EXECUTION COPY
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "AGREEMENT"), dated as of July 28, 2008
(the "EFFECTIVE DATE"), is made by and among Xxxxxxx Properties, Inc., a
Maryland corporation (the "COMPANY"), on the one hand, and JMB Capital Partners
Master Fund L.P., a Cayman Islands limited partnership, Smithwood Advisers,
L.P., a California limited partnership, Smithwood General Partner, LLC, a
California limited liability company, and Smithwood Partners, LLC, a California
limited liability company (all parties other than the Company collectively, the
"STOCKHOLDER GROUP"), on the other hand.
WHEREAS, the Company and the Stockholder Group have agreed that it is in
their mutual interests to enter into this Agreement, among other things, to set
forth certain agreements concerning the composition of the board of directors of
the Company and the Company's 2008 Annual Meeting of Stockholders (including all
adjournments or postponements thereof (the "2008 ANNUAL Meeting")), as
hereinafter described.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, and agreements contained herein, and other good and valuable
consideration, the parties hereto mutually agree as follows:
1. NOMINATION TO THE BOARD.
(a) INCREASE IN DIRECTORSHIPS. Promptly following the Effective Date
(but in no event later than July 30, 2008), the Board of Directors of the
Company (the "BOARD") shall, pursuant to the powers granted to the Board under
Article III of the Bylaws of the Company, increase the number of directorships
by four until the time of the 2008 Annual Meeting. The Board shall promptly (but
in no event later than July 30, 2008 with respect to the two Stockholder Group
Designees (as defined below) identified below) elect Xxxx Xxxxxx (the
"COMPROMISE DIRECTOR") and the Stockholder Group Designees to fill the new
directorships so created on the Board and to serve in such capacity from such
date of election through the date of the 2008 Annual Meeting and until their
successors are duly elected and qualify.
(b) 2008 ANNUAL MEETING. With respect to the 2008 Annual Meeting:
(i) the Board and the Nominating and Corporate Governance
Committee of the Board (collectively, "MANAGEMENT") shall nominate and
recommend the following individuals ("STOCKHOLDER GROUP DESIGNEES") for
election as directors of the Company for a term that expires at the 2009
Annual Meeting of Stockholders of the Company (the "2009 ANNUAL MEETING")
and until their successors are duly elected and qualify:
o an individual to be named by the Stockholder Group,
subject to the provisions of Section 5(b);
o Xxxxx Xxxxxx; and
o Xxxxxxxx Xxxxxx;
(ii) the terms of the following members of the Board shall expire
at the 2008 Annual Meeting and they shall not be nominated by Management
for re-election:
o Xxxxxxxx X. Xxxxxx;
o Xxxxxx X. Van xx Xxxx; and
o Xxxxxx X. Xxxxxxx;
(iii) promptly after their election as directors, the Board shall
appoint Xxxxxxxx Xxxxxx to the Compensation Committee, Xxxxx Xxxxxx to the
Audit Committee and the third Stockholder Group Designee to the Nominating
and Corporate Governance Committee, and each (or their Stockholder Group
Replacement Director (as defined below)) shall serve on such committee
during the term of this Agreement. Committee appointments of the
Stockholder Group Designees shall be changed during the term of this
Agreement only with the approval of a majority of the Stockholder Group
Designees. One Stockholder Group Designee with the requisite qualifications
selected by the Stockholder Group Designees shall also be appointed by the
Board to any additional Board committee created during the term of this
Agreement; and
(iv) the Board and each member of the Stockholder Group shall use
their reasonable best efforts to support the election to the Board of each
of Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, the Compromise
Director and the Stockholder Group Designees at the 2008 Annual Meeting.
