and either party
shall thereafter have the right, on notice to the other, to apply for the
appointment of a third appraiser to the chapter of the American Arbitration
Association or its successor organization located in the metropolitan area
in which the Property is located or to which the Property is proximate or
if no such chapter is located in such metropolitan area, in the
metropolitan area closest to the Property in which such a chapter is
located. Each appraiser shall render its decision as to the Fair Market
Value of the Property in question within thirty (30) days after the
appointment of the third appraiser and shall furnish a copy thereof to the
Guaranteed Party and Guarantors. The Fair Market Value of the Property
shall then be calculated as the average of (i) the Fair Market Value
determined by the third appraiser and (ii) whichever of the Fair Market
Values determined by the first two appraisers is closer to the Fair Market
Value determined by the third appraiser; provided, however, that if the
Fair Market Value determined by the third appraiser is higher or lower than
both Fair Market Values determined by the first two appraisers, such Fair
Market Value determined by the third appraiser shall be disregarded and the
Fair Market Value of the Property shall then be calculated as the average
of the Fair Market Value determined by the first two appraisers. The Fair
Market Value of a Property as so determined shall be binding and conclusive
upon the Guaranteed Party and Guarantors. Each party shall bear the cost of
its own appraiser and the cost of appointing, and the expenses of, the
third appraiser shall be shared equally by the Guaranteed Party and
Guarantors.
2. Waivers: Other Agreements.
The Guaranteed Party is hereby authorized, without notice to or demand upon
Guarantors, which notice or demand is expressly waived hereby, and without
discharging or otherwise affecting the enforceability of the obligations of the
Guarantors hereunder (which shall remain absolute and unconditional
notwithstanding any such action or omission to act), from time to time to:
(i) waive or otherwise consent to noncompliance with any provision of
the Note or Mortgage, or any part thereof, or any other instrument or
agreement in respect of the Guaranteed Obligations now or hereafter
executed by Maker or any other person and delivered to the Guaranteed
Party;
(ii) accept partial payments on the Guaranteed Obligations by Maker;
(iii) receive, take and hold additional security or collateral for the
payment of the Guaranteed Obligations or for the payment of this Guarantee,
or for the payment of any other guarantees of the Guaranteed Obligations,
and exchange, enforce, waive, substitute, liquidate, terminate, abandon,
fail to perfect, subordinate, transfer, or otherwise alter or release any
such additional security or collateral;
(iv) apply any and all such security or collateral and direct the
order or manner
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of sale thereof as the Guaranteed Party may determine in its sole
discretion;
(v) settle, release, compromise, collect or otherwise liquidate the
Guaranteed Obligations or accept, substitute, release, exchange or
otherwise alter, affect or impair any Mortgage or any other security or
collateral for the Guaranteed Obligations or any other guarantee therefore,
in any manner;
(vi) add, release or substitute any one or more other guarantors,
makers or endorsers of the Guaranteed Obligations and otherwise deal with
Maker or any other guarantor as the Guaranteed Party may elect in its sole
discretion; and
(vii) apply any and all payments or recoveries from Maker, Guarantors
or from any other guarantor of the Guaranteed Obligations, to such of the
Guaranteed Obligations as the Guaranteed Party in its sole discretion may
determine, whether such Guaranteed Obligations are secured or unsecured or
guaranteed or not guaranteed by others.
3. Miscellaneous.
A. This Guarantee is irrevocable as to any and all of the Guaranteed
Obligations until the earliest date (the "Termination Date") that, as a
result of a repayment, compromise or adjustment of a principal amount of
the Note, the total principal amount outstanding under the Note is reduced
by an amount equal to or greater than the Guaranteed Amount, or if the
Maker incurs indebtedness senior to, or pari passu with the Note, provided
that the obligations of the Guarantors hereunder shall continue after the
Termination Date to the extent of any claims that are attributable fully
and solely to an event or action that occurred before the Termination Date.
B. This Guarantee is binding on the Guarantors and their successors
and assigns, and inures to the benefit of the Guaranteed Party.
C. No delay on the part of the Guaranteed Party in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise or waiver by the Guaranteed Party of any right or remedy shall
preclude any further exercise thereof, nor shall any modification or waiver
of any of the provisions of this Guarantee be binding upon the Guaranteed
Party, except as expressly set forth in a writing duly signed or delivered
by the Guaranteed Party or on the Guaranteed Party's behalf by an
authorized officer or agent of the Guaranteed Party. The Guaranteed Party's
failure at any time or times hereafter to require strict performance by
Maker, Guarantors or any other person of any of the provisions, warranties,
terms and conditions contained in any security agreement, agreements,
guarantee, instrument or document now or at any time or times hereafter
executed by Maker or Guarantors or delivered to the Guaranteed Party shall
not waive, affect or diminish any right of the Guaranteed Party at any time
or times hereafter to demand strict performance thereof and such right
shall not be deemed to have been waived by any act or knowledge of the
Guaranteed Party, its agents, officers, or employees, unless such waiver is
contained in an instrument in writing signed by an officer or agent of the
Guaranteed Party and directed to Maker or Guarantors, or either of them (as
the case may be) specifying such waiver. No waiver by the Guaranteed Party
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of any default shall operate as a waiver of any other default or the same
default on a future occasion, and no action by the Guaranteed Party
permitted hereunder shall in any way affect or impair the Guaranteed
Party's rights or the obligations of Guarantors under this Guarantee.
D. This Guarantee shall be interpreted and the rights and liabilities
of the parties hereto determined in accordance with the laws (other than
the conflicts of law provisions) of the State of [New York].
E. This Guarantee contains all the terms and conditions of the
agreement between the Guaranteed Party and Guarantors. The terms and
provisions of this Guarantee may not be waived, altered, modified or
amended except in writing duly executed by the party to be charged thereby.
F. Any notice shall be directed to the parties at the following
addresses:
If to Guarantors:
If to the Guaranteed Party:
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