(c) Effective as of the 2008 Annual Meeting and thereafter during the
term of this Agreement, (i) the number of directorships on the Board shall be
seven, (ii) the Board shall not increase or decrease the number of directorships
for service during such period (although the number of directorships for service
as of and following the 2009 Annual Meeting may be increased or decreased if
notice of such increase or decrease is given to the Stockholder Group on or
before the date that is twenty (20) days prior to the advance notification
deadline in the respect of the 2009 Annual Meeting) without the approval of a
majority of the Stockholder Group Designees, and (iii) the Board shall not
adversely revise the exculpation provisions in the Company's Charter or the
indemnification or expense advance provisions in the Company's Bylaws, as either
applies to any officers or directors of the Company as of the date of this
Agreement. The parties agree that the 2009 Annual Meeting shall not be held
prior to October 2, 2009.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER GROUP. Each member of
the Stockholder Group hereby represents and warrants to the Company as
follows:
(a) The Stockholder Group has beneficial ownership of 4,650,000 shares
of common stock of the Company (the "COMMON STOCK") and has full and complete
authority to enter into this Agreement and to vote and otherwise act with
respect to the entire number of shares of the Common Stock which it or any of
its members holds, or may hold, including any shares purchased in the future, in
accordance with the terms of this Agreement. No "affiliate" or "associate" (as
such terms are defined in the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT ")) of the Stockholder Group beneficially owns any shares or
rights to acquire shares of the Common Stock. No member of the Stockholder Group
or Stockholder Group
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Designee or any affiliate thereof has engaged in any hedging or other
transaction or series of transactions or any other agreement, arrangement or
understanding (including any short position or any borrowing or lending of
shares), the effect or intent of which is to mitigate loss to or manage risk or
benefit of share price changes for, or to increase or decrease the voting power
of, such member or Stockholder Group Designee with respect to any share of stock
or other security of the Company.
(b) There are no other arrangements, agreements or understandings
between the Stockholder Group and the Company or Management except as set forth
in this Agreement.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) The Company hereby represents and warrants to the Stockholder
Group that there are no other arrangements, agreements or understandings between
the Stockholder Group and the Company or Management except as set forth in this
Agreement.
(b) The Company agrees to notify Xxxx Xxxxxx of Xxxxxxx Xxxx & Xxxxx,
and Xxxxx Xxxxxx, by telephone and email, and Xxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx
and Xxxxxxxx Xxxxxx (together, the "PROPOSAL NOTICE RECIPIENTS") by email, at
the numbers and email addresses in Section 16(b) below, immediately following
the receipt by the Company of any proposal or notice of nomination in respect of
the 2008 Annual Meeting if such proposal or notice is received prior to 11:59 pm
on the last date on which nominations or proposals submitted to the Company for
consideration at the 2008 Annual Meeting would be considered timely under the
Company's Bylaws (which date the Company has informed the Stockholder Group is
August 3, 2008 (as such date may be extended should a court so determine, the
"ADVANCE NOTICE TERMINATION DEADLINE")). In the event that such a proposal or
notice is received, the Company agrees that the Stockholder Group shall have 24
hours from the time the Company notifies the Proposal Notice Recipients of
receipt of a proposal or notice to submit a notice of its intent to nominate
directors and to make any other proposals it deems necessary (the "JMB
NOMINATION NOTICE"). The Company agrees that the JMB Nomination Notice, if
received within such 24 hour period, shall be considered timely for purposes of
the Company's Bylaws and for all other purposes, and the Company waives any
claim that such notice and the nominations contained therein are invalid under
the Company's Bylaws or otherwise.
4. CONDITIONS AND COVENANTS OF THE STOCKHOLDER GROUP.
(a) CONDITION TO NOMINATION. The continued service of the Stockholder
Group Designees as directors prior to the 2008 Annual Meeting and the nomination
of the Stockholder Group Designees for election to the Board by Management for
the 2008 Annual Meeting shall be subject to the condition that no "person" or
"group" (for purposes of this Agreement, as such terms are defined and used in
the Exchange Act) other than the Stockholder Group shall have submitted a
proposal or nominee or slate of nominees for election to the Board prior to the
Advance Notice Termination Deadline.
(b) COVENANTS OF THE STOCKHOLDER GROUP. At all times from and after
the date hereof until the termination of this Agreement, each member of the
Stockholder Group shall, and
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shall cause the Stockholder Group Designees to, comply with the following
covenants and provisions:
(i) Until the termination of this Agreement, the Stockholder
Group shall, and shall cause each of the Stockholder Group Designees to,
support each of Management's nominees and the Compromise Director for
election as a director at the 2008 Annual Meeting. Effective as of August
4, 2008, assuming the condition set forth in Section 4(a) has been met, the
Stockholder Group agrees, and shall cause each of the Stockholder Group
Designees, to irrevocably withdraw any proposal, proposed nominee or slate
of nominees with respect to the 2008 Annual Meeting and the Company may
treat any such proposal or nomination as null and void and not include such
proposal or nomination in the Company's proxy statement or allow it to be
presented at the 2008 Annual Meeting. From and after August 4, 2008 until
the termination of this Agreement, (i) the Stockholder Group shall not, and
shall cause each of the Stockholder Group Designees not to, submit any
proposal or nomination to the Company including any proposal to nominate
any individual or group of members for election to the Board, and (ii) the
Company shall be entitled to treat any such proposal or nomination as null
and void and not include such proposal or nomination in the Company's proxy
statement or allow it to be presented at the 2008 Annual Meeting.
(ii) Concurrently with the execution of this Agreement (or upon
election as a director with respect to the third Stockholder Group Designee
or any Stockholder Group Replacement Director), the Stockholder Group shall
cause each Stockholder Group Designee to deliver to the Company an
executed, blank-dated irrevocable resignation as a director in the form
attached hereto as Exhibit A, which shall be effective upon: (A) any
termination of this Agreement pursuant to the terms set forth herein; (B)
any death or disability of such Stockholder Group Designee; (C) the
termination of employment of such Stockholder Group Designee with the
Stockholder Group, unless the Stockholder Group has otherwise notified the
Company in writing within ten (10) days of such termination that it wishes
such Stockholder Group Designee to continue as its designee at the time of
such termination; or (D) a reduction in the number of Stockholder Designees
pursuant to Section 11(a)(i), (ii) or (iii), respectively (with each
Stockholder Group Designee resignation specifying with respect to which
subsection his resignation relates).
5. REPLACEMENT OF DIRECTORS.
(a) Upon the death, disability or resignation as a director of any
director other than a Stockholder Group Designee or the Compromise Director, the
remaining directors (excluding the Stockholder Group Designees and the
Compromise Director) shall be entitled to designate a replacement (the
"REPLACEMENT DIRECTOR") for the vacancy resulting therefrom. The Replacement
Director shall be promptly reviewed and recommended by the Nominating and
Corporate Governance Committee of the Board and elected by the Board.
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(b) Upon the death, disability or resignation (except pursuant to
SECTION 11(a)) as a director of any Stockholder Group Designee, the Stockholder
Group shall be entitled to designate a replacement (a "STOCKHOLDER GROUP
REPLACEMENT DIRECTOR") for any vacancy resulting therefrom. The Stockholder
Group Replacement Director shall be promptly reviewed and recommended by the
Nominating and Corporate Governance Committee of the Board and elected by the
Board, provided that the Board (excluding the Stockholder Group Designees) does
not advance a reasonable objection to such Stockholder Group Replacement
Director (in which case such Stockholder Group Replacement Director shall not be
elected), and provided further, that if the Board (excluding the Stockholder
Group Designees) does advance a reasonable objection to such Stockholder Group
Replacement Director, the Stockholder Group shall be entitled to designate a
further Stockholder Group Replacement Director or Stockholder Group Replacement
Directors subject to the terms herein, until such time as a Stockholder Group
Replacement Director is elected to the Board.
(c) Upon the death, disability or resignation as a director of the
Compromise Director, the remaining directors (excluding the Stockholder Group
Designees) shall be entitled to designate a replacement (a "REPLACEMENT
COMPROMISE DIRECTOR") for the vacancy resulting therefrom. The Compromise
Replacement Director shall be promptly reviewed and recommended by the
Nominating and Corporate Governance Committee of the Board and elected by the
Board, provided that the Stockholder Group Designees do not advance a reasonable
objection to such Replacement Compromise Director (in which case such
Replacement Compromise Director shall not be elected), and provided further,
that if the Stockholder Group Designees do advance a reasonable objection to
such Replacement Compromise Director, the remaining directors (excluding the
Stockholder Group Designees) shall be entitled to designate a further
Replacement Compromise Director or Replacement Compromise Directors subject to
the terms herein, until such time as a Replacement Compromise Director is
elected to the Board.
6. STOCKHOLDER GROUP'S PROHIBITED CONDUCT.
(a) Except as otherwise stated in this Agreement, until the
termination of this Agreement, each member of the Stockholder Group, together
with the Stockholder Group Designees and any and all of their affiliates,
associates or other persons acting in concert therewith, shall be prohibited
from (and shall cause any such person to refrain from):
(i) acquiring, offering or proposing to acquire, directly or
indirectly, or retaining ownership of, any of the Common Stock in excess of
the Stockholder Group's current "beneficial ownership" (for purposes of
this Agreement, as such term is defined under Section 13(d) of the Exchange
Act) as of the date of this Agreement;
(ii) forming, joining or in any way participating in any "group"
(for purposes of this Agreement, as understood under Section 13(d) of the
Exchange Act) with respect to the Common Stock;
(iii) financing, assisting or encouraging anyone to acquire
beneficial ownership of the Common Stock for the purpose of influencing
control over the business or operations of the Company;
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(iv) soliciting proxies or consents, engaging in a referendum,
supporting a "withhold the vote campaign," giving voting advice to any
third party, or participating in, encouraging or financing any of the
foregoing;
(v) seeking, either alone or in concert with others, to (A)
call any special meeting of stockholders, (B) make or be the proponent of
any stockholder proposal, (C) nominate any person or group for election to,
or make any request to increase or decrease the number of members on, the
Board (except as provided in this Agreement), (D) remove any member of the
Board (except any Stockholder Group Designee), or (E) seek any additional
representation on the Board (except as provided in this Agreement);
(vi) entering into a voting agreement, voting trust or similar
agreement or arrangement, or depositing any of the Common Stock into any
voting trust, or subjecting any of the Common Stock to any arrangement or
understanding with respect to the voting rights of the Common Stock (other
than solely a proxy given with respect to the 2009 Annual Meeting);
(vii) making any public announcement with respect to any proposal
or offer involving, or proposing to enter into, or assisting, encouraging
or financing any other person in connection with, directly or indirectly,
any merger, consolidation, business combination, tender or exchange offer,
sale or purchase of assets or securities, dissolution, liquidation,
restructuring, recapitalization or any other transaction of or involving
the Company, except as required by law;
(viii) making any public announcement or remarks (A) critical of
the Company, its present or former officers or directors, (B) in favor of
any proposal opposed by a majority of the Board, or (C) regarding any of
the foregoing in this section;
(ix) commencing any litigation against the Company or its
present or former officers or directors, other than with respect to a
breach of this Agreement;
(x) making any public request to amend, waive or terminate this
Agreement, or bringing any action to contest the validity thereof; or
(xi) otherwise taking, causing, promoting, supporting or
financing others to take, any action inconsistent with any of the foregoing
in this section.
(b) Each member of the Stockholder Group will be liable for any
violation of Section 6(a) by any member of the Stockholder Group or any of the
Stockholder Group Designees and any and all of their affiliates, associates or
other persons acting in concert therewith.
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7. COMPANY PROHIBITED CONDUCT. Except as otherwise stated in this
Agreement, until the termination of this Agreement, Management, together with
any or all of their affiliates, associates or other persons acting in concert
therewith, shall be prohibited from: making any public announcement or remarks
that constitute an ad hominem attack on or that disparage the Stockholder Group
or its officers, directors managers or partners or any Stockholder Group
Designee.
8. VOTING. During the term of this Agreement, each member of the
Stockholder Group shall cause all shares of the Common Stock beneficially owned
by the Stockholder Group to be present for quorum purposes at any annual or
special meeting of stockholders, and to be voted for each of the Management's
nominees for election as directors.
9. DISPOSITIONS. Without the prior written consent of the Company, each
member the Stockholder Group shall be prohibited from selling or otherwise
transferring more than 240,000 shares of the Common Stock beneficially owned by
it (treating all sales or transfers by members of the Stockholder Group in the
aggregate) to any person, entity or group ("THIRD PARTY") in a negotiated
transaction or series of related transactions, unless the Stockholder Group
obtains a representation from such Third Party stating that after such sale or
transfer, the Third Party would not beneficially own greater than 4.9% of the
Common Stock, and that the Stockholder Group has no reasonable grounds to
believe that such representation is not accurate.
10. CERTIFICATION OF OWNERSHIP. Each member of the Stockholder Group
shall, upon request of the Company from time to time, certify to the Company as
to the amount of shares each member of the Stockholder Group beneficially owns
(determined in compliance with Schedule 13D and Rule 13d-3 under the Exchange
Act). The Stockholder Group shall promptly disclose in reasonable detail to the
Company if member of the Stockholder Group or Stockholder Group Designee or any
affiliate thereof has engaged in any hedging or other transaction or series of
transactions or any other agreement, arrangement or understanding (including any
short position or any borrowing or lending of shares), the effect or intent of
which is to mitigate loss to or manage risk or benefit of share price changes
for, or to increase or decrease the voting power of, such member or Stockholder
Group Designee with respect to any share of stock or other security of the
Company.
11. REDUCTION OF STOCKHOLDER GROUP DESIGNEES AND TERMINATION.
(a) The number of Stockholder Group Designees serving and entitled
to serve as director shall be reduced upon the occurrence of the following
events:
(i) from three members to two, upon the Stockholder Group
having beneficial ownership of less than 6.5% (determined in compliance
with Schedule 13D and Rule 13d-3 under the Exchange Act) of the shares of
the Common Stock outstanding as of the date hereof;
(ii) from two members to one, upon the Stockholder Group having
beneficial ownership of less than 5% (determined in compliance with
Schedule 13D and Rule 13d-3 under the Exchange Act) of the shares of the
Common Stock outstanding as of the date hereof; and
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(iii) from one member to none, upon the Stockholder Group having
beneficial ownership of less than 3% (determined in compliance with
Schedule 13D and Rule 13d-3 under the Exchange Act) of the shares of the
Common Stock outstanding as of the date hereof.
(b) This Agreement shall terminate upon the earliest of the
following:
(i) prior to the Advance Notice Termination Deadline, any
person or group (other than the Stockholder Group) shall have submitted a
proposal for consideration at the 2008 Annual Meeting or nominee or slate
of nominees for election to the Board at the 2008 Annual Meeting;
(ii) the Stockholder Group having beneficial ownership of less
than 3% (determined in compliance with Schedule 13D and Rule 13d-3 under
the Exchange Act) of the shares of the Common Stock outstanding as of the
date hereof;
(iii) any person becoming the beneficial owner of more than 50%
(determined in compliance with Schedule 13D and Rule 13d-3 under the
Exchange Act) of the Company's voting stock, including as a result of any
merger, acquisition or other type of business combination, provided, that
the Stockholder Group has an opportunity to sell or exchange the Common
Stock beneficially owned by it in such transaction pro rata with other
public stockholders (it being understood that pro rata participation
excludes any different consideration received by Xx. Xxxxxx X. Xxxxxxx III
and related entities as a result of the Company's contractual obligations
to provide tax deferral opportunities to them as of the date hereof and
consideration received by the Company's officers, directors and employees);
(iv) upon any member of the Stockholder Group's (together with
any and all of their affiliates, associates or other persons acting in
concert therewith), or any Stockholder Group Designee's, engagement in any
of the prohibited activities set forth in Section 6(a) above (other than
engagement in such activities that is immaterial in the aggregate),
following receipt of written notice from the Company and a three (3) day
opportunity to cure (if curable);
(v) upon any other material breach of this Agreement by any
member of the Stockholder Group (together with any and all of their
affiliates, associates or other persons acting in concert therewith) or any
of the Stockholder Designees, following receipt of written notice from the
Company and a three (3) day opportunity to cure (if curable);
(vi) upon any material breach of this Agreement by the Company,
following receipt of written notice from the Stockholder Group and a three
(3) day opportunity to cure (if curable);
(vii) immediately prior to the 2009 Annual Meeting of
Stockholders of the Company;
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(viii) upon the Company's receipt of notice from the Stockholder
Group that it intends to conduct a proxy contest with respect to the 2009
Annual Meeting; or
(ix) the date on which there are no Stockholder Group Designees
on the Board.
12. RELEASE AND WAIVER.
(a) The Stockholder Group, for the benefit of the Company and each of
the Company's controlling persons, officers, directors, stockholders, agents,
affiliates, employees, attorneys and assigns, past and present, in their
capacity as such (the Company and each such person being a "COMPANY RELEASED
PERSON"), hereby forever waives and releases, and covenants not to xxx, any of
the Company Released Persons for any claim or cause of action based on any act,
omission, or failure to act by the Company Released Persons, whether known or
unknown, which occurred prior to the Effective Date; provided, however, this
waiver and release and covenant not to xxx shall not include the right to xxx to
enforce the terms of this Agreement and does not extend to acts which are
criminal.
THE STOCKHOLDER GROUP HEREBY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS
LEGAL COUNSEL, AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE
SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
BEING AWARE OF SAID CODE SECTION, THE STOCKHOLDER GROUP HEREBY EXPRESSLY
WAIVES ANY RIGHTS IT MAY HAVE THEREUNDER, AS WELL AS ANY OTHER STATUTES OR
COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
(b) The Company, for the benefit of any member of the Stockholder
Group and each of such member's controlling persons, officers, directors,
stockholders, agents, affiliates, employees, attorneys and assigns, past and
present, in their capacity as such (each such person being a "STOCKHOLDER GROUP
RELEASED PERSON"), hereby forever waives and releases and covenants not to xxx,
for any claim or cause of action based on any act, omission or failure to act by
such Stockholder Group Released Person, whether known or unknown, which occurred
prior to the Effective Date; provided, however, that this waiver and release and
covenant not to xxx shall not include the right to xxx to enforce the terms of
this Agreement and does not extend to acts which are criminal.
THE COMPANY HEREBY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS LEGAL
COUNSEL, AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION
1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME
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OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR."
BEING AWARE OF SAID CODE SECTION, THE COMPANY HEREBY EXPRESSLY WAIVES
ANY RIGHTS IT MAY HAVE THEREUNDER, AS WELL AS ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT.
(c) The releases contained above shall survive the termination of
the Agreement.
13. PUBLIC ANNOUNCEMENT. The parties shall disclose the existence of this
Agreement within two (2) business days after its execution pursuant to a joint
press release in the form attached hereto as EXHIBIT B, and the Company shall
file a corresponding Form 8-K; PROVIDED, HOWEVER, that neither party shall
disclose the existence of this Agreement until the press release is issued. The
Stockholder Group shall file a corresponding amendment to its Schedule 13D.
14. MATERIAL NONPUBLIC INFORMATION. In connection with this Agreement and
the Stockholder Group's ongoing relationship with the Company, there may be
instances in which material nonpublic information concerning the Company will be
divulged to members of the Stockholder Group or its affiliates or associates who
are not at that time members of the Board by the Company, the Stockholder Group
or the Stockholder Group Designees. The Stockholder Group expressly acknowledges
that federal and state securities laws prohibit any person who misappropriates
material nonpublic information about a company from purchasing or selling
securities of such company, or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities. The Company represents to
the Stockholder Group that the requirement set forth in the Xxxxxxx Xxxxxxx
Policy that Covered Persons obtain the pre-clearance of the Compliance Officer
prior to trading in securities of the Company is applied by the Company only in
the event that there is in effect a general limitation on such trading
applicable to all Covered Persons (as defined in the Xxxxxxx Xxxxxxx Policy).
15. REMEDIES. The Company and the Stockholder Group acknowledge and agree
that a breach or threatened breach by either party may give rise to irreparable
injury inadequately compensable in damages, and accordingly each party shall be
entitled to injunctive relief to prevent a breach of the provisions hereof and
to enforce specifically the terms and provisions hereof in any state or federal
court having jurisdiction, in addition to any other remedy to which such
aggrieved party may be entitled to at law or in equity. In the event either
party institutes any legal action to enforce such party's rights under, or
recover damages for breach of, this Agreement, the prevailing party or parties
in such action shall be entitled to recover from the other party or parties all
costs and expenses, including but not limited to reasonable attorneys' fees,
court costs, witness fees, disbursements and any other expenses of litigation or
negotiation incurred by such prevailing party or parties.
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16. NOTICES.
(a) All notice requirements and other communications (other than
notices provided in Section 3(b)) shall be deemed given when delivered or on the
following business day after being sent by overnight courier with a nationally
recognized courier service such as Federal Express, addressed to the Stockholder
Group or the Company as follows:
The Company:
Xxxxxxxx X. Xxxxxx
Senior Vice President, General Counsel and Secretary
Xxxxxxx Properties, Inc.
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
With a copy to:
Julian T.H. Xxxxxxxxxxx
Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
The Stockholder Group:
Xxxxxxxx Xxxxxx
c/o Smithwood Advisors, L.P.
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
With a copy to:
Xxxx Xxxxxxxxxx
Xxxxx Xxxxxxxxx
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(b) The notice required by Section 3(b) shall be delivered to all the
following recipients at the following phone numbers and email addresses:
Xxxx Xxxxxx: Xxxxxxx.xxxxxx@xxx.xxx
Xxxxx Xxxxxx: email:xxxxx@xxxxxxxxxx.xxx
Xxxxx Xxxxxxxxx: Xxxxx.Xxxxxxxxx@xxx.xxx
Xxxx Xxxxxxxxxx: Xxxx.Xxxxxxxxxx@xxx.xxx
Xxx Xxxxxx: Xxx@xxxxxxxxxx.xxx
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17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions of the parties in connection therewith not referred
to herein.
18. COUNTERPARTS; FACSIMILE. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, and
signature pages may be delivered by facsimile, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
19. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
20. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Maryland, without regard to
choice of law principles that would compel the application of the laws of any
other jurisdiction.
21. SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
22. SUCCESSORS AND ASSIGNS. This Agreement shall not be assignable by any
of the parties to this Agreement. This Agreement, however, shall be binding on
successors of the parties hereto.
23. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made herein shall survive
the execution and delivery of this Agreement. Section 3(b), Section 12, and
Sections 16 through 27 and any claims arising out of or relating to breaches of
this Agreement occurring prior to the termination of this Agreement (regardless
if brought following the termination of this Agreement) shall survive
termination of this Agreement.
24. AMENDMENTS. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by all of the parties hereto.
25. FURTHER ACTION. Each party agrees to execute any and all documents,
and to do and perform any and all acts and things necessary or proper to
effectuate or further evidence the terms and provisions of this Agreement.
26. CONSENT TO JURISDICTION. Each of the parties hereby irrevocably
submits to the exclusive jurisdiction of any United States Federal or state
court sitting in the State of Maryland in any action or proceeding arising out
of or relating to this Agreement and each of the parties hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in any such court.
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27. EXPENSES. Upon receipt of satisfactory documentation, the Company
shall be responsible for certain reasonable expenses incurred by the Stockholder
Group prior to the date hereof in an amount of up to $100,000 in connection with
the execution and delivery of this Agreement by the Stockholder Group.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties hereto have executed this Stockholder
Agreement as of the date first set forth above.
XXXXXXX PROPERTIES, INC., JMB Capital Partners Master Fund L.P.,
a Maryland corporation a Cayman Island limited partnership
By: /s/ Xxxxxx Xxxxxx By: Smithwood Partners, LLC,
-------------------------- General Partner
Its: President and Chief Executive
Officer By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxx
Its: Managing Member
Smithwood Advisers, L.P.,
a California limited partnership
By: Smithwood General Partner, LLC
General Partner
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxx
Its: Managing Member
Smithwood General Partner, LLC,
a California limited liability company
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxx
Its: Managing Member
Smithwood Partners, LLC,
a California limited liability company
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxx
Its: Managing Member
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EXHIBIT A
[FORM OF IRREVOCABLE RESIGNATION]
[Date]
Attention: Chairman of the Board of Directors of Xxxxxxx Properties, Inc.
Reference is made to that certain Stockholder Agreement, dated as of
___________, 2008 (the "AGREEMENT"), by and among Xxxxxxx Properties, Inc., a
Maryland corporation, on the one hand, and JMB Capital Partners Master Fund
L.P., a Cayman Islands limited partnership, Smithwood Advisers, L.P., a
California limited partnership, Smithwood General Partner, LLC, a California
limited liability company, and Smithwood Partners, LLC, a California limited
liability company, on the other hand. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Agreement.
In accordance with the Agreement, I hereby tender my irrevocable
resignation as a director of the Board, effective upon the occurrence of any of
the events set forth in Section 4(b)(iii) of the Agreement. In the event that
this resignation shall become effective pursuant to Section 4(b)(ii)(D) of the
Agreement, I hereby designate that my resignation is pursuant to Section
11(a)[__] of the Agreement.
This resignation may not be withdrawn by me or the Stockholder Group at any
time during the term of the Agreement.
Very truly yours,
---------------------------
[Name]
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EXHIBIT B
[FORM OF PRESS RELEASE]
XXXXXXX PROPERTIES TO ADD NEW BOARD MEMBERS
LOS ANGELES, July 29, 2008 -- Xxxxxxx Properties, Inc. (NYSE: MPG), a Southern
California-focused real estate investment trust, today announced that it will
elect four additional directors to its Board as part of an agreement reached
with JMB Capital Partners Master Fund L.P.
Under the terms of the stockholder agreement, the Board of Directors of the
Company will be temporarily increased to ten members and the following
individuals will be elected to fill the new directorships created on the Board:
Xxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxx and a JMB Capital nominee to be named
shortly. Further, with respect to the 2008 Annual Meeting of Stockholders of the
Company: (i) the Nominating and Corporate Governance Committee of the Board will
nominate and recommend current Directors Xxxxxxxxx Xxxxxx, Xxxxxx Xxxxxx and
Xxxxxx Xxxxxxxx as well as Messrs. Brooks, Hadidi, and Xxxxxx for election to
the Board along with a yet to be named JMB Capital nominee for a term that
expires at the 2009 Annual Meeting of Stockholders; and (ii) Xxxxxxxx X. Xxxxxx,
Xxxxxx X. Van xx Xxxx and Xxxxxx X. Xxxxxxx will not stand for re-election and
the Board will be reduced to seven members.
In addition, the JMB group has agreed to withdraw any proposal or proposed
nominees or slate of nominees for consideration at the 2008 Annual Meeting and
will not make any other proposals or nominations to the Company during the term
of the stockholder agreement.
Xx. Xxxxxx is the founder and general partner of JMB Capital Partners, an
investment partnership formed in 2002. JMB Capital Partners manages over $1.2
billion in assets. Xx. Xxxxxx received his MBA from the University of Chicago
and his B.S. in Business Finance from the University of Southern California.
Xx. Xxxxxx joined JMB Capital shortly after inception in 2002 and currently
serves as the co-portfolio manager of the Fund, as well as Chief Operating
Officer for the partnership. Xx. Xxxxxx received his MBA from Harvard Business
School in 2002, where he graduated as a Xxxxxx X. Xxxxx Scholar and a Xxxx Xxxx
Fellow in Finance. Xx. Xxxxxx received a B.A. in History and Rhetoric (dual
majors) from the University of California at Berkeley in 1996.
Xx. Xxxxxx is the retired Vice Chairman of Xxxxx Fargo Bank NA, where he was
responsible for wholesale and commercial banking, and headed the company's
nationwide commercial, corporate and treasury management businesses. Prior to
his 45-year tenure at Xxxxx Fargo, Xx. Xxxxxx served as 1st Lieutenant in the
United States Army. Xx. Xxxxxx received a Bachelor of Arts degree from the
University of San Francisco and a certificate from the Stanford graduate school
of management.
Mr. Rising, President and Chief Executive Officer of Xxxxxxx, commented, "Over
the past two months, we have taken a series of steps to better position our
Company for the future, and we
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have made considerable progress. With this agreement, we will be able to focus
our full attention on the strategic initiatives we have underway to deliver
value for our stockholders. We look forward to the contributions of our new
Board members."
Xx. Xxxxxx commented "We are pleased to be joining the Board. As significant
shareholders in the Company, we think it is important to have a Board focused on
delivering shareholder value. We have supported Mr. Rising's strategic direction
for the company, and believe that these appointments continue the positive
changes at Xxxxxxx. We would also like to extend our thanks to the existing
Board for reaching this agreement, which allows the company to remain focused on
executing its business plan without unnecessary distractions."
The Company will file the full text of the stockholder agreement with the
Securities and Exchange Commission.
ABOUT XXXXXXX PROPERTIES, INC.
Xxxxxxx Properties, Inc. is the largest owner and operator of Class A office
properties in the Los Angeles central business district and is primarily focused
on owning and operating high-quality office properties in the Southern
California market. Xxxxxxx Properties, Inc. is a full-service real estate
company with substantial in-house expertise and resources in property
management, marketing, leasing, acquisitions, development and financing. For
more information on Xxxxxxx Properties, visit the Company's website at
xxx.xxxxxxxxxxxxxxxxx.xxx.
BUSINESS RISKS
This press release contains forward-looking statements based on current
expectations, forecasts and assumptions that involve risks and uncertainties
that could cause actual outcomes and results to differ materially. These risks
and uncertainties include general risks affecting the real estate industry
(including, without limitation, the inability to enter into or renew leases,
dependence on tenants' financial condition, and competition from other
developers, owners and operators of real estate); risks associated with the
availability and terms of financing and the use of debt to fund acquisitions and
developments; failure to manage effectively the Company's growth and expansion
into new markets to complete acquisitions or to integrate acquisitions
successfully; risks and uncertainties affecting property development and
construction; risks associated with downturns in the national and local
economies, increases in interest rates, and volatility in the securities
markets; potential liability for uninsured losses and environmental
contamination; risks associated with joint ventures; risks associated with our
company's potential failure to qualify as a REIT under the Internal Revenue Code
of 1986, as amended and possible adverse changes in tax and environmental laws;
and risks associated with the Company's dependence on key personnel whose
continued service is not guaranteed. For a further list and description of such
risks and uncertainties, see the reports filed by the Company with the
Securities and Exchange Commission. The Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
CONTACT:
Xxxxxxx Properties, Inc.
Xxxxx Xxxxxxx, 000-000-0000
Senior Vice President, Investor and Public Relations
